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CDL Commercial Drivers License

Classroom – Provides 40 hours of classroom training that will prepare the student to pass the “Knowledge Test” required to obtain a Class A CDL instruction permit. Range/Road – Provides 120 hours of practical experience and training relating to performing and passing pre-trip inspection testing, basic controls skills testing and road skills testing. Home Study – Students will study the KY CDL Manual (provided) in order to pass the Class A CDL knowledge test. In addition, part of the Delmar Tractor Trailer Truck Driver Training book (provided) will be completed prior to course completion. Upon successful completion of this class the student will be able to master the skills necessary to obtain a Class A CDL. The student will also be able to understand and discuss the importance of safety as it relates to the operation of a semi-tractor and trailer in and around docks, shippers and consignees, in both city and/or over the road driving. The student will also be able to perform the following procedures;

1. Drive and control a semi-tractor and trailer on local, city, county and interstate roads
2. Perform vehicle inspections
3. Shift gears
4. Understand speed and space management
5. Recognize road hazards, aggressive drivers/road rage
6. Identify and avoid distracted driving and why
7. Learn about night driving, driver fatigue, extreme driving conditions, hazard perception
8. Learn about railroad crossings and how to cross them properly
9. How to handle driving emergencies and accident procedures
10.Rules about alcohol and other drugs
11.Map reading and trip planning
12.DOT Regulations
13.Log Book and Hours of Service Regulations
14.Accident reports
15.Conduct pre and post-trip inspections, complete Driver Vehicle Inspection Reports (DVIR)
16.Perform maneuvers, straight line, off-set backing and parallel parking
17.Double clutch and shift a 10-speed transmission
18.Master turns, ramps, lane changes, space management and uphill and downhill shifting situations
19.Pass the Class A skills Test

Commercial Drivers License
Certification-Board Commercial availability
Killexams : Certification-Board Commercial availability - BingNews https://killexams.com/pass4sure/exam-detail/CDL Search results Killexams : Certification-Board Commercial availability - BingNews https://killexams.com/pass4sure/exam-detail/CDL https://killexams.com/exam_list/Certification-Board Killexams : New Precast Standards Bring Goals Of Project Owners And Architects Into Alignment

The award-winning 1200 Intrepid Ave. project in the Philadelphia Navy Yard was a High Concrete Group project.

A new certification program helps project owners, architects and designers select the right architectural precast concrete producers for their jobs, allowing projects to be completed faster and more cost-effectively without sacrificing design quality.

But to get the most out of the new program, architects and owners need to understand some of the nuances that separate the four tiers of architectural precast certification. 

When it introduced the standards in Q4 2021, the Precast/Prestressed Concrete Institute said the previous one-size-fits-all certification program it had used for more than 50 years no longer met the needs of the architectural, engineering and construction community.

“Designers asked PCI to consider developing a new program that would highlight the quality skills available from the industry,” PCI President and CEO Bob Risser said when the new standards were unveiled. “The PCI board accepted the challenge and after several years of hard work by PCI members and staff, the program is underway.”

What does this mean for the architects, builders and owners of new commercial buildings? Representatives of High Concrete Group, one of the country’s largest precasters, said PCI’s new four-tiered system better aligns the expectations of project stakeholders. 

“While it is easy to see why architects and end users gravitate toward the very ornate and intricate aesthetics that precast concrete certainly offers, these designs may conflict with some of the client’s priorities," High Concrete President John J. Seroky said. "That is why it is important to work with a precaster that has an in-house design and engineering team to help ensure the right balance of aesthetics and function.” 

But in the context of PCI’s new standards, this does not mean that architects and end users need to sacrifice quality, said Jamie Sweigart, director of sales for High Concrete. 

“Today’s precast product options are not the precast concrete of years ago,” Sweigart said. “They are not limited to institutional-looking walls. There are so many features that can be added to any precast product and the new standards allow the manufacturer to produce very economical and yet very aesthetically pleasing products.”

PCI’s new system separates architectural precast products into four categories. The most stringent, known as “AA,” has the tightest product and installation requirements, and covers cladding or non-load-bearing products that feature three-dimensional or curved surfaces. 

Two other categories, AB and AC, also cover cladding or non-load-bearing precast products but with less-demanding tolerances, which establish permissible variations in product dimension and location. The least architecturally exacting category, AD, concerns structural precast products. 

Architects might be tempted to specify AA-level precast products for architectural applications, but most times their customers’ needs can be met with the slightly less stringent — and more budget-friendly — AB or AC standards, Sweigart said.

“The high tolerances of AA are achievable, but what architects need to know is that there are costs associated with AA,” Sweigart said. “In all the jobs we look at throughout a year’s time, you might get one project that's truly right for AA, but there's a lot of additional setup time, forming time and pouring time involved. Because the tolerances are so tight, we have to really make sure that our forms are absolutely perfect. And then once the piece is pulled out of the forms, then it's making sure the color and the finish are absolutely premium.”

Fewer than 20% of precasters are certified capable of doing AA-level work, a designation that is not easily achieved. To join that exclusive club, Sweigart said High Concrete participated in extensive and ongoing auditing and monitoring by PCI at its two plants in Ohio and Pennsylvania. 

But even with that level of commitment, Sweigart said the company doesn’t hesitate to tell a customer when they might be just as well-served by specifying products that meet the slightly less stringent AB category.

“An AB product itself is really a very high-end architectural precast product but with less of the costs of an AA product, which is significant at a time when many contractors and owners are concerned about high material and labor costs,” he said. “For most projects, everything that you need or want in a precast wall is covered through AB.” 

Whichever level of precast a project owner ultimately chooses, Sweigart said all precast products bring the same benefits to buildings. 

“It often gets overlooked by architects and owners, but precast offers a huge reduction in a completed building’s operational costs,” he said. “Precast panels provide edge-to-edge insulation, which is required today by many building codes. The concrete is absorbing heat or cold and releasing throughout the day, which ultimately reduces the demands on the building’s HVAC equipment. Precast also has a very long lifespan, which reduces maintenance or repair needs for owners.”

Any industry-wide change can lead to disruption. But in this case, the shift to using the new certification program should provide project owners, architects and designers better clarity and inspiration when selecting and specifying precast concrete for their projects, Sweigart said. 

This article was produced in collaboration between Studio B and High Concrete. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com

Wed, 03 Aug 2022 09:26:00 -0500 en text/html https://www.bisnow.com/washington-dc/news/construction-development/precast-certification-highconcrete-studiob-113640
Killexams : Republican lawmakers want to increase pilot retirement age amid airline struggles No result found, try new keyword!A group of Republican lawmakers are hoping to counteract flight cancellations fueled by current pilot shortages with a bill that would increase the mandatory retirement age from 65 to 67. Tue, 26 Jul 2022 06:55:38 -0500 en-us text/html https://www.msn.com/en-us/travel/news/republican-lawmakers-want-to-increase-pilot-retirement-age-amid-airline-struggles/ar-AA100boY Killexams : New York contractor corners market on solar schools

Sunrise installs an array on the roof of Westbury Middle School.

The commercial-scale solar market can be competitive, but finding a niche sets companies on a fast path to success. One Top Solar Contractor spent years honing the skills to specialize in the growing sector of school solar systems.

Sunrise Power Solutions (No. 93 on the 2022 Top Solar Contractors List) had experience working with schools as an electrical contractor, so when the company added solar services to its toolbelt about 12 years ago, it already had an advantage.

At that time, many school districts were obtaining grants to procure small, 10-kW systems that served as science experiments for students. Sunrise didn’t balk at these minuscule projects, instead seeing them as opportunities.

“After doing a few of those, then it got bigger and bigger each year to the point where we are right now,” said Stephen Foley, director of business development at Sunrise.

Now, the company calls itself the largest installer of school solar in New York. However, these solar projects are much different from other commercial-scale projects, starting with the sales process.

“It’s a lot more complicated than for any other solar installation. When you’re dealing with the school district, there are many, many stakeholders,” Foley said.

Instead of working with a few business leaders like in other C&I-scale projects, school solar installations require buy-in from numerous officials — as well as the general public if the project requires taxpayer funding. Permitting can also be more complex, since companies must get permission from the New York State Education Department to do any work on a school building.

The Sunrise team does a presentation on the solar project being installed at the Elwood School District’s John Glenn High School. Left to right: Stephen Foley, director of business development at Sunrise Power Solutions; Sean Logan, project manager for Johnson Controls, the ESCO for the Elwood School District and high school student Colin Presti.

“It’s not something that just anybody can jump into and do because of that,” Foley said. “It literally takes years to do, from the time you start initially developing a project to going through the whole approval process.”

When Sunrise is working with a new school, Foley first speaks with the superintendent of the district and other assistant administrators. His master’s degree in educational leadership and certification as a school business official makes this part easier.

“The other administrators, we speak the same language,” he said. “It’s not like I’m coming in as a solar salesman, I’m coming in as a colleague.”

But the administration isn’t the end of the line. The school board must be engaged in the process too.

“If the administration thinks it’s a great idea, they can’t just go ahead and do something on their own, they have to present it to their school board and the school board has to vote on it,” Foley said.

Sunrise often helps prepare presentations on solar projects for school board meetings and is available to answer questions from the board or the public.

In Foley’s experience, school board members are hesitant to vote in favor of something that costs taxpayer money and seems risky to them. For that reason, energy service performance contracts (ESPCs) have become crucial to growing school solar. ESPCs are comprehensive contracts between an energy service company (ESCO) and a facility owner. ESCOs will audit the energy of the entire school and then procure efficiency measures like LED lighting and solar installations under a single contract.

These contracts are often financed through existing school maintenance budgets or bonds, and they always include performance guarantees. If a solar project underperforms, that ESCO will pay the difference out of pocket.

Foley said most schools these days are procuring solar installations through ESPCs. Other schools may have access to municipal grants or rebates.

“We use all those factors to help make it more affordable for schools to put the solar on. We’re always looking for opportunities,” he said.

Once a school finds the funding and decides to go solar, the challenges don’t end. Prioritizing the children’s safety and working around school schedules makes construction more complicated.

“We’ve had years of experience of working in the schools, we know how important it is to work with proper etiquette. It’s not a typical construction job environment,” Foley said. “You have to have a project manager who’s in touch with the facilities director of the school district and is in tune with everything that’s going on.”

When the installers are ready to tie the solar project into the grid, they sometimes have to turn off power to the whole school. That means they must carefully plan for a time when class isn’t in session and no after-school activities are taking place.

Another common roadblock for school solar involves the project logistics. School roofs are often old and may not be deemed structurally capable of holding ballast blocks and solar panels. Sunrise has learned to be creative in those situations, offering custom carport designs instead.

“We can take a look at parking lots or even field areas where we can put in a ground-mount or a canopy system over walkways,” he said.

Although the extra work required in all stages of school solar installations can be overwhelming, dedication to this growing sector has paid off for Sunrise Power Solutions.


This story was featured exclusively in our 2022 Top Solar Contractors issue. See the issue and full list of top U.S. solar installers here. 

Tue, 26 Jul 2022 23:58:00 -0500 Kelsey Misbrener en-US text/html https://www.solarpowerworldonline.com/2022/07/new-york-contractor-corners-market-on-solar-schools/
Killexams : Five states think assistant physicians can Excellerate access. Doctors disagree.

Created to address clinical staffing shortages in underserved areas, the assistant physician role is also designed to employ medical school graduates who have not matched into a residency program.

However, providers and medical organizations have not widely embraced assistant physicians as an effective solution. In the eight years since the position was created, only five states have licensed it, including Missouri, which created the position.

Assistant physicians graduate from medical school and have many of the same responsibilities as other clinical staff such as the similarly named physician assistants. But they do not have to complete a residency or undergo extensive hours of clinical rotations before diagnosing and treating patients. Assistant physicians are required to work in medically underserved areas, cannot practice independently and are not reimbursed by Medicare along with some commercial insurers.

Organizations such as the American Medical Association and American Academy of Family Physicians have opposed the designation, saying they are concerned about safety issues and that the quality of care provided by assistant physicians—particularly in medical care deserts—may not be not on par with doctors who have completed their residencies.

Discussion on the future of assistant physicians recently resurfaced in the medical community as advocates create model legislation for other states and seek to alter existing rules.

In June, the AMA House of Delegates rejected a proposal from its Missouri delegation to support assistant physician programs, and said it opposes any effort for graduating physicians to become independent, licensed physicians. It also opposes expanding the scope of their practice to other services or by geography without completing formal residency training.

ADDRESSING A PROBLEM

In 2014, Missouri created a licensed position called assistant physicians, sometimes referred to as associate physicians.

By tapping into a population of graduates that did not match into residency programs and having them work as licensed physicians in areas short of health professionals throughout Missouri, the state was able to "take an available resource and apply it to a real need," said Keith Frederick, a former member of the Missouri House of Representatives.

For years the limited availability of residency or postdoctoral training slots and application process complexities, paired with a greater number of graduates, has made the path to licensure more difficult, said Frederick, who helped pass the state bill to license assistant physicans. The assisant physician role becomes an opportunity for individuals to provide services and make a living to repay medical school loans, he said.

"If you have that amount of debt, and you can't continue training, it's kind of like having a mortgage but no house and no job," Frederick said.

Assistant physicians work under a collaborative practice agreement with a licensed supervising physician and typically have the same duties as nurse practitioners or physician assistants, prescribing medications, performing patient exams and assisting in surgery.

To become an assistant physician in Missouri, an individual must be a U.S. citizen or legal resident who is proficient in English, has graduated from a recognized medical school, has passed steps one and two of the U.S. Medical Licensing Examination and has not matched into or completed a residency program.

Once they receive their license, assistant physicians are required to receive a month of clinical training before practicing in a health provider shortage area, with oversight from a supervising physician.

Utah, Arkansas, Arizona and Kansas have followed Missouri's example and established similar licensing programs.

After graduating from medical school, Trevor Cook got a job as a medical scribe and dove into the residency application process, which he described as a "capitalistic hellscape." Cook said he spent thousands of dollars sending out test score transcripts and applied to hundreds of programs but was not accepted.

Cook came across job listings for assistant physicians in Missouri. Following 120 hours of training with a collaborating physician, Cook obtained his assistant physician license in 2018 and began working in urgent care.

"I perceive it as becoming a professional in the business, and the only way to really learn is to do it," Cook said.

For the last four years Cook said he has had the same responsibilities as a doctor, running tests, treating and diagnosing conditions, updating emergency medical records and referring patients to specialists. Cook said he sometimes works with his supervising physician, who is required to review at least 10% of his notes and be within 50 miles while Cook is practicing medicine.

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INDUSTRY OPPOSITION

A major sticking point for healthcare leaders is concern that assistant physicians do not have the same level of training and qualifications as those who have completed a residency program.

"We are very much in favor of our trainees following the traditional accepted path to full licensure," said Alison Whelan, chief academic officer at the Association of American Medical Colleges. "It dictates by specialty the type of learning and clinical experience that the resident must have to be an effective independent practitioner."

Just because a student has a medical degree does not mean they are ready to provide safe and effective independent care, especially without receiving training, supervision and feedback specific to their practice area, Whelan said. Residency programs can span more than four years and include 16,000 hours of direct clinical care experience.

The AMA has opposed the concept of the assistant physician since Missouri introduced it, fearing it might weaken the organization's case for increasing graduate medical education funding and creating more residency slots.

This year, more than 42,000 students applied for around 39,000 residency positions, and almost 37,000 positions were filled, leaving several thousand applicants unmatched, according to data from the National Resident Matching Program.

The main reason residency slots go unfilled is because students tend to try to match into specialties such as family or emergency medicine that are not a good fit for them, said Dr. Sterling Ransone, president of the American Academy of Family Physicians. When residency slots fill up in specialties, students untrained in other areas are in limbo, unable to apply to an area with open slots, Ransone said.

Ransone said he advocates for the correct allocation of funds to schools, hospitals and residency programs that allow for graduate students to gain more exposure to underserved communities and a variety of specialities.

Recently, the AMA urged support for two federal bills. One, the Resident Physician Shortage Reduction Act, would expand Medicare funding for 14,000 additional residency positions. The other, the Physician Shortage Graduate Medical Education Cap Flex Act, would provide teaching hospitals with an extra five years to set their funding cap if they form residency training programs in primary care or other specialties facing shortages.

In July, the Health and Human Services Department announced $155 million in awards to 72 teaching health centers that operate primary care medical and dental residency programs in underserved and rural communities.

Amid all the abbreviations, titles and job descriptions in healthcare, some are concerned the assistant physician role adds to the confusion for patients, particularly with the existence of physician assistants. Physician assistants take a different road to licensure, though they have many of the same responsibilities as assistant physicians.

To become a physician assistant, medical students must earn a master's degree through an accredited physician assistant program—which includes more than 2,000 hours of clinical rotations—and pass the Physician Assistant National Certifying Examination. Physician assistants have to complete 100 hours of continuing medical education credits every two years to maintain their certification.

In 2020, Missouri issued 169 assistant physician licenses, compared with 114 in 2021 and 17 in 2022, according to the Missouri Board of Registration for the Healing Arts. The state issued 200 physician assistant licenses in 2020, 282 in 2021, and 139 this year.

CONCERNS FOR UNDERSERVED AREAS

Assistant physicians are required to work in areas that lack medical providers, which has led to worries about health equity.

"There's some concern that they're going to create a kind of second-class physician that is for people who are already socially and economically disadvantaged," said Patricia Pittman, director of the Fitzhugh Mullan Institute for Health Workforce Equity at George Washington University. "Essentially, rich people see physicians and less rich people see those who were not able to become physicians, which is a bit problematic from an equity perspective."

Treating individuals in communities that lack access to care is often more complex due to the myriad social issues underlying their condition and requires more clinical experience rather than less, said Doug Olsen, president of the board of directors at the Association of Clinicians for the Underserved.

Rather than only allowing assistant physicians to work in healthcare deserts, their position should be expanded as part of a workforce for the entire state of Missouri, Olsen said.

"If they're good enough for the underserved, they should be good enough for the served," he said. "If they're good enough for the uninsured, they should be good enough for the insured."

Olsen said there is an absence of consistent evidence and patient-reported outcome measures that prove assistant physicians deliver high quality care and should be practicing with an expanded scope, despite eight years of the position's use.

Better solutions exist for staffing and care access in medically disadvantaged areas, such as obtaining long-term funding and creating partnerships between stakeholders and teaching health centers to provide more training opportunities and bring in more clinicians, said Amanda Pears Kelly, executive director for the Association of Clinicians for the Underserved.

"What we're trying to do with healthcare transformation is create situations where we can actually lift up these communities so that they're no longer underserved," Pears Kelly said.

Tue, 02 Aug 2022 05:35:00 -0500 en text/html https://www.modernhealthcare.com/physicians/efforts-expand-use-assistant-physicians-face-opposition
Killexams : Taking the Bar Exam

Contact: OCS & OPIA

BAR ADMISSION IN A single STATE

Generally, your employer will only require you to be admitted to the bar in the jurisdiction in which you are practicing. You should contact your employer to confirm the jurisdiction to which they would like you to be admitted.

If you haven’t secured a job by the time bar registration deadlines roll around, you should sign up for the bar in the jurisdiction in which you are focusing your job search. This is quite common for students seeking public interest positions, for which the job search can extend into the spring. Carefully monitor the bar deadlines of any state you are considering working in and meet with an OPIA or OCS advisor to discuss your unique situation.

Note that for LL.M. students, eligibility to sit for a particular bar test varies by state.

BAR test RECIPROCITY AND SCORE Transfer

For a variety of reasons, some students choose to apply for bar admission to two different states immediately after graduation. Others may be curious about being admitted to a second state later on in their career. Processes such as “bar reciprocity,” “waiving in,” or “admission on motion” refer to a state bar admitting an attorney under a more streamlined procedure based on their membership in another state’s bar. Some states, including California and Florida, do not allow such a procedure, and require practicing attorneys to sit for the bar test in their state instead.

Some states allow you to transfer your bar test score from one state to another, with some additional state-specific requirements.

Bar test score transfer is commonly used by students and junior attorneys who have not practiced law for the number of years that a particular state requires for waiving in.

Some state bar examiners will accept Multistate Bar test (MBE) scores from a concurrent exam. Practically speaking, this means that applicants will sit for three (very likely consecutive) days of exams: one day for the MBE, and one day for each of the two states. You must, however, check your state’s requirements and the schedule for the examinations to see if this is allowed or even feasible.

Additionally, a number of states, including Colorado, Illinois, New York, Massachusetts, and will accept transferred scores from the Uniform Bar test (UBE), a uniform series of tests (including the MBE) administered over two consecutive days simultaneously in the jurisdictions currently administering the UBE. Learn about your state’s UBE status with the NCBE’s interactive map, and double-check that state’s bar admission site as well. Practically speaking, this means you would take the two-day UBE in a particular UBE state, which then results in a portable score that can be used to apply for admission to other UBE jurisdictions. You will likely have additional state-specific requirements in order to be admitted to a UBE state. For example, in New York, you are required to take an online course on New York State-specific law known as the New York Law Course (NYLC), as well as an online examination, the New York Law test (NYLE), in addition to the UBE.

For states that permit bar reciprocity or admission on motion, requirements for waiving into a particular jurisdiction vary widely but often include a requirement that an attorney practice for a certain number of years.

Note that military spouse attorneys may be able to apply for a temporary permit to practice while in a state on military orders without needing to take an additional bar exam.  See here for more information.

Be aware that reciprocity and score transfer processes may require a lengthy waiting period while your application is reviewed. Make sure to check with your employer about their expectations surrounding jurisdiction and timeline.

Wed, 20 Jul 2022 10:47:00 -0500 en text/html https://hls.harvard.edu/dept/dos/taking-the-bar-exam/
Killexams : Orangeburg Department of Public Utilities: Water, sewer rates going up; no increases for electric, gas rates

Orangeburg Department of Public Utilities customers could see water and wastewater rate increases.

Under a budget being considered by Orangeburg City Council, the average customer inside the city limits could see an increase of approximately $1.71 for water and $3.24 for wastewater per month, according to DPU. That’s based on 600 cubic feet of water used per month.

The average customer outside the city will see increases of $3.42 for water and $6.48 for wastewater.

The changes will bring in an additional $1,193,644 in revenue for the water division and $911,446 for the wastewater division.

“It does not get us to where we need to be at this point, but it does close the gap with respect to where we are today,” Orangeburg DPU Manager Warren Harley told City Council at its Aug. 2 meeting.

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Harley said the rate increase will be spread out over time.

“We will bring a portion in this budget and in subsequent budgets there will be recommendations of other increases in the future,” Harley said.

Water and wastewater rates were last increased in 2017.

DPU officials say the increases are necessary due to increased cost of treating water and wastewater.

“The proposed operating and capital budget for the Department of Public Utilities focuses on maintaining our current operational service levels and it also seeks to absorb some cost increases associated with the inflation and the cost of goods and services that we are experiencing due to economic conditions,” Harley said.

Council gave first reading to the utility's budget on a 5-1 vote. Councilman Richard Stroman was opposed. Councilman Bernard Haire was not in attendance at the meeting.

“I am not in favor of increasing water and wastewater,” Stroman said. “When you have a business, sometimes you make money in certain parts and don't make money on other parts. I think you can go out and make more money on gas.

“I just don't see right now. People are having a hard time paying bills. I just can't put this on them.”

DPU officials say despite the increase, the utility still has among the lowest combined water and wastewater rates around.

DPU electric and gas rates will not increase.

DPU’s budget includes projected operating revenues of $114.1 million and operating expenses of $100.3 million for a year-end net projected profit of $13.9 million. When other expenses are considered, the utility's net profit for the fiscal year is projected at $13.1 million.

Harley noted, “We are seeing increases in our power supply contract.”

“Much of that $13 million will be a pass through that we ultimately pay to our suppliers for gas and for electric and power supply contracts,” he said.

Harley said total expenses are expected to increase about $10 million from last year. The driver of the increase is the cost of gasoline, electricity and other goods and services.

“We have also seen some costs associated with retirement continuing to increase,” Harley said.

The utility projects beginning the year with $36.4 million in cash and equivalents, but expects to see a net decrease in cash and cash equivalents of $14.8 million for a year-end cash total of about $21.6 million.

The utility plans to spend about $19.6 million in capital improvements.

“We are planning to draw down just under $15 million in cash to help supplement paying for some of those projects,” Harley said. “We will draw down a significant amount of cash as these projects unfold.”

Harley said spending on the projects will be done over several fiscal years.

The budget will also include a full-time gas division operator.

“The goal of that position is to move us closer to the national standard of having four people per crew,” Harley said. “We have three crews in that division.”

Harley said the utility learned lessons through COVID and all divisions have been asked to evaluate manpower availability to ensure the utility can withstand a future pandemic.

“There is no new debt incurred in this budget,” Harley said.

DPU's economic development revolving fund will hold steady at $1.5 million.

The revolving fund sets aside money for incentives for industrial or commercial development in the county or city.

As part of the budget, DPU will transfer $6 million to the city's general fund budget, leaving the utility about $7.1 million in the black for the end of the 2022-2023 fiscal year, according to budget proposals.

In addition to approving DPU's 2022-2023 fiscal year budget, council gave unanimous first reading to changes to the 2021-2022 DPU budget.

The utility's revenues exceeded its expenses for the current fiscal year by $9.95 million, though the numbers could change before third and final reading.

After a $7.2 million transfer from the utility to the city's general fund budget, the utility will see a profit of about $2.3 million for the current fiscal year.

• Council unanimously passed a resolution to enter into a three-year contract with Raleigh, N.C.-based ElectriCities of North Carolina, Inc.

Under the agreement, the company will provide DPU lineworkers and substation technicians training on the installation, repair and maintenance of electric systems and substations.

The program will include online training as well as onsite Occupational Safety and Health Administration training in line with OSHA regulations. It will help lineworkers receive their electric journeyman certification that would be registered with the U.S. Department of Labor.

The estimated cost is $16,500 annually for a total cost of $49,500.

• Council unanimously appointed Larry Jackson, Willie Hubbard, Spencer Anderson and Louis Boone to the city's Building Board of Appeals. The appointments fill four expiring terms. The terms are for four years.

• Council recognized retired DPU employee Harold M. Hughes III for his nearly 39 years of service to the utility. Hughes retired July 18.

Hughes began his employment with DPU in 1983 as a serviceman in the water division. In 1986 he was promoted to crew chief and in 1988 to assistant foreman. In 1990, Hughes was promoted to crew foreman.

In 1999, Hughes was transferred to the Gas Division as the construction and maintenance supervisor.

Council gave him a round of applause for his service.

• Council recognized cheerfulness as the character trait of the month of August. Council encourages city residents to exercise the character trait throughout the month of August.

Thu, 04 Aug 2022 13:30:00 -0500 en text/html https://thetandd.com/news/local/orangeburg-department-of-public-utilities-water-sewer-rates-going-up-no-increases-for-electric-gas/article_46e0ea2c-31e0-5282-ab6e-ef174eaccec4.html
Killexams : Eve Holding, Inc. (EVEX) Management on Q2 2022 Results - Earnings Call Transcript

Eve Holding, Inc. (NYSE:EVEX) Q2 2022 Results Conference Call August 4, 2022 12:00 PM ET

Company Participants

Lucio Aldworth - Director of Investor Relations

Jerry DeMuro - Co-Chief Executive Officer

Andre Stein - Co-Chief Executive Officer

Eduardo Couto - Chief Financial Officer

Luiz Valentini - Chief Technology Officer

Conference Call Participants

Sheila Kahyaoglu - Jefferies

Savanthi Syth - Raymond James

Marvin Fong - BTIG

Jeff Hung - Morgan Stanley

Josh Milberg - Morgan Stanley

Operator

Greetings. Welcome to Eve Holding Second Quarter 2022 Earnings Call. This time all participants are in listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

At this time, I'll now turn the conference over to Lucio Aldworth, Head of Investor Relations. Lucio, you may now begin.

Lucio Aldworth

Thank you, operator. Good afternoon everyone. This is Lucio Aldworth, the Director of Investor Relations at Eve. And I wanted to welcome everyone to the second quarter of 2022 earnings conference call. I have here with me, Co-CEOs Jerry DeMuro, and Andre Stein, as well as our CFO, Eduardo Couto.

We also have Luiz Valentini, our Chief Technology Officer, who's responsible for the development of our eVTOL. After the initial remarks, we're going to open the call for questions. We have prepared the deck with a few slides and additional information, which is available at our Investor Relations website at ir.eveairmobility.com. So please download it for your reference.

Let me first start by mentioning that this presentation includes forward-looking statements, or statements about events or circumstances that have not yet occurred. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business and our future financial performance.

These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things, general economic, political, and business conditions, both in Brazil and in our market. The words believe, may, will, estimate, continuous, anticipates, intends, expects and similar words are intended to identify forward-looking statements. We take no obligations to update publicly or revise any forward looking statements because of new information, future events, or other factors.

In light of these risks and uncertainties the forward-looking events and circumstances discussed in this presentation might not occur. Our genuine results could differ substantially from those anticipated in our forward-looking statements.

With that, I will now turn the presentation over to Jerry. Jerry?

Jerry DeMuro

Thank you, Lucio. I'm delighted to be here today on the occasion of our first quarterly release following Eve’s listing on the New York Stock Exchange. This is an exciting time Eve, and I'm proud to be part of the team that has achieved this important milestone. For those not familiar with our accurate merger with Zanite Acquisition Corporation, the transaction includes a number of strategic and financial investors that raised a combined $377 million as shown on Slide 2. We believe this funding provides an excellent foundation for the development and certification of our eVTOL and other elements of the Urban Air Mobility ecosystem that we expect to launch in 2026.

Our most notable and relevant strategic investor is Embraer, the third largest aircraft manufacturer, and a leader in the regional and executive jet market. Embraer is a unique partner that brings significant competitive advantages to Eve. We are leveraging its long history and deep expertise in aircraft design and production with royalty free access to its more than 50 years of intellectual property.

We also have access to skilled engineers on a flexible and first priority basis. In simple terms, we have access to a pool of some of the most accomplished and talented aerospace engineers in the world. Our long-term agreement with Embraer yields an unmatched position of development capabilities and cost advantages, it means we do not have to create this workforce from scratch, and then shape it into a cohesive team. It already exists, and we can scale up or down as needed.

This arrangement means we do not have to carry these engineers on our P&L when not required, which makes for a lean and highly efficient organization. When coupled with attractive labor costs in Brazil, this arrangement will substantially reduce our development costs.

Lastly, our partnership with Embraer also gives us access to its global infrastructure. This is critical not only to our development and certification efforts, but also to service and support of aircraft on a global basis. Embraer has more than 80 service centers around the world that can be an important platform for our maintenance business in the future. There could be no eVTOL operation without a reliable and efficient customer support capability.

The combination of Embraer’s partnership and our holistic approach of Urban Air Mobility along with superior aircraft design, have translated into what we believe to be the largest and most diversified order book for eVTOLs globally. We have signed letters of intent for more than 2000 aircrafts from 22 different launch customers. These are operators from around the globe, with different aviation backgrounds, including fixed wing and helicopter operators, rideshare providers, and more recently, a defense player with the potential to expand the applications of our UAM solutions.

One last point that is important to note is that no customer represents more than 10% of our order book. This serves to derisk our business plan and brings confidence to our eVTOL program.

Now, I would like to invite my colleague and Co-CEO, Andre Stein to provide us a bit more color on the development program and the aircraft itself. Stein?

Andre Stein

Thanks, Jerry. I'm also very excited to be here. It is a historic moment for Eve. We have come a long way, and there is a lot more ground to cover, but you are clearly moving in the right direction. We have already kick started the certification process of our eVTOL with Brazil's Aviation Authority, ANACC, and initiated conversations with the FAA in U.S., EASA in Europe and other major certification authorities as well. It is important to highlight that we will receive undivided attention from ANACC, while the certification authorities in the U.S. and Europe will be busy dealing with multiple problems at the same time.

The Brazilian authorities have a long history of collaboration and bilateral agreements with the FAA, whereby it affects and validates the work done by ANACC requiring only a few additional tests. We believe this puts Eve on a clear path to certification, especially when combined with our simpler design with fixed wings and lift-plus-cruise configuration.

Embraer’s support is going to be vital in this regard as well. Embraer brings quite a bit to the table by having certified over 30 aircraft just in the last 25 years. They too, for example received the simultaneous certification approval in Brazil, the U.S. and Europe on schedule within specs and budget

And we also took important steps to optimize the plans for our manufacturing facilities and supply chain strategy by partnering with Porsche Consulting. They will bring expertise that will help us plan for future productions, supply chain logistics and to scale our business.

Now, on to Slide 3. In parallel, we are performing several tests in our Proof-Of-Concepts, Wind Tunnel Models, RIGs, Flight Simulators, and Mock-Ups. All of these of course offer important input for our aircraft development. We have also run simulations with conventional helicopters to validate and stress test our concept of corporations for eVTOLs in a real urban air environment. The most accurate experience took place in Rio de Janeiro over 30 days. We collect important information to better address the needs of the passengers, partners and the community when it comes to the use of eVTOLs for urban mobility.

Now onto the next slide, Slide 4. We hosted last month our First Advisory Board in Europe, where we brought several of our customers to discuss the whole spectrum of our portfolio of Urban Air Mobility solutions, including aircraft characteristic such as performance and user experience. In that sense, we unveiled our fifth generation of our eVTOL cabin Mock-Up. This cabin was later shown for the first time to the public at the Farnborough Airshow, and it showcased our approach to a human centered design and reflects market needs such as accessibility and safety perception, as well as our own emphasis on sustainability.

Last but not least, we also disclosed at the Farnborough Airshow the current design of our aircraft that we can see on the left of the slide, featuring a conventional wing and tail. It's important to highlight that as a part of our development process and based on all the background work that has been done so far, we have been evaluating variations of our lift-plus-cruise configuration. Now we believe that the current configuration’s mature enough to disclose to the markets.

The aircraft remains simple in design with eight lifters and pushers, allowing for a reliable and safe platform designed for vertical takeoff and landing and avoiding moving parts. The simple design is the differentiation in our certification efforts.

Next on this Slide 5, Jerry will talk about our partners and how important they are to Eve.

Jerry DeMuro

Thanks, Stein. We currently enjoy an extensive list of strategic partners that continues to grow. They will all be important in developing the best-in-class products and services we plan to offer to the UAM market. A number of these partners are also investors in our pipeline, so they do have skin in the game and their participation reflects the fact that they share our belief and vision for the UAM industry.

These partners cover the full spectrum with the UAM ecosystem offering operational support, infrastructure design and build-out for technical expertise in the design of critical components of our aircraft such as motors, avionics, and propulsion systems.

The list of aviation partners includes leading aircraft operators across the globe such as SkyWest and Republic, as well as important leasing companies like Azorra and Falko. There are also several leading helicopter operators from different parts of the world and ride-sharing platforms that connect the operators with the riding public. In sum, we have partners involved in every aspect of UAM market. This is a holistic approach that will help define the standards for the entire Urban Air Mobility market.

The order book shown on Slide 6 demonstrates that the market recognizes our qualities and strengths. As I noted earlier, we have already received more than 2,009 binding orders from 22 different customers, which we believe to be the largest and most diversified order book for eVTOL in the world today. We have orders from 10 countries across six continents. Not only do these customers include helicopters and fixed wing operators, and leasing companies as well as rideshare platforms, more recently, we signed an agreement with BAE Systems and Embraer, which will jointly pursue defense applications as well, while Eve can remain focused on Urban Air Mobility.

This new partnership begins to pave the way for different use cases for our aircrafts. Our nonbinding backlog is valued at almost $6 billion. And we expect progress downpayments will add significantly to our cash flow as we begin to convert those Letters of Intent into firm orders in the years to come.

Now, I'll turn it over to Edu and talk a bit about our financial position.

Eduardo Couto

Thanks, Jerry. I'm glad to be here today to present Eve's second quarter results after the accurate conclusion of our capital raise and public listing on the New York Stock Exchange in May. This is a very exciting moment for us as we were able to secure significant funding for our program, while bringing strong partners to join our project.

Turning to our financials on Slide 7, I would like to start with the income statement highlights. We spent $9.8 million during the second quarter 2022 and almost $20 million in the first half of this year on research and development. The bulk was invested in our eVTOL development and a portion was used for the development of our service and support solutions in the development of our Urban Air Traffic Management System.

We’re the only eVTOL company with a complete solution, including the vehicle, service and support and air traffic control. In addition to the R&D expenses, we also had $6.5 million in SG&A expenses during the second quarter '22, and $7.3 million in the first six months this year. Given those expenses and considering we are still a nonoperational company, we reported a net loss of $11.8 million in the second quarter 2022 and $21.3 million in the first half of the year.

I would like to call your attention to some of our competitive cost advantages, especially first, our full access to Embraer's engineers on a first priority basis and only as needed. That means we don't need to bring hundreds of engineers to our P&L, which makes our development much more cost efficient. Second, our ability to use Embraer's 50-year intellectual property on a relative free basis, that's another important source of cost savings. And third, access to Embraer's facilities which minor investments in only the sharing of facility fees. That also saves us significant infrastructure CapEx at this stage.

That said, moving to cash flow, I would like to highlight our cash burn of $13.2 million in the first six months of 2022. The cash consumption was positively impacted by accounts payable of approximately $10 million related to Embraer's development services. Eve has 45 days to pay Embraer for engineering services for any given period.

With that, we ended the second quarter with approximately $330 million in cash following our net capital raise of $329 million in May. Given the cost advantages I just mentioned, we feel extremely comfortable with our current cash position, as it gives Eve plenty of resources to maintain our eVTOL development for multiple years. At this point in time, Eve has no debt on its balance sheet, which provides another avenue for financing operations, as well as cash from customer progress payments once LOIs are definitized at firm orders.

Now, on the balance sheet, I want to emphasize again, total accounts payable of $12.6 million at the end of the second quarter that reduced our cash burn. At the same time, we have no debt on our balance sheet and a cash or net cash position of more than $330 million.

That concludes our financial highlights. And now, we would like to open for questions. Operator, please go ahead.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Sheila Kahyaoglu with Jefferies.

Sheila Kahyaoglu

So maybe I wanted to just ask first step in terms of you announced the formalization of your eVTOL certificate with ANACC during Q2, what's sort of the next step in the process? And if you could sort of talk about what testing is involved from here? Maybe for Andre or Jerry.

Jerry DeMuro

Sure. Thanks, Sheila. It's an excellent question. The quick answer is that there are multiple steps and as we have done in the past, we expect to move to a common structure with the FAA later this year. Stein, you want to talk to that a little bit further?

Andre Stein

Sure. So the -- our strategy overall as Jerry mentioned, something that's done in other programs, which is use ANACC as our primary certification organization. So we have their undivided attention, but at the same time engage with all the other major regulatory authorities, including in particular, the FAA, where ANACC has bilateral agreements, we’ve used that in previous problems to assure that there is not a new certification process in FAA, but rather a validation with ANACC has done. So we are quite confident of moving towards that. I'm not sure if Valentini want to comment more on that, but that covers it.

Sheila Kahyaoglu

I just have one more question actually. This one's for Eduardo, if that's possible. Eduardo, you guys raised a little bit of debt, I believe, on August 1st with a loan agreement with Embraer, for $81 million at about a 5% rate. I guess what drove you to take on that debt? And how do you think about the use of funds there? And do you have -- would you like to pursue any leverage and your thoughts on any debt raises?

Eduardo Couto

Yeah, hi, Sheila. Just to clarify, it's really the other way around. We didn't raise any debt with Embraer, we invested part of our cash with Embraer at the arms-length rate right of almost 5% a year. So that's $80 million, will provide us almost $5 million in interest rates per year, so a very good investment for Eve. It's a one year, we can prepay that loan and get the money back anytime we want. We get an independent assessment for an auditor regarding the interest rate of 5%. We also get our independent board approval. So it's really the other way around. We don't have any debt.

We are always looking right ways to leverage the company and maybe bring additional cash and maybe raise some debt at the future. We are approached by a lot of potential lenders, but at this time, we have no leverage in our balance sheet, which gives us flexibility to raise future debt to bring even more cash for Eve.

Operator

The next question is from the line of Savanthi Syth with Raymond James.

Savanthi Syth

If I might ask, like, the design changes that you announced at Farnborough, could you talk about some of the rationale behind the changes and kind of what kind of benefits they provide versus the prior design? Just to understanding a little bit more of what was finalized here at Farnborough?

Jerry DeMuro

There are a number of benefits, and Valentini, you're probably in the best position to talk about some of the specific trade-offs and what they resulted in.

Luiz Valentini

Sure Jerry, so good afternoon to all. I think there are two important points to highlight with respect to the changing configuration. One is that, the displacement of the rotors. The placement of the rotors that we made allows us for sizing of the motors with less power, the motors of the lifters with less power, thinking of the controllability in case of the failure of one of them in flight. So we maintain controllability of the vehicle, but we can do that, and we did maintain also, in the previous configuration. But we can maintain it in this updated configuration with less power in each of the motors. So this is helpful with respect to the sizing and the weight of the vehicle. It allows us to reduce the weight, which of course brings benefit in terms of energy efficiency and noise and other aspects.

In addition to this, we find that this configuration with the conventional placement of wing and tail gives us a little bit more flexibility to adjust the stability and controllability of the vehicle in the future and make minor adjustments if we have to. So it gives us a little bit of more of leeway to refine the flying qualities as we refine the project and go along. So those are the two main reasons for updating the configuration in this way.

Savanthi Syth

I guess the follow-up on that would be just the kind of the parts and the aircraft design and suppliers like, when do you expect that to be firmed up and when can we kind of expect a full demonstrative vehicle here?

Jerry DeMuro

Yeah. So, Savi, that happens as the design matures, as you saw here or as Valentini talked about. These modifications provide us an enhanced controllability with reduced power and weight. They also provide a little bit of design margin as we further refine this design.

So the best answer I can provide to your question is, we're flying a variety of vehicles now, doing extensive simulation and modeling to test variations of key elements so that we can understand and verify the effects those variations have.

And with respect to suppliers, you'll probably see us start on three of the key areas, really on the motors, propellers and batteries. Starting at the end of this year through the first half of next year, we will probably lock down each of those three categories.

Valentini, anything you want to add to that?

Luiz Valentini

Jerry, just that, that timeline supports the development of the vehicle as we had planned originally. So that timeline of bringing the -- locking in with the suppliers as you mentioned, is part and again, as we had originally planned for the project.

This -- I just want to remind that we are talking about the -- signing the contracts of supply of these parts and these systems that you mentioned. But before that, we have some great significant engagement with several potential suppliers for them to participate and us, even to learn about their products from the beginning of this year. So we mature the participation with them and then sign with that schedule, as you mentioned.

Jerry DeMuro

And Savi, I would just add one more point. We believe we will continue to mature this design as we get closer to what we call a production representative model. So it depends how one defines prototype and commercial or production representative models. But we expect to refine details on this all the way until we head towards that production representative model roughly two years in advance of certification.

Savanthi Syth

Final question, just -- I thought that the BAE announcement was interesting. It kind of gives you a new, maybe a vertical of defense kind of vertical to go into. I was curious, this is still very early days, but any thoughts on what type of missions these will probably start -- launch on first as you can start to produce and how big that defense angle can get? Could it be as meaningful as it is for Embraer?

Jerry DeMuro

Savi, I'll turn that over to Stein. But in terms of the specific applications, that'll be up to the joint venture between Embraer and BAE to determine. We at Eve will remain focused on the core Urban Air market. Stein, you want to talk a little bit about where maybe some of the early adoption might be on the defense segment?

Andre Stein

Sure. And actually, the beauty of the deal because of BAE and Embraer is exactly that Eve will remain focused on the Urban Mobility Market, and we'll provide them with our baseline aircrafts. So we can optimize our aircraft for Urban Air Mobility, and at the same time access to defense market. And particular applications where we could deploy technology for autonomous for example, that are regulatory environment, and these are in the defense applications, then it is for the civilian applications.

As Jerry said, the final use will depend on the market development from both BAE and Embraer defense, but some of the applications we have heard during the discussions are things like search and rescue, disaster relief, ship to shore, things that will take advantage of both the different qualities we have on our vehicle, being it the fact that it’s electric. And in ship to shore, for example, there is an access of electricity in the ship, so we don't need to carry fuel. That's the benefit of electrical vehicle for that type of application. And there apparently quite a few potential customers that have been excited about

Operator

Our next question is from line of Marvin Fong with BTIG.

Marvin Fong

I appreciate the color you provide on the redesign, that was one of my questions. So I'll move on to a couple of finance questions perhaps. Your press release referenced that you'll be able to kind of leverage additional capital from down payments as orders firm up. And I know that pre-delivery payments is very common in the aircraft industry. But since potentially a lot of investors on the call are actually not familiar being tech investors, maybe it'd be helpful if you guys just kind of dug a little deeper into how much capital you think or working capital you can raise from pre-delivery payments and the timing relative to final delivery those payments will come in. And then I have a couple of additional questions.

Jerry DeMuro

Sure, I'll turn that over to Edu in a moment. But as Edu said, we've got substantial cash on the balance sheet. So we've got quite a bit of runway in front of us that allows us to determine what's the most advantageous way to strengthen the balance sheet if and when we decide to do that. And certainly, the pre-delivery payments are a vehicle to do that. In terms of timing, we expect to start definitive sizing those LOIs over the next 24 months period.

Edu, do you want to talk a little bit about the timing of, and the magnitude of what that cash flow could be?

Eduardo Couto

Yeah, sure. Sure. Gerard. Thanks, Marvin for the question. Yeah, it depends from product to product, but down payments or advances could be as big as 50% of the value of the vehicle. So if you look, our nonbinding backlog, right, it's over 2000 vehicles, over $6 billion. If you assume that some of the advances could be as high as 50%, you can figure out that a lot of cash inflow may come to the company as we transition those nonbinding orders into firm orders. In general, if that happens as Jerry mentioned, 24, 18 miles prior to the delivery, so there is a schedule. But it depends a lot in varies from customer to customer.

Marvin Fong

Okay, great. Thanks for that color. And one other question on finances. Edu, maybe you could share your thoughts on how we should be thinking about OpEx and CapEx for the back half of the year? If the second quarter rates a good run rate or do you expect that to step up?

Eduardo Couto

Yeah, we expect that to step up as we advance in the program, right? So probably the cash burn or the expenses investments will be higher on the second half. We have a lot of advantages, right? As you mentioned, we only pay the engineers as they work for us, we don't bring them to the balance sheet. We have all the engineers or the labor force, most of that’s available in Brazil, where is competitive rates.

So, we have a lot of advantages, but I would say we may spend around -- it depends on the year, but throughout the development around $100 million, maybe some years a little less, some years a little more. So I believe the cash we have today, the $330 million, it's a robust cash considering the pace of cash burn that we expect. And we have a lot of room and a lot of cash to speed up our development. So, we are feeling very good.

Marvin Fong

And maybe just one last question for me. Just some business development, you guys have built the largest unit backlog in the industry as far as I'm aware. Could you just help investors understand like the process. I mean, how are potential customers -- are they reaching out to you or are you reaching out to them and what sort of the evaluation process, are you -- are they considering you against some of the other eVTOL players or is it generally like an exclusive sort of negotiation?

Jerry DeMuro

That's an excellent question. I think Stein's in the best position to answer that, but as you look at the backlog, it really covers the first three or four years of our business plan. So, at this point we're not focused as much on numbers as the strategic positioning, et cetera. Stein, you want to add anything to that?

Andre Stein

Sure. To your question about if we were being -- if they're looking for us or we're looking for the customers? The answer is always the both of them, right? We have been approached from several customers around the globe. We, as Jerry brought it, we are very selective on the partners we accept to join us in a way. So it's not just a question of get the largest backlog for the sake of it, but really find the right partners. And the build of it, the way we're doing is that we don't have today no customer that has more than 10% of our backlog, for example. So that minimizes the risks, quite spread around. We have customers in all parts of the globe, in all continents that also helps to minimize the risk, as well as business models with leasing companies, helicopter operators, airlines coming on board. So we are being strategic and going on that direction. And to your point about competition, yes, competition's definitely always there.

Operator

The next question is coming from the line of [Marcel Laniado] with JPMorgan.

Unidentified Analyst

Question to Eduardo. Regarding cash needs and capital structure. I mean, you guys comment about this like, $100 million cash burn per year over the next I don’t know, two to three years, but just to understand what you guys see as the capital structure? Of course it all depends on the speed of development and so on. So just to understand, how much leverage you guys think that you can add and how do you see the capital structure evolving over the years?

Eduardo Couto

We raised very good money, right, in our capital raise, almost $400 million. We have this almost $350 million in our balance sheet. Our cash burn is really, in our view, it's under control. We definitely are always analyzing and looking possibilities to bring more cash to the company. There are ways to do that, leverage the company is one of them. We could always raise that, but we need to make sure that this rate -- that this debt comes at right maturity, it needs to be long-term, it needs maybe some grace period, and also it needs to come at the right cost. We are approaching by different players offering different opportunities, but we still don't have any anything secured. But it's one way to go.

Another possibility, as we were discussing here, right, advances as we -- from customers, as we security orders, we expect to start to get bigger down payments, advances, and that could be a meaningful cash inflow. So there are different levers that we can pull to bring more cash to the company. And considering our cash burn running rate, we feel -- we already feel comfortable with our cash, but there are ways to bring more cash flow. So we are feeling super good.

Unidentified Analyst

The second question is regarding the start of the levers, there were those changes on design, and everything's very fluid at this point in time as you guys are perfecting the model and get to the most efficient solution. So, just wanted to double check, if 2026 continues to be kind of the base case or if no change in design or supply chain or certification process, has any of those things over the past six months has changed and could lead to an anticipation or delay on this base case for 2026?

Jerry DeMuro

I'll turn this over to Valentini and Stein, but the short answer is we're still looking at 2026. But as you know, things can happen like, for instance, you mentioned the certification process and major agencies, whether it's ANACC, FAA or EASA, we are still working our way through that. I think that's not so much an Eve specific issue, but that affects the industry as a whole. That's one of the macro things that could affect entry into service. As well as the other community acceptance and the other regulatory factors associated with the operation, not just certification, I think they could be as much or more of an impact on 2026 for the industry than the internal factors.

Stein, Valentini, you want to add anything to that?

Luiz Valentini

Sure. Just on the configuration, it's important to highlight that it is part of the development process, selecting the configuration was a planned part of it. So we have been particularly in the lift-plus-cruise solution, perceiving that as the best direction to go with 8 rotors to takeoff. That's what we have been evaluating, and we've selected the direction to go now. So wasn't a change in -- of course, was part of the development, a natural development and evolution of the product. So we are -- that was the way it was planned, and that there is no change on our target for instance, service for the first delivers.

Operator

The next question comes from the line of Kristine Liwag with Morgan Stanley.

Jeff Hung

This is Jeff Hung on for Kristine. I wanted to ask about plans for autonomy, appreciating that it's still a ways out. But maybe you could speak to the roadmap here in any maybe near-term milestones to watch for with regard to autonomy?

Jerry DeMuro

That's an excellent question. Stein, you already alluded to that with the defense application,

maybe giving us an early adopter there, but some things that we were already doing in CONOPS in Rio to advance the autonomous capabilities. Stein?

Andre Stein

Absolutely. Earlier this year we have announced our tasks in Rio where we have been carrying a pack of sensors in a helicopter in a real urban environment. And the idea for that was exactly to start the machine learning in a very literal sense, so starting acquiring the data in a real urban environment so we can apply that for the future that is autonomous. We are on track for that. We believe that we started operations with eVTOL operator on board and from there gather even more data in real operations to move towards autonomous future. So we have been investing on that and investing in the development of the technology, but not counting on that as part of the critical path for eVTOL service.

Valentini, if you want to add anything else to it?

Luiz Valentini

Sure. So, in addition to what Stein described, we have in the near-term advances that -- directions really that we are establishing for the vehicles still while piloted, that we believe will set the base for introducing then the autonomous flight. So one, for example, is having a modular architecture for the avionics in a way that we can evolve it to an autonomous flight taking advantage on what we will have already built in terms of fly-by-wire flight controls in terms of sensors and integration. So that also is connected to our vision of developing a simplified human machine interface for the pilot while the pilot is onboard the vehicle, and that also creates automation in the system, in the flight control system, for example, that will be already a step ahead when receiving the autonomous functions of the vehicle.

So at the same time that we are executing these works that Stein alluded to with Embraer for example, we are also taking measures on the vehicle architecture and definitions that will pave the way for receiving the autonomous functions in the future.

Operator

Next question comes from the line of Josh Milberg with Morgan Stanley.

Josh Milberg

You guys covered a number of our doubts, but I wanted to ask if you could elaborate a little further on the course of proof-of-concept flight testing? Just on the latest developments there, what you have planned for the remainder of the year?

Jerry DeMuro

As I said, we're flying a number of different kinds of aircraft, you can define them as proof-of-concepts, prototypes, et cetera. But more importantly, we think is evolving the final design through the simulation modeling and testing.

Valentini, you want to talk about that?

Luiz Valentini

Sure. So we talked about, for example, updating the configuration recently and so we believe that this -- at this stage, we need to make sure that we understand all of these variations that are possible for the vehicle and make sure that whatever the improvements or changes we want to make to the vehicle, we do it now when we still have flexibility to do it, right? So, the later you apply any modifications then the harder it is, the more expensive it is, the more rework that you have, right, for changing the vehicle as you go along the project.

So, with this in mind, these tests that we are performing, which include flying vehicles but also include for example, wind tunnel tests or RIGs and things like that, they help us understand these characteristics, the different effects of different system architectures and things like that. And with that, then -- with the modeling that we do, which then receives data from these tests, we are able to make sure that the choices that we are making for the vehicle are the right choices for us to move on. So, that's how the tests being proof-of-concepts again or not, that's how they contribute to the stage of the development that we are in right now.

Jerry DeMuro

So Josh, the short answer is we generally don't publish a schedule, we let the engineering team move through this entire process of model as Embraer has proven is very effective in the past. And we expect to be flying more and more mature aircraft all the way up to the time that I said about two years out from entry into service, where we think we have a production ready or production representative specimen. So it's ongoing.

Operator

At this time, we've reached the end of our question and answer session. I'll turn the call over to Lucio Aldworth for closing remarks.

Lucio Aldworth

Thanks, Rob. And thank you everyone for joining us today. We do look forward to updating you on our continued progress throughout the year. And please, don't hesitate to reach out to us in case you have any additional questions. Thanks and have a good day.

Operator

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

Fri, 05 Aug 2022 14:36:00 -0500 en text/html https://seekingalpha.com/article/4530599-eve-holding-inc-evex-management-on-q2-2022-results-earnings-call-transcript
Killexams : The Lion Electric Company's (LEV) CEO Marc Bedard on Q2 2022 Results - Earnings Call Transcript

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Marc Bedard – Chief Executive Officer and Founder

Nicolas Brunet – Executive Vice President and Chief Financial Officer

Conference Call Participants

Mike Shlisky – D.A. Davidson

Craig Irwin – ROTH Capital Partners

Rupert Merer – National Bank

Michael Glen – Raymond James

Mark Neville – Scotiabank

Operator

Good morning, ladies and gentlemen. Welcome to Lion Electric Second Quarter 2022 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded.

I would now like to turn the call over to Isabelle Adjahi, Vice President, Investor Relations and Sustainable Development. Please go ahead, Ms. Adjahi.

Isabelle Adjahi

Good morning, everyone. Welcome to Lion’s second quarter 2022 results conference call. [Foreign Language] Today, I’m here with Marc Bedard, our CEO-Founder, and Nicolas Brunet, our EVP and CFO. Please note that our discussion will include estimates and other forward-looking information, which our genuine results could differ from in the future.

We invite you to review the cautionary language in this morning’s earnings release and in our MD&A regarding the various factors, assumptions and risks that could cause our genuine results to differ.

With that, let me turn it over to Marc to begin. Marc?

Marc Bedard

Thank you, Isabelle, and good morning, everyone. We are very proud of our results in the second quarter of this year, both in terms of vehicle deliveries and in the execution of our growth initiatives. As we navigate through those challenging times, we relentlessly focus our strategic activities on accelerating return on investment with the ultimate goal of increasing deliveries to our customers, while at the same time, increasing our manufacturing capacity at a pace consistent with the EV market adoption.

To do that, we leverage both the strength of our Lion ecosystem and experience we have accumulated over 14 years of operations. This enables us to ensure that our investments are aligned with the underlying fundamentals impacting our industry and operations, as well as our liquidity profile. Today, in addition to discussing our Q2 2022 operational and financial performance, we will explain the actions we will implement to support our growth strategy and accelerate return on investment.

There are three key elements for today’s call. First as supply chain continues to improve. So does the pace of our vehicle deliveries. We delivered the highest quarterly number of vehicles ever, with 105 deliveries in Q2. This is the result of a more stable manufacturing rhythm, where we see continued growth in the number of finished vehicles being produced. And we expect our manufacturing operations to continue to Excellerate in the upcoming quarters.

Second, our Joliet plant and our battery factory are advancing as per schedule. And we remain on track to start manufacturing U.S. build vehicles and Lion batteries by the end of the year. That being said, with a view to focus in our strategic activities to accelerate return on investment and optimally manage our capital resources, we decided to adjust the cadence of our capital spend for the Joliet Facility. Our goal being to align CapEx with projected deliveries, we will reduce 2022 spend to focus on reaching commercial production for the electric bus production lines in Joliet.

Third, with many long time expected EV programs in both the U.S. and Canada now being deployed or to be deployed in the near future, we expect global demand to significantly accelerate and are more than ever ready to support customers in their transition to EV. We will elaborate on each element during the call.

Let’s begin with vehicle deliveries. We delivered 105 vehicles in Q2, the highest number ever for a quarter. This represents an increase of 72% compared to 61 vehicles in Q2 of 2021. Also a growing number of our customers in Q2 dealt with Lion Capital to secure financing solutions, making it easier for them to access financing solutions, tailored to the EV product on a timely basis.

Let me now provide an update on our supply chain for both critical and non-critical components. The challenges experienced over the past year are decreasing, even if they’re not yet fully reverted to pre-pandemic levels, as we remain extremely vigilant and to avoid any disruption in distilled fragile environment, we continue to proactively seek new alternate suppliers. Specifically, we have increased the number of suppliers from which we source raw materials and components by more than 15% over the last 12 months.

One of the biggest hurdles we are nevertheless currently facing is the upwards inflation pressure for some of our commodities and for transportation cost, which had and is expected to continue to have a negative impact on our product cost. To that end, we have begun rolling out near-term price increases in certain markets to preserve our unit level gross margins.

On the battery front, we have over 3,000 packs in inventory and we expect to continue to receive additional packs until the end of the year, thus ensuring a smooth transition to our own battery pack production in 2023. Let me now discuss our U.S. factory and our battery plant and our priorities for the foreseeable future. Like most companies, we spent the last few months navigating through the current challenging economy environment, and I’ve decided to put additional focus on what will generate revenue in the short-term with a goal to accelerate return on investment and optimally manage our capital resources.

The concrete actions we are putting in place are the following. We adjusted the plan cadence of our capital spend at Joliet Facility to align it further with projected deliveries and therefore decided to initially focus exclusively on bus production. Trucks will continue to be manufactured in Canada in the near-term where we have ample capacity to meet near-term demand. As a result, the installation of some of the equipment and other capital expenditures at the Joliet Facility has been pushed beyond 2022.

This includes equipment aimed at supporting truck production or further increasing bus capacity towards full scale production. Specifically, we are reducing the amount of total CapEx expected to be insured for the full year in the Joliet plant in 2022 by $35 million from $115 million to $80 million. While the estimated cost to build out the Joliet facility to its full capacity remains at $150 million, the timing of the fill build out will be continuously reassessed.

The same line of start, staffing of the Joliet plant is being adjusted to align our focus on short-term production needs. Most of the management and back office employees have been hired. And on the manufacturing front, we will hire the number of employees required to begin our bus production ramp up towards the end of 2022. We will then scale the account over time based on demand for our vehicles.

With respect to the Lion Campus, with a view to better leverage our available space and maximize cost efficiency in this environment of very expensive and rare square footage renting cost. We have decided to use a portion of the Innovation Center that was initially planned for engineering offices for warehousing capabilities on the temporary basis starting early next year.

A portion of the Innovation Center will still be used as planned for test and certification of our vehicles and batteries as well as for vehicle prototype production. While there are no changes to the expected CapEx of approximately $100 million to be incurred in total in 2022 for the Lion Campus, we will hear again focus on the battery plant, which will have a significant impact on our short-term revenue and accelerate return on investment. The timing of the full build out of the Innovation Center will therefore be continuously reassessed.

I will now discuss the advancement of each plant in detail, starting with our U.S. manufacturing plant in Joliet. A construction work is progressing well during Q2, we continue to install school bus assembly stations and manufacture Lion C units for the purpose of working station set up and employee training.

We expect the installation of school bus production stations to be substantially completed near the end of the year. And we remain on track to start the commercial production of buses also by the end of the year. This will enable us to meet the demand for our electric school buses coming in part from the $5 billion EPA program.

Let me stress that while our current focus is on ramping up near-term production in a capital efficient manner, our long-term expected annual capacity in Joliet remains unchanged at 20,000 vehicles per year.

Now turning to the Lion Campus. During the quarter, we substantially completed the shell of the battery plant building. We expect the interior work to be largely completed by the end of Q3 and production of battery packs to begin towards the end of the year. For the Innovation Center building foundation work has been completed and the steel structure has advanced to approximately 90% completion.

In parallel, testing of both our battery packs and assembly line are progressing as planned. We continue to produce additional prototype battery packs at JR Automation’s facility in Troy, Michigan, where the prototype line has been in operation. The battery packs are currently undergoing testing and certification, and we expect the certification of facts, factory acceptance of production equipment at JR Automation facility, as well as production of our battery packs at the Lion factory to be completed by the end of this year.

Now turning to orders. Our PO book amounts to $590 million consisting of 286 trucks and 2,071 buses for a total of 2,357 vehicles substantially all of them being conditional on the grant of subsidies and incentives. Long awaited subsidies, which are finally being launched on both sides of the border should accelerate the transition to EV and we believe that this momentum will positively impact our book.

On that note, we are pleased to announce that our order book includes a first order for four Lion ambulances, a vehicle we developed in partnership with Demers and for which we see great potential. With respect to electric buses, we are seeing more and more interest from Canadian customers as reflected by accurate orders, including several repeat orders during Q2.

The Canadian ZETF program continues to generate increased interest from large school bus fleet owners. As a reminder, under this program, the federal government is dedicating CAD2.75 billion to support public transit and school bus electrification. Most recently on the truck side, the Canadian federal government announced the launch of the incentives for median and heavy duty zero emission vehicles program dedicating CAD547.5 million over the next four years.

The objective of this program is to promote the adoption of median and heavy duty zero emission vehicles. Under this program, electric truck buyers can receive up to $150,000 in subsidy per electric truck. Even more interesting is that this funding can be combined with provincial incentives. As an example by stacking both the federal and provincial incentives such as Quebec’s Ecocamionnage program, alliance its truck is eligible for subsidies of up to $244,000, which has a material positive impact on the TCO.

Since funds, mainly trucks have benefited from this program and we continue to increase interest from customers. In the U.S., the $500 million first phase of the announced $5 billion EPA program open in May translating into unprecedented customer interest and dialogue. We are confident that the positive impact of this program will materialize on the order book. Once orders can formally be placed by the operators in school districts starting next October, as per the program roll out procedures. In the meantime, many U.S. customers are putting orders on old awaiting final grant allocations.

As a reminder, this program will award up to $375,000 per zero emission school bus in priority districts, while other school districts can receive up to $250,000 per school bus. As further rules of this program, infrastructure installation and vehicle delivery must take place no later than October 2024. We believe that we are ideally positioned to serve eligible customers, given our leadership in the industry, our Lion ecosystem, our close relationships with the largest operators in school districts and of course our upcoming Joliet plant, where we will manufacture Made in America electric vehicles.

Still in the U.S., we were also pleased to see that the Inflation Reduction Act is on its path to passage in the next couple of weeks. This legislation once voted will significantly increase federal funding to clean OEMs and it will represent the single biggest climate investment in U.S. history. The act currently includes over $60 billion to increase domestic production of clean energy and transportation technologies, and $1 billion specifically for clean heavy duty vehicles, including school buses and garbage trucks.

Last, on the Lion Energy front, our order book consists of 226 charging stations, representing a total order of value of approximately $3 million. Our order book has also been impacted by the postponement of commercial production and delivery of some of our models, mostly the Lion8 and LionD models.

This resulted in some POs being canceled due to funding being expired and in the removal by us of certain orders from our order book. Given that the postponement might create uncertainty relating to the payment of subsidies. That said, we are in dialogue with customers and agencies to find alternative arrangements to be able to preserve those orders.

Let me finish by providing an update on our vehicle rollout. As we look back into the last few months, supply chain challenges, but pressure both on manufacturing and development activities. We achieved some important milestones this quarter in the development of new models, including the first prototype units of the Lion8 school bus, the LionD school bus, the Lion8 Bucket trucks, and the Lion8 Tractor truck.

Despite this important progress, supply chain challenges and delays ensure that the test centers impacted our commercialization timeline, mostly for the Lion8 and the LionD models. And to a lesser extent, for certain other platforms that will be commercialized in the first half of next year, instead than by the end of this year. This is further detail in our MD&A.

With respect to the Lion team, our headcount now amounts to approximately 1,300 employees, including more than 200 engineering and R&D professionals. Recently hires include Sydney Dunn as Vice President, Truck Sales for the U.S. market and Dominik Beckman as Vice President of Marketing and Communication for the U.S. as well. Sydney brings 20 years of sales and operations leadership experience to Lion, including at ElectraMeccanica and General Motors. While Dominik joins us from Hino Trucks, a Toyota Group Company.

Before turning it on to Nicolas, I would also like to officially welcome Ms. Latasha Akoma and Mr. Dane Parker, who recently joined Lion’s boards of directors. Latasha is the Operating Partner at GenNx360 Capital Partner. She previously held several executive leadership positions at Harley-Davidson and Chrysler. As for Dane, he was Chief Sustainability Officer and Vice President, Sustainable Workplaces at General Motors. He also have several leadership positions at Dell and Intel Corporation. They both have been appointed to the board as independent directors, and we look forward to working with them.

Nicolas will now further discuss our financial performance and our expected spending for the remainder of 2022.

Nicolas Brunet

Thank you, Marc. We posted record deliveries and revenues in the history of our company in the second quarter of 2022. Not only did we post growth as compared to last year, but we also posted sequential growth in deliveries for the third straight quarter. In Q2, we delivered 90 buses and 15 trucks for a total of 105 vehicles translating into revenues of $29.5 million for the quarter.

Of these units, 91 were in Canada and the remaining 14 in the U.S. This compares to 61 units in Q2 2021 and to 84 units in Q1 2022. The average selling price of these vehicles was slightly higher than in Q1, which is mostly a reflection of the unit. Despite setting a new quarterly record this quarter, we believe the number of units delivered still could be significantly below what we can achieve with our current resources and manufacturing ramp up investments.

We posted negative gross margins of $3.5 million, reflecting increased fixed manufacturing and storage costs. The positive impact of increased sales volume was mainly offset by increased fixed manufacturing and inventory management system costs related to the ramp up of production capacity for future quarters and the impact of continuing global supply chain challenges.

Continuing with administrative expenses, they amounted to $11.7 million, including $2.6 million in non-cash share-based compensation. If we exclude share-based compensation, this represented an increase of $4 million as compared to the $5.2 million in Q2 2021, and a more modest $0.9 million increase as compared to Q1 2022. The increase mostly results from additional expenses in the context of the expansion of the Lion’s head office capability, as well as professional fees related to supply chain and strategic project optimization initiatives.

Selling expenses amounted to $6.7 million, including $0.8 million in non-cash share-based compensation. If we exclude share-based compensation, this represented an increase of $2.6 million as compared to the $3.3 million in Q2 2021, and a $1.5 million increase as compared to Q1 2022. The increase as compared to last year was primarily due to Lion expanding its salesforce in anticipation of the ramp up of production capacity and an increase in expenses because of the opening and operations of new Experience Centers.

During Q2, we recorded a $2.1 million gain related to the balance sheet removal of the financial viability related to previously acquired dealership rights that we had acquired from a private party and for which all payments expired on May 7, 2022. We maintained all dealership rights associated with this acquisition, but we will not have to incur any related cost in the future.

Now turning to adjusted EBITDA. It was negative $14.4 million for Q2. Adjusted EBITDA for the quarter was mostly impacted by gross margin and to a lesser extent by sequential increase in SG&A.

Let me now spend a few minutes on our expected capital expenses. As previously mentioned, we believe our balance sheet provides us with runway and flexibility as we continue to focus on achieving our growth project and ramping up our production. We remain very focused on the prudent management of our cash resources and thus implementing actions to support our growth strategy and accelerate return on investment. This would positively impact our CapEx.

First for the Joliet Facility, we expect to incur total CapEx of $80 million in 2022, a $35 million reduction versus the $150 million previously disclosed. As of June 30, 2022, we had incurred CapEx of approximately $36 million in the plant [ph] for 2022, including approximately $22 million during the second quarter.

As Marc mentioned, this investment is expected to bring us to commercial production of school buses in Joliet by the end of 2022. For the Lion campus, we continue to expect to incur approximately $100 million of total CapEx in 2022 of which approximately $39 million has been incurred this year as of June 30. Again, this amount is expected to lead us to production of battery packs by the end of the year.

While total cost estimates for the full build out of the Joliet Facility and Lion campus remain unchanged. The timing of the full build out of the facility and the related capital spend will be dependent upon prevailing economic condition, the demand environment for the company’s product and the company’s growth and liquidity profile.

Depending on our liquidity profile, we expect to further review the cadence of our investments and to take additional measures to optimize our required production capacity in light of projected delivery and to monitor our liquidity.

Let me now turn to our balance sheet and liquidity profile. Our cash position amounted to $83 million as of June 30, 2022. We also have access to committed revolving credit facility of up to $200 million subject to a borrowing base, which was estimated to translate into a total availability of approximately $75 million as of June 3.

Last, we have access to support from the Canadian Federal and Quebec government of up to approximately 100 million Canadian dollars in connection with the build out of the Lion campus. As of June 30th, $3.7 million was drawn on the provincial loan. We expect to perform our first draw on the federal loan during the third quarter.

As of today, we estimate that approximately $40 million of the CapEx to be incurred in 2022 on the Lion campus will be funded through this government support subject to the related claim process and timing.

At the end of the quarter, our debt amounted to approximately $14 million, which includes the first provincial loan draw that I just mentioned. Despite our current runway and liquidity, we expect to seize opportunities that may become available to raise additional capital. This could be performed over time through the $125 million at the money equity program, which we established late in Q2 and for which no amounts have been raised yet, or to other financing transactions.

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

Marc Bedard

Thanks, Nicolas. Before we open the lines for questions, let me conclude by stressing that we are pleased with the momentum we built over the past months. And we aim to further accelerate our growth in terms of vehicle deliveries and manufacturing vehicle output. We are focused to accelerate return on investment, while reducing 2022 CapEx and protecting liquidity without compromising our long-term growth.

The EV incentives have reached an unprecedented level with the accurate announcements in the U.S. and Canada. And as we play an integral role in helping our customers meet their GHG reduction targets and their overall GHG emissions, we believe more than ever before that we are exceptionally positioned to capture our share of the medium and heavy duty EV market much faster than most of the other OEMs.

Thank you, everyone.

Isabelle Adjahi

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

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Mike Shlisky from D.A. Davidson. Mike, please go ahead.

Mike Shlisky

Good morning and thank you. I wanted to start off by touching on the battery plan and the strategy for batteries going forward. You had announced a battery supply agreement with another – with an outside provider. I think it was last year a provider is not about to be acquired and it’s about to exit some of their Lion contracts which I presumably would include yours. You do have your facility opening soon, which is great. But other companies that are using that other supplier have announced that they want to still have a dual source battery strategy. Maybe discuss what the acquisition of this third-party supplier means to Lion and kind of your plan. Does it make sense, given supply chain to have a very robust multiple battery supplier strategy going forward?

Marc Bedard

Yes. Good morning. Good morning, Mike. This is Marc. Yes, so we feel more than ever before that the strategy put in place in the last few years is the right one. We’ve been talking about vertical integration. We’ve been talking about cost savings and we feel that everything we’ve been doing is exactly what needed to get done. So you alluded to this agreement with the third party. So as you know this agreement is public. It is public. It has been publicly disclosed in the last few years. So just a reminder, it’s a long-term agreement that we’ve entered into in 2021. It’s a five-year agreement. And as they were saying back then they are expecting to generate of $234 million of revenue over five years.

And you probably remember also that this agreement, I mean is for the supply of those batteries for the Lion8 Tractor model. So this is one thing I just wanted to make sure it’s well understood. Speaking of our battery factory, it’s doing very well. You probably remember at scale. We will have a five gigawatt hour manufacturing capacity. This is going very well. The first battery pack will be manufactured this year. And we’re talking about battery packs for the trucks mostly to start with. So again, no delay we are on – we are absolutely on schedule.

Mike Shlisky

Okay. Okay. I also wanted to ask about the cadence of production going forward here. Now, I know you don’t provide guidance typically. But we are entering a bit of a tricky point in Lion’s history as the new facility is open and we have the supply chain issues. Could you at least confirm with us or let us know whether you feel like you’ll have a little bit better production in Q3 versus Q2, and then Q4 versus Q3. I mean, are you on the output trajectory here?

Marc Bedard

Yes, no. Mike, you remember in Q1, we had 84 deliveries, 105 this quarter. So obviously it’s going the right way. There has been some supply chain challenges and those supply chain challenges I mean will remain. That being said, I mean, we are – the pace of our manufacturing is getting better and better. I was just saying it earlier this morning. We have a better rhythm in everything we’re doing. So in a nutshell, I mean, supply chain is while everything takes a little bit longer with the supplier. So what used to take a couple of months is now many, many times, like we do have like four months, five months of delay when receiving those parts, and now it’s being considered into the supply, the procurement at clients. So all in all, I mean, it’s going well, still challenging. And but we expect that the next quarters will keep increasing. So you are right. We are not providing guidance, but we see growth in manufacturing and we see growth in deliveries as well.

Mike Shlisky

Thank you. That’s great color. I’ll pass it along.

Marc Bedard

Thank you, Mike.

Operator

The next question comes from Craig Irwin of ROTH Capital Partners. Craig, please go ahead.

Craig Irwin

Hi. Good morning. Thanks for taking my question. So the notable improvement in gross margin performance this quarter, it’s nice with the increased volumes, obviously better coverage of overhead. But can you maybe help us unpack what the additional expense burden is that you’re carrying? I know you could have made these vehicles without building out your new facilities. And if we were to maybe just look at the historical performance where you have had margins in the 30s, how do you feel about the natural margins on these products or I guess the variable margins excluding these additional expenses that you’re incurring for growth?

Nicolas Brunet

Yes. Hey, Craig, Nic here. The gross margin was negative $3.5 million this quarter. So obviously, very much impacted by our expenditures towards growth. Ultimately, what’s really – I think you’re banging on what’s impacting gross margins is that investment in scaling up our production and ultimately our delivery, a good example of this is we’re incurring storage and the transportation costs for the inventory that could be spread across much more production, right, as we’re ramping up. And we incur the totality of those costs. And so ultimately it’s a matter of fixed cost absorption. When you look at the results isolated in one quarter where we take a lot of comfort, of course is in, what I like to call the unit level economics or unit level margin.

We have a – what we believe is a very healthy margin over the bill of material. And when we look at a production rate, that’s more reflective of certainly increased usage of the capacity of our plant, we feel that it’s a model that scales really well. You will also have picked up in Marc’s remarks that we’ve roll – we’ve started rolling out this quarter, some price increases, which will help as well. That’s a matter of protecting ourselves in the current inflationary environment, but I won’t provide specific figures, but ultimately it’s all about fixed cost absorption for the immediate quarter. And looking at long-term, just having unit level margins that we can scale very well.

Craig Irwin

Excellent. Thank you for that. So as a follow up, you’re very clear about the healthy margin over the bill of materials. That’s what we would expect if we look sort of at the historic performance, the way you set up the company. So your major competitor in electric school buses has made commitments, fixed price commitments underwater, right. They’ve had let say 25% pricing and they still don’t have a clear line of sight on making profit on the buses that they’re selling today. They have to deliver buses where they wrap them in dollar bills.

On the bill of materials, can you just remind us how you price your buses and whether or not you see this 25% price increase from your major competitor as an opportunity or if you’re likely to be a lot more metered in the way you approach things, given your long-term commitment to customers?

Nicolas Brunet

Yes. That’s a good question, Craig. The order book that we have is on a fixed price basis. So any price adjustments that we make going forward would be for new orders. That said, when I talk about the unit level economics working well, it certainly applies to the upcoming deliveries in the order book. And so yes, we view price increases from competitors, certainly as an opportunity for us. At the same time, we aim and we are able to believe, be very nimble in how we tackle price increases. We have a direct sales force, which – so obviously much easier to roll those through, but they would be for post what’s in the order book today.

Marc Bedard

Hey, Craig, maybe – this is Marc, maybe just one additional comment on your question. I think we are seeing the benefit that the vertical integration we’ve been doing for all of those years. We’ve been talking about this for years and we’ve been doing it and we’ve been building the foundation for many, many years. We see the benefit of what we’re doing. We believe we can be the lowest cost manufacturer.

And it seems that what’s happening in the market right now is proving that we’re doing the right thing. And also I think the focus on EV makes a huge difference. I mean, this is what we’re doing. We are an EV business. We’re not selling everything, C&G, propane, diesel, EV, like some other companies are doing. So when you’re focus on something, you usually get better and this is what we are doing.

And also, I think our customers, you see the benefit of the Lion ecosystem. So they’re buying a bus, they want to make sure it’s going to be delivered on a timely basis. They want to make sure they will be getting the charging stations as well at a fair price installed at the right location, obviously at the right time. And this is exactly what we can offer. So it’s not only like buying a vehicle, it’s buying the old Lion experience. And I think it makes a huge difference.

Craig Irwin

Thank you for that. And congratulations on the delivery traction, it’s impressive progress.

Marc Bedard

Thank you, Craig.

Operator

The next question comes from Rupert Merer from National Bank. Rupert, please go ahead.

Rupert Merer

Hi. Good morning, everyone. With the…

Marc Bedard

Good morning, Rupert.

Rupert Merer

With the reduced CapEx – good morning with the reduced CapEx in Joliet. What are you giving up in terms of capacity initially? And maybe can you talk to us about what you expect your production capacity to be at the end of the year and how quickly can you ramp up production?

Marc Bedard

Yes, so Rupert, with respect to Joliet basically, we’re focused on delivering our order book. And the order book is very much – well, we have more school buses right now than we have trucks and we are building the truck pipeline and the truck order book. While we do that, we do have truck capacity in Montreal, significant truck capacity in Montreal. Decision we’ve made is to what comes on CapEx in Joliet to focus on electric school buses, meaning all the models of electric school buses that Type C, the Type D, that Type A as well. And also the Lion M, which is the [indiscernible] and in the shuttle bus as well.

So that’s basically what Joliet will be doing at the beginning. So again to remain very focused and to deliver made in America buses for our U.S. customers. So very exciting and we will start by the end of this year. I mean we – the first school buses will be manufactured in Joliet. This is great.

And the Lion was not so good. For the second part of your question was that about the Joliet factory, the manufacturing capacity, was that what the battery factory?

Rupert Merer

Yes. With the Joliet factory. So if we think about the numbers, you’ve given us for the Quebec production facility historically, you’ve talked about maybe 800 unit per year capacity that you’re ramping up to. Is there an equivalent number how we should be thinking about Joliet with the new CapEx plan? What’s the – how much capacity are you building with the new CapEx plan?

Marc Bedard

Yes. No. Sure. The – so the good news Rupert that there’s nothing has changed with respect to the at full scale, we are going to be at 20,000 units. So it’s a mix of trucks and buses, but we want to make sure, like, we’re cash conscious. We want make sure also that we’re ramping up manufacturing capacity opposing to the order book. So right now, the order book we have and the order book we are expecting will not be impacted.

So there will be no delays in delivering our vehicles because of the CapEx push that we are doing. So we have all the capacity we need in Joliet to manufacture everything. So we’re not getting into all the specifics of the number of units we deliver or we can deliver, but we do have the capacity to deliver the – on the order book that we’re expecting.

Rupert Merer

Okay, great. Thanks. And then on the capital needs, I know you talked about this little in your prepared comments. So wondering if you can get a little more color on liquidity, what we should anticipate as far as a debt draw down goes over the next few quarters, and maybe any plans you may have to access the ATM.

Nicolas Brunet

Yes. I’ll take this one, Rupert. Look, as you saw in the prepared – you heard rather in the prepared remarks, we’re taking action that that’s focused on liquidity. Of course, that includes the reduction in the 2022 CapEx that we just talked about. And the – obviously the same mindset will apply going forward by [indiscernible] match spend with expected demand and to spend where we get sort of immediate return if you will or near-term return I should say.

In terms of liquidity profile, we continue to provide this with flexibility. We have the $83 million of cash on hand as of today. We have a committed $200 million revolving facility that is borrowing based, I guess and that does today $75 million of that could be issuance – could be borrowed right away to figure that we expect will continue to increase over time.

And then in terms of the government loans recall, we have the $80 million government loans for the project here in Quebec for the campus. And we expect that as we with the spend that we’re going to do this year, $40 million of that will be unlocked if you will subject to the – obviously the process and the timing to claim that money.

We – with all that said, and even with that flexibility with we explained this morning is that we’d look to see opportunities to raise additional capital. This can be done through the $125 million ATM that, that we put in place and for which remains on path as of today. And ultimately, the timing and the quantum of any raise will be dependent on market conditions and the opportunities we see is that that’s really how we’re thinking about it as of today.

Rupert Merer

Excellent. Thanks for the color.

Marc Bedard

Thank you.

Operator

The next question comes from Michael Glen of Raymond James. Michael, please go ahead.

Michael Glen

Hey, just a couple questions. On the truck program in Canada. Does that program have a made in Canada stipulation within it?

Marc Bedard

Good morning, Michael. No, it doesn’t.

Michael Glen

Okay. And then just in terms of the capital needs, can you indicate what your working capital is expected to look like through the back half of the year?

Marc Bedard

Not in great detail, Michael, but when you think about it, we’re going to continue. We plan to continue to ramp up obviously our production and our deliveries, that the objectives. And we want to make sure that we’re well stocked for batteries. So we plan to continue to invest in working capital in the coming quarters.

Michael Glen

Okay. And the inventory investment that you’ve been making so far year-to-date, we should expect that to continue around same levels.

Marc Bedard

Well, yes, I mean, given that we’re – we want to make sure we’re well stocked in batteries and in the current supply chain environment part of the strategy to be very well inventorized. We – yes, we do – when I speak of the working capital, it’s mostly from an inventory standpoint that we expect to use cash flow you want.

Michael Glen

Okay. Thank you.

Marc Bedard

Thank you, Michael.

Nicolas Brunet

Thank you, Michael.

Operator

[Operator Instructions] The next question comes from Mark Neville from Scotiabank. Mark, please go ahead.

Mark Neville

Hey, good morning.

Marc Bedard

Good morning, Mark.

Mark Neville

Just first on the Joliet, in terms of the equipment that you deferred, is there a certain time where you need to make a decision on whether or not you’re going to accept that equipment?

Marc Bedard

Yes. We are – basically, this is – with respect to the truck, mostly the truck equipment Mark. So we have a lot of time in front of us. So relationship with the – with our suppliers is great, but yes, there’s a timeline at which we need to make decisions at some point, obviously if we want those equipment to be installed in Joliet yet.

Mark Neville

Okay. And is that sort of near-term or is it 2023? And just trying to get a sense for one sort of something like that would need to be made?

Marc Bedard

Yes, we’re good to adapt. I mean, with the increase in the order book. So right now, as I was saying earlier, I mean, we have – we do have a lot of capacity in the Montreal factory for trucks and well, the goal is to install those truck equipment as soon as needed in Joliet. So we’re pretty well prepared and we have a lot of truck experts as well to take care of that. But we just want to make sure that, we are following the – basically the ramp up of the order book, but yes, it could be done on a near-term basis. Yes.

Mark Neville

Okay. Understood. And just in terms of the Lion Campus is, I want to make sure I’m understanding this correctly. So you’re still going sort of full steam ahead on the battery assembly capacity. We’re not really clear sort of what you’re deferring in terms of the full build out, as you can maybe just clarify with all that things.

Marc Bedard

Sure. Yes. So Mark, there’s two buildings at the Lion Campus. The first one is the battery factory. The battery factory is key and everything we’re doing part of the – our vertical integration strategy. This is where we are saving cost, we’re controlling old battery technology. So this is amazing. Glad, we made the decision years ago to do that, because there is no way we will be able to manufacture those toward the end of the year, if we will not have made that decision years ago.

So battery factory, we are going full steam into this, first batteries before the end of the year. So this is amazing. So basically, we’re pushing out a little bit, with respect to the innovation center. So the innovation center, you probably remember, this is where – it’s basically the –for our engineering resources.

So right now we have many hubs for the engineering resources and a lot of them are working from Saint-Jerome. So it’s really a place where all of them or almost all of them will be together. We do have a Test Center as well. And we do add a track where we can test our vehicle. So basically, the track is there, I mean, and it’s all ours, so it doesn’t change anything. With respect to the testing that we will be doing, we will still be doing that. So basically all these testing, it’s great. We will also be building the prototypes in this place as it was planned. So basically, everything that will – we will basically get a return on investment on a short-term, medium-term basis, we’re still doing it.

But we’ve decided basically to use the engineering offices for warehouse capacity. I mean, right now the square footage everywhere is going to the roof, as you probably know, and it’s very close to our operations. So we’ve decided on a short term basis to use it as a warehouse – for warehouse capacity. So that’s really a change we’re doing. And obviously, we are able to push some CapEx because of that and this CapEx was mostly a little bit for some equipment, but mostly for the building of the engineering offices.

Mark Neville

Okay. Understood. Maybe just one last question, just for Nick. In terms of the revolver, just curious the – my understandings was that you had full access to it, and just in terms of the incremental $125 million, just how you get access to that.

Nicolas Brunet

It really is a – what I’d say a traditional borrowing based ADL facility. So it’s a matter of margining on the receivables and the inventory. And so how we get access to it is as we continue to scale up have more receivables, have more inventory is, yes, the way works.

Mark Neville

Okay. But was there a change or was it always sort of – was it always like that?

Nicolas Brunet

It’s always been a boring base, Mark, as mentioned in the past…

Mark Neville

Yes. Okay. Got it. Thanks.

Nicolas Brunet

Thank you.

Operator

We have no further questions. So hand back to the management team for any concluding remarks.

Isabelle Adjahi

Well, thanks, everyone for joining the call today. We really look forward to continuing the discussion with you and feel free to contact us for any follow-up questions you may have. On this, you have a nice day.

Marc Bedard

Thank you.

Operator

This concludes today’s call. Thank you very much for your attendance. You now disconnect.

Fri, 05 Aug 2022 07:07:00 -0500 en text/html https://seekingalpha.com/article/4530386-lion-electric-companys-lev-ceo-marc-bedard-on-q2-2022-results-earnings-call-transcript
Killexams : Republican lawmakers want to increase pilot retirement age amid airline struggles

GREENVILLE, S.C. (WCBD) – U.S. Senator Lindsey Graham (R-SC) and fellow lawmakers are set to introduce legislation aimed at increasing the mandatory pilot retirement age.

The “Let Experienced Pilots Fly Act” would raise the mandatory commercial pilot retirement age from 65 to 67. It would also require pilots over 65 to maintain a first-class medical certification, which must be renewed every six months.

The bill comes at a time when airlines are struggling to maintain pilots and keep flights on track.

“With baby boomers making up half of the airline pilot population, roughly 5,000 fully qualified pilots are being forced to retire each year,” Sen. Graham said. “The wave of forced pilot retirements continues even as hundreds of flights are being canceled due to a shortage of available pilots and crews.”

The retirement age for pilots in the United States was raised from 60 to 65 in 2007 after medical reports concluded age had an “insignificant impact” on performance in the cockpit, and there were safety precautions already in place to prevent accidents in case of incapacitation.

Sen. Graham said this legislation does not change or alter any other qualification beyond the age to become a commercial airline pilot.

Under the bill, air carriers must continue using pilot training and qualification programs approved by the Federal Aviation Administration (FAA).

Cancellations and delays, meanwhile, are increasing in frequency as air travel in the U.S. returns to — and in some cases exceeds — pre-pandemic levels. Major airlines have also increased their efforts to hire and train new pilots to replace those that retired during the earlier stages of pandemic, when demand for air travel was at its lowest points.

Sen. Graham said he hopes the Let Experienced Pilots Fly Act will draw bipartisan support, though Transportation Secretary Pete Buttigieg had already expressed concern over the idea earlier this month.

During an interview on “Fox News Sunday,” Buttigieg said the answer to the pilot shortage is not to keep the “Baby Boomer generation in the cockpit indefinitely,” but to attract new pilots to the commercial aviation field.

“These retirement ages are there for a reason, and the reason is safety,” Buttigieg said. “I’m not going to be on board with anything that could compromise safety.”

The Air Line Pilots Association, which represents 65,000 pilots in the U.S. and Canada, also opposes the act.

“This legislation is yet another attempt to distract the conversation from the real issue, which is that some U.S. airlines have clearly failed to plan for the industry’s comeback that we are experiencing today,” said Capt. Joe DePete, the president of ALPA, in a statement issued Monday. “ALPA strongly opposes this proposed legislation, as there is no reason to change the retirement age and doing so would only increase costs for airlines and introduce unnecessary risks to passengers and crew alike.”

Tue, 26 Jul 2022 06:59:00 -0500 en-US text/html https://www.wane.com/news/republican-lawmakers-want-to-increase-pilot-retirement-age-amid-airline-struggles/
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