I'm OutI am out on VMC, at least for now.
I had already been becoming frustrated with managements communication prior to this last quarterly release and Q/A. It was not so much unwillingness to give forward guidance but a seeming unwillingness or inability to communicate in a clear and upfront manner to the market and especially their shareholders what they saw as the development time period and plan to advance both the ev bus side and especially the class 3 and 4/5 commercial ev truck products. Everything was “seeing overwhelming interest”, “massive TAM”, “huge subsidies/gov. support”, etc, etc. But no specifics on what the development process will involve, how long we should expect for the different steps to take.
Example. As Ferndale finally opened last September all they said was “were hiring and onboarding people”.
Whereas they could have said something like: Were ramping up the assembly process. We intend to be in the position to assemble X number of class 3 trucks per month by Y month! Six months later we expect to be able to assemble Z number of trucks PER MONTH!
Onboarding and training takes time. Settling in a new assembly plant takes time. Were all adults here. If your clear and upfront in communicating what the process and timeline is and what you can and CANNOT do, it builds confidence not reduces it because we see you have a clear strategy and execution plan.
They are seemingly unable or unwilling to communicate in that kind of upfront and clear manner so we seem to constantly be getting negative surprises.
Another example: This invoicing but not recognising revenue of the 71 ev1200 trucks. Only now are they saying that the upfitting of these trucks is something that they must undertake before shipping on to dealers and other customers and that it may take from 2-3 up to 6 months for each truck to generate revenue once they come out of Ferndale plant. Well okay. But again, if this had been communicated last September that this is the delivery to payment process and timeline we would all have understood and been prepared.
And this tidbit. That they had 325 trucks in total but that 215 were assembled up to end 2023 and only 110 in q1 2024!!
And that only being dragged out of them after the analyst questioned them on number of trucks produced and when. ie: it would never have been communicated if they had not been pointedly asked. They didn’t state it on their own initiative. That info, combined with William Trainers comment about Ferndale being “lightly” staffed right now (again only stated after being pushed by the analyst as to what there production staffing was at Ferndale) and would bring more people on as greater production is needed!!
Say what?? You have a 1,000 truck order plus another 50-70 trucks from other dealers which we all were lead to believe was deliver as fast as production can be ramped up!!!
Which brings us to the ultimate $64 question now of course, what is the ACTUAL status of the Pioneer Group 1,000 unit so called Purchase Order???
When they first announced this order they actually were stating the expectation to fill it by end 2023. Then with Ferndale delays it became end 2024. But it always seemed to be represented as can deliver as fast as can produce (ie: end 2023 first date). As of today the corporate presentation STILL states 1,000 trucks to be delivered by end of 2024!!!
So why only 115 trucks assembled in Q1?? 100 trucks less than Q4 2023! It really looks like the Pioneer order delivery schedule is dependent on Pioneer’s sell through rate AND it “seems” like the delivery pace is in fact being slow walked or reduced.
If this order has always had a clause in it that says delivery pace is dependent on the sell through rate then this is a “material point” and should have been communicated as such right from the start as well.
If it is the case, so be it, but if shareholders had been told then they would have managed their expectations and been able to factor that in.
With management unwilling to give any kind of forward guidance and with what was only seemingly grudgingly pried out of them in terms of Ferndale staffing and the past quarter production rate of the 1200 trucks, we as shareholders can only conclude that the expectations of 500-700 (let alone 1,000 trucks) delivered in 2024 seems to be very questionable. To say nothing of 100 busses…….
This dramatically changes revenue and ebitda potential AND brings into question possible line of credit reductions, their ability to meet the debenture repayment schedule and ultimately their overall financial position. A slower growth rate or financially harder development path could absolutely require them to raise more equity and at the current stock price this could involve significant dilution.
So.
Management having lost my confidence through what was and was not communicated in the past months culminating in this past earnings release and has forced me to sell my entire position. I will keep a close eye on developments, but it is 100% show me now, with real, sustainable results and hopefully much more clear and upfront communication on the companies progress and/or challenges.
I think the products have markets (especially the smaller commercial trucks). As to whether VMC with this management group can execute and have success, well we will see, but for now I’m on the sidelines.
I wish the best for all.