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01:04 Thank you, operator. And good afternoon everyone.

I’m pleased to welcome you to today’s third quarter twenty twenty one corporate update conference call. The third quarter of twenty twenty one was instrumental in our foundation building for twenty twenty two, having secured exciting new lines of business, namely EV chassis sales alongside EAVX and low-floor electric shuttle bus sales through our new partnership with Optimal-EV.

01:37 While revenues from our transit bus business are at times irregular and see some periods of lower deliveries, as illustrated with this quarter, for our financial guidance, we've released, we're on a trajectory to realize over one hundred and forty million in revenue next year, marking what will be a record breaking year for Vicinity by any measure. 02:02 Our entry into the high demand electric truck in shuttle bus market is expected to fill the gaps for periods of lower transit bus deliveries in the future.

We are leveraging our strong momentum to accelerate the launch of next generation electric vehicle products, including our breakthrough Vicinity Lightning EV, and our new VMC 1200 Class 3 Truck. 02:31 The S1 and E1 cut away product lines from our strategic partner, Optimal EV, and finally, EV sales for upfitting into next-generation municipal and delivery vehicles alongside EAVX, our strategic partner and business unit of North American commercial automotive leader JB Poindexter.

02:57 The land grab for EV market share is well underway, and we're positioned to gain traction through our long-lasting partnerships with North American transit agencies and a continent wide dealer network. 03:12 Given the capital needs to fully fund our Washington State Manufacturing Facility, and these exciting new business lines, namely our exclusive North American distributor agreement with Optimal EV and our strategic collaboration for chassis sales alongside EAVX, we've made significant moves towards fortifying our balance sheet in recent months, as well to support some of these exciting new growth initiatives.

Supplementing our twenty million line of credit with a ten point three million debt financing and proceeds from a U.S. seventeen million underwritten public offering.

03:56 To support our twenty twenty two financial guidance for revenues of at least one hundred and forty million and adjusted EBITDA of at least ten million numbers, which we believe are conservative and provide room for significant potential upside, driven by our continuously strong North American sales momentum. 04:18 We have appointed respected commercial transportation veteran, Brent Phillips as our Senior Director of Sales in North America, Brent is an incredibly well network in talented individual, a perfect example of our ability to create a Tier 1 organization in setting up for an accessible future.

04:43 We attended key investor industry events in this quarter as well, namely the SNN Network Summer Virtual Event, the H.C. Wainwright 23rd Annual Global Investment Conference, and the LD Micro Main Event on the investor side of things, as well as the CALACT 2021 Autumn Conference & Expo and the APTA TRANSform Conference & Expo on the industry side, both significant industry trade events where we're showcasing our newest, most advanced products for potential customers to familiarize themselves with.

05:25 Now with that, I'll turn it over to Dan to review the financial results of this quarter ended September thirty, twenty twenty one. Dan?

05:34 Thanks, William. Good afternoon, everyone.

I will constrain my portion to a quick review of our financial results. A full breakdown is available in our regulatory filings and in the press release across the wire aftermarket close today.

05:48 Please note, I'll refer to adjusted EBITDA and other non-GAAP measures. For the calculation of adjusted EBITDA and other non-GAAP measures, please refer to the Q3 MD&A, which is available on SEDAR.

06:01 Revenue decreased sixty seven percent to two point nine million for the three months ended September thirty, twenty twenty one as compared to eight point nine million in the three months ended September thirty, twenty twenty. 06:14 The decreased revenue was primarily driven by the delivery of six buses in the quarter as compared to twenty buses in the third quarter of twenty twenty.

Reflecting low order intake during the first and nine months of the pandemic and delivery delays related to shipping, and the global supply chain challenges for certain parts currently experienced in the industry. 06:34 Revenue grew one hundred and twenty eight percent to forty nine point three million for the nine months ended September thirty, twenty twenty one as compared to twenty one point six million in the nine months ended September thirty, twenty twenty.

06:49 The company delivered one hundred and nineteen buses for the nine months ended September thirty, twenty twenty one, as compared to forty nine buses for the nine months ended September thirty, twenty twenty. 07:02 Gross loss totaled zero point seven million dollars or negative twenty four point nine percent of revenue in the third quarter of twenty twenty one, as compared to a gross profit of zero point six million dollars or six point three percent of revenue in the same year ago quarter.

07:19 Gross profit increased to five point seven million or eleven point six percent of revenue for the nine months ended September thirty, twenty twenty one as compared to gross profit, of one point two million or five point three percent of revenue for the nine months ended September thirty, twenty twenty. 07:37 The margins for the three months ended September thirty, twenty twenty one were negatively affected by the sales of higher than average cost buses in inventory, and the sales of fewer buses compared to the prior year period.

07:50 The gross profit in the nine months ended September thirty, twenty twenty one was positively affected by sales mix with twenty twenty one deliveries generally having higher margins than those realized in twenty twenty. 08:03 Net loss for the third quarter of twenty twenty one was four point eight million or zero point one six dollars per share, negative zero point one six dollars per share, as compared to net loss of one point three million dollars or negative zero point zero five dollars per share in the same year ago quarter.

08:20 Net loss for the nine months ended September twenty twenty one was three point one million as compared to a net loss of three point eight million for the nine months ended September thirty, twenty twenty. 08:33 Adjusted EBITDA loss for the third quarter of twenty twenty one was three point five million dollars as compared to an adjusted EBITDA loss of zero point seven million in the same year ago quarter.

08:45 Adjusted EBITDA loss for the nine months ended September thirty, twenty twenty one was zero point five million, as compared to an adjusted EBITDA loss of two point four million dollars for the nine months ended September thirty, twenty twenty. 09:00 Cash and cash equivalents as at September thirty, twenty twenty one totaled five million dollars further fortified through the addition of ten point three million in debt financing and the proceeds from U.S.

seventeen million dollar public offering subsequent to quarter-end. 09:17 Working capital as at September thirty, twenty twenty one totaled sixteen point four million dollars as compared to sixteen point seven million as at December thirty one, twenty twenty.

09:29 Our company is in a strong position. We have a strong balance sheet, are well positioned to execute on our robust twenty twenty two financial guidance and the fundamentals of our operations are very positive.

We remain well positioned for future growth. 09:43 I now like to pass it back to William to offer some closing remarks after which, we will begin our question and answer session.

09:51 Thank you, Dan. Looking ahead into twenty twenty two, we are incredibly well positioned to create long term value for our shareholders.

We are intensely focused on delivering upon our robust one hundred and forty million twenty twenty two revenue guidance, completing our U.S. Manufacturing plant, and securing new purchase orders for our ever expanding line of electric vehicles.

10:18 Addressing the needs of an increasingly diverse customer base as we empower their drive, to create a more sustainable public transportation system. I look forward to providing our shareholders with further updates in the near term as we launched new products, announced new customers, and successfully execute on our business plan.

10:41 I thank you all for calling in. And now, I'd like to hand back to the operator to begin our question and answer period.

Operator?

11:13 Yes. Thanks taking my question here.

Maybe we could just start on the visibility on the twenty twenty two target, the one hundred and forty million. You gave a breakdown down of some of the units you're expecting between Optimal, the VMC 1200, Lightning and the Classic, maybe you can just touch where we are from an order book standpoint on those units?

Are there any areas where you still have some work to do between now and the end of next year to kind of hit those numbers or how fully booked is that?

11:51 Sure. This is Dan here.

So, if we're looking at next year, we do have some good visibility already into next year. Our backlog is definitely increasing.

We don't have all of these orders in hand yet, but if we're looking at our backlog right now, it’s near ninety million already for the backlog. Where we know that we're getting orders still is on the truck side.

12:22 We were budgeting for two hundred trucks next year and that's probably light from where we think it's going to go, but that's where do you still see some orders coming in and the lead time for trucks is a lot lower, same with the optimal EV products, the lead times will be a lot lower, but we are well on our way to achieving that target and hopefully beating it by a significant margin.

12:51 Got it. Okay.

Yeah. I mean, the hundred, you know order for the [truck load] [ph] is certainly kind of move that needle.

So, I guess the truck and the Optimal would be the two areas from the unit standpoint where you think there's most upside and then I’m curious, on the optimal, what is the initial activity in speaking with your customers about that? Then like as far recognize [indiscernible] in a month, and I'm curious, in the press release you quoted firm orders and LOIs are consistent with a month ago.

So, what has the initial feedback been there?

13:28 Well, I mean, initial feedback on the optimal product, I’ll let William talk in a second, but we were just at apt here in showing the optimal product and people are excited. They are extremely excited.

13:41 We had a very good showcase here with the Optimal. I think it probably generated a lot of attention probably we look at the customer base and who is coming through looking at it.

It definitely was high on everybody's regard to get in to take a look at that vehicle. We really liked the vehicle, it's an easy manufacturing, a very short manufacturing timeframe.

We're set up extremely well in Elkhart, Indiana. 14:10 The production levels that we could actually hit at a factory are six thousand to eight thousand units per year.

It's quite amazing. And the actual people looking at it was just – we have great feedback.

14:27 That's great to hear. And then obviously to the balance sheet here, how should be thinking about capital and working capital needs through the ramp over the next few months and quarters, how much cushion do you think is baked in, kind of currently to get towards cash flow positives next year?

14:48 Yeah. And that's a good question.

Obviously, we're seeing a lower second half than we had for the first half. That's directly related to just lower intake that happened during the first nine months of COVID.

15:05 The backlog is there now. And when we are producing for sales, we're producing profitably for all the orders.

So, we don't really see being cash flow negative for too long here. This is definitely going to be a cash flow positive year in twenty twenty two as you can see with our ten million dollar EBITDA projections.

15:29 So, I'm not too concerned there from a liquidity perspective. I still have not drawn on our twenty million dollars [ABL] [ph].

So, liquidity here is buying right now.

15:43 Okay. And then just last one, when – it seems kind of transit side customers, any kind of update you could provide on where momentum is from those customers?

Are people waiting for some of this infrastructure spending to start to have more visibility? I'm curious, you know, our conversation is starting to heat up here as COVID starts to improve or where do we stand?

16:11 Yes. We're just in the – we feel we're just in a perfect position here right now.

Funding has – it's at record highs. We've got the transportation build, it’s just finished being passed in the U.S.

here, which is really targeting billions and billions of dollars towards the cleaner greener transit vehicles. 16:33 It's – on the Canadian side as well, we see five thousand vehicles, a thousand vehicles a year being funded through greener initiatives.

So, we're positioned extremely well. I think if we really have to look at the market coming out of the pandemic and coming out of some lower ridership’s on the transit side, a mid-sized bus now really makes better sense than it ever has in the life of the vehicles.

17:03 There's lot of people, lot of talk from the transit authorities that are coming through to show here, where we're rightsizing and fundings in place. So, we're just well-positioned I think to grab a lot of those businesses coming out.

17:18 Yes, I should say to you that we showed the Vicinity Lightning for the first time and the excitement around that was huge. So, we're definitely poised to have a lot more lighting sales coming into near future.

17:32 That's great to hear. Thanks.

17:36 Thank you.

17:45 Hey, good afternoon Will and Dan, thanks for the time here. Just a couple questions left from my side.

You gave some great color on what we should be looking for next year, and I know we're still focused on building the foundation, but when you think about 4Q, what are your expectations for deliveries directionally or are we going to be seeing maybe more of the same as what we saw this quarter? Are we going to see some improvements, some deterioration, maybe some color there?

18:19 Sure. Dan, here.

It will be slightly better than the third quarter. So, we're still – we guided before that we are looking to do one hundred and thirty buses for the year.

We’re at one hundred and nineteen right now, so that guidance still stands.

18:39 Okay, got it. That's helpful.

And then just thinking about the P&L next year, we have that, I guess if you do the math seven percent only for EBITDA margin at the end of the year, but thinking through some of the expense line items, labor inflation, some of your R and D efforts ramping up that Washington facility, where do you think some of the opportunities are to potentially get better than that and where are some of the risks that might put that EBIT number in question?

19:12 I can tell you that SG and A has gone up from the past. If you compare this year's SG and A to last year SG and A, it's not really apples to apples because we did a pandemic in full swing last year with no travel.

19:30 We had government assistance in the salary side, but we're also ramping up our staffing right now to be ready for the increased demand and to actually address our sales network a little more. So, I would see the SG and A going up for the future.

I would say that it would top out at eight hundred and nine hundred thousand a month, which would be two point four million to two point seven million a quarter for next year. So, that would be the largest increase that we would see on the cost side.

20:08 Okay, That's helpful. And are you having any problems finding people to step up facilities and kind of prepare yourself for growth next year?

20:19 No, not right now. I mean we just hired Brent as we announced, which was a very big addition to our team.

So, we will probably stop up on the sales side as well to increase our exposure now in the U.S. and now that we have the Optimal product as well, but that's probably where we would look to increase.

And for our plant in Washington, we don't foresee a ton of issues there. 20:50 Where we've – while we're in the process of hiring the U.S.

Production Manager right now. And so, oh, apparently we have.

So, that’s [indiscernible] the presses. We have hired – started to hire there.

So, yeah, we're starting and that's the first step, just filling that plans and getting the right people in place.

21:14 Okay. Awesome.

And I mentioned you're still on track for that sort mid twenty twenty two start-up on that Washington facility?

21:25 That's correct.

21:26 Yes, we see the factory actually, the building being completed sometime towards the end of this year, and then we just need to outfit it with a specialized equipment to get into production.

21:38 Okay. So, units will actually be rolling off the floor by mid- twenty two, at least …?

21:44 Yes, we're hoping to have it up in – by Q2 to get some production right.

21:50 Okay. Terrific.

And then just one final question here, you all have made some great progress with the product portfolio this year, a lot of big changes. When we think about the products wide space and your current offering, where do you see opportunity?

Are you pretty complete at this point or is there potential to, kind of move into some parallel segments? And I think you are not going some Class 3, but maybe some kind of higher classes, any thoughts there?

22:22 Yes. We are, right for now, we're just focused on the midsize and below.

That’s what we believe – we believe this optimal partnership really rounds out our portfolio. We're selling that vehicle in the same customer base that we were selling our existing vehicles into.

And we're just staying focused on that midsize at this point in time. We really want to dominate that midsize market.

22:51 Okay, great. Well, that's all for me.

Appreciate the time and hope you all have a great weekend.

22:56 Great, thanks Bruce.

22:57 Thanks Bruce.

23:07 Thank you, operator. I'd like to thank each of you for joining our earnings conference call.

We look forward to continuing to update you on ongoing progress and growth. If we were unable to answer any of your questions, please reach out to our IR firm, The MZ Group, who would be more than happy to help you and assist.

Thank you.