ADOMANI, Inc. (NASDAQ:ADOM) Q4 2018 Results Earnings Conference Call February 13, 2019 4:30 PM ET
James Carbonara – Hayden IR
James Reynolds – President and Chief Executive Officer
Michael Menerey – Chief Financial Officer
Conference Call Participants
Craig Irwin – ROTH Capital Partners
Joseph Osha – JMP Securities
Edward Woo – Ascendiant Capital Markets
Good day, ladies and gentlemen, and welcome to ADOMANI’s Fourth Quarter and Full-Year 2018 Earnings Call. All lines have been place in a listen-only mode and the floor will be open for your questions and comments following the presentation. [Operator Instructions]
At this time, it is my pleasure to turn the floor over to Mr. James Carbonara, Investor Relations. Sir, the floor is yours.
Thank you, operator. And once again, good day and welcome to ADOMANI’s fourth quarter and full-year 2018 earnings call. With me on the call are Jim Reynolds, President and Chief Executive Officer; and Mike Menerey, Chief Financial Officer.
I would like to begin the call by reading the Safe Harbor statement. All statements made on this call with the exception of historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although ADOMANI believes that the expectations reflected in such forward-looking statements are reasonable on the basis of current expectations, ADOMANI can make no assurances that such expectations will prove to be correct.
Also these forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results to differ considerably from ADOMANI’s current expectations due to changes in operating performance, technical and economic factors, and other risks and uncertainties disclosed in ADOMANI’s annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by ADOMANI from time-to-time with the Securities and Exchange Commission.
Any forward-looking statements included in this earnings call are made only as of the date of this call. ADOMANI does not undertake any obligation to update or supplement any forward-looking statements to reflect new information, subsequent events or circumstances, except as required by law. ADOMANI cannot assure you that projected results or events will be achieved.
Now, I will turn the call over to Jim Reynolds, President and Chief Executive Officer of ADOMANI. Jim, please proceed.
Thanks James, and welcome everybody. I’d like to begin by providing overview of our 2018 sales and operations and our outlook for 2019 and then pass it over to Mike for a deeper dive into our financials. After that, we’ll open it up for questions and answers.
Sales for the fourth quarter of 2018 were $1.2 million, $5 million was for the full year of 2018 at same times the revenue we had in 2017. The backlog as of February 08, 2019 was $10.1 million a 17% increase from December 31, 2018 which backlog at that point was $8.6 million and 166% increase in the backlog of $3.8 million a year ago. We believe that our backlog, future pipeline and revenue growth are credited to successful marketing efforts which include the many Ride-and-Drive events conducted with Blue Bird and Steelers.
On the marketing side, we started 2018 with Ride-and-Drive events throughout California beginning in January in conjunction with A-Z Bus sales, the Blue Bird California dealer, and we finished by appearing on ABC’s Evening News in Fresno. The Ride-and-Drive events held during 2018 were designed to build stakeholder understanding of the newest product offering from Blue Bird which is the all American rear-engine Type D’s electric school bus powered by ADOMANI.
Our zero-emission all electric drivetrain system is included in every Blue Bird electric bus. With decades of collective school bus marketing, sales, and support experience this teams of ADOMANI, Blue Bird and A-Z Bus sales were able to handle and facilitate the rides, the driver events, field funding questions and discuss the preorder process.
Many local utilities were invited to discuss infrastructure, best practices for charging and general planning considerations for the line of electric vehicle adoption. Also federal, state, and local elected officials, local air districts and state agencies were invited to experience the Ride-and-Drive events and many attended events in Los Angeles, San Diego, the central valley, Sacramento and the Bay Area.
In 2018 we attended and presented at 73 trade show, government sponsored forums and Blue Bird and Blue Bird dealer Ride-and-Drive events, including a total of 46 Ride-and-Drive events. These included locations such as California, New York, Indiana, Alabama, Georgia, Florida, Nevada, Arizona, Colorado, you get the message and in Canada.
Another driving factor of revenue is the backlog and future pipelines and successful participation in government programs. In February 2018 it was announced that Blue Bird All-American Type D electric school bus powered by ADOMANI had become eligible for $4.7 million in New York Truck Voucher Incentive Program money. The bus qualifies for a purchase incentive for a $150,000 per bus which is incented to cover the incremental cost of the electric drivetrain and makes the zero-emission choice more attainable in New York.
New York for context is the home of the largest school district in the United States and operates a fleet of approximately 50,000 school buses, over 10% of the nation’s total. The 2018 program was fully subscribed to and funding has been dispersed at this time. We are anticipating that funding will be renewed in 2019 and we hope at a larger level in the 4.7 [ph] which came out last year.
Additionally, last year we announced ADOMANI participation in the U.S. Department of Grant award with Blue Bird. The Department of Energy has announced that it would be awarding $15 million to organizations in an effort to accelerate the adoption and advancements of alternative fuel vehicles. Blue Bird was presented the largest award of $4.4 million towards the development of zero-emission, 100% electric school bus with vehicle to graded capabilities. The electric bus drivetrain system for that vehicle is being developed in conjunction with ADOMANI.
The last couple of operational items I’d like to touch on for 2018 are the new product launch and the revenue stream for ADOMANI and the area where we came up short. Although annual revenue was $5 million in 2018 compared to $425,000 in 2017 represented a significant increase we expect them to be higher. The shortfall came in two area; first, we have previously expected to recognize approximately $950,000 in drivetrain revenue in December 2018. Unfortunately, $400,000 of that did not yet shipped and has been pushing it to early 2019. We view this shortfall as minor.
The more material variance was the fact that we have yet to recognize $2.1 million from a non-reoccurring, non-drivetrain legacy project for six complete zero-emission, all electric school buses for the formal part. This was an agreement we entered into in 2017 before partnering with Blue Bird and while we have previously expected to recognize our revenue in 2018, we now anticipate that we will receive such revenue in the first half of 2019.
The last item I’d like to mention regarding 2018 is that we launched a new product line. Historically, our main products have been electric drivetrain systems. However in late 2018 we announced that ADOMANI will begin to offer zero-emission all electric trucks, cargo vans and chassis.
We especially like this segment for multiple reasons, including the large number of available funding and market size. In terms of subsidies with the availability of the hybrid vehicle incentive programs, the California Air Resources Board, California school districts and commercial businesses are eligible for $50,000 for the new class 3 vehicle, up to $80,000 for the new class 4 vehicle and $90,000 for the new class 5 vehicles.
With the addition of $5,000 to $15,000 respectively available for schools and businesses located in disadvantaged communities this brings the savings of the fundings which brings the price of the unit down on class3, class, 4 and class 5 to be extremely competitive if not below the equivalent diesel, gas, or even propane powered vehicles. When you consider the savings in fuel costs and reduce in maintenance, we think we have a winner.
Additionally, in terms of market size, in 2017 unit sales of class 3 vehicles in the U.S. were approximately 317,000. Unit sales of class 4 through 7 vehicles were approximately 223,000. We believe that the school bus replacement market is about $35,000 to $40,000 annually. So the class 3 through class 7 truck market represents an opportunity as approximately 13.5 times greater in terms of total unit sales. We also project that represents a higher profit margin opportunity for ADOMANI.
Turning to our outlook for 2019, we also feel confident that we are situated to meet or exceed full-year 2019 analyst revenue estimates. The reason for our confidence in 2019 revenues are, first our current revenue backlog of $10.1 million. These sales have been made. We are now waiting to make deliveries so we would recognize the revenue. Second, we have a new product line with trucks, cargo vans and chassis. We expect to take orders and make deliveries starting in the first half of this year and we fully expect the revenue segment may compose as much or more than 50% of our total revenue in 2019.
Third, there’s a significant amount of funding available for electric vehicles that are starting to be released. Beginning last October with the combination of local air districts, state funding and money from awarded school districts the next phase of electric school bus funding is expected to come from a $10 million rural school grant followed by the larger $75 million from the California Energy Commission which we expect to be released in Q2 or at the latest Q3 of 2019. Also the California Air Resources Board HVIP program currently has over $100 million for electric vehicle purchase incentives. These include trucks, a portion of which is available for funding, for purchases of ADOMANI product offerings.
The expected funding from both programs may result in the sale of approximately 350 to 400 electric busses from these brands of which we know Blue Bird and dealers [ph] A-Z Bus sales have been working diligently to communicate with each prospective grantee to assure the Blue Bird eclectic bus is the preferred bus among California schools districts. Any such sale by Blue Bird and its dealers will result in added drivetrain sales for ADOMANI. We believe that our exclusive partnership with Blue Bird, who is the leading independent designer and manufacturer of alternative school busses and has more than 180,000 busses in operation to date, will help sales of our electric drivetrain systems that drive.
Furthermore, the electric vehicle industry is primed to benefit from the $2.9 billion in Volkswagen funding which is slowly being released. As it continues we believe we have the opportunity to capture our share of it not only for our drivetrains but our trucks, vans and chassis.
Turning quickly to important profit data points, in 2018 we had approximately $7.1 million in non-cash charges, that amount is expected to be reduced to less than $1 million in 2019 which as a positive impact on our bottom line, based on our current projections we believe we will have profitability in 2020 and perhaps as soon as fourth quarter of 2019. With cash and cash equivalents of 7.7 million at December 31, 2018, we believe we have sufficient cash to fund us to profitability.
At this point, I’d like to turn it over to our CFO, Mike Menerey to walk through the financials.
Thank you, Jim. Good afternoon everyone. You’ve probably seen our earnings release which went out just shortly after 1 o’clock Pacific Time this afternoon, so I’ll try to be brief and get through this so we can ask questions.
As Jim mentioned, sale were $1.2 million approximately in the first quarter and a little over $5 million for the year ended December 31, 2018. That’s compared to $425,000 for both, the fourth quarter and the full year a year ago. Cost of sales were $1.49 million [ph] for the quarter, $4,878,000 for the year and again that compares to cost of sales for both the quarter and the full year of last year of $479, 000.
Our general and administration expenses in the fourth quarter were $1,331,000 compared to $342,000 in the fourth quarter of 2017 an increase of $989,000 but that’s almost exclusively related to a $964,000 decrease in non-cash stock based compensation expense in the fourth quarter of 2017 that was previously disclosed and discussed. The fourth quarter 2018 general and administrative expenses included approximately$365,000 in non-cash charges, $350,000 of which was related to stock-based compensation expense.
General and administrative expenses for the full year were $10.7 million compared o $18.7 million for the full year 2017, a decrease of approximately $8.1 million and that all primarily related to an $8.6 million decrease in non-cash stock-based compensation expense from 2017 to 2018. That decrease was partially offset by increases in legal and professional, insurance expense, and bad debt expense. The $10.7 million in general and administrative expenses for the year of 2018 include approximately $6.7 million in total non-cash charges, including $6.4 million in stock-based compensation expense and a $200,000 bad debt expense recorded in Q3.
Consulting expenses were essentially unchanged in Q4 from the same period last year and was significant lower for the year ended December 31, as compared to last year as a result of the June 2017 issuance of a warrant to purchase 350,000 shares of common stock, which were valued at $1.2 million, and the payment of $800,000, in each case pursuant to the terms of a settlement agreement we entered into during the three months ended June 30, 2017. As a result, the decreased in consulting expenses was approximately $2.1 million.
Research and development expenses in the fourth quarter of 2018 increased by $15,000 over the fourth quarter of last year due to the timing of some expenditures and research and development for the entire year increased by $99,000 primarily related to expand a product development activity in 2018.
Total net operating expenses for the fourth quarter of 2018 increased by $1 million compared to the fourth quarter of 2017 again due primarily to the $964,000 reduction in expenses in 2017. Total non-operating expenses decreased by $10 million for the year ended December 31, 2018 compared to last year, primarily due to $8.6 million reduction in non-GAAP stock based compensation expense and the $1.2 million reduction in consulting expenses that I just mentioned.
Net loss in the fourth quarter of 2018 was $1.3 million, $350,000 of which related to non-cash expenses for stock based comp and an increase of approximately $1 million as compared to that net loss of $292,000 last year which artificially low because of that stock based comp adjustment. The total non-cash expenses included in the net loss totals for the quarter ended December 31, 2018, were $365,000 and -$ 415,000 in the fourth quarter of last year, again because of the stock based compensation adjustment.
Net loss for the year ended December 31, 2018 was $11 million, of which $6.4 million related to non-cash expenses for stock-based compensation, in this total expense was a decrease of $10.9 million as compared to a net loss of $21.9 million for 2017. The total non-cash expenses included in the net loss totals for the year ended December 31, 2018 and 2017 were $7.1 million and $16.7 million, respectively. So if you take the reduction in stock based comp and the reduction in the consulting expense accounts for most of that difference.
At the end of December 2018, ADOMANI had cash, cash equivalents, and short-term investments of approximately $7.7 million and we had outstanding debt of $1.7 million, so we had a net of about $6 million. That compares favorably to $2.4 million of cash, cash equivalents and short-term investments and $2.1 million of debt at the end of 2017 which was a net of $300,000. Working capital at December 31, 2018 was $7.2 million as compared to $1.8 million at December 31, 2017.
That concludes my remarks for today. James, if you want to, we can open it up for questions.
[Operator Instructions] We will take our first question from Craig Irwin with ROTH Capital.
Good evening and thanks for taking my questions. First I wanted to ask about the revenue slippage in the quarter. It seems that a good chunk of that might be related to third-party suppliers and timely delivery. Can you maybe update us on whether or not the suppliers have resolved their delivery issue and would you expect those units to be recognized as revenue in the first quarter?
Well, thanks for the question. We would expect the issues to be resolved we believe by the second quarter. We’d like to think that it will be resolved in the first quarter, but up till now we have not had the confidence in the supply chain that they will be resolved. So as we discussed before the vehicles in question are new electric school buses from a different vendor than Blue Bird. We represented them and sold the product in 2017 and expected delivery sometime around September of last year. Didn’t get it, we were promised delivery by the end of 2018 and that slipped as well.
There are just some mechanical issues with the body build, the chassis. The electrical components all work fine. The body itself needs some adjustments. There are some seating issues, some window issues, so it’s nothing that can’t be overcome. It is just how quickly we can get the people to the facility to start making those corrections. So we like to believe it is the first quarter, but we tried that the last year and now we’re – we going to believe it is going to be the first half of 2019.
Okay and then that clarity is good. So then in your prepared remarks and in your press release you expressed a level of comfort with the analysts estimates out there. We’re estimating around $15 million in 2019 and you’re really healthy $10 million plus backlog that you have right now seems to give us some good visibility there. Can you comment proportionately whether or not the couple million dollars in revenue that was missed in the fourth quarter, these chassis that you’re waiting for delivery of is there a materially larger contribution from this product expected for 2019 or is this likely to represent a very minor risk to the overall revenue forecast for the year?
If you’re talking about the six school bus units, those are won and done. Those are a product that we represented. We sold it. We’re waiting to make delivery to our customers, but we don’t plan on having anymore sales in that area. So that’s – that’s that $2.1 million outstanding is a standalone project.
Okay, excellent. So I was also a little bit surprised on the call you didn’t make more of a big deal about your class 3 chucks and cargo vans that you started doing Ride-and-Drives with in the past couple of weeks. I guess you – practically [ph] something at the end of January about showing these to the California school districts. Can you maybe just describe for us a little bit about what these products mean to ADOMANI and the future growth trajectory over the next couple years?
What do you see is there available subsidies potentially in California, do you think the qualification process will be similar to what you saw with Blue Bird looking backwards and what do you see as the most likely path for assembly of these vehicles, will you be using EDI again in partnership that we did originally or would you be doing this through a different execution mechanism that maybe pulls it a little closer to ADOMANI?
Well, let me see if I can – I get most of those quite compounded questions, but I get most of those. So, it’s all right. So first off, we probably could have highlighted a little bit better on the vehicles. This is taking us from the drivetrain part which is just kind of it’s a component part. It is like an engine or a transmission. It is a component part, but we don’t control the final sales. And we realized early on when we talked to Blue Bird about the final sales that they had their dealer network and while we thought we were very qualified to out and help them make those sales, the dealers have their own sales groups and their own customer base and they are going to do that.
The trucks, vans and chassis give us a chance to deal directly with the customer. We are selling our product to the customer. We’re taking care of the warranty on it, delivery, pre-delivery, and we’re doing everything as though we were not only the manufacturer, but also the dealer. So it gives us some much better control over the control project from start to finish. We like that part of it because we think we’re pretty good at it. And I think that those sales or those products for California as I mentioned in the run up to this, each fit has $100 million in its program.
If you take a class 4 for example, our retail price is going to be somewhere around $120,000 to $125,000. The incentive is between $80,000 and $90,000 which makes the vehicle about a $30,000 or $40,000 cost. If you take comparable gas, diesel or propane vehicle it is probably $40,000 or $50,000. So we think it will be well priced in the marketplace and be able to save them money on the fueling and on the maintenance. You put all that package together, it makes it almost like a no brainer that everybody should go electric and everybody won’t, but they certainly will look at it favorably.
So we think the market in California particularly is huge New York. When they refund they enter the program will be very large. Other states are putting money into programs much like the school bus for Blue Bird would also have incentive money for trucks and vans and other vehicles which we plan to participate in. So we have a double dib at the Volkswagen. We have our own product line, plus we have the Blue Bird product line that we represent the drivetrains on. So we think it’s good for all of us going forward and we have many different options.
Great, thank you. That color is really helpful. So, last question if I may, is the Dieselgate settlement funds, can you maybe share with us which geographies you are most excited about, where do you think we’re going to see the greatest potential for accelerating release of these subsidy funds for buying your school bus and electric truck products? And maybe can you prioritize for us a list of states or geographies that we should monitor most closely for future orders to ADOMANI?
Well, you know this, the old saying about real estate, the three most important things, the location, location, location? Well, similar to the electric product is California, California, California. California has [indiscernible] ADOMANI for $100 million, the CDC [ph] has $75 million, real schools [ph] has $10 million. The Volkswagen is $432 million spread over three years, so $130 million or so a year for that, and that’s the tip of the iceberg, kind of more your money.
California is the leader in everything green, everything greenhouse gas reduction, so that’s our primary focus. Once you step away from California, New York has made a lot of noise about electrical products, electrical vehicles and going green. New Jersey is the same way. Let’s us extend to Pennsylvania, another large state with – got good sized amount of Volkswagen funding of about $64 million. Michigan has stated and put together their plan that says we want to spend money for electric. Florida started allocating money for school busses and all good trucks and vans, it goes on.
Those are the states that are – the four runners right now in Ohio said okay, $3 million worth of school busses today and then we’ll see what we’re going to do next week. Illinois did in Cook County, $1 million dollars which was three vehicles, not a lot out of the money they’re getting, but at least it’s they’re kind of throwing money at it right now, piece by piece as they try to figure out what they’re going to do. So any of the states in the coastlines that are more progressive states like California, Washington, Oregon, New York, New Jersey and those areas will be the first ones to release funds and push for electric vehicles. Those are the ones that we’re most focused on.
But there’s – every state is going to have some level of funding and there will be hopefully a carve out somewhere that we can get for electric vehicles that we provide. We’ve got also many utility partners out there who are looking to provide infrastructure. One partner on the East Coast who has, I think six states are probably second, third, fourth largest utility in the country, has put together a program for 30 busses in one state, 100 busses in another state and some other buses where they will fund up to a third of it out of their own funding to help get a pilot program running.
So there’s a lot of activity out there. Different states have different mandates, but we’re trying to get all of them on our list to contact and be in touch with. I talked to Nevada people a couple of days ago, they have $26 million and they’re looking at maybe putting $15 million into electric school buses. So there’s money everywhere. But once again, California, California, California.
Great, thank you very much for that and we look forward to watching the continued progress.
We’ll take our next question from Joseph Osha with JMP Securities.
Hi, guys how are you?
Good Joe, how are you?
Very well, thank you. Craig unfortunately asked my first question, so I’ll just jump to the second one. I’m wondering if you’re looking at what Federal Express has been doing, what UPS has been doing with some of these class 5, class 6 fleet testing programs, whether that’s something you do directly or maybe with some of these Volkswagen funds behind it whether that’s something that you’re contemplating trying to get involved in as well?
Oh we sure have. We had talked to them, but until we have a class 5 vehicle on the ground and test it and with some miles on it and some funding attached to it and we’re a little premature with them.
Okay. Is that potentially on is the roadmap though?
Okay. And then a related – not a related question, sorry, a completely different question, technology question. I saw last year at the Advanced Transportation Expo and then I’ve seen it once or twice since then an integrated motor/differential trans axle from Meritor. They’ve put everything basically into that differential bump there. I’m wondering how you guys feel about that, highly integrated approach to doing drivetrains, whether that makes sense, whether that’s something we might see you guys look at?
But I think they, as you know, used to use the Euclidean motor in that system and you can back me here on. I’ll call them today to discuss opportunities that both companies have available to them. We’d love to find a way to work with them. We have some projects that we’re quoting now that would use their product. So the short answer I guess is yes, the long answer is it takes a while to get there and it takes the customer that is looking for that product and that cost factor that they can accept and they are planning. So I think the answer is yes. It’s just not today.
Do you, I mean obviously now with team for part of data that’s changed as well I mean do you see other is it likely that other people are going to start to go that way or do you think most of the market’s going to say separate sort of separate motor transactions for a while?
A – James Reynolds
I think you’ve got the two schools of thought, depends what the integrator is that feels most comfortable. Some have been using [indiscernible] for a while, others have done with the team before. So I don’t think there’s a clear cut winner. It’s not a VHS and Betamax thing, but the day will come when there’s an accepted technology that people gravitate towards because it fits their needs better, I think. So I think it’s still a battle today.
Okay, and then the last question, this is a battery question, you’re, starting to see, it’s interesting if you look in this passenger car observation, but the Jaguar Pace has a pouch based pack. You’ve seen [indiscernible] pouch company, everybody complaining about getting enough 18,650s or 21, 70s. I’m curious as you guys look forward, how you think about pouch versus cylindrical cell and whether it’s the dynamics in the marketplace might kind of push you one way or the other?
Well, I think we use both today, so we’re not agnostic, but we try to find the best application. I think that the pouch has certain advantages that lend it to the larger vehicles that we provide products to now, but I think cylindrical was the standard for a long time. They still haven’t given that up. So I think it all those answers are kind of we have to wait and see what happens because we have to wait to see what happens. But the market is not going to change rapidly. It’s going to be, if you’ve got a cylindrical system now you’re using and happy with, if it gets you to change has to be a good reason because you’re producing product going forward. But I think the battery manufacturers will really determine that because as they bring down their costs of overall cells themselves and packaged cells they’ll help determine which way the market goes.
So you don’t have, I mean there are some strong opinions on this. It sounds like you don’t have a big axe to grind one way or the other?
We do not because we want to make sure that we’re doing a couple of things. One is, we’re providing the product that the customer is looking for. And then once they dictate what they’re looking for, we try to fit whatever we’re working with into that plan they have. So if we’re out with pouch cells and we’re pushing just that we can push customers away from what they really want or need by forcing them into a different box. We don’t want to do that.
Yes. Okay, that makes sense. Thank you. Thank you so much.
And we’ll take our next question from Ed Woo with Ascendiant Capital.
The delivered so far with in partnership with Blue Bird. How many are on the road right now?
Oh, less than less than 20.
As you’re beginning to roll them out on the road do you find the sales process improving, speeding up?
Absolutely. The biggest, no not the biggest, okay one of the biggest hurdles we had to overcome was the Blue Bird dealers out there are successful. They have a good handle on customer base, on the product. Blue Bird is a high quality bus. They’re a leader in alternative fuel. They introduced CNG took forever to get CNG in the marketplace but now they are a leader in CNG. They came out with propane. It took years, but they are the leader by far with propane vehicles. They introduced a gas vehicle a larger scale. Whether this is type A, but type C with gas that took off and now they’re in electric space and the dealer I’m sure like the customer gets overwhelmed with. I got one more choice I don’t need another choice I’m fine where I am.
But as they see the funding available, as they get the help and they get the confidence that the product works, they understand the product as you know how salespeople are. If it’s – the customer says, I’ll take a blue one and if he’s got eight red ones in his way, he’ll go out and sell the blue one because it’s easier sale. But if the dealers can go out and the sales people go out and show the value of electric vehicle and can show where the funding comes from, so they get a bus that’s less expensive or free sometimes, it makes it something they can sell. It gets delivered. The customer is happy because it works great and the next sale is easier. They gravitate towards that product. So yes, we’re seeing the gravitation of the uphill battle.
It’s not downhill yet, but at least it’s on level ground. So we’re seeing more and more people accepting electric vehicles. Understanding them. An example would be of the school districts that received electric vehicles in the last year. On our Ride-and-Drives we went out to every one of those school districts to show them vans, trucks, chassis and it wasn’t a battle, it was easy. It was, we know electric works. We like electric, you’ve got electric vehicle. Let’s do an RFP, let’s do a proposal, let’s do something. Let’s see if we get some. So it’s a lot easier once they have a vehicle in their hands and it makes it easier for the sales process when there’s vehicles they can point to that are working in a field.
Great. Thank you. And my other question would be more on the new trucks, cargo vans and chassis you guys are introducing. You’re saying that potentially you’d be taking orders in early this year and potentially start delivering it in second quarter. What gives you confidence that you’ll be able to hit those targets?
Well, taking orders is the easy part because we’re already talking to customers all across the country. We’re talking to some ones that would like to have one or two vehicles up to people who have the desire, the money and the wherewithal to buy a hundred vehicles. So we’re talking to them. In the meantime, we’re not waiting for every order to come in before we place and we’re placing orders today for vehicles, so that they’re in process, so that when we do get an order the timeframe from order to build to deliver to PDI, we cut out part of that because we’ve already got units on order.
Great, that sounds good. Thanks a lot for the color and good luck. Thank you.
Very welcome. Thank you.
And there appear to be no further questions at this time. Thank you. This does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.