Phoenix Motor Inc. (PEVM) Earnings Call Transcript & Summary

Hello. This is Craig Brelsford with RedChip Companies. Thank you for joining today's event with Phoenix Motor, which trades on the Nasdaq under the ticker PEV. With us today, we have Denton Peng, Chief Executive Officer of Phoenix Motor; Michael Yung, Chief Financial Officer; and Jose Paul, Chief Commercial Officer. We will get a brief presentation in a moment and then we will answer your questions. [Operator Instructions] Before we begin, please allow me to read the safe harbor statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results along with other statements about the future expectations, beliefs, goals, plans or prospects expressed by management constitute forward-looking statements. Any statements that are not historical facts should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. I now turn this webinar over to the Phoenix Motor team. Gentlemen, please go ahead.

Thank you, Craig, and thank you to everyone for joining us on the call today. I'm excited to share our story with you. At the Phoenix Motor, our mission has always been clear, leading the way in zero emission, all-electric transportation solutions. Over the past 20 years, we have pioneered in the industry, becoming one of the largest manufacturers of medium- and heavy-duty electric commercial vehicles in the United States. Our vehicles have accumulated more than 55 million all-electric miles, saving over $30 million in fuel [ cell ] costs. The efforts have directly resulted in reduction of over 60 million pounds of carbon emissions. Today, we offer a broad lineup of medium- and heavy-duty electric vehicles from shuttle and school buses to utility trucks and more. We are not just building vehicles. We are shaping a cleaner, quieter, future for transportation. With that let's dig deeper into how we are continuing to drive innovation and growth. Our first quarter acquisition of one of the largest zero-emission bus manufacturers in the U.S. significantly enhanced our capabilities, positioned us as a leader in the electric transit market with over 1,300 buses delivered at a 40% market share in North America. At the Phoenix Motor, not just leading the charge in zero emission vehicles today, we are -- commitment to molding the future of transportation. We envision a world where clean, quite transportation is [ accessible ] to all. Our focus remains on delivering sustainable efficient solution for both medium- and heavy-duty vehicles from public transit to last-mile delivery. We are building an unmatched foundation of expertise over the past 2 decades, and we leverage that experience to push the boundaries of electric vehicles, innovation and soon the Phoenix will always be there from front for those seeking greener technology solutions. Our mission is clear, to be the driving force in electrifying commercial transportation for a sustainable future. Our team has over 100 years of combined experience in electric vehicles and clean energy solutions. I bring over 20 years of leadership in solar battery storage, EV and charging infrastructure. The key members of our teams includes Michael Yung, our Chief Financial Officer, brings 25 years of financial leadership, bringing a wealth of experience in corporate finance, including his time at UBS and the Pingtan Marine. Dr. Lewis Liu, our Chief Operation Officer, who has spent over 30 years in electric vehicles and e-mobilities, previously driving business development and strategy at Karma Automotive and KPMG. Jose Paul, our Chief Commercial Officer, with over 20 years of automotive experience and held senior roles at FedEx and Frost & Sullivan. And Dr. Frank Lee, our Chief Technology Officer, who has spent 3 years leading vehicle development in major companies like Genral Motors, BYD and Karma. This leadership team is dedicated to [ excelling ] our vision, driving innovation and ensure Phoenix Motor remain a leader in the zero emission vehicle space. With a strong leadership team in place, we are well positioned to capitalize on the significant opportunities ahead. To give you a closer look at our commercial strategy and market initiatives, I now hand it over to our Chief Commercial Officer, Jose Paul.

Thank you, Denton, and afternoon, everyone. We doubled our manufacturing footprint this year with the acquisition of the largest transit bus manufacturer in North America. Our 2 strategic locations provide us with coast-to-coast presence and the ability to efficiently serve customers nationwide. On the West Coast, our Anaheim, California facility, serves as a hub for our medium-duty vehicle production and headquarters. This facility has been instrumental in delivering our next-generation shuttle buses, trucks and utility vehicles. Our East Coast facility in Greenville, South Carolina, has historically been dedicated to the production of heavy-duty transit buses. Going forward, this facility gives us the flexibility to scale both medium- and heavy-duty lines to meet the increasing demand of zero-emission vehicles across the country. As we look at the evolution of PhoenixEV, it's clear that we have consistently been at the forefront of innovation in the electric vehicle industry. We started delivering all-electric vehicles over a decade ago. And since then, each milestone has built on our commitment to lead in zero-emission transportation. In 2014, we delivered our first all-electric Shuttle ZEUS 300 to the Los Angeles Air Force base. This was a pivotal moment that set the stage for our growth in the medium-duty vehicle segment. By 2018, we had won the prestigious EPA SCAQMD grant, enabling us to deploy 29 electric shuttle buses to key airports in Southern California, a major leap in expanding our fleet of zero-emission vehicles. Fast forward to 2022, we made a significant step by becoming a publicly traded company on the Nasdaq, providing us with the platform to accelerate our growth and scale our operations. And as we've just covered in 2024, our acquisition of Proterra's transit bus operation has not only expanded our manufacturing capabilities, but also solidified our leadership in the zero-emission space. And throughout the last decade, we have built a strong foundation with each of these milestones. We have furthered our mission of delivering sustainable transportation solutions to customers nationwide. As you can see here, our transit buses are already being used by many of the most prominent transit agencies across North America. Additionally, our buses are available on various state and federal contracts simplifying the purchasing process for transit agencies and allowing them to easily acquire our zero-emission vehicles. One of the most telling indicators of our success is our strong and growing customer base. We proudly serve over 200 customers across North America with over 1,300 vehicles delivered to date, and our buses are in operations in 43 states and provinces, a testament to the trust we have built across the continent. We are particularly proud that 70% of our orders come from repeat customers, a clear signal of the reliability and value that PhoenixEV brings to their operations. At PhoenixEV, we are proud to support domestic manufacturing through our Buy America compliance. Our transit buses are manufactured with majority of key components sourced locally and final assembly takes place in our Greenville, South Carolina facility. This ensures that our vehicles meet federal requirements, making them eligible for government funding programs, which is critical for many of our customers. We also offer Buy American compliant options across our vehicle line, providing a seamless procurement process for transit agencies and other entities looking to maximize their federal and state funding opportunities. At Phoenix EV, we focus on one thing, electric vehicles, and we've been doing it for over 20 years. Unlike traditional manufacturers, electric is all we do. This singular focus has allowed us to build unmatched expertise in both medium- and heavy-duty vehicles from transit buses to commercial trucks. Our vision is simple. Clean, quiet transportation for all. And with decades of experience in electrification, we are confident in our ability to continue delivering best-in-class zero-emission solutions that meet the evolving needs of our customers. As you can see here, PhoenixEV offers a wide range of all-electric vehicles from heavy-duty transit buses to shuttles, utility trucks, school buses and more. This diverse portfolio allows us to meet the needs of a broad spectrum of customers, all while supporting their transition to zero-emission transportation. The transit bus segment is rapidly transitioning to zero-emission powertrains to meet the federal transit administration goals of reducing greenhouse gas emissions by 50% by 2030. Various states, including California, have mandated the switch to zero-emission transit and airport shuttle operations. And importantly, transit agencies are supported with consistent federal funding through the FTA with over $1 billion allocated annually towards low and zero-emission transportation. Next, let's take a look at our flagship ZX5 heavy-duty transit bus. The ZX5 is built on a fully integrated heavy-duty technology platform designed to deliver superior performance and durability. At its core, the bus features an advanced composite body made from lightweight, durable carbon fiber reinforced materials ensuring strength without compromising efficiency. The high-efficiency drivetrain is a game changer, delivering 5x the efficiency of diesel with industry-leading horsepower and acceleration. Charging is made simple with Universal Level 3 charging capabilities allowing for faster, more flexible operations and powering it all as a heavy-duty battery pack that's built with commercial-grade, high-density technology, ensuring reliable and long-lasting energy for our customers. The road proven ZX5 is engineered with advanced carbon fiber reinforced composite materials that make it both efficient and durable while ensuring the highest levels of safety. These materials are strong yet lightweight, providing the bus with excellent impact resistance critical for long-term durability and operational safety. Additionally, the composite is nonconductive and rust resistant, which not only enhances safety, but also significantly reduces maintenance needs, ensuring that ZX5 stays on the road longer with fewer complications. As a purpose-built vehicle, the ZX5 includes optimized battery placement that enhances both safety and performance. The batteries are placed underneath and outside the passenger compartment, separated by a sealed bulkhead below the bus floor. This strategic placement keeps the batteries out of common crash zones, significantly improving safety. Additionally, the lower positioning of the batteries help create a lower center of gravity providing great vehicle stability and a smoother, more reliable ride for the passengers and operators. Next, let's turn our attention to our medium-duty vehicle line, which plays a critical role in serving a wide range of industries. As you can see, PhoenixEV offers a diverse lineup of all-electric medium-duty vehicles, built to meet the demands of everything from delivery services to vocational service trucks. At the core of our medium-duty vehicle line is our fourth-generation all-electric drivetrain, gen 4. This advanced drivetrain represents the latest in electric vehicle technology, delivering greater efficiency, performance and reliability across our medium-duty lineup. Our Gen 4 all-electric drivetrain has -- for the Ford E-450 chassis is powered by lithium-ion high-voltage batteries offering up to 131-kilowatt hours of capacity and delivering an impressive 165-mile range operation, ideal for a wide range of commercial applications. It also features DC power distribution with built-in power options for additional equipment, making our vehicles adaptable to different industry needs. To maintain optimal performance and battery health, the gen 4 includes an advanced cooling system that ensures efficiency, even in demanding conditions. Charging is flexible and fast, supporting both J1772 Level 2 charging at 19.2 kilowatt and CCS Level 3 fast charging capable of going from 15% to 100% SOC in under an hour. Additionally, the drivetrain DC-to-DC converter and motor assembly are designed for modular AC and DC power options, ensuring optimal performance and durability for our medium-duty vehicles. Our medium-duty vehicle lineup is the largest all-electric fleet available in the market today. As you can see, the wide range of customers from various industries are already using our vehicles, proving the versatility and reliability for our medium-duty solutions. These partnerships are a testament to the trust our customers place in PhoenixEV for their zero-emission transportation needs. We understand that transitioning to an electric fleet can be complex. So we provide comprehensive support to help our customers, get their vehicles on the road quickly and efficiently. We offer data collection services, including GPS tracking, route analysis and tools to help identify optimal layovers. Our vehicle configuration are tailored to customer needs with options for vehicle models, energy and storage capacity and drivetrain setups. We also provide charging configurations, helping customers choose the right charging options, system sizing and charger types for their specific operations. And for those needing financial solutions, we offer purchase and lease funding opportunities and guide our customers through procurement method to make the transition as smooth as possible. Finally, our wide range of services include telematics, data analytics, fleet transition training and more, ensuring that our customers are fully equipped to manage their new electric fleets. Our extensive support services include technical training dedicated to preparing customers' maintenance and operations workforce for the transition to electric vehicles. We offer a range of training options from classroom instructions and hands-on training to on-site training and even virtual classroom sessions. And to further support customers, we have regional field service representatives available to help maintain your fleet and ensure continued reliable operations. I'll now hand it over to our CFO, Michael Yung, who will take you through our recent financial performance.

Thank you, Jose. We achieved a record net revenue of $12 million in Q2 of this year, a significant increase from $1.2 million in the prior year period, and an approximately 20% increase over our first quarter revenue. Our gross margin for this quarter increased -- I'm sorry, our gross profit increased this quarter to $1.8 million, up from a gross loss of $0.01 million the same period last year, resulting in gross margin of 15.2%. This improvement is largely due to the higher margin associated with our newly acquired transit bus business. The net loss for Q2 improved to [ $2.26 million ] compared to a net loss of $3.2 million in the prior year period. Our total equity increased to $21.9 million, up from a negative equity at the end of 2023. The results demonstrate the transformative impact of our strategy action and set a strong foundation for continued growth. Looking ahead, we are extremely optimistic about our continued financial performance, in addition to our growth -- growing transit bus business, our focus on new product launch and other strategic initiatives are expected to further boost our revenue and market presence in the quarter ahead. Thank you for all your continued support and joining us today. Now we are ready to take your questions.

[Operator Instructions] When you acquired Proterra, there was a backlog of buses to be delivered, how many buses were in WIP and how many have been delivered to date?

Let me address that. And if I miss anything, Jose and Denton could add on to it. The question you have was that when we acquired Proterra, how many buses was what -- what was in the backlog and what we delivered so far. When we acquired Proterra, Proterra has over $500 million in backlog. We did not take all the $500 million worth of backlog, because as we -- as you know, Proterra business plan didn't work, that's why they went out of business. So we due diligently look at every single one of the backlog that they have, and we picked up about $200 million worth of backlog. And year-to-date, we probably deliver close to -- over $20-plus million in delivery of the buses that we acquired from the purchase of the backlog orders.

Is anybody else -- Denton, you're on mute.

Yes, every bus is -- unit price around $1 million. So we have -- first half year, we have about less than -- around $25 million of revenue.

So just to be clear, this person asks, do you currently have a backlog of business, just to reiterate.

Yes, we currently have about between all our business between signed contract and LOI, we have close to -- we have another close to $200 million in backlog because we're continuing to get new orders. As an example, we recently got an order. We're building for UCSD. We are out there working with the [ Dominion Resources ] for 18 buses. We're working with Suffolk County for another 22 buses. So we are continuing to receive orders as we continue to operate.

Are municipalities your primary customers? Can you break down sales by category?

I can take that.

Go ahead, Jose.

Yes. Municipalities, transit agencies are our primary customer base now, particularly after the acquisition of the transit bus business earlier this year. The 3 larger segments, I would say, for us are transit agencies, you have airports and also universities. These are the 3 largest customer bases we are working with. And then on the medium-duty side, it's very varied. We have small businesses. We have delivery companies. We have cities and municipalities, again, utilizing our trucks for -- service trucks for various applications. And we're also now entering into the school bus segment with a Type A school bus built on the E-450 chassis.

How stable is your Nasdaq listing? And what are you doing to address concerns that you'll be delisted?

Okay. We are in compliance with the Nasdaq. We are not currently in major violation right now. We have a minimum price bid, which we already received an extension to April 17, 2025. So we're not concerned with that. Our major concern today is focusing on producing the buses, producing the product that we promise our customer. We have $180 million to $200 million worth of backlog, that's going to take us 18 to 24 months to finish up. So that's all we are doing. Right now, we are working closely with Nasdaq and replying to any questions they have. So right now, we don't see us having any issue with them so far. But like everything else, we're just focusing on our business as of today.

Will your business grow organically? Or will you need to raise capital?

We are in a heavy-duty manufacturing business. We will be needing to go out there and raise capital. We could grow organically but growing organically means as an example, 2024, we expect to sell between 35 to 45 buses. If we don't raise capital, we'll deliver a similar amount, maybe 10% to 25% more buses than what we could do. Our current production line allow us to produce up to 450 buses. 2024 we'll probably produce around 40 buses. So we are tremendously underutilizing our current operations, our current manufacturing facility. So we are out there continuing to seek financing, whatever financing that we can seek, that's why we're continuing to look.

[ Badar ] you are on with the team.

Can you guys hear me?

Yes.

Okay. Denton, and everybody, a great job, guys. You have done a wonderful work. I have a couple of questions. The one question is regarding the financing because right now, with the cash that is on the balance sheet is very low, and what are your plans to really ramp up your cash position and operational position because of the lack of the cash?

Okay, [ Badar ]. There's a couple of things that we are little different than most company update. So one of the thing is the majority of our business today, we have what we call progress payment means that we get paid as we start manufacturing the buses that will give us a big release. As an example, when we bring the bus online, we get financing from the -- our customers. So by the time the bus leaves our facility, we have -- we already received majority of the payment. So that's a very big relief for us. We are out there, continue this funding. We look for PO, purchase order financing. We're looking for equipment financing and possibility next year between first and second quarter and maybe into a secondary offer. So we are looking for financing to the best of our ability.

Just a follow-up question for Denton because he is on both SPI and the PEV and I'm also an investor through the SPI in the company. What's the hangup about the financials there? It's been almost a year for 10-K for 2023? And why it hasn't been filed yet?

Yes. I think this conferences -- webinar is just for the Phoenix Motor. So I just want to add up for our cash situation for the Phoenix because we see our inventory -- have a very big amount of inventory and its value close to $60 million. So we are working very intelligent to reduce our inventory and get more cash available for the Phoenix. And as just mentioned by Michael, so we are working on supply chain finance, equipment finance and PO finance to get our -- because the good things for Phoenix, we have close to $200 million of backlog orders, so these orders are from many our blue chip customers, both from airports, university and also transport agency. We also try to working with some bank for the line of credit. So I think with this cash we should be much better positioned to increase our cash position and the cash flow.

How will you scale production to clear the backlog quickly?

Okay. That's a complicated question. It's difficult to scale up operation right away because as many of you might understand that when you acquire a company at a bankruptcy, a lot of the vendors took a big hit. So right now, everything we do, it takes time. Our supply chain takes up to -- certain parts take 9 weeks and, certain part takes up to 22 weeks. So we are working with different vendors and seeking new vendors that can help us reduce the supply chain issue that we're currently facing. And at the same time, we're out there seeking funding for the company. As soon as we have extra funding that we could do, we may be able to seek -- accelerate our production. But right now, we're working due diligently with all our vendors, including some of the new vendors that we're working with to see we could get some of our supply chain expected time to reduce. As soon as that get reduced, we're hoping to have -- we're hoping to accelerate our growth for next year. We expect a certain portion of finance to come in next year, provided we could do it. If we get -- that financing comes in, we expect and we'd like to see us produce somewhere between 75 to 100 buses next year. That's just the -- on the transit side of the business, then we have the shuttle side of the business, we expect to deliver anywhere between 50 to 70 shuttle side of the business. So we're expecting a pretty robust year for next year.

[indiscernible] for the bus and shuttle bus, both the facility in Anaheim, California and Greenville, South Carolina. So our capacity can be -- could do $500 million of revenue, just with -- and we have already a big inventory already in there. So we -- if just some more cash flow, if we can do a supply chain finance sometime in few quarters, definitely our revenue will be increased, and our supply chain finance will help a lot to get everything moving ahead.

The Proterra acquisition gave you a 40% market share in North American transit buses. How do you plan to defend this market position against both traditional OEMs transitioning to electric and new EV entrants?

Okay...

Yes, I can take that -- go ahead, Michael.

I'm just going to say a couple of quick things, and I'm going to let Jose follow up with rest of it, okay? 40% market share for electric EV business, it's a huge business. Let me explain what that means. The FTA would like -- currently there's 3 players that's left on the electric bus vehicle that's approved by FTA. We are 1 of the 3. FTA would like to see 4,800 buses produced for 2024 and 5,000 for 2025. Between the 3 players, we can produce 500 vehicles. So the pent-up demand for the next 15 years is enormous. Even we only maintain 20% of the market share on a 5,000 bus demand on an annual basis that's 1,000 transit buses on an average $1.2 million each between the manufacturer, the service and the parts. Even if I have 20% market share, my annual revenue north of $1.5 billion. So will we like to continue 40% market share? Yes. Do we see competition coming in? Yes. But that's not all in the near future because just to be approved by the FTA, it takes 9 months. The Altoona testing that's required is take at least 9 months. So for us, right now, we have the market share. We're going to continue to do everything we can to maintain that market share. But the reality is producing 1,000 buses, our facility currently allow us to produce almost 450, means we need to double the capacity just to maintain 20% market share. That's provided our competition able to do more than what they could do. So can we maintain it? I would love to continue maintaining, but we're currently focusing on delivering 65, 75, 85 buss for 2025. And if capital raise comes in faster, we may be able 150 buses. So we're focusing on day-to-day operation and just trying to meet the existing customer demand and also be able to satisfy the new contract we have coming in. The positive about us today is that we are a pure EV company. We could deliver bus in 18 months to 24 months versus all our competition is 24, 36 months just to deliver their next order. So we do have some advantage, and we are planning to continuing to use our advantage.

[ Erwin Shane ], please unmute your line.

I have a question about other products, are you focusing on anything at all? Or do you expect any revenue from your other products this year and in next year? Or do you have to focus totally on the buses?

No, I think we would -- we are expecting some amount of revenue from the other products, primarily shuttle buses and trucks for this year. The primary reason why revenues have been limited from that is because we've been transitioning over to our fourth-generation product. And we are now looking to ramp up production on that. So we would be building a few units before the end of the year. But the next year, we would be further accelerating the production on the medium-duty line, too. Because like Michael mentioned previously, we have about 75 units in backlog between school buses, trucks and shuttle buses. So we will also focus on that. So that's also going to be a significant part of the revenues for next year.

Did you disclose profit margin on these trucks or these buses and other products?

Yes, our transit buses, the one that cost $1.2 million on average, we have about a 15% margin. Our shuttle buses that cost between $350,000 plus or minus, we are running at a 25% margin. Our parts, we're running at 65% to 75% margin. Our service is also running between 65% and 70% margin. So [ Erwin, ] we generate revenue in 3 parts: Manufacture, parts and service. The positive about our business is majority of our product as you heard Jose say earlier, is all proprietary. Everything on our bus is built from ground up. We do not do what our competition does is take a bus, take the parts out and then retrofit it. Everything on our bus is proprietary, patented from the ground up. As an example, our batteries are on bottom of the bus, has low center of gravity, which is safer, and that's why we are very different from everybody else. And we generate our revenue in 3 parts.

Will the upcoming change of administration in the United States impact the bus subsidy program?

As of today, we don't see anything and it's difficult for us to comment on administration changes, and we just don't -- we are just focusing on what we need to do and we have backlog and even if nothing changes between the already funded FTA money that from 2024, 2025 already went out. If we get good part of that business in 2025, that's going to last us next 3 to 4 years anyway. So we're not -- we haven't -- we're not focusing on by changing administration, anything like that, we're focusing on what we need to do every day.

Just to add to that, I mean, the FTA Low or No program, which is the largest program, which funds procurement of transit buses, the funds required for 2025 is already appropriated. So there is no risk to that. And moreover, I mean, transit agency, just given the nature of its business, they are required to continue funding purchase of new buses. Typically transit agencies operate a bus for about 12 years. So there are a number of buses which are in that time frame where they need to be replaced. And while they replace these buses, they are always looking for low carbon emission options and electric is one of the preferred choices or the preferred choice at this moment. So we don't see a significant risk there.

Who you see as your biggest competitors?

I don't see...

The transit industry...

Go ahead, Jose.

Go ahead, Michael. Go ahead.

As of today, I don't see a lot of competition. The reason I don't see a lot of competition is because the demands are so high. The supplies are so low, just between the 3 player that's left, it's going to take us 10 years just to catch up what the FTA wants. So in terms of competition, I don't see a lot as of this moment. And every customer -- every customer of ours has a different need, and we may have product different than the other 2 or the other 2 may have product different than us. So I don't foresee that as any major competition going forward. I think whoever that -- the 3 players left today, all we do is focusing on how to produce the what we call no-low, low emission and no emission vehicle going forward because our 2 competition today, majority of their business is either internal combustion or compressed natural gas. So -- and everyone is trying to get into the EV business or the hydrogen business, whatever. So the market is big and it's a long way to -- long, long way to go before anybody has any -- become a dominant player. And technology changes so fast, you have to be able to be ready for the technology.

What can we expect for 2025? How many buses can you build in 1 year?

That's a 2-part question. The first part is how many bus can we build. Our current facility, we could build up to 450 buses based on 2 lines, 2 shifts. For next year, we are forecasting and we're trying to budget for 2025, we'd like to see us between 75 buses plus or minus some variance.

Next question. Are you planning to make an electric vehicle sedan in the future?

Maybe Denton could take that question because we do have electric sedan in our company, it's called future -- EdisonFuture.

So Phoenix is in a commercial EV company, we are focused on the commercial market. So that is more for consumer market. So we have no plan to go to the consumer market in the short term.

Are customers patient in waiting for their orders? In other words, what is the chance of cancellations of orders?

During the FTA program, FTA contract, the customer always has the right to cancel the orders, and there may be incidences that the customer will cancel their order. But in general, we don't have too many canceled orders. During the bankruptcy, that's a different case that there were customer canceling. And at the same time, there were a lot of contracts that we did not assume. So some of those customers are coming back as you heard earlier, we have 70% repeat customers. So right now, for us just focusing on satisfying our current customer demand is more than enough for us as of this moment because that alone would help us grow 40%, 50%, 100% for the next few years.

Why were the past 2 quarterly reports late? And will you release reports more consistently going forward?

We always tried to best release the financial as best we can. The last few quarters were late due to various reasons. And one of the reason as you acquire a new company, you are required to have their previous company's financial since -- when Proterra went out of business, 95% of the employees no longer exist. Their accounting department no longer exist. For us to -- when Proterra was in business, they have 3 businesses, they have manufacture, battery and infrastructure. We acquired just the manufacturing. So for us, just to peel the onion on every single item of the $300-plus million business, it's going to take a few years. Because of that, we're going to have -- that's why our financials took us a little longer. At the same time, we had a little other issue that was involved that caused us -- for our filing to be late. But going forward, we're going to do the best we can to file on time, if not no more than 10 days late because there are always something with regard to the previous company's financials that we don't have it after next year, we should because quarter 1, we need to compare to quarter 1 of '23 of Proterra. We don't have those data. Quarter 2, we need to compare the quarter 2 of the previous company data on top of our own. So that's why it takes a little more time to get those numbers filled out, and we have to make sure that we are in compliance with the auditors and with the rules and regulations. So I thank everybody for being patient, but we are expecting to starting next year to be filing on time.

Are you using Industry 4.0 strategies to resolve manufacturing issues quickly and efficiently?

Jose?

I mean, unfortunately, I wouldn't be able to answer the question, our Chief Operating Officer would be best positioned to answer that question. He is unfortunately not able to join this call today. But I mean at a general note, in terms of manufacturing, resolving manufacturing issues, it is something which is a heavy focus right now. We have a regular manufacturing production team updates where there is a lot of focus on trying to kind of forecast our supply chain, our demand, trying to forecast what the cash flow impact is. So this is something which we are working very, very hard on. Michael mentioned about improving efficiencies, about the capacity utilization. I think the goal right now for us is to make sure that we go through our backlog as fast as possible and in the most efficient manner. When we took over the Proterra business, we see a lot of opportunities for cost optimization. And I would say we're making significant progress there. So in terms of...

Final question -- excuse me...

I was just going to say, Craig, that running an efficient operation on the manufacturing side and improving output in the most cost-effective manner is a key priority for us.

Final question, gentlemen. Are you interested in pursuing any other acquisitions?

Denton?

Yes. I think we are -- always have an eye to see different kind of opportunity. And we definitely want to grow the business organically. But in the meantime, we have some -- have a chance for the acquisition opportunity, we definitely will keep an eye to take a look and also to do something and for some -- especially, we see some products we want to do develop, and maybe sometimes we do some [indiscernible] maybe much save our time and save our costs to do something, especially some products that we were planning to launch in the future. So definitely, we will keep on going. I'll keep the business on organic growth. But in the meantime, we also use acquisition to grow business plan.

Thank you very much, Denton. Thank you as well, Jose and Michael. We've received far too many questions to be able to answer in this amount of time, but you can send us your question to [email protected], I will make sure that the Phoenix team sees your question that's [email protected]. You can also call us that 1-800 RedChip, that's 1-800-733-2447. Also, RedChip has an investor information page for Phoenix. It's a very nice page, got a lot of information on it. It's phoenixmotorinfo.com. For example, you can view and download today's investor presentation on that page. You can look at the Phoenix fact sheet, and you can sign up for news alerts on Phoenix. Please be sure to watch Small Stocks, Big Money, RedChip's program featuring exciting small-cap companies, including occasionally Phoenix Motor, every Saturday at 7:00 p.m. Eastern on Bloomberg U.S.A. Join RedChip's forthcoming webinars, VSee Health, Tuesday, December 3, GreenPower Motor Company on Wednesday, December 4, and Alta Global Group on Thursday, December 5, all webinars start at 4:15 p.m. U.S. Eastern. Register for those events and for all RedChip webinars at redchip.com/events, where you can also view an archived version of today's Phoenix webinar. Thanks again to our many participants today. And as always, thank you Denton, Michael and Jose.

Thank you.

Thank you.

Thank you, everyone.