Phoenix Motor Inc. (NASDAQ:PEV) Q2 2022 Earnings Conference Call August 15, 2022 5:00 PM ET
Mark Hastings – Senior Vice President & Head of Investor Relations
Lance Zhou – Chief Executive Officer
Chris Wang – Chief Financial Officer
Welcome to the Second Quarter 2022 Phoenix Motor Inc. Earnings Conference Call. All participants are in a listen only mode. All questions can be directed after the call to Phoenix IR at icrinc.com.
I will now turn the call over to Senior Vice President and Head of Investor Relations, Mark Hastings.
Thank you, Josh. Welcome everyone to our second quarter earnings call. This is our first earnings call as a publicly traded company, and we’re excited to have you join us. First, let me introduce the members of the Phoenix Motorcars leadership team that are taking part in today’s call. We’ll hear first from Dr. Lance Zhou, our Chief Executive Officer; and then Chris Wang, our Chief Financial Officer.
Before I turn the call over to Dr. Zhou, please allow me to give a little background on Phoenix. For those of you who are not familiar with us. The company was founded in 2003 and we’re headquartered in Anaheim, California. And Phoenix Motorcars goal is to be a leader in sustainable and zero emission transportation with a range of products available to our customers, including shuttle buses, delivery vans, school buses, and work trucks.
Phoenix is achieving this through the use of standardized platform and an asset light strategy, which helps us to deliver our products at a lower cost of maintaining focus on energy efficient, intelligent and innovative designs. We market our vehicles through two brands. The first at Phoenix Motorcars is our legacy line, which offers various all electric medium duty commercial vehicles to the market. The products such as buses, utility and service trucks, box trucks, walk in vans, and refrigerated trucks. We sell our products as complete vehicles, as well as in kit form to other entities.
In a Phoenix Motorcars customers are sourced from a wide range of industries with applications such as airport parking, hotels, campuses, municipalities, ports, micro transit services, and dial ride applications. Today we serve over 50 commercial fleet customers to whom we have deployed more than 100 shuttle buses and trucks is combined miles traveled of over 3 million miles. We’re currently developing our fourth generation drag train for the Phoenix Motorcars brand, which is expected to be introduced in 2023.
The sports you in vehicles will have greatly enhance reliability and be cost competitive without subsidies. The ability to be cost competitive without subsidies is a key focus as we seek to meet future demand as the markets and EV technologies in general move from an emerging market phase to a steadier state market phase. Phoenix’s second vehicle brand, which is currently in development is called Edisonfuture. This is our light duty consumer line that is expected to be brought to market in 2024. Edisonfuture’s EF-1 pickup truck and van debuted last fall at the Los Angeles Auto Show previewing what will be our solar powered, light duty vehicle offering our Edisonfuture vehicles will provide a cutting-edge technology and be marketed for personal and commercial use in the form of pickup trucks, SUVs and vans.
In addition to our vehicle lines, Phoenix also produces a wide range of affordable and reliable battery powered forklifts exposed best-in-class warranties. And finally, as one of the early as one of the early movers in the medium duty EV industry, we’ve experienced firsthand how infrastructure can be a barrier to the successful electrification of vehicles. As a result, we also offer products and services through our EV infrastructure solutions business, which targets both commercial and consumer customers, offering one stop shop solutions through a full charging infrastructure solution portfolio that extends beyond our clients to include the retail sector level one and level two chargers.
At its core, we’re an engineering focused company with patented technologies to address the markets need for the next generation of pickup trucks, SUVs and commercial vehicles. We have constructed our company to be flexible and asset light. Our asset light approach extends to our production model and our business procedures as well as the selection of key suppliers and the allocation of cash. In short, this means we’re building a scalable business as in the returns on our capital, while also deploying industry leading technology. We put together a management team that’s both seasoned and established in the EV sector putting us in an excellent position in the high growth commercial electric bus, delivery truck and consumer sectors.
With that said, I’ll now turn the call over to Dr. Lance Zhou to give some insight into his background and his vision for reshaping our company.
Thank you, Mark. And thank you for joining us today. I am Dr. Lance Zhou, CEO of Phoenix Motors, and for those who do not know me, I joined Phoenix team earlier this year. I came to the company with over 30 years of automotive industry experience. My previous experience includes most recently serving as a CEO of Karma Automotive. Prior to handing up Karma, I served as a CEO and President of Beijing Foton-Daimler Automotive. Level-1 Vice President of Daimler Global, as well. Also, as a CEO of NAVECO. That is IVECO in China. I have designed and developed three commercial vehicle platforms from concept to final production to meet customer demand. In class three to class seven segments. I did my first EV brand in 2011 for NAVECO in China.
And I also launched a luxury high performance electric sports car which Karma, gave my prior experience I’m excited to join Phoenix model as it enters its next stage of growth and rapid development. We are excited to have complete our initial public offering in the second quarter of this year, while compressing strong revenue growth as we continue to build and reshape the company. We are busy working not only on our new force generation divert train, but also unexcited but also on exciting news addictions to our product offerings in quarters ahead. We are forging important partnerships with a Surf Western serving providers, suppliers and customers.
We have been expanding our management team by acting decent and expect an average EV in industry veterans. We are taking order one of these methods to persist positioning Phoenix Motorcars for tremendous growth in the quarters ahead as we capitalize both analysis six full path experience as well as the emerging industry pavings support by resented by recently passed legislation in the US and elsewhere, encouraging this green energy transition.
I want to now turn the call over to our CFO, Chris Wang.
Thank you, Dr. Lance. Phoenix is not a pre revenue company like many others in our sector. We have a long history of making and delivering completed products for the total satisfaction of our customers. We have a stable and the loyal customer base. And then we provide a simple one stop shop solution for clients by offering vehicles, chargers and then complete service support. For the three months ended June 30, 2022, our revenues were $1.5 million compared to 653,000 for the same period in 2021.
Our total revenues increased by 130%, principally driven by the extended the sale off of forklifts during the recent quarter, but delivered to EVs during the second quarter of 2022 to the same as in the second quarter of 2021. For the six months ended June 30, 2022, our revenues were $2.2 million compared to $1.1 million in 2021. The 93% increase year revenues was primarily driven by the increase in the sales of a forklift. For the second quarter of 2022, our cost of revenues was $1.2 million, compared to $0.8 million in the year ago quarter. Cost of revenues increased by $400,000 or 45%, primarily driven by the cost of foreign forklift product, partially offset by lower direct costs associated with EVs due to higher efficiency in production during the recent quarter. For the six months, ended June 30, 2022, our cost of revenues was $1.7 million, up from $1.2 million driven by higher forklift costs.
Our gross margin comparisons are as follows. For this analysis, gross profit is defined as revenues minus cost of revenues, and the gross margin percentage is gross profit divided by revenues. For the second quarter of 2022, our gross margin improved significantly to 21.7% from negative 24.3% in the year ago quarter, driven by improved the margins across all product categories, particularly attributable for the 19.2% gross margin of a forklift product. For the six months, and then, during 2022, funded to our gross margin similarly improve that to 20.5% from negative 9.5%. Again, driven by improved the margins across all product categories.
Operating expenses, consisting of SG&A expenses, or $2.3 million in the most recent quarter, compared with 1 million a year ago. The increase in operating expenses was mainly due to increases in payroll and expenses associated with becoming a public company. For the six months ended June 30, 2022, our operating expenses were $5.3 million, up from $4.1 million in 2021. The increase in operating expenses was driven by an increase in sales in salaries and the wages and the professional services fees and the insurance expenses. Our other income for the first six months of 2022 were $0.6 million, primarily due to the recognition of a forgiven PPP loan. As a result of the above factors, a net loss for the second quarter of 2022 was $1.9 million narrower than the last year is $2.3 million loss.
For the six months. For the first six months of 2022, a net was $4.2 million, the same as in the first half of 2021. As we diligently implement various measures to boost the revenue, and the control costs and expenses, were more excited than ever, about the bright and the green future of Phoenix.
Thank you so much for joining our call today. I will turn it back over to Mark.
Great. Thanks, Chris. As we wrap up the call today hope we’ve conveyed our enthusiasm for the outlook here at Phoenix. We are reshaping and refocusing the company under Dr. Zhou’s leadership and are well positioned to benefit from as well as be a leader in the transition to a greener energy future. If you have any questions after the call today, please direct them to Phoenix IR at icrinc.com.
Thank you to everyone who joined the call today. We look forward to sharing more of the Phoenix story and our progress in the coming quarters.
This concludes our call. You may now disconnect.
Read the full article here