Good morning, ladies and gentlemen. Welcome to Lion Electric's Fourth Quarter and Fiscal 2022 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I would now like to turn the call over to Isabelle Adjahi, Vice President, Investor Relations and Sustainable Development. Please go ahead. Good morning, everyone. Welcome to Lion's Fourth Quarter and Fiscal 2022 Results Conference Call. Today I'm here with Marc Bédard, our CEO Founder, and Nicolas Brunet, our EVP and CFO. Please note that our discussion will include estimates and other forward-looking information and that our actual results could differ materially from those implied in those statements. We invite you to review the cautionary language in this morning's press release and in our MD&A regarding the various factors, assumptions, and risks that could cause our actual results to differ materially from those implied in such forward-looking statements. With that, let me turn it over to Marc to begin. Marc? Thank you, Isabelle. Good morning, everyone. At the beginning of last year, as we were discussing our strategic objectives for 2022, we highlighted the following specific areas of focus that guide our work and investments. Ramping up production at our Montreal plant, building and starting production at our Joliet plant and our battery factory, and accelerating vehicle and charging infrastructure deliveries. I'm glad to report we delivered on our plan for each of these items while maintaining our commanding leadership in the electric school bus space. There are three main elements we will be talking about today. Number one, we continue to increase our vehicle production cadence in Q4, which translated into growing vehicle deliveries and growing revenue. We expect this trend to continue in 2023. Number two, we achieved significant milestones in our two growth projects as we assembled our first electric school bus unit at our U.S. manufacturing plant and our first battery pack in our battery factory. Number three, while in 2023, we will continue to invest in our two new manufacturing factories to ramp up production capacity, we will also continue to smartly align capital spend with expected near-term demand for our vehicles and to carefully manage our liquidities. We will provide color on each of these items before we open the line for questions. Let's begin with deliveries and orders. During the quarter, we delivered 174 vehicles consisting of 139 buses and 35 trucks. This is the fifth quarter in a row of sequential growth in vehicle deliveries. In fiscal 2022, we delivered 519 vehicles, more than twice the 196 vehicles delivered in 2021. Our PO book currently stands at 2,468 vehicles for total order value of $575 million. It includes orders for 2,167 electric school buses, including 190 from the EPA program, as school districts that were awarded grants under the program have started to place purchase orders ahead of the April 28th deadline. Speaking of the EPA Clean School Bus Program, we have already started delivering electric buses funded by this program well ahead of the October 2024 deadline. As per the program rules, we expect the EPA to make upfront payments to program awardees after receiving proof of a confirmed purchase order. This will have a significant positive impact on our liquidities by allowing us to invest in upfront procurement costs required to manufacture these vehicles. Our PO book also includes orders for 301 electric trucks. Last, our Lion Energy PO book amounts to approximately $6 million, mostly for charging infrastructure and related services. Besides the EPA, ZETF, and many other programs discussed previously, other legislation and funding initiatives continue to support the shift to the electrification of the transportation sector, which represents great news for Lion and our customers. For example, the U.S. federal government recently published the U.S. National Blueprint for Transportation Decarbonization and signed the Global Memorandum of Understanding on Zero-Emission Medium- and Heavy-Duty Vehicles, which commits to 30% of medium and heavy-duty vehicle sales being zero-emission vehicles by 2030 and 100% by 2040. In California, the proposed 2023 budget allocated $48 billion to climate change. On the IRA front, Lion was officially approved as a qualifying manufacturer by the IRS, which means that our vehicles sold in the United States starting January 1st, 2023, are eligible for a tax credit of $40,000 per vehicle. Let me now provide an update on our supply chain. Last year, the supply chain continued to be impacted by several factors, although to a lesser extent than in 2021. As discussed previously, this has generally translated into longer lead times, increased transportation costs, and ultimately, higher cost of components for vehicle production. While supply chain issues are improving, we nevertheless expect continued challenges this year, which may impact our production cadence and vehicle cost. To mitigate those supply chain impacts, we have successfully put in place several measures which we will continue in 2023, including qualifying additional suppliers and proactively managing inventory for critical components such as batteries and motors. At the end of the quarter, we had approximately 4,700 BMW battery packs on hand. This inventory should enable us to gradually convert to Lion battery as we ramp up our own battery production, which I will address in a minute. As for the battery packs to be supplied by Romeo, the arbitration process is progressing. In addition, we initiated legal proceedings against Nikola Corporation on the basis that it intentionally interfered in our contractual relationship with Romeo and in our business expectancy with respect to our relationship with Romeo. As you can expect, we will refrain from commenting on this situation. Let me now talk about the development of our different vehicles. We have substantially completed the development work for the LionA, the LionD, the Lion5 truck, and the Lion8 tractor truck, and we expect these platforms to begin commercial production this year. Please note that the timing of the start of commercial production for the Lion8 tractor truck could be impacted by the supply of the Romeo-powered battery packs for the reasons I just mentioned. Also, as a reminder, our buses will be manufactured at both the Montreal and Joliet plants, while our trucks will be manufactured in Montreal for the time being, where we have ample capacity to accommodate current demand. Which takes me now to an update on the Joliet plant and the battery plant. As announced, we completed in Q4 the assembly of the first electric school bus unit at our U.S. plant and delivered our first made-in-America electric school buses while we ramp up our manufacturing capacity in Joliet. In this regard, we expect to manufacture a modest number of buses in Joliet during the first quarter, followed by a gradual increase in production throughout the year. We will continue to invest carefully in the Joliet plant this year with a goal to have an annual production capacity of 2,500 buses by the end of the year. As for our battery plant, following the completion of the installation of a first portion of our battery assembly line in our battery manufacturing facility, we completed in Q4 the production of our first battery pack at our own battery factory. Final certification of the first battery pack model is expected in the first half of this year, followed by a gradual production ramp up in 2023. The first Lion batteries will serve to power the LionC and LionD school buses and the Lion5 trucks. With our planned 2023 investments in the battery plant, we are targeting to reach a battery production capacity of 1.7 gigawatt-hour by the end of the year. This represents capacity for approximately 5,000 vehicles in a mix of buses and trucks. As for the Innovation Center building, the shell work is now substantially completed, and this building will initially be used this year for test and certification of vehicles and batteries for pre-delivery inspection of vehicles and as a warehousing space. Let me now talk about our recently announced North American agreement with Mitsubishi and ENGS Commercial Finance to provide financing for all-electric buses and medium and heavy-duty trucks through our LionCapital Solutions offering. This agreement will allow LionCapital Solutions to provide our customers with financing solutions specifically designed for Lion school buses and trucks, thereby making it easier and simpler for our clients to secure the financing required for the purchase of their Lion vehicles. All of this without putting any significant pressure on Lion's balance sheet, as we will leverage Mitsubishi's vehicle financing expertise and capital. This type of product offering should have a positive impact for our customers as it could eliminate or reduce upfront capital requirements for the purchase of Lion vehicles. Nicolas will now further discuss our financial performance for Q4 fiscal 2022, and he will also provide color regarding our CapEx objectives for 2023. Thank you, Marc. I will start with the financial highlights of the Q4 and full year 2022 results. I will cover the 2023 investment outlook for our growth project and conclude with our liquidity position. During the quarter, we delivered 174 vehicles consisting of 139 buses and 35 trucks, which translated into revenue of $46.8 million compared to $22.9 million in Q4 2022, a 104% year-over-year growth in revenue. 160 of the vehicles delivered in Q4 were delivered in Canada and 14 in the U.S. This was our fifth consecutive quarter of sequential growth in vehicle delivery. We posted gross margin of -10%, mostly impacted by supply chain challenges, ongoing inflationary pressures within manufacturing costs. Our conscious decision to continue to invest in plant ramp-up, which is an important part of our growth strategy and our goal to achieve long-term profitable growth. As previously explained, for the foreseeable future, gross margins should continue to reflect the investments we are making to establish manufacturing operations at our Joliet facility and the Lion Campus and to ramp up production at all of our facilities. As we scale production, we expect margins to improve as fixed costs will be spread over increased numbers of units. SG&A amounted to $15.6 million in Q4. After removing the impact of non-cash share-based compensation, SG&A amounted to $13.1 million. This is a slight decrease versus Q3 expenditure of $14.8 million, again, net of non-cash share-based compensation for the quarter. the quarter. Adjusted EBITDA was -$13.9 million for Q4 as compared to -$7.5 million for the same period last year, and - $16.1 million in Q3 2022. During the quarter, CapEx amounted to $39.1 million, including $18.9 million incurred for the Joliet plant and $19.6 million incurred for the Lion Campus, as compared to $19.2 million during the same period last year. Capital expenditures for Joliet in Q4 were higher than the previously disclosed estimate of $12 million, mostly due to earlier timing of equipment construction milestones and tooling costs. Capital expenditures for the Lion Campus in Q4 were lower than the previously disclosed estimate of $35 million due to later timing of construction of the innovation center and due to battery plant equipment received in early 2023 as opposed to the end of 2022. For the quarter, addition to intangible assets, which mostly consists in R&D, amounted to approximately $21.3 million as compared to $9.7 million last year. Let me now make a few comments on selected 2022 full year performance items. We delivered a total of 519 vehicles during the year, consisting of 409 buses and 110 trucks as compared to 196 vehicles in 2021. 471 of the 2022 deliveries took place in Canada and 48 in the United States. This translated in revenue of $139.9 million for 2022, up $82 million or 142% as compared to $57.7 million in 2021. Our gross profits were - $12.9 million or - 9.3% for the year, and adjusted EBITDA was - $55 million. Most of the CapEx incurred for the year related to the two growth projects. $72 million was incurred for the Joliet plant, and $71 million, including approximately $5 million of R&D, was incurred for the Lion Campus. Additions to intangible assets stood at $79 million for the year. Let me now spend a minute on capital investments for our growth project in 2023. As previously signaled, we plan to further invest in CapEx activities, although at a reduced pace versus what we did in 2022. For Joliet, we expect 2023 CapEx to amount to $20 million. These investments should allow us to have the infrastructure in place for an annual production capacity of 2,500 buses by the end of the year. For the battery facility, we expect to incur CapEx of $23 million in 2023, with a goal of bringing annual production capacity to up to 1.7 GWh by the end of the year. In parallel, we expect to incur approximately $22 million in CapEx for the innovation center in 2023. We expect that approximately 55% or approximately $25 million of the $45 million in CapEx expected to be incurred in 2023 for the Lion Campus will be financed through the federal and provincial loans secured for such purpose. Let me now say a few words on liquidity and capital resources. In Q4, we successfully closed a $50 million offering of units, with each unit consisting of a common share and a warrant to purchase a common share. We also raised $10 million under our ATM program during the quarter. Finally, we drew $56 million on our debt facility, including the revolving credit facility, the government loans related to the Lion Campus, and on a new credit facility with Synapa and CDPQ which was used to refinance our previous credit facilities with Synapa. As of the end of Q4, we had a cash position of $88 million. We were also owed $10 million on the government loan for the Lion Campus for CapEx incurred in 2022. Shortly after the end of Q4, we announced the exercise of the over-allotment option for the unit offering, increasing gross proceeds by $7.5 million. We also announced a sale-leaseback transaction for the battery plant building in Mirabel, raising gross proceeds of approximately $21 million. As previously mentioned, we expect that approximately 55% of the CapEx to be incurred in 2023 for the Lion Campus will be financed with federal and provincial loans. At the end of the quarter, capacity of approximately $94 million remained available for issuance under our ATM program. While our balance sheet provides us with flexibility and runway, we will continue to closely monitor our liquidity in 2023 and look to seize opportunities that may become available to raise additional capital. With that, I will pass it back to Marc for concluding remarks. Thanks, Nicolas. Before we open the line for questions, let me conclude by saying that as we start 2023 with a good order book and our three manufacturing plants gradually ramping up, we have everything in place for long-term growth and profitability. Our focus is on sustaining this trend. You will be able to see all of our improvements yourself since we will proceed with the official opening of our two new factories this year. Starting with a visit of the battery plant this spring. Thank you for your time this morning. Operator, we will now open the line for questions. I just want to ask you to limit to two the number of questions asked to allow other participants to ask their questions. You can, of course, go back into queue if you have any follow-up questions. Thank you. If you would like to ask a question, please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind and would like to be removed from the queue, please press star and then two. Our first question today comes from Mike Shlisky with D.A. Davidson. Mike, please go ahead. Good morning, thanks for taking my question. I know you don't usually give any kind of guidance, but we're already at the last few weeks of March here. Can you give us some kind of directional or range for the production of trucks for at least the first quarter here? I mean, I'm sorry. I mean, when I say that, I mean trucks and buses, of course. Trucks and buses. Good morning, Mike. This is Marc. Thanks for your question. Absolutely. I mean, we don't give, you know, guidance as you just said. It's going very well in terms of manufacturing capacity. Manufacturing capacity in Montreal, just a reminder that, you know, we have the manufacturing capacity of 1,000 units, and we're ramping up in Joliet as well. What I can tell you is that, you know, the trend that we've seen, I'm sorry, in the last five quarters, you know, keep growing. This is what we're expecting as well in 2023. I've said it several times. I mean, it's a constant growth one quarter to the other. This is exactly what we keep, what we think, you know, will happen in 2023, you know, from one quarter to the other. Okay. Okay. My other question, I've got a whole bunch, but I'll just go to this other one here. This week I was at Work Truck Week. I saw the Lion booth. You had a lot of nice signs around the show. As you kind of walk the show, there aren't really many other Class 6 trucks, maybe one or two other Class 5, but only really zero Class 6 trucks of any note at the show. I'm curious, A, how the show went, do you think, for your folks, and B, I guess I'm curious why aren't we seeing a real flood of orders there if you really can't get an EV Class 6 anywhere else and Class 6s in general are in short supply on the ICE side? Well, I think, you know, we've said it right at the beginning, Mike. I mean, you know, the Class 6 we have right now is one of a kind. I mean, you know, this is a purpose-built electric truck like everything else we're doing, purpose-built buses, purpose-built trucks. It's not an afterthought for us. I mean, that's part of the DNA we're doing. You're absolutely right. I mean, this is a market where there is almost nobody else right now, the Class 6. You've seen this, you know, with some of the partnerships that, you know, we, the partners that we were exposing with at this show. We feel, you know, it's a good market for us. We feel that the truck market is just at the beginning of this. You see that also, you know, with the order book at 301 unit. To us, I mean, it's only the beginning of that. We feel, you know, that the supply chain crisis and the COVID crisis in the last couple of years has basically, you know, delayed everything by about two years. We feel very good. If you walk the floor, you probably saw, you know, the number of partners that we have there and also the interest of the operators for our trucks. That's true, you know, for the Class 6, but that's also true, you know, for the Class 8, but also for the other models, I mean, that we are launching this year. After all those years of working so hard on those trucks, like for example, the Lion5 and the Lion8 Tractor, well, finally, I mean, we're launching them this year. This is exciting. I mean, all the operators you've seen on the floor, I mean, they wanna see the Lion5. Well, many of them, I mean, they've seen them already. They are driving them. The good thing about those operators, they are looking, a lot of them, they're looking at electrifying the whole thing, so the whole fleet. Basically, they are looking at their operation. They have a very good understanding of the total cost of ownership and what that means. They spend so much money in diesel right now and in maintenance as well, that they are excited by, you know, the trucks that we have right now and the ones that are coming along. Thanks for your question. I think, you know, everybody is starting to see the difference between what we're doing and some of the, you know, the other incumbent OEMs have been doing, which is basically just a retrofit, you know, of their current products. Okay. Just to answer the tail end of my question. The actual Work Truck Week itself, how do you feel it went? What feedback do your folks from the booth give you as far as, you know, customer visits, if they got orders, fleets, et cetera? I'm sorry, Mike. The Work Truck Show, it went well. In those shows it's always, you know, we do it, I mean, obviously to meet some customers, but we don't need those shows to meet, you know, with the customers. We do that already. It's really, you know, about also about brand recognition and also to expose some of the equipment that the operators, you know, can put on the truck. Went very well. That's part of what we're doing basically on a daily basis. We keep building the brand, we keep building the relationship with all of those customers. I think, you know, as I said earlier, I think we're just at the beginning of what we will see in the future. You know, this is the reason we feel this market is gonna be so big at some point. This is the reason why we've reserved. Three quarter of our capacity in Joliet, I mean, for trucks, at some point, you know, in a few years from now. Great. I appreciate it. I'll leave it there. Thank you. Thank you, Michael. Our next question comes from Benoit Poirier with Desjardins Capital Markets. Please go ahead, Benoit. Yes, thank you, and good morning, everyone. If we look at the order book, it was pretty stagnant in Q3. Are you seeing bookings slow down given the macro environment and higher finance, and financing costs? I mean, if we look specifically for the truck venture, it has declined over the last two quarters. What could explain this? Yeah. Hi, Benoit. Nick here. Good to speak to you this morning. No, to answer the first part of your question, no, we're not seeing a decline. I mean, there's a number of factors influencing the order book. When we look forward, obviously the EPA program we expect will help with the order book momentum. We always have, you know, the smaller orders with a good number of operators that we're working to gain, and there's also the bigger contracts that we're working on. You know, continue to feel good about the order book going forward. In terms of, I think Marc addressed the question on trucks, but it's, you know, it's still early stage, but the momentum is building well. Obviously what we want to announce there is orders, but we remain excited about that. Okay. Okay, great color. Just on the liquidity front, you were successful to get over, slightly over $100 million of financing in the quarter. If we look at 2023, you provided great color about Joliet, also Mirabel. What about the acquisition of intangible and how should we look at the free cash flow burn for 2023 in light of the ramp up and investment overall in your plans? Yeah. I'll take a step back here, Benoit. When you look at the overall balance sheet, we had $88 million of cash on the balance sheet, that's as of December 31st. Right after the quarter, we'd have the sale-leaseback for $21 million, another $7.5 million from the over-allotment option on the December unit offering. We have the revolving credit facility of $200 million. There was about $7 million of capacity there at the end of the month, at the end of the quarter, excuse me. We expect the borrowing base to continue to increase as we scale. Of course, we expect some upfront payments from the EPA for the purchase orders under that program, which will help significantly as we procure for those units. Recall that we had secured 109 of those purchase orders as at the end of the quarter. The specific guide that we're giving for 2023 is really on $65 million CapEx for the growth project. Of course, we'll need to continue to fund our operations, and there will be continued investment in R&D or in the acquisition of intangible assets. With all that said, we feel that the balance sheet provides us with significant runway and flexibility. We will, of course, continue to explore alternatives to raise capital. We're very mindful of the market conditions and we'll of course, try to use as much as possible non-dilutive instruments. Recall we still have $94 million remaining under the ATM. That could be one of the tools that we have to fund our operations. Okay. Thank you very much for the time. Thank you, Benoit. The next question comes from Chris Souther with B. Riley. Chris, please go ahead. Hey, guys. Thanks for taking my questions here. Maybe a little bit more on the EPA program, 190 purchase orders. How many of those were applications that you had filed versus some of the free agents that were out there that had filed independently? Obviously, there was a really long wait list for the program in the first round. Can you talk a little bit about the discussions with the EPA for what they might be looking for in the next round and, you know, the structure and timing that you guys think might be the case for that 2023 round? Thanks. Yeah. Yes. Hi, Chris. In terms of the first part of your question, I'd say the majority of those purchase orders that were secured were from the 210, but we are seeing some successes in terms of converting the free agents. That is going well. I think more importantly, there's significant dialogue around the free agents. These things take time. The deadline is April 28th, and we continue to make that, of course, a key priority for the company. That's, Benoit, what was the second part of the question again? That was about the further rounds of. Oh, yeah, the further rounds. The next round of the EPA, yeah. Those are still to be. Yeah. Those are still to be. Yeah. Yeah, yeah. There will be $1 billion, we expect allocated next year. We expect that part of it will be via a reimbursement program like the one that's in place today, but there could be a separate component as well. And we expect to hear more in the first half of this year in terms of timing, in terms of the procedure and then the form of essentially, the attribution of that $1 billion. Got it. Okay. That's helpful. Maybe on the truck side, sounds like the Romeo Power outcome is really gonna dictate the timing for Class A. Can you talk a little bit about demand for the other vehicles here? You had a big uptick in orders in the third quarter and then it moderated a bit in the past quarter. I'm curious if you're seeing any momentum or, you know, customers that were waiting for kind of the IRA details, you know, around some of those subsidies. What are you seeing kind of, you know, now that it's a new year and some of those IRA subsidies are starting to kick in there? The, Chris, this is Marc. The IRA is gonna help for sure. I mean, 40,000 a unit, I mean, is good. As I was mentioning earlier, I mean, the TCO, I mean, this is really the tool that all the operators are using to purchase. Right now the TCO is favorable, you know, most in most of the cases. That's, that's great. I was talking about the Lion5 earlier. There's a lot of momentum we feel, you know, around the Lion5, obviously we will be launching this one this year. The same Lion5 will be used as the electric ambulance under the partnership that we have with Demers Ambulances. This is good. The Lion6, you know, as we were talking earlier, I mean, there's almost nothing else. Nobody else in the market right now, and this is a big market also. We're expecting, you know, some good results with the Lion6. It's a matter of timing. You mentioned the Lion8 Tractor. This one is we will be launching, you know, by the end of the year. You're absolutely right. I mean, this thing with Romeo, I mean, could have an impact though on the launching date. That could, you know, delay the launch of that product. That being said though, we have orders for the Lion8 Tractor right now, and there's a lot of momentum also with the customers. We're trying to go as fast as possible, I mean, to launch this product and we feel that adding like the full line of products of medium duty and heavy duty also makes a huge difference because for most of the operators, they are buying many of those models. Every time we speak to a customer, they can buy like a Lion6, a Lion8 T ractor, and also a Lion5. Adding, you know, the full lineup is gonna be something very specific to Lion that most of the other OEMs will not be providing. All right. Okay, maybe just a last one. would you be able to provide any update around, you know, either timing or volume you think we need to hit for positive gross profit and positive EBITDA, you know, as you're starting to scale up here? I'll hop in the queue. I'd say, Chris, we continue to feel good about the unit level economics. Obviously, we're investing in scaling up right now, and that leads to some drag on the gross margin. As we continue to scale up, we think we're gonna improve the gross margin and eventually of course the EBITDA as well. I won't provide a specific timing or number just yet. Thanks. Thank you. The next question comes from George Gianarikas with Canaccord Genuity. George, please go ahead. Hi, good morning. Thank you for taking my questions. You know, I'd like to ask a little bit about this, the EPA program. Obviously we're very close to orders being concrete, manifesting themselves materially in potentially in your order book. Could you help guide us to understand a little bit of what your market share expectations are in terms of conversion? Well, look, I mean, we're going after all of the markets here. You know, there's a clear list of all the applicants, and it's clear to us which ones are free agents. You know, there are some areas where you see we're having more success in certain regions, but the idea for us is to focus on the regions with critical mass and where we're ready to deploy. Unfortunately I can't point to a specific targeted market share, but we've already started delivering some units. We've secured 190 purchase orders so far. As I mentioned before, we think we have good momentum with the free agents, we're looking to get as much as we can. Switching to the commercial side, I'd like to ask a little bit about conversion there as well because the Inflation Reduction Act incentives are out. You know, I believe that many of your offerings are eligible. When do you expect, you know, momentum to turn there and to start manifesting itself in orders on your order book? Because I understand, you know, the whole, the TCO argument. It's very compelling. The incentives are very compelling. When do you think we start to see momentum in the P&L? Thank you. Yeah. As Marc mentioned, look, we're getting good traction in the discussions. I'd say that both discussions with the some fleet operators that are trying the units and are looking to eventually convert the full fleet, as well as with some larger names that are thinking quite big. There were a number of parties we were speaking with a few years ago that were very enthused and in the last couple of years, the dialogue slowed down, we're seeing that come back in the recent months, it's quite promising. I think what's interesting about the IRA $40,000 tax credit is that it applies really, you know, broadly. you know, either on itself, on its own or in combination with other programs, it's just something that helps scale quite a bit because of how broad the program is. We certainly expect to get momentum in the truck space this year, and what we wanna announce there is the purchase orders, obviously stay tuned for that. George, yeah, also, this is on the U.S. side, and this $40,000, obviously, is helping us move the needle. If you take a look also on the Canadian side, there are many programs out there like the NZEV and also, the one that we have in Quebec. Well, those will make, in our opinion, we feel a big difference as well. There are that type of money right now, but there's also some other programs on the U.S. side as well, like HVIP program. There's like local money in many places, and this is where we feel like that's what we're doing, like the Lion ecosystem with the Lion grants. It's really easy because it's not easy. It's not easy to manage through all the money available right now, and this is one thing that we feel, you know, we're doing well with our customers. Many of those programs, I mean, just started to apply. Well, we spoke about the EPA, obviously, on the school bus side, been waiting on, you know, for us for a couple of years, and now we'll see the result of that. We feel the same thing on the truck side as well. There's some subsidies that, you know, just came available to the customers. Some of that, let's say, new money, is something new for the operators, but we're very up to date on all of that, and we're helping them. We feel, you know, that's obviously gonna help because the upfront cost is always a challenge. I mean, when you're selling electric vehicles, I mean, that's part of the challenge, and that's one of the reason we have this agreement with Mitsubishi and ENGS as well, because we feel that, you know, they can they need to finance their product. This LionCapital Solutions, we feel, you know, will really help us move the needle as well. It sounds to me like you're saying that some of the bottlenecks are really red tape as opposed to anything else at this point in time, just because the programs are new and people are still working through the math and the paperwork, so to speak. Well, there's... Yeah, there's a little bit of that. There's also, I mean, that's a change. I mean, you know, we've always said it. We can see the difference between the truck business and the bus business right now. We started selling the buses in 2016. Now when we're selling buses, I mean, the question back then is that, you know, is this reliable? Is it possible to make a living, I mean, with those products, with those vehicles? Now, I mean, it's That question, I mean, doesn't exist anymore. I mean, the, the people in most of the regions now, they're going full electric. We feel the same thing will happen on the truck side. That will not happen, you know, like just tomorrow. I mean, those truck operators, they're making the calculation with us. They're trying the product, and we feel that, you know, they will be purchasing a, let's say, modest number of units to start with. A little bit like, you know, we saw on the school bus side. After that, I mean, they will go with big big orders. This is what we're doing now with the with the truck operators. Obviously, you know, this this money that they can use to to lower, you know, the upfront cost is really gonna help. I mean, it's helping the TCO, it's helping them with everything. It's helping them, you know, making those decisions. Yes. Thank you. Thank you. Our next question comes from Kevin Chiang with CIBC. Please go ahead, Kevin. Good morning. Thank you for taking my question. Maybe you can speak to how you're ramping up labor here. You know, you provide a great color on where Joliet's gonna be and where your data factory is gonna be in terms of production capability. I guess, how is your ability to find headcount here in order to match your production targets, I guess, over the next couple of years here? Maybe if you could also comment on what turnover looks like today, maybe versus a couple of years ago within your current facilities. Yeah, good morning. Good morning, Kevin. This is Marc. We plan. I'm talking about the Montreal factory to start with. The manufacturing capacity for buses is 1,000 units. We add the equipment, and we add the people to manufacture those units. We have a good pace right now, and the supply chain has been an issue. As I said just earlier, I mean, it will remain an issue probably for next year, maybe in the next 18 months, but we're able to navigate through that. You saw the Q4 results, and you heard my comments about the trend that we're going through. Is labor a challenge? Absolutely. I mean, are we doing fine? Yes. We do have the people we need on the bus side. On the truck side, we do have the equipment we need to manufacture, you know, the 1,500 units a year, but we are ramping up the labor as need be. Because obviously, Well, you saw the order book at 300 units. Also we need to match this with the timing of the launch of the new products. We don't see a specific challenge or with respect, you know, to adding the right labor on the truck side in Montreal. Right now, let me speak about Joliet. In Joliet, we're doing fine. We have about, you know, over 100 people right now. We've invested, and if you, in the CapEx that Nicolas was mentioning earlier, the manufacturing capacity we will have at the end of this year will be 2,500 buses. Our decision with respect to the trucks is remaining the same. We will not start investing in more truck capacity on a short-term basis because we have manufacturing capacity of 1,500 units at the Montreal factory. Right now we're ramping up the labor in Joliet as needs be, but we have over 100 people right now, and we're doing fine. We're doing fine. As I said earlier, I mean, we will be doing a modest number of vehicles in Q1, and we will be ramping up the output in Joliet throughout 2023. That's great. We started manufacturing in 2022, and this is gonna be a constant ramp up. You're gonna see that in our results, I mean, for the whole year, but this is exactly what we're expecting. You can expect this number to go higher than, you know, the over 100 that we have right now. It's always a challenge to recruit, you know, the right people, but, you know, we are able to hire the people that we need right now in both countries. That's excellent. Maybe my second question, you know, you know, the vehicle order book, you know, almost 2,500 vehicles. You know, obviously, some of these orders came in, during various points in the cycle in terms of, you know, supply chain issues, commodity cost inflation. I'm just wondering how you protect the gross margin here as you deliver into that order book. Do you have a? You know, is there an inflation adjustment factor or some sort of indexing, so at the time of delivery or when you put this vehicle into the production line that you get made whole on maybe unexpected costs that may have occurred over the past year or two or are these, like, fixed price contracts where you essentially have to manage the cost and the price level is essentially fixed? Hey, Kevin. Nick here. To answer your question there, yes, the purchase orders of the vast majority are at a fixed price. We have for sure seen some inflation in the bill of materials over the last year, 18 months, and that's reflected in the gross margin that we're presenting today. We continue to think that the model scales really well. The way to protect is obviously to start with a unit level economic that works well, and we think that's the case. That said, you've heard us in the previous quarters talk about some price increases that we rolled out. They are relatively modest price increases, and we're gonna gradually start seeing those through the P&L. Because of our direct sales model, we feel that we're quite nimble in being able to implement those price increases. The bottom line, it's really starting with a unit level economic that works well and that scales well, and we think that's the case today still with the figures in the order book. I know you're not gonna give me the number 'cause I know someone tried to ask it earlier, but maybe just from a qualitative perspective then, do you think the inflation you've seen over the past couple of years here, and maybe some of this is transient over time, but whatever is structural, do you think that materially changed where you thought the break even unit number was, you know, versus what you know, today versus maybe what you thought a couple of years ago, or has inflation been pretty manageable and, you know, that break even target is still pretty much the same? Yes. For sure it has an impact, but I'd say, you know, scale, unit mix will have, you know, were more important than just the inflationary pressure. As I mentioned, going forward when we think longer term, you know, the price adjustments will sort of reset that. Recall that we've always said that our objective is to bring the price to our customers down over time. For sure, inflation takes us in a different direction in the very short term. The objective remains that in the longer term. What it does cause is a certainly a delay in price reductions for us. Hey, Kevin, also keep in mind that, you know, the batteries that we're using right now, like the BMW batteries, I mean, we had a fixed price, and we have 4,700 of those in stock as we speak. This has an impact of about, you know, The batteries account for, let's say 30%-40% of the bill of material of an EV. This is very significant. Also we're very pleased by the investment that we've made in the battery factory. The battery factory, I mean, this is gonna make such a huge difference in terms of, of costing, I mean, at some point, because obviously, you know, we're shaving cost, I mean, when we're comparing to the others. We spoke earlier about all the advantages of having your own battery factory in terms of, you know, cooling technology and all of that and better efficiency and all of this, but also better costing. This makes a huge difference. This is something we're totally controlling through this vertical integration. Right now, I mean, for 2023, it's gonna be mostly the BMW batteries that we will be using, and this cost, you know, has not really changed. That's a big piece of our bill of material, and this is something that really helped us, you know, manage through this inflation. Oh, those are great points. Thank you very much. Best of luck in 2023 here. Thank you. Thank you. The next question comes from Dan Levy with Barclays. Please go ahead, Dan. Hi. Good morning, and thank you for taking the questions. I just wanna go back to your comments on the Joliet ramp and Plans to get to a 2,500 annualized capacity by the end of the year. Maybe you can just talk about some of the gating factors, you know, that are required to be met to achieve that capacity. Maybe you could give us a little more color of how we think about actual your run rate of production as that capacity is being unlocked? Yeah. Well, no, thank you. Good morning, Dan. Yeah, in Joliet, I mean, what we've been doing, and we'll do the official opening within the next few months, so you'll be able to see that yourself as well. We have more working stations than we have, you know, at the Montreal factory. Basically, you know, the goal in a few years from now will be to have a capacity of 5,000 buses. And at the end of this year, it's gonna be 2,500 buses. The those structures of what we're doing now with the number of working stations, which is about, you know, 70 working stations in Joliet, has been planned, you know, for this kind of manufacturing capacity. It's a little bit less labor intensive. We've invested a little bit more in automation as well. You know, this was the plan. The good news, though, is that, you know, by the end of this year, with, you know, the CapEx investment that we still need to do this year to get there. After the end of 2023, when we're looking at the battery factory, you know, at the 1.7 gigawatt-hour, when we're looking at the 2,500 units in Joliet, I mean, there we're almost done with CapEx investment. I mean, those plants and the same thing in Montreal. We're already done. We're kind of done. I mean, this is a big year, 2023, for us because this is really the year where we're managing those three manufacturing plants. One of them, I mean, is already scaled up on, basically on the school buses. The other two plants, I mean, we're ramping up. They are there, we have the people on site. A lot of the equipment, you know, are already there. It's great. I mean, this is, 2023 is really a big year, you know, of, let's say kind of turning point, you know, for Lion. Basically, by the end of this year, if we hire the labor because we feel that we need to do the 2,500 units, well, you know, this will be on a... I think you were asking, you know, the manufacturing pace. It's basically like, you know, 50 units a week that we will be able to do if we decide to hire the labor in Joliet. You know, you'll see that by yourself. I mean, the equipment, you know, will be there. The equipment will be there, and after that, to go from 2,500 to 5,000, the amount of CapEx needed is absolutely not the same that, you know, the amount of CapEx it took to get to 2,500. It's a lot more modest than anything we've been spending in the past. It will be kind of, let's say, almost easy to double the manufacturing capacity at some point. We do not expect we will need to do that before probably a couple of years after that. You know, we are ready to take the market by storm and be even bigger, you know, than we are right now, when the timing will be right. Thank you. Just to interpret, it sounds like to unlock, you know, to unlock further growth, there's not a lot of additional spend required. Meaning, you know, there's not sort of a, an underlying desire to manage expenses and to limit volume growth. The heavy spending is done now. Well, I mean, we're very carefully managing the spend. I mean, you know, liquidity is, I mean, top of mind for us, and we're making sure we're aligning the order book, I mean, with our spending. I mean, no doubt. That's the reason we've decided to go to 1.7 gigawatt-hour at the battery factory. Same thing, you know, with respect to the CapEx that we're investing in Joliet. Yeah, we're being very, very careful about that. That being said, though, I mean, you know, going from 2,500 in Joliet to 5,000 units is a very minimal, let's say, spending, if we compare to everything we've been spending so far, because everything is in place to get to 5,000, but we will carefully manage. When we're saying, Dan, like going, you know, from 2,500 to 5,000, doesn't mean that we have to go from 2,500 to 5,000. I mean, there are steps, you know, that we will be taking through ramping up. If we need to go higher than the 2,500 because we're having a lot of success in getting all of those orders, we will be able to ramp up carefully in the CapEx spend. CapEx and all those investments are always top of mind, you know, in everything we're doing. Great. Thank you. Just as a follow-up, you were talking about supply constraints still as an issue. Maybe you could just provide a little more color on those underlying constraints. You said you're taking actions to mitigate that. What are those actions? Thank you. So I'm sorry, I didn't get that. Oh, the supply chain? Yeah. Well, that's exactly, you know, what we've been doing in the last couple of years, Dan. I mean, you know, Well, one of the things we've been doing is the supplier redundancy, and it's going very well. Also it's a kind of... it's almost natural that supplier redundancy, especially with what we're doing now, like we're the only OEM in the, on the school bus side, with factories on both sides of the border. So we're having suppliers on the U.S. side, we're having suppliers on the Canadian side, but there's nothing, you know, that prevent us from using one supplier on the in one country and using it on the other side. I mean, if needs be. That's one thing we're doing. At some point, also, what we did, a little bit like... I don't like to say overstocking, but, you know, this is a little bit what we've been doing in the past, I think it served us well. One good example is the number of batteries we have now. 4,700, you know, batteries, I mean, is great. The price, also, you know, was fine. We did the same thing with some critical components as well. That's what we've been doing. Are we, like, out of the wood on all of those supply chain issues? Absolutely not. Can we manage and navigate through that? Yes. We feel, you know, we're getting, you know, better and better, you know, from one quarter to the other. Honestly, I feel that, you know, the worst is behind us, but we're very well equipped to for any other, you know, headwinds in this regard going forward. We feel there will be, you know, headwinds in the supply chain. Supply chain crisis, I mean, you know, obviously, we've been talking about the war also that's been impacting all of us. There's the war. There was the supply chain crisis, you know, for a lot of other reasons, including COVID and all of that, but I feel good that we're well equipped to protect Lion, you know, and our customers in those difficult times. Great. Thank you very much. Thank you, Dan. The next question comes from Rupert Merer with National Bank. Please go ahead, Rupert. Hi. Good morning, everyone. Morning. Morning, Rupert. On the call so far, we've talked about supply chain, and it does seem to be limiting your production run rate, and I think you mentioned these issues could be around for another 18 months or so. In Joliet, you believe you could have capacity to do 50 units a week by the end of the year if you hire enough people. It sounds like you think the supply chain may not be a limitation for Joliet by the end of the year. Is that a fair comment? Well, we feel that, you know, it's under control. It's more and more under control, Rupert. Let's put it this way. You know, the discussions we had, like, a year ago, I mean, the tone was totally different. Right now, I mean, we feel better and better about the supply chain. We still feel, you know, this is gonna be an issue, but this limiting factor, we feel is gonna go away within the next 18 months. You're absolutely right. Hopefully, I mean, in a year from now, supply chain, I mean, will be something that will almost not be a limiting factor anymore. Yeah. Are there any other limitations to the production rate? We know the order book is big enough, but are there enough of those orders that you could deliver on this year, let's say, to produce at that kind of run rate? Well, there's always, you know, the final approval, you know, of the subsidies and all of this. It's going well because most of the orders that we have, you know, always rely, you know, on subsidies. You know, absolutely no red flag. It's going well. We're aligning obviously, you know, the subsidies, I mean, with the delivery schedule. You know, when I was talking about our ecosystem in the past, making sure that the customers are very well equipped in terms of charging infrastructure to receive the buses and that they are being trained is always something, you know, that is top of mind for us. Thank God, you know, that we had this Lion Energy that we've launched, you know, several years ago. We feel this is making a huge difference, I mean, in terms of, for the operations of the operators. I would say, you know, for them, it's really receiving the buses and trucks when they need them, but they need to be fully prepared to receive them to make sure that it's gonna be a very efficient operation. I feel this is something that, you know, throughout the years, we became very good at doing. You heard me talk, you know, a lot of time about this ecosystem. I think it makes a huge difference, and I think it's one of the big advantage we have when we're comparing to some of the other OEM that are selling to dealers. Not easy for dealers to take the, let's say, the EV turn and equip themselves, you know, with everything that they need to do that, and that's one of the reason we've decided to sell direct. I think it's serving us very well. Great. Thanks. Thanks for that. Secondly, on the battery plant. You believe your capacity could be 1.7 gigawatt-hours. I think you said that's enough for 5,000 vehicles. Obviously, by the end of the year, the battery plant capacity could be greater than what you need for your internal uses. Are you contemplating using any of that capacity to sell to third parties, or are there any other ways you can optimize those operations for, say, improving your margins? It's always an option, Rupert, because this capacity is gonna be there. You know, the reason we're scaling up to 1.7, I mean, it's a matter of automation. Almost everything is automated. You'll see that. I mean, we'll do an opening probably in April, and you'll be able to see that. It's a very exciting operation. It's a matter of automation. It's a matter of, you know, purchasing, you know, the right robot. We felt the 1.7 gigawatt-hour, you know, was the right number. Yeah, you're right. I mean, if we're selling only trucks, I mean, that would be like 2,500 trucks, like if we're selling only like Lion8 Tractor. If it's only buses, it's like, you know, 10,000 buses. We do have ample capacity in this regard. We're not planning on selling our battery packs to anybody else, right now, because time is, time to market is of the essence, as well right now. Doing this, you know, for other OEMs means a lot more. If you wanna do it right, I mean, this means a lot more than just selling a battery pack. That will mean, you know, integrating this, the battery pack with their, you know, their current trucks or buses. We're talking years for, you know, those OEMs to integrate those packs. This is something that many incumbent OEMs, you know, through the years have been, I would say, understating, but it takes a lot of time to integrate, you know, a battery pack on a truck or on a bus. We're not thinking about any like short-term option like that because we don't feel it's gonna serve us well. We wanna keep this capacity because we feel that we will need it on a short or medium-term basis, and we wanna make sure that we're fully focused on selling the Lion products and getting the better cost. Not an option for now. Thanks. Just one final follow-up on that battery plant. Are there any other limiting factors on the capacity of that plant? Do you have any supply chain concerns for the battery plant? I know it's mostly automated, so I imagine few labor concerns. Any other concerns you might be able to hit the run rate? Yeah. No labor concern. You're absolutely right. I mean, labor is not a, let's say it's not a challenge. Supply chain is always a challenge. I should say that, you know, we have the same supply chain challenges than we have, you know, for the rest of our operations. We know the lead times, you know, of all of our suppliers. We have a solid, you know, agreement for the cells, which is key in what we're doing, we've announced that last year. This is in place, and this is very strong. We have a long-term relationship with most of those tier one suppliers as well. We didn't start with most of the suppliers, we didn't start building this relationship just lately. I mean, many of them, I mean, we had them as suppliers, I mean, for many, many years. It's a very good relationship. It's almost partnerships that we have with those suppliers. I would say in all the comments I've made earlier about the supply chain and, you know, the challenges for the next 12 months to 18 months are the same, but we navigate through those, and we manage those supply chain challenges, you know, the same way we're doing for the rest of our operations. Great. Thank you very much. I'll leave it there. Thank you, Rupert. The next question comes from Michael Glen with Raymond James. Please go ahead, Michael. Oh, hey. Everything's been answered. Thanks. Okay. Thank you, Michael. Our next question comes from Abhi Sinha with Northland Capital Markets. Abhi, please go ahead. Yeah. Thanks for squeezing me in. Just one question on supply chain, this last one. I know you have answered a lot. Is there any way you can quantify the impact, whether on revenues or in terms of number of units, what the exact impact could have been, was there? If there was no supply chain impact, what the revenues or the units could have been? Yeah. I mean, well, not easy to say. Obviously, you know, we've been managing those supply chain challenges. We've been hiring, you know, the people we needed accordingly, you know, with our production schedule. The good news is that, you know, we have a good solid order book. This is where it starts. When you're looking at the number of buses and trucks we can do, we're very well equipped to do that. You know, I spoke about this earlier. I mean, I think, you know, part of, we're being very careful with, you know, the capital, the capital spend. Capital spend is not only CapEx, it's also about OpEx. It's also about operation and making sure you're making money on every single buses and trucks that you're selling, and, you know, this is what we're doing. We align all of our spending according to the economic conditions, including everything. Not easy to answer. I mean, if there was no supply chain challenges, I mean, you know, how many units we could have done. Obviously we could have done a lot more units than the ones that we did last year. Did you face more issues on the Canada side or the U.S. side on the supply chain? I would say it's on both sides of the border. I mean, we have a lot of suppliers on both sides of the border, we're trying to be as local as possible. It's really like the landed cost and the quality, you know, that's always top of mind for us. We have suppliers in Canada. We have suppliers in the United States. We have suppliers in some other countries as well. We're trying to avoid, you know, any authoritarian countries, we will not, as you know, we will not be doing business with authoritarian countries in a few years from now. I don't think there's any significant difference between in Canada and U.S. right now. I think it's really a matter of understanding and really knowing your supplier because they have their own challenges. Sometimes, you know, they will be manufacturing in some other countries as well for some components that they're putting into the components that they are selling us. Our game is really to stay very close to them. Make sure we understand their business and we understand their lead times and we have a full transparency on, you know, the when they will deliver the products. I don't see any significant difference between the two countries. Sure. Thanks for that. Just one last, if I could. On the batteries, if I understand that, you know, you switched to BMW because you're looking for more robust, more powerful battery. When you are making your own, I'm trying to understand, like, if you could provide some color on what the differentiating factor. I know you talked about the cost. Is there anything else that adds on? Is it charging speed, more power? And what does it do to the margin, immediate margin impact for you guys in terms of any kind of qualification? How accretive would that be? Well, Abhi, there's so many differences between, you know, our packs and any packs, you know, that, you know, an OEM could be buying, you know, from battery packs suppliers. First of all, I mean, those packs are, let's say, custom-made, you know, for the Lion products. It's a perfect weight and balance of our trucks and buses, and the operators are saying they're seeing a huge difference because of that. Not only, I mean, it's a better driving experience, but it's also, it's also safer for them. It's also a way to put more kilowatt-hour if needed. Like, we do have a modular approach, and we are selling in multiple of 70 kWh or 105 kWh as well. Basically, you know, the customer, you know, can buy and invest the money in the number of kilowatt-hour they need for their operation. That's a huge difference. In terms of technology as well, I mean, wow, it's like night and day. The efficiency we could get from our batteries is better than most of, you know, the technology that we see out there right now. For many reasons, I mean, the BMS is really state-of-the-art, so the battery management system, but also the BTMS, the thermal management system, state-of-the-art, fully, you know, custom-made to the Lion batteries as well, and the usage that we're doing, you know, with the Lion trucks and Lion buses. Also, I mean, the way you charge, like, you know, the speed of... The charging speed for the, you know, the customers or for the operators, it makes a huge difference. Now, you know, most of the operators and all of the operators on the truck side are using Level 3 charging stations, and we became very, very good at all of that, you know, with respect to the Level 3. Right now, I mean, we're at 350 kilowatt, but, you know, we're working on getting a lot more than that in the short-term future. For a lot of operators that, you know, are using our trucks, like 20 hours a day, makes a huge difference. Charging speed as well, but also, I mean, the cooling system will affect, you know, the efficiency of the battery. It will affect, you know, the charging speed for the batteries, as well, also the life cycle. When you are able to cool your batteries in a timely manner, well, you're helping your life cycle. Your life cycle is getting better also. We feel that all of those factors, you know, are making a huge difference. Now, you've been asking about the gross margin. Nick, I don't know if you wanna comment any more on this? No, look, I'd just say that we expect to get margin improvements over time from switching to our own batteries. We're supplying at the commodity level. We're cutting intermediaries. We're reducing obviously the profit that we're paying to third parties. There is some ramp-up in terms of getting there. That's one of the key components that will certainly help. Sure. Thank you very much. That's a lot. Thanks a lot. Good morning, Abhi. Our final question today comes from Craig Irwin with Roth Capital. Craig, please go ahead. Thank you. A very simple question. You guided for $20 million, and then, what was it? $45 million for CapEx. Is there any other CapEx, or are we looking at a total CapEx this year of $65 million? No. There is some other CapEx that I'd qualify, Craig, as, you know, maintenance and procurement CapEx, et cetera. Over the last year, that CapEx was about $10 million. That's in 2022. Okay. Thanks, Nick. Thanks, guys. Thank you, Craig. Thank you, Craig. you, Craig. Thanks. Those are all the questions we have time for today, so I'll turn the call back to the management team for any concluding remarks. Well, thanks everyone for joining the call today. We look forward to continuing the discussion with you. Feel free to contact me for any questions you may have. You have a nice day. Thank you. Thank you everyone for joining us today. This concludes our call. You may now disconnect your lines.