Investor Presentation - October 23, 2017 TSX-V: BUS | OTC Pink: - - PowerPoint PPT Presentation
Investor Presentation - October 23, 2017 TSX-V: BUS | OTC Pink: - - PowerPoint PPT Presentation
Investor Presentation - October 23, 2017 TSX-V: BUS | OTC Pink: GWTNF Forward Looking Statements This presentation contains ''forward-looking statements'', which reflect the expectations of management regarding Grande West Transportation
TSX-V:BUS OTC:GWTNF | www.grandewest.com
This presentation contains ''forward-looking statements'', which reflect the expectations of management regarding Grande West Transportation Group Inc.’s (the “Company”) future growth, results of operations, performance and business prospects and opportunities. The words ''believes'', ''anticipates'', ''plans'', ''expects'', ''intends'', ''projects'', ''estimates'' and similar expressions are intended to identify forward-looking statements. These forward-looking statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this presentation. Such forward-looking statements are based on a number of material factors and assumptions, including, but not limited in any manner to the availability of sufficient working capital to market the Company's products and provide after-sales maintenance and support services to the Company's customers, access to adequate services and supplies to operate the Company's business, economic conditions, commodity prices, foreign currency exchange rates, interest rates, access to capital and debt markets and associated costs of funds, availability of a qualified work force, and the ultimate ability to develop, manufacture and sell the Company's products on economically favourable terms. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under ''Risk Factors'' in the Company prospectus dated November 27, 2013 and which will be detailed from time to time in the Company’s interim and annual financial statements and management’s discussion and analysis of those statements, all of which are or will be available for review on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual performance to differ materially from that described in forward-looking statements there may be other factors that cause its performance not to be as anticipated. These forward-looking statements relate only to events or information as of the date on which the statements are made. The Company neither intends nor assumes any obligation to update these forward-looking statements or information to reflect changes in assumptions or circumstances
- ther than required by law. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those
currently anticipated. Accordingly, readers should not place undue reliance on forward-looking statements. Disclaimer This presentation does not form part of any offer of securities, or constitute a solicitation of any offer to purchase or subscribe for securities. The sole purpose of this presentation, in paper or electronic form, is strictly for information.
Forward Looking Statements
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TSX-V:BUS OTC:GWTNF | www.grandewest.com
Executive Overview
Grande West Transportation is a Canadian-based company which designs, engineers and manufactures mid- size, multi-purpose transit vehicles for sale to public and private enterprises in Canada and the US.
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TSX-V:BUS OTC:GWTNF | www.grandewest.com
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Corporate Timeline
- Grande West Founded
- Strategic Partners with BC Transit
- Vicinity 27.5’ Born
- Manufacturing Agreement w Weichai
- CMVSS Certified
- Vicinity Prototypes Delivered
- Vicinity 30’ Option
- First BC Transit Order (15)
- VP Sales, JM Landry Hired
- Growth in east coast sales
- FMVSS Certified
- Vicinity Marketing
- Altoona Best in Class
- Large multi-year contracts
- Vicinity 35’ Option
- CNG and EV Option
- US Customers
- Buy America Compliant + US Assembly
- Profitable Operations
- $100M Backlog
- Medium-Duty Vehicle Designed
Brought a superior product to market in only 5 years, at a price that sells
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Key Points to Know
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- We make transit vehicles and are completely focused on ‘mid-sized’ units (35’ and under)
- Our Heavy Duty Vicinity is “Best-in-Class” - FTA Altoona testing confirmed we engineered, designed and built the best bus
- Lowest Cost Producer - Demonstrated in competitive bids. Best bus for the Best Value
- New Trend in the market is transitioning to a ridership-based model and “Right-Sizing” - Think Southwest Air
- We delivered our first fleet of 15 buses to BC Transit in 2013, delivered 36 in 2016 and targeting 200 buses in 2017
- Backlog is over 354 buses, over $131 million CAD
- Large pipeline of bids in the US and Canada, Buy America Assembly
- We are Innovators - released three sizes of Vicinity with Clean Diesel, CNG and EV in two years, medium-duty designed
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Vicinity’s Position in the Bus Market
Cutaway Bus Traditional 40’ bus
- r modified to 30’ or 35’
VICINITY
- Monocoque Frame
- Big Bus Technology
- Compact Platform
- Lower Operating Costs
- Lower Capital Costs
- Right-Sizing fleets
- Clean Diesel or CNG Powered
- Altoona Rated ‘Best-in-Class’
- 33% Higher Fuel Costs
- 30-40% Higher Capital Cost
- Higher Maintenance Costs
- Very Costly to Operate in HD ops
- 5 year life cycle
- Poor Access
- Built on a Light Duty Truck Chassis
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TSX-V:BUS OTC:GWTNF | www.grandewest.com
Product Line Strategy - Medium Duty
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Crossover Vehicle New Category Cutaway Bus VICINITY Conventional 40’
We developed a monocoque body, rear engine, medium-duty multi-purpose transit vehicle positioned to compete with cutaways in the 22’-28’ space. We are finalizing design with customer input for sales and deliveries in 2018. This unique vehicle, powered by a GM gas engine and Allison transmission, will offer the same serviceability, maintainability and reliability typically found in transit vehicles with similar powertrains. We consider this action to define a new category: “Crossover” . The Crossover is a complete design option to the long unchanged, standard cutaway design. Our intention is to dominate this new category with what we believe to be a complete “game-changer” in the North American medium-duty market.
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Bus Market in North America - Summary
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Canada: Approximately 18,000 public transit agency buses US: Approximately 120,000 buses - 60,000 public transit / 60,000 private transit Bus lifecycle is usually 10-12 years: ~1,800 in Canada, and ~12,000 in the US every year Public transit agencies are growing Historically the market has consisted of 40’ workhorse commuter buses and “cutaways” Competition: New Flyer (NFI.T), Rev Group (REVG), Nova (Volvo), Gillig (Private) and cutaway providers New Flyer discontinued mid-size activities, El Dorado stopped bidding the Canadian market Pursuing a market of ~14,000 buses on a yearly basis with a goal of selling 1,500 at full run
TSX-V:BUS OTC:GWTNF | www.grandewest.com
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Business Model
Grande West is positioned within a changing transit bus business model. The Right-Sizing concept, successfully applied by Southwest Airlines to change the airline business model, is being adapted by bus transit for many of the same reasons. In a comparison look, Grande West is supplying mid-size buses in much the same way that SouthWest and WestJet Airlines’ model demanded mid-size planes. Grande West has a considerable first mover advantage as the major bus manufacturers failed to recognize the trend. With a bus transit model that is moving towards Right-Sizing, Grande West is well positioned to satisfy demand and, with “Best-in-Class” designation, is capturing and dominating the mid-size bus market.
TSX-V:BUS OTC:GWTNF | www.grandewest.com
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Right-Sizing Trend
”Increasingly, transit systems are recognizing that the 40-foot bus is not a one-size-fits-all vehicle. It is excellent for high volume routes, but is big and unwieldy in residential neighbourhoods and presents a wasteful image when operating with few passengers. More and more systems are also realizing that service frequency builds ridership better than spatial coverage. In other words, more frequent service with smaller buses is far more attractive than less frequent service with larger ones. Smaller buses are perfect for this type of strategy and more and more systems are looking seriously at “Right-Sizing” their fleet by introducing smaller buses for portions of their route network that do not warrant 40-foot buses.”
- Michael Roschlau, Grande West Strategic Advisor, former CEO of Canadian Urban Transit Association
“We are committed to creating more efficient transportation options for our customers. That means building a more highly layered, customized service model. These new Vicinity vehicles allow our bus operators to travel safely into neighbourhoods where our standard fleet could not easily navigate while offering more space than our current Mobility bus options.”
- Keith Parker, GM and CEO of Metropolitan Atlanta Rapid Transit Authority (MARTA)
TSX-V:BUS OTC:GWTNF | www.grandewest.com
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Growing on a Solid Foundation
Unique Product
- Best in Class Results achieved with FTA Altoona
- Heavy duty mid-size bus with monocoque technology
Scalability
- Increase production and delivery to meet growing demand
Solid Partnerships
- Strong relationships with ABG and Weichai
Open Market
- High demand in a very large addressable market
Innovation
- Vicinity in 3 sizes, 3 propulsion systems; Crossover Vehicle
Experienced Team
- Focused, talented management and working board
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Altoona Test Results: Best-in-Class!
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MANUFACTURER FAILURES MPG CLASS 1 CLASS 2 CLASS 3 CLASS 4 VICINITY
7 6.02
Competitor A
34 15 5.54
Competitor B
9 15 4.43
Competitor C 29'
20 2 4.1
Competitor D
12 6
Competitor E
31 13
Competitor F 40’
12 9
Competitor G 40’
14 4 2.97
Competitor H*(**)
4.8
Competitor I**
3 1 40 19
Competitor J
21 13
Competitor K**
32 7 4.28
* Partial test no durablity ** 10 YEAR TEST
Vicinity Scores
- Best in Class: Fuel economy
- Best in Class: Structural Durability
- Best in Class: Fewest repairs
required - only 7 minor Class 3 vs. Competitors The US Federal Transit Authority’s (FTA) Altoona test is an internationally recognized tough testing regime, as it essentially performs 12 years and 500,000 miles of a New York City heavy duty cycle upon completion of the testing. It allows customers to measure performance and estimate life cycle costing of the vehicle.
Full test results: Vicinity Altoona Test
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Order Backlog and Q1-Q3 Deliveries (as at October 23, 2017)
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Backlog - Firm Orders Backlog Revenue Canada 221 $79,000,000 USA 133 $52,000,000 Totals 354 $131,000,000
2017
Q1 Q2 Q3 (pre-announced) Total (pre-announced) Deliveries 12 32 75 119 Revenue $4,548,968 $11,780,851 ~$25,000,000 ~$41,000,000
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Deliveries and Backlog
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$18M Backlog
18 Deliveries Backlog - 60
$61M Backlog
36 Deliveries Backlog - 175
$131M Backlog
44 Deliveries Backlog - 354
Q1-Q3 2017
2016
2015
2014
$6M Backlog
6 Deliveries Backlog - 21
$1M Backlog
15 Deliveries Backlog - 6
2013
TSX-V:BUS OTC:GWTNF | www.grandewest.com
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Weichai - Manufacturing Partner
- Multi-Billion Dollar Company
- Over 74,000 employees internationally
- Global service, support and warranty network in place
- Ships over 5,000 buses/year internationally
- World’s largest HD engine manufacturer
USA - Alliance Bus Group
- Exclusive distribution agreement
- Buy America manufacturing in Atlanta (HQ)
- One of the largest US retail bus sellers
- National coverage, with 8 mega-dealers
- MARTA and Atlanta Airport first Customers
Our Partners
TSX-V:BUS OTC:GWTNF | www.grandewest.com
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Management and Board of Directors
William Trainer – CEO, President and Director
- 25+ years of business leadership with extensive
- verseas import and export experience
John Wang – VP Chief of Engineering
- Accredited Mechanical Design Engineer and
previously senior mechanical and designer/project manager Jean-Marc Landry – VP Business Development
- Over 20 years experience in public transit business
development, former head of sales for Nova Bus Aaron Triplett – CFO
- Chartered Accountant, previously Senior Manager at Big 5
accounting firm with public company and auditing focus Andrew Imanse – Director
- Former President of Thor Industries Bus Group
- Grew the El Dorado bus business to $500M/year
Joe Miller – Director & Chairman
- Global businessman with over 30 years in the construction
field John LaGourgue – VP Corporate Development, Director
- 20+ years in management, sales, and investing in public/
private companies
TSX-V:BUS OTC:GWTNF | www.grandewest.com
2017 Quarterly Performance
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CY 2016 Q1 Q2 Q3 (pre-announced) Vicinity Buses Sold 26* 12 32 75 Revenue $7,465 $4,549 $11,780 ~$25,000 Cost of Sales $6,682 $3,474 $9,854
- Gross Margin
$782 $1,011 $1,926
- % Gross Margin
10% 21% 16%
- SG&A, R&D
$3,500 $1,647 $2,031
- Net Income
- $2,700
- $1,085
$222
- EPS FD/Issued
$(0.035) / $(0.04) $(0.02) / $(0.02) $0.00 / $0.00
These are scenarios based on existing sales, potential sales and near-term market potential. *36 buses delivered in 2016, 10 buses under lease term
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Balance Sheet Q2 (June 30, 2017)
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ASSETS
Cash $6,496,447 Trade and other receivables 7,233,286 Inventory 15,754,642 Deposits and prepaid 6,378,671 Property and equipment 2,865,644 Total Assets 38,728,690
LIABILITIES
Accounts Payable and Accruals 10,801,744 Letter of Credit Facility 4,216,227 Current Deferred Revenue and Warranty 3,984,199 Short Term Loans 3,548,759 Total Current Liabilities 22,550,929 Long Term Liabilities 487,313 Convertible Debt 528,855 Share Capital and Equity 15,161,593 Total Liabilities and Equity 38,728,690
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Selected Quarterly Information Q2 (June 30, 2017)
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3 months ended June 30, 2017 3 months ended May 31, 2016 Revenue - Bus sales and parts $11,780,851 $85,423 Gross Profit $1,926,105 $15,910 Gross Margin 17% 18% Net earnings (loss) $221,884 ($908,610) Basic and diluted earnings (loss) per share 0.00 (0.02) Cash and cash equivalents $6,496,447 $3,784,813 Working capital $13,312,118 $639,872 Total Assets $38,728,690 $7,962,955 Non-current financial liabilities $1,016,168 $86,462
Q2 Highlights
- Record bus and parts revenue of $11,780,851
- 160% Q2 over Q1 revenue increase $11.8M vs. $4.5M
- First ever profitable quarter, net income of $221,884
- First ever positive EBITDA of $399,602
- Record deliveries of thirty two (32) Vicinity buses
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Capital Structure (as at October 13, 2017)
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Symbol TSXV: BUS OTC Pink: GWTNF Shares Issued and Outstanding 70,141,146 Stock Options 3,505,000 Warrants 1 1,952,159 Convertible Debentures 2 1,903,030 Fully Diluted 77,501,325 Insider / Founder Ownership 40%
Notes:
- 1. 1.8M @ $0.40, March ’18; 90% Insider/Founders
86,400 @ $1.90
- 2. A) Unsecured $628,000, March 2020
8% coupon, 5 year, $0.33 strike
TSX-V:BUS OTC:GWTNF | www.grandewest.com
- Buy America compliant manufacturing, Atlanta GA
- Secured first strategic public transit agency
- MARTA (Atlanta) - top 10 in North America
- Growing with Private Sector Sales (Airport Shuttles, etc.)
- Atlanta Airport first US customer, operated by Standard Parking
- Altoona Test high score proves quality and durability
- Multiple RFPs ongoing
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US Market
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Canadian Government is strongly committed to deliver a long-term infrastructure plan to develop transformative and modern transit projects over the next 10 years
- Vicinity is in 8 of 10 provinces’ systems Coast to Coast
- $20B transit budget pledge over the next 11 years
- Customers are already receiving additional funding, increasing demand
- Up to 50% Government funding for eligible project costs
- Bus Transit is a critical element in Canadian transit plans - Vicinity is
providing the solution
Grande West has cultivated and developed relationships with most transit authorities across the country. We expect to continue to receive new and repeat orders.
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Canadian Market
TSX-V:BUS OTC:GWTNF | www.grandewest.com
Investment Highlights
- Lowest Cost Producer, Best-in-Class mid-size bus
- Q3 2017 - 1H 2018 Backlog over $130 million; 350 buses
- Large sales and RFP pipeline in Canada and the US
- Canadian Market is Developed
- Sales in 8 of 10 provinces, additional orders expected
- Many repeat orders
- USA: Alliance Bus Group
- Received Private and Public Transit orders for 2017 deliveries
- Buy America production
- Major opportunity for growth
- GW’s addressable market opportunity is over 1,500 buses/year or $500M+
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TSX-V:BUS OTC:GWTNF | www.grandewest.com
Contact
Head Office Grande West Transportation 3168 262nd St. Aldergrove, BC V4W 2Z6 Phone: (604) 607-4000 Fax: (604) 607-4004 Email: info@grandewest.com Investor Contact John LaGourgue VP Corporate Development Phone: (604) 607-4000 Email: jlagourgue@grandewest.com
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