GREENPOWER MOTOR COMPANY INC. GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
Introduction
This Management's Discussion and Analysis ("MD&A") is dated June 28, 2024 unless otherwise indicated and should be read in conjunction with the audited consolidated financial statements of GreenPower Motor Company Inc. ("GreenPower", "the Company", "we", "our" or "us") for the year ended March 31, 2024 and the related notes, and the Company's filings through the U.S. Securities and Exchange Commission, as filed on EDGAR. This MD&A was written to comply with the requirements of National Instrument 51-102 - Continuous Disclosure Obligations. Results are reported in US dollars, unless otherwise noted. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results presented for the three months and year ended March 31, 2024 are not necessarily indicative of the results that may be expected for any future period. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and the interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"). The Company's IFRS accounting policies are set out in Note 2 of the audited consolidated financial statements.
For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of the Company's common shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) if it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.
Further information about the Company and its operations can be obtained from the offices of the Company or from www.sedarplus.com.Information in these websites do not form part of this report and are not incorporated by reference.
Cautionary Note Regarding Forward-Looking Information
Certain statements contained in the following MD&A may contain forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements in this MD&A may include, but are not limited to statements involving estimates, assumptions or judgements, and these statements may be identified by words such as "believe", "expect", "expectation", "aim", "achieve", "intend", "commit", "goal", "plan", "strive" and "objective", and similar expressions of future or conditional verbs such as "will", "may", "might", "should", "could" or "would". By their very nature, forward- looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our expectations or conclusions will not prove to be accurate, that our assumptions may not be correct, and that our plans, goals, expectations and objectives will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements.
Non-IFRS Measures and Other Supplementary Performance Metrics
This MD&A includes certain non-IFRS measures and other supplementary performance metrics, which are defined below. These measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Investors are cautioned that non-GAAP financial measures should not be construed as an alternative to IFRS measures. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. Readers should not rely on any single financial measure to evaluate GreenPower's business.
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GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
This MD&A refers to Adjusted EBITDA "Adjusted EBITDA", a non-IFRS measure, which is defined as loss for the year (for annual periods) or loss for the period (for quarterly periods), plus depreciation, plus interest and accretion, plus share-based payments, plus / (less) the allowance / (recovery) for credit losses, plus / (less) the increase / (decrease) in the warranty liability, plus taxes. Adjusted EBITDA is a measure used by management as an indicator of profitability since it excludes the impact of movements in working capital items, certain non-cash charges, and financing costs. Therefore, Adjusted EBITDA gives the investor information as to the profitability of the business. However, Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered a substitute for other financial measures of performance. Adjusted EBITDA as calculated by GreenPower may not be comparable to Adjusted EBITDA as calculated and reported by other companies. The most comparable IFRS measure to Adjusted EBITDA is net income.
This MD&A also makes reference to "Total Cash Expenses", a non-IFRS measure, which is defined as sales, general and administrative costs plus interest and accretion, plus/(less) foreign exchange loss/(gain), less depreciation, less share-based payments less amortization of deferred financing fees, plus/(less) the decrease/(increase) in warranty liability, plus / (less) the (allowance) / recovery for credit losses. Total Cash Expenses is a measure used by management as an indicator of sales, general and administrative, interest and accretion, and foreign exchange costs that excludes the impact of certain non-cash charges. Management believes that Total Cash Expenses provides a measure of cash expenses from the operations of the business. However, Total Cash Expenses is not a measure of financial performance under IFRS and should not be considered a substitute for other financial measures of performance. Total Cash Expenses as calculated by GreenPower may not be comparable to Total Cash Expenses as calculated and reported by other companies.
This MD&A also makes reference to "Vehicle Deliveries", a supplementary performance metric, that management believes provides useful information regarding the business activity of the Company during a quarter or year. Vehicle Deliveries is vehicles that have been sold or leased to a customer during a quarter or a year, as determined by management. The models of vehicles included in Vehicle Deliveries will vary over time, such that Vehicle Deliveries in one period may not be comparable to Vehicle Deliveries in another period. Vehicle Deliveries is not a financial metric, and vehicle deliveries is not an indication of the Company's financial performance in a given period. While management considers Vehicle Deliveries to be a useful supplementary performance metric, users are cautioned to consider other factors to evaluate GreenPower's business.
Description of Business
GreenPower designs, builds and distributes a full suite of high-floor and low-floorall-electric medium and heavy-duty vehicles, including transit buses, school buses, shuttles, cargo vans and a cab and chassis. GreenPower employs a clean-sheet design to manufacture all-electric buses that are purpose built to be battery powered with zero emissions while integrating global suppliers for key components. This Original Equipment Manufacturer ("OEM") platform allows GreenPower to meet the specifications of various operators while providing standard parts for ease of maintenance and accessibility for warranty requirements. GreenPower was founded in Vancouver, British Columbia, Canada with primary operational facilities in southern California and a manufacturing facility in West Virginia. Listed on the TSX Venture Exchange since November 2015, GreenPower completed its U.S. IPO and NASDAQ listing in August 2020. For further information go to www.greenpowermotor.com.
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GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
Operations
The following is a description of GreenPower's business activities during the year ended March 31, 2024. During the year, the Company delivered a total of 222 vehicles, which were comprised of 122 EV Star CC's, 18 EV Star 22-foot cargo, 6 EV Star Cargo Plus, 32 EV Stars, 31 BEAST Type D school buses, 10 Nano BEAST Type A school buses, and 2 EV 250's. During the year GreenPower generated annual revenue of $39.3 million, which was a decline of 1.1% from the prior year.
During the year ended March 31, 2024, GreenPower sales included 105 EV Star CC's to Workhorse, a key customer of GreenPower, which was a decline of over 50% compared to 220 EV Star CC's to Workhorse during the year-ended March 31, 2023. Importantly, the sales in the current year represent a transition to a more diverse group of end customers in a range of new markets in the US and Canada. As well, the Company experienced significant growth in sales of all-electric BEAST and Nano BEAST school buses, which increased to 41 in the current year from 9 in the prior year.
During the current fiscal year, the Company completed the build-out of the West Virginia school bus manufacturing facility and delivered the first all-electric school buses produced at the facility with the first deliveries of four Nano BEASTs in December 2023. The Company is currently manufacturing additional school buses at the facility pursuant to customer orders and anticipates that school bus deliveries will continue to grow in the current fiscal year based on existing backlog and manufacturing activity. Subsequent to the year end, GreenPower hired Paul Start as the VP of Sales for the school bus division. Mr. Start brings decades of experience in the school bus market and is actively working on converting GreenPower's book of sales leads into firm customer orders and generating new sales opportunities for the school bus division.
GreenPower's commercial sales during the year were negatively impacted by Workhorse's postponement of vehicle deliveries during the second and third quarter of the fiscal year. GreenPower is actively working to complete the existing firm purchase orders received from Workhorse, including for spare parts and vehicles. GreenPower continued to expand its dealer network during the year and through the dealer channel was able to generate its first sales in new markets, including the company's first sales in North Carolina, Oregon and Colorado. In addition, GreenPower was able to utilize its in-house truck body division, GP Truck Body, to improve the delivery time of upfitting EV Star CC's with truck bodies for customers, and to develop new truck body designs, including the EV Star stake-bed truck and EV Star Refrigerated truck. These new designs open up exciting new markets for GreenPower and demonstrate the flexibility of the EV Star platform.
During the fourth quarter GreenPower expanded its sources of liquidity by entering into a revolving $5 million term loan facility with EDC. This facility will be used to finance the production of GreenPower all- electric vehicles pursuant to existing customer orders, and was used in the fourth quarter to fund production costs for a significant school bus order. Subsequent to the end of the year GreenPower completed an underwritten offering of 1,500,000 common shares and warrants to purchase 1,575,000 common shares for gross proceeds of $2,325,750 before deducting underwriting discounts and offering expenses. GreenPower continues to seek new sources of financing to fund and grow its business.
During the fiscal year GreenPower commenced monthly lease payments on a lease/purchase agreement with the state of West Virginia for a production facility located in South Charleston, West Virginia with over
6.0 acres and an 80,000 square foot building. Lease payments totalled $600,000 for the year and will be applied in full to the purchase of the property. The state will also provide up to $3.5 million in employment incentive payments to GreenPower for jobs created in the State as production increases over time. Title to the properties will be transferred to GreenPower once total lease and incentive payments reach $6.7 million.
GreenPower completed a nine-month school bus pilot program with the state of West Virginia covering 18 counties, representing one-third of the school districts in the state with more than 100 professionals driving the buses more than 32,000 miles. Data from the pilot showed both the Type D BEAST and Type A Nano BEAST performed as expected whether on flat or mountainous terrain, in cold or warm conditions and on rural roads or city highways.
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GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
During the year the EV Star Cab & Chassis was the winner of the "2023 Green Car Product of Excellence", Green Car Journal said the award honors commercial vehicles that feature greater environmental performance through higher efficiency, the integration of advanced technology and electronics, and innovative powertrains that achieve decarbonization goals with low or no carbon emissions.
As at March 31, 2024, the Company had:
- Property and equipment on the balance sheet totaling $2.8 million, comprised of several models of GreenPower vehicles used for demonstration and other purposes, company vehicles used for sales, service and operations, tools and equipment, and other business property and equipment;
- Parts inventory totaling approximately $3.9 million representing parts and materials at GP Truck Body, spare parts for sale to customers pursuant to customer orders, spare parts to be used for vehicle manufacturing, and spare parts for vehicle repairs and warranty;
- Work in process inventory totaling approximately $14.3 million representing EV Star's, EV 250's, BEAST Type D school buses, Nano BEAST Type A school buses and parts inventory, and;
- Finished goods inventory totaling approximately $13.8 million, comprised of EV Star cab and chassis and other EV Star models, and BEAST Type D and Nano BEAST Type A models.
Trends
The Company does not know of any trends, commitments, events, or uncertainty that are expected to have a material effect on the Company's business, financial condition, or results of operations other than as disclosed herein under "Risk Factors".
Annual Results of Operations
Year ended March 31, 2024
For the year ended March 31, 2024 the Company generated revenue of $39,271,839 compared to $39,695,890 for the previous year, a decrease of 1.1%. Cost of sales of $33,914,237 yielding a gross profit of $5,357,602 or 13.6% of revenue. Revenue for the year was generated from the sale of EV Star CC's, EV Star 22 foot cargo, EV Star Cargo Plus, EV Stars, 29 BEAST Type D school buses, 12 Nano BEAST Type A school buses, and 2 EV 250's, as well as revenue from truck body manufacturing, revenue from the sale of vehicle parts and service, from vehicle transportation, from finance income, and revenue from finance and operating leases. Operating costs consist of salaries and administration of $8,814,561 relating to salaries, employee benefits, and administrative services; transportation costs of $212,263 which relate to the use of trucks, trailers, tractors as well as other operational costs needed to transport company products around North America; insurance expense of $1,716,157; travel, accommodation, meals and entertainment costs of $599,169 related to travel for project management, demonstration of company products, and trade shows; product development costs of $1,811,472; sales and marketing costs of $661,426 interest and accretion of $1,554,858; professional fees of $1,925,938 consisting of legal and audit fees; as well as non- cash expenses including $1,502,112 of share-based compensation expense, depreciation of $1,858,458, and an allowance for credit losses of $1,450,962. The remaining operating costs for the period amounted to $1,607,459 in office expenses, other income of $306,288, a foreign exchange gain of $131,416 and a write down of $423,267 on finance lease receivables, resulting in a consolidated net loss of $18,342,796. The consolidated total comprehensive loss for the year of $18,313,249 was impacted by $29,547 of other comprehensive income as a result of the translation of the entities with a different functional currency than presentation currency.
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GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
Year ended March 31, 2023
For the year ended March 31, 2023 the Company generated revenue of $39,695,890 compared to $17,236,773 for the previous year, an increase of 130.3%. Cost of sales of $32,445,836 yielding a gross profit of $7,250,054 or 18.3% of revenue. Revenue for the year was generated from the sale of 226 EV Star CC's, 40 EV Star 22 foot cargo, 3 EV Star Cargo Plus, 19 EV Stars, 7 BEAST Type D school buses, 2 Nano BEAST Type A school buses, and 2 EV 250's, as well as revenue from truck body manufacturing, revenue from the sale of vehicle parts and service, from vehicle transportation, from finance income, and revenue from finance and operating leases. Operating costs consist of salaries and administration of $7,394,085 relating to salaries, employee benefits, and administrative services; transportation costs of $324,773 which relate to the use of trucks, trailers, tractors as well as other operational costs needed to transport company products around North America; insurance expense of $1,801,665; travel, accommodation, meals and entertainment costs of $748,299 related to travel for project management, demonstration of company products, and trade shows; product development costs of $2,090,338; sales and marketing costs of $818,289 interest and accretion of $1,549,769; professional fees of $1,477,094 consisting of legal and audit fees; as well as non-cash expenses including $3,645,893 of share-based compensation expense, depreciation of $1,219,223, and an allowance for credit losses of $95,153. The remaining operating costs for the period amounted to $920,468 in office expenses, other income of $72,867 from the gain on sale of property in California, a foreign exchange loss of $30,897 and a write down of $250,832 of goodwill recognized on the acquisition of Lion Truck Body, resulting in a consolidated net loss of $15,043,857. The consolidated total comprehensive loss for the year of $15,056,864 was impacted by $13,007 of other comprehensive loss as a result of the translation of the entities with a different functional currency than presentation currency.
Year ended March 31, 2022
For the year ended March 31, 2022 the Company generated revenue of $17,236,773 compared to $13,286,184 for the previous year, an increase of 29.7%. Cost of sales of $13,360,068 yielding a gross profit of $3,876,705 or 22.5% of revenue. Revenue for the year was generated from the sale of 18 BEAST school buses, 11 EV Stars, 4 EV Star + and 21 EV Star cab and chassis, as well as 1 EV Star and 10 EV Star CC's for which the Company provided lease financing, and 28 EV Stars that had previously been on lease and whose leases were cancelled and the vehicles were subsequently sold. Operating costs consist of administrative fees of $5,807,744 relating to salaries, project management, finance, and administrative services; transportation costs of $231,472 which relate to the use of trucks, trailers, tractors as well as other operational costs needed to transport company products around North America; insurance expense of $1,244,505; travel, accommodation, meals and entertainment costs of $641,500 related to travel for project management, demonstration of company products, and trade shows; product development costs of $1,381,101; sales and marketing costs of $686,544; interest and accretion of $515,618; professional fees of $1,207,920 consisting of legal and audit fees; as well as non-cash expenses including $5,771,475 of share-based compensation expense, depreciation of $661,958, and an allowance for credit losses of $8,940. The remaining operating costs for the period amounted to $419,398 in office expenses, other income of $364,296 primarily related to the forgiveness of a Payroll protection Loan, a foreign exchange loss of $65,117 and a write down of assets of $607,579 resulting in a consolidated net loss of $15,009,920.
The consolidated total comprehensive loss for the year was impacted by $39,413 of other comprehensive loss as a result of the translation of the entities with a different functional currency than presentation currency.
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GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
Comparison of Annual Results
The following table compares the annual results of GreenPower for the years ended March 31, 2024, 2023 and 2022:
For the years ended | Percentage Change | $ Change | ||||||||||||||
March 31, | March 31, | March 31, | 2024 to | 2023 to | 2024 to | 2023 to | ||||||||||
2024 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||
Revenue | $ | 39,271,839 | $ | 39,695,890 | $ | 17,236,773 | -1.1% | 130.3% | $ | (424,051) | $ | 22,459,117 | ||||
Cost of sales | 33,914,237 | 32,445,836 | 13,360,068 | 4.5% | 142.9% | 1,468,401 | 19,085,768 | |||||||||
Gross Profit | 5,357,602 | 7,250,054 | 3,876,705 | -26.1% | 87.0% | (1,892,452) | 3,373,349 | |||||||||
Gross profit margin¹ | 13.6% | 18.3% | 22.5% | -4.6% | -4.2% | |||||||||||
Sales, general and administrative costs | ||||||||||||||||
Salaries and administration | 8,814,561 | 7,394,085 | 5,807,744 | 19.2% | 27.3% | 1,420,476 | 1,586,341 | |||||||||
Depreciation | 1,858,458 | 1,219,223 | 661,958 | 52.4% | 84.2% | 639,235 | 557,265 | |||||||||
Product development costs | 1,811,472 | 2,090,338 | 1,381,101 | -13.3% | 51.4% | (278,866) | 709,237 | |||||||||
Office expense | 1,607,459 | 920,468 | 419,398 | 74.6% | 119.5% | 686,991 | 501,070 | |||||||||
Insurance | 1,716,157 | 1,801,665 | 1,244,505 | -4.7% | 44.8% | (85,508) | 557,160 | |||||||||
Professional fees | 1,925,938 | 1,477,094 | 1,207,920 | 30.4% | 22.3% | 448,844 | 269,174 | |||||||||
Sales and marketing | 661,426 | 818,289 | 686,544 | -19.2% | 19.2% | (156,863) | 131,745 | |||||||||
Share-based payments | 1,502,112 | 3,645,893 | 5,771,475 | -58.8% | -36.8% | (2,143,781) | (2,125,582) | |||||||||
Transportation costs | 212,263 | 324,773 | 231,472 | -34.6% | 40.3% | (112,510) | 93,301 | |||||||||
Travel, accomodation, meals | 599,169 | 748,299 | 641,500 | -19.9% | 16.6% | (149,130) | 106,799 | |||||||||
and entertainment | ||||||||||||||||
Allowance for credit losses | 1,450,962 | 95,153 | 8,940 | 1424.9% | 964.4% | 1,355,809 | 86,213 | |||||||||
Total sales, general | ||||||||||||||||
and administrative costs | 22,159,977 | 20,535,280 | 18,062,557 | 7.9% | 13.7% | 1,624,697 | 2,472,723 | |||||||||
Loss from operations before | ||||||||||||||||
interest, accretion and | ||||||||||||||||
foreign exchange | (16,802,375) | (13,285,226) | (14,185,852) | 26.5% | -6.3% | (3,517,149) | 900,626 | |||||||||
Interest and accretion | (1,554,858) | (1,549,769) | (515,668) | 0.3% | 200.5% | (5,089) | (1,034,101) | |||||||||
Other Income | 306,288 | 72,867 | 364,296 | 320.3% | -80.0% | 233,421 | (291,429) | |||||||||
Foreign exchange gain / (loss) | 131,416 | (30,897) | (65,117) | -525.3% | -52.6% | 162,313 | 34,220 | |||||||||
Loss from operations | ||||||||||||||||
for the year | (17,919,529) | (14,793,025) | (14,402,341) | 21.1% | 2.7% | (3,126,504) | (390,684) | |||||||||
Other item | - | - | ||||||||||||||
Write down of assets | (423,267) | (250,832) | (607,579) | 68.7% | NM | (172,435) | 356,747 | |||||||||
Loss for the year | (18,342,796) | (15,043,857) | (15,009,920) | 21.9% | 0.2% | (3,298,939) | (33,937) | |||||||||
Other comprehensive | ||||||||||||||||
income / (loss) | ||||||||||||||||
Cumulative | ||||||||||||||||
translation reserve | 29,547 | (13,007) | (39,413) | NM | NM | 42,554 | 26,406 | |||||||||
Total comprehensive | ||||||||||||||||
loss for the year | $ | (18,313,249) | $ | (15,056,864) | $ | (15,049,333) | 21.6% | 0.1% | $ | (3,256,385) | $ | (7,531) | ||||
Loss per common share, | ||||||||||||||||
basic and diluted | $ | (0.74) | $ | (0.64) | $ | (0.69) | 15.6% | -7.2% | $ | (0.10) | $ | 0.05 | ||||
Weighted average number of | ||||||||||||||||
common shares | 24,950,961 | 23,522,755 | 21,877,488 | 6.1% | 7.5% | 1,428,206 | 1,645,267 | |||||||||
outstanding, basic and | ||||||||||||||||
diluted
- Gross profit margin, a supplementary financial metric, is calculated as gross profit divided by revenue. Gross profit margin is not a defined term under IFRS.
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GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
Change in Revenue
The annual decrease in revenue for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $424,051 or 1.1%. This decrease was the result of 77 fewer vehicles delivered during the year ended March 31, 2024 compared to the prior year, which was almost entirely offset by sales of a higher number of vehicles with a higher per unit price, including Type D BEAST and Type A Nano BEAST.
The annual increase in revenue for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $22,459,117 or 130.3%. This increase was the result of an additional 206 vehicles delivered during the year ended March 31, 2023 compared to the prior year.
Change in Cost of Sales and Gross Profit and Gross Profit Margin
The annual increase in cost of sales for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $1,468,401 or 4.5%, resulting in a decrease in gross profit of $1,892,452 or 26.1%. During the year ended March 31, 2024 GreenPower delivered a total of 222 vehicles compared to 299 in the prior year, a decrease of 77 vehicle deliveries. The increase in cost of sales and reduction in gross profit over the year was due to an increase of inventory writedowns included in cost of sales of $886,854, and due to the application of overhead costs from our West Virginia facility. The application of overhead costs in West Virginia was applied to levels of production that are below capacity, and it is anticipated that allocated costs on a per unit basis will decline as production at the facility increases.
The annual increase in cost of sales for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $19,085,768 or 142.9%, resulting in an increase in gross profit of $3,373,349 or 87.0%. During the year ended March 31, 2023 GreenPower delivered a total of 299 vehicles compared to 93 in the prior year, an increase of 206 vehicle deliveries. The increase in cost of sales and gross profit over the year was due to the increase in unit sales, which was primarily comprised of lower cost vehicle models, as well as an increase in shipping and other conversion costs included in cost of sales.
Gross profit margin (defined as gross profit over sales) for the years ended March 2024, 2023 and 2022 was 13.6%, 18.3%, and 22.5% respectively. Gross profit margin declined by 4.6% between March 31, 2024 and March 31, 2023 due to an increase of inventory writedowns included in cost of sales of $886,854, which accounted for 2.3% of the decline, due to the application of overhead costs from our West Virginia facility, and due to below target gross margins at GP Truck Body. Gross profit margin declined by 4.2% between March 31, 2023 and March 31, 2022 due to increased sales under a high volume contract, which were at a lower gross profit margin than sales in the prior year, which were primarily comprised of lower volume sales at a higher gross profit margin. In addition, the decline in gross profit margin during the year ended March 31, 2023 compared to the prior year was due to an increase in shipping costs that was driven by a higher percentage of sales outside of the state of California, compared to the prior year.
Change in Salaries and Administration
The annual increase in salaries and administration expense for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $1,420,476 or 19.2%. The increase over the period was due to salary increases for executive officers and existing employees, and an increase in the number of employees over the period to 116 employees at March 31, 2024 compared to 112 employees at March 31, 2023.
The annual increase in salaries and administration expense for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $1,586,341 or 27.3%. There were 112 employees at March 31, 2023 and 69 employees at March 31, 2022 due to the expansion of our business in West Virginia, and in California primarily due to the acquisition of Lion Truck Body, which increased salary expense. In addition, the increase was also due to salary increases for existing employees, and due to the implementation of a defined contribution retirement plan for US employees.
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GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
Change in Depreciation
The annual increase in depreciation for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $639,235 or 52.4%. Approximately $210,000 of this increase was from an increase in depreciation on right of use assets, with the remainder from an increase in depreciation expense on GreenPower's property, plant and equipment acquired during the year and depreciation expense on assets transferred to property, plant and equipment from inventory during the year.
The annual increase in depreciation for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $557,265 or 84.2%. Approximately $340,000 of this increase was from an increase in depreciation on right of use assets, with the remainder from an increase in depreciation expense on GreenPower's property, plant and equipment acquired during the year, including assets acquired in the Lion Truck Body acquisition.
Change in Product Development Costs
Product development costs declined by $278,866 or 13.3% between March 31, 2024 and March 31, 2023. This decrease was primarily due to a reduction in other product development costs primarily comprised of vehicle parts and related expenses used in product development activities and to a small reduction in warranty accrual, which is a fixed percentage of sales.
The annual increase in product development costs for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $709,237 or 51.4%. This increase was due to increased warranty expense accrual, which is a fixed percentage of sales, offset by a reduction in other product development costs primarily comprised of vehicle parts and related expenses used in product development activities.
Change in Share-Based Payments
Share based payment expense for the year ended March 31, 2024 compared to the year ended March 31, 2023 declined by $2,143,781 or 58.8% and declined by $2,125,582 or 36.8% for the year ended March 31, 2023 compared to March 31, 2022.
Share based payment expense is for non-cash stock option grants, where the value of stock option grants are calculated on the date of the grant using the Black Scholes method and recognized in earnings over the stock option's vesting period. The reduction in share-based payment expense during the years ended March 31, 2024 and March 31, 2023 compared to the prior years was due to a lower stock option expense recognized during each year and due to forfeited stock options during both periods.
Change in Transportation Costs
The annual decrease in transportation costs for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $112,510 or 34.6%. This decrease was due to a reduction in costs related to shipping vehicles for non-sales purposes.
The annual increase in transportation costs for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $93,301 or 40.3%. This increase was due to increased costs related to shipping vehicles for non-sales purposes, as well as for expenses associated with company vehicles and transportation.
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GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
Change in Interest and Accretion
Interest and accretion increased in the year ended March 31, 2024 compared to the year ended March 31, 2023 by $5,089 or 0.3% and increased in the year ended March 31, 2023 compared to the year ended March 31, 2022 by $1,034,101, or 200.5%. The change in interest and accretion expense in the year ended March 31, 2024 compared to the prior year was due to a reduction in interest and accretion on loans from related parties, which was partially offset by interest expense incurred on the term loan facility during the final quarter of the year.
The increase in interest and accretion expense in the year ended March 31, 2023 compared to the prior year was due to an increase in interest bearing debt during the year, including loans from related parties, the term loan assumed in the acquisition of Lion Truck Body, as well as due to the increase on the variable rate of interest on the Company's $8 million operating line of credit, which increased by 4.0% over the year. In addition, the increase was due to non-cash interest expense associated with deferred revenue.
Change in Other Income
Other Income of $306,288 during the year ended March 31, 2024 was the result of a non cash gain from loans from related parties. During the year ended March 31, 2023, GreenPower recognized other income of $72,867 from the gain on a sale of property and recognized $364,296 in other income during the year ended March 31, 2022 from the forgiveness of a payroll protection loan during the year. Changes in other income during each of these years was due to these unrelated non-recurring events.
Change in Office Expense
Office expense increased by $686,991 or 74.6% during the year ended March 31, 2024 compared to the prior year and increased by $501,070 or 119.5% during the year ended March 31, 2023 compared to the prior year. The increase in office expense during the year ended March 31, 2024 was due to general inflation increases in maintenance and utilities expense, as well as full year of expense associated with the West Virginia property during the current year. The increase in the year ended March 31, 2023 compared to the prior year well as due to the increased number of properties leased by the Company in the year compared to the prior year.
Change in Insurance Expense
Insurance expense decreased by $85,508 or 4.7% during the year ended March 31, 2024 compared to the prior year primarily due to a reduction in premiums charged on the Company's insurance policies. Insurance expense increased by $557,160 or 44.8% during the year ended March 31, 2023 compared to the prior year due to increased insurance requirements from growth in GreenPower's business and operations, including from the acquisition of Lion Truck Body, from the new property lease and business expansion in West Virginia, and from growth in the Company's core business and operations.
Change in Professional Fees
Professional fees increased by $448,844 or 30.4% during the year ended March 31, 2024 compared to the prior year, and increased by $269,174, or 22.3%, during the year ended March 31, 2023 compared to the prior year. The increase in the year ended March 31, 2024 was primarily due to increased legal costs associated with general corporate matters and litigation, and the increase in the year ended March 31, 2023 was primarily due to an increase in audit and accounting fees.
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GreenPower Motor Company Inc.
Management's Discussion and Analysis
For the year ended March 31, 2024
Discussion dated: June 28, 2024
Change in Sales and Marketing and Travel, Accommodation, Meals and Entertainment
Sales and marketing expense for the year ended March 31, 2024 decreased by $156,863 or 19.2% and travel, accommodation, meals and entertainment expenses decreased by $149,130 or 19.9% compared to the prior year. The decrease in both of these expenses was due to a general reduction in the Company's attendance at trade shows and sales and marketing events compared to the prior year.
Sales and marketing expense for the year ended March 31, 2023 increased by $131,745 or 19.2% and travel, accommodation, meals and entertainment expenses increased by $106,799 or 16.6% compared to the prior year. The increase in both of these expenses was due to a general expansion of the Company's sales and marketing activities year over year.
Change in Other Costs
The allowance for credit losses in the year ended March 31, 2024 increased by $1,355,809 or 1,424.9% compared to the prior year primarily due to allowances associated with accounts receivable and a promissory note receivable owed by a lease customer, and to accounts receivable from other customers that is over 90 days past due. The allowance for credit losses in the year ended March 31, 2023 increased by $86,213 or 964.4% due to an increase in allowances on overdue accounts receivable.
Annual changes in foreign exchange gain / (loss) is caused by the Company's exposure to changes in foreign currency exchange rates due to financial assets and liabilities in foreign currency. The Company is exposed to foreign currency risk from assets and liabilities in CDN dollars, as described in the Market risks section.
Change in Write Down of Assets
During the year ended March 31, 2024, the Company had a write down of assets of $423,267 from the write down of finance lease receivables with overdue lease payments. During the year ended March 31, 2023, the Company had a write down of assets of $250,832 from the write down of goodwill recognized on the acquisition of Lion Truck Body. The change in write down of assets during each of these years was unrelated to the write down of assets in the prior year.
Change in Loss for the Year and Loss per Common Share
The loss for the year ended March 31, 2024 increased by $3,298,939 or 21.9% compared to the prior year. The majority of this loss was due to a reduction of $1,892,452 in gross profit earned in the current year, with the remainder caused by an increase in selling, general and administrative costs, partially offset by a reduction in interest and accretion.
The loss for the year ended March 31, 2023 increased by $33,937, or 0.2% compared to the prior year, and was due to an increase in the Company's gross profit, which more than offset increases in the Company's selling, general and administrative costs and other expenses.
Loss per common share for the year ended March 31, 2024 increased by $0.10, or 15.6%, due to an increased loss for the year which was partially offset by the increase in the weighted average number of shares outstanding. Loss per common share for the year ended March 31, 2023 declined by $0.05 per share, or 7.2%, due to the reduction in the loss for the year and the increase in the weighted average number of shares outstanding.
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GreenPower Motor Company Inc. published this content on 28 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 June 2024 01:59:05 UTC.
