ADOMANI provides complete zero-emission electric and hybrid vehicle solutions to school bus and medium to heavy-duty fleet operators.
The company was founded in 2012 and is headquartered in Corona. This very young company active in the electric vehicle space focuses on electric school busses and recently also decided to step in trucks.
It has an exclusive partnership with Blue Bird to deliver electric drivetrains. Blue Bird (NASDAQ: BLBD) is the leading independent designer and manufacturer of school buses. This partnership has generated a large number of orders and has generated a backlog as the company is ramping up the production of the electrical drivetrain production. On 30 September the backlog was $6.5M of which they anticipate to deliver $3.6M in Q4’18. The balance of this backlog will be delivered by Q1 2019.
Besides school busses, Adomani began to launch truck, cutaway and van offerings. In October, they held the debut of their all-electric commercial truck products at the Green California Schools and Community Colleges Summit in Pasadena on 29 October. In contrast to the school busses partnership where they deliver only the electric drive trains, the complete truck will be delivered to customers.
The recent earnings showed an improved financial balance sheet with a 5 times higher net worth and 3 times higher working capital as last year. Although they have a Nasdaq minimal bid issue until 12 Feb 2019 and an S-3 offering form out that is not in effect. There should be little concern on dilution before we get a substantial share price increase.
1. Approval to sell electric trucks coming in the next weeks: They have 6 truck assembled with electric drivetrains and these trucks are in the late stage of an approval. This approval is required before able to be sold. From the earnings call (https://bit.ly/2SGICRD), the CEO mentioned:
“We have two vehicles that will be at the show next week in Pasadena and we’ll be showing it to different school districts there. Once those — and we have six additional trucks and a couple of vans and a couple of chassis. But everything — Ford homologation, which is what’s required to get CARB certification Executive Order has been done, except for the brake tests. The brake tests have to be done at certain facility, so two of the vehicles will be going to Arizona either late next week or the following week early to do the brake tests. Once those are done, we’ll submit paperwork to California Air Resources Board, they review it. If they don’t find any problems which they shouldn’t, we have done this many times before, if they don’t find any problems, they’ll issue an Executive Order that those vehicles are legal to be sold. And once they are we’ll attach HVIP funding to them and to be able to take orders starting towards the end of the year. We hope to get them done by mid-November but now maybe it’s late November“
2. Funding to be approved in the coming weeks: They anticipate selling around 400 busses in the next quarters. This assumption is based on the approval of the funding that support schools.
“The next phase of electric school bus funding is expected to come from the $10 billion dollar rural school grant which we’re expecting to be released the next 30 days, followed by the larger $75 million from the California Energy Commission and the $220,000 per vehicle from the California Air Resources Board HVIP program.“
The California Air Resources Board HVIP program is a state incentive funding. The state of California had a funding of $72M and held a public meeting on 25 October to propose an increased new funding of $125M for 2018-2019 https://bit.ly/2yRmFHf. We expect a formal communication to come out any of the coming days on the acceptance.
Last week the price bounced off the $.40 mark showing buyers stepping in. I’ll use this support to take a position in the range of .40 – $.45 until one of the catalysts hit and takes this price higher testing the $.60 range.
In August H. C. Wainwright & Co. has initiated analyst coverage on ADOMANI® with a “buy” rating and a $3 per share price target. This could increase the effect of any good news and should it lead to a major price spike, meaning above $1, we will need to look for an in effect notice of the S-3 form to get out.
The diary of a real $ trader,
Disclaimer: I am long ADOM