GW Investor July 2019
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Investor Presentation - July 11, 2019 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 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 other 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. TSX-V:BUS OTC:GWTNF | www.grandewest.com 2 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. TSX-V:BUS OTC:GWTNF | www.grandewest.com 3 Vicinity’s Positioning in the Bus Market Traditional 40’ Bus Cutaway Bus VICINITY or modified to 30’-35’ The Vicinity is the only purpose-built heavy duty Smaller mid-size bus in the market Larger • Monocoque Frame • Lower Capital Costs • Built on a Light Duty Truck Chassis • Big Bus Technology • Lower Operating Costs • 33% Higher Fuel Costs • No standees • Compact Platform • Clean Diesel or CNG Powered • 30-40% Higher Capital Cost • Costly to Operate • Right-Sizing fleets • Altoona Rated ‘Best-in-Class’ • Higher Maintenance Costs *The Vicinity LT (medium duty, 7 year bus) is now for sale, more product detail forthcoming TSX-V:BUS OTC:GWTNF | www.grandewest.com !5 Altoona Test Results: Best-in-Class! The US Federal Transit Authority’s (FTA) FAILURES MANUFACTURER MPG CLASS 1 CLASS 2 CLASS 3 CLASS 4 Altoona test is an internationally VICINITY 7 6.02 recognized tough testing regime, as it Competitor A 34 15 5.54 essentially performs 12 years and 500,000 Competitor B 9 15 4.43 miles of a New York City heavy duty cycle Competitor C 29' 20 2 4.1 upon completion of the testing. It allows Competitor D 12 6 customers to measure performance and Competitor E 31 13 estimate life cycle costing of the vehicle. Competitor F 40’ 12 9 Competitor G 40’ 14 4 2.97 Vicinity Scores Competitor H*(**) 4.8 • Best in Class: Fuel economy Competitor I** 3 1 40 19 • Best in Class: Structural Durability 21 13 Competitor J • Best in Class: Fewest repairs Competitor K** 32 7 4.28 required - only 7 minor Class 3 vs. * Partial test no durablity Competitors ** 10 YEAR TEST Full test results: Vicinity Altoona Test TSX-V:BUS OTC:GWTNF | www.grandewest.com !6 I. Origins and Timeline • CNG Option • US Customers • Buy America + US Assembly • Profitable Operations Q2, Q3 • Vicinity 27.5’ • $100M Backlog • First BC Transit Order (15) • $20M RBC ABL • Spartan Motors US Manufacturing • $54M annual revenue • Grande West Founded • EV Prototype Planned • BC Transit Strategic Partnership • Medium-Duty Prototype Planned • Marketing in Canada • Vicinity 27.5’ Born • U.S. sales reorganization • Vicinity 30’ Model • Weichai Agreement 2008 2013 2015 2017 2019 2010 2014 2016 2018 • CMVSS Certified • Altoona Best in Class • Vicinity Prototypes Delivered • Large multi-year contracts • VP Sales, JM Landry Hired • Vicinity 35’ Model • Alliance Bus Group Distribution • FMVSS Certified • Buy America Orders/Audit • Executive/Board Changes: • CEO, JM Landry • CFO, Dan Buckle • VP Sales, Rob Mowat • Direct Sales Eastern Canada • $70M annual revenue TSX-V:BUS OTC:GWTNF | www.grandewest.com 7 Bus Market in North America - Summary Canada: Approximately 18,000 public transit agency buses U.S.: Approximately 128,000 buses - 68,000 public transit* / 60,000 private transit Bus lifecycle is usually 10-12 years: Bus Sales of ~1,800 in Canada, and ~12,000 in the US every year Grande West Vicinity market opportunity is over 1,200 buses per year (management’s estimates) Competition: New Flyer (NFI.T), Rev Group (REVG), Nova Bus (Volvo), Gillig (Private) and cutaways *Source: APTA and management estimates TSX-V:BUS OTC:GWTNF | www.grandewest.com 8 Business Model • Grande West’s Vicinity bus (27.5, 30 and 35 foot models) costs significantly less, is more maneuverable, burns less fuel and emits less harmful emissions than a regular 40 foot transit bus • Unparalleled capacity to quickly increase or decrease production to meet customer demand with minimal overhead cost impact • No production facility overhead cost burden • No minimum production level commitments • Ability to deliver new products to market very quickly TSX-V:BUS OTC:GWTNF | www.grandewest.com 9 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, Former GM and CEO of Metropolitan Atlanta Rapid Transit Authority (MARTA) TSX-V:BUS OTC:GWTNF | www.grandewest.com 10 Historical Results – Revenue, Backlog & Gross Margin + 933% + 750% $70M Revenue $54M Revenue $53M Backlog $7.5M Revenue $6M Revenue $100M Backlog 180 Deliveries $61 Backlog $1M Revenue $18M Backlog 36 Deliveries 153 Deliveries Backlog - 160+ $6M Backlog 18 Deliveries Backlog - 175 6 Deliveries Backlog - 300 Backlog - 60 GM 12.5% GM 17% Backlog - 21 GM 0% GM 12% GM 0% 2014 2015 2016 2017 2018 TSX-V:BUS OTC:GWTNF | www.grandewest.com !115 Selected Quarterly Information Q1 (March 31, 2019) 3 months ended, March 31, 2019 3 months ended, March 31, 2018 $ $ Revenue 5,733,034 22,440,211 Gross margin 1,340,084 3,020,971 Net (loss) income (680,400) 420,209 Basic and diluted loss per share (0.01) 0.01 March 31, 2019 December 31, 2018 $ $ Cash and cash equivalents 247,880 2,732,437 Working capital 16,432,294 16,921,864 Total assets 39,171,081 40,445,904 Non-current financial liabilities 2,684,733 2,404,022 TSX-V:BUS OTC:GWTNF | www.grandewest.com 12 Balance Sheet Q1 (March 31, 2019) ASSETS Cash + Restricted Cash $600,222 Trade and other receivables