Kansas City, MO-based Smith Electric Vehicles Corp. announced on Sept. 20th that it had decided not to pursue its planned initial public offering (IPO). The company said it would withdraw its registration statement on Form S-1 as filed with the U.S. Securities and Exchange Commission.
“We received significant interest from potential investors, however, we were unable to complete a transaction at a valuation or size that would be in the best interests of our company and its existing shareholders,” said Bryan Hansel, CEO of the privately held firm, in a ststaemnt. “We have instead elected to pursue private financing opportunities to support the execution of our business plan.”
Smith launched in the U.S. as Smith Electric Vehicles US Corp. and began producing trucks in 2009. Its initial truck design was drawn from Smith Electric Vehicles (U.K.), which was founded back in 1920. In January 2011, the U.S. Smith company acquired the British firm and formed what is now Smith Electric Vehicles Corp.
“The strategy behind our launching an IPO revolved around knowing the confidence of our client base of large fleets would be higher if we were publicly traded and they could thus access our public information,” Hansel told FleetOwner.
“With $50 million in revenue last year,” he continued, “we thought the market would give is the valuation we thought we deserved [to make an IPO successful]. But in talks with financing groups, the ultimate response we received was that we were not yet big enough or profitable enough at this time to make a public offering [and we should] come back when we are more appropriately sized for the public market.
“In short,” Hansel added, “we were not getting the valuation we wanted to move ahead with an IPO so we withdrew it. However, we feel we are only a couple of quarters away until we can re-assess our decision on a public offering. We will stay private until we get to that point.”
Further private funding, according to Hansel, will provide Smith the capital needed “to move our manufacturing processes to the next level of efficiency for higher volume. The result will be to drive up profitability by taking costs out of production.”
“We need to raise capital and that’s never easy, but we are in final round” of attaining it privately. He said the firm’s expectation now is to be profitable in the second half of 2013.
A posting by The Kansas City Star reported that Smith had “slashed its production target [from 620 to 380 trucks in 2012] for this year…” The newspaper also reported that thecompany said in filings with the Securities and Exchange Commission (SEC)that it made 79 trucks in the first six months of this year and intends to increase production later in the year to meet its lowered goal.
“The production downsize we stated in April for the SEC filing is accurate,” Hansel noted. “As we are moving on to a higher level of [manufacturing] suppliers to gain efficiencies and drive our costs down, we do not want to be building trucks to lose money on them,” he said candidly.
“We are, however, building enough to keep our customers happy and doing so, again, while driving our production costs down. We are still on plan to plan to build 380 trucks this year—and we have the biggest order backlog we have ever had so the demand is there.”
While Hansel said he has not decided yet whether to publish a 2013 production forecast, he allowed that next year “will certainly reflect meaningful growth over this year.”
He also noted that Smith has had to deal with a “supply-constrained market from the beginning, but moving up to higher-tier suppliers that have a more robust supply chain, we will see throughput increased.”
The company operates manufacturing facilities in Kansas City, MO, and outside of Newcastle, UK.
Smith also announced in Nov. 2011 that it would increase its U.S. operations by adding a manufacturing location in the New York City borough of The Bronx for building its medium-duty Newton models. The company noted at the time that a package of city and state incentives of approximately $11 million would augment Smith’s private investment for the new facility.
“This expansion reflects an important step in executing Smith’s localized assembly, sales and service strategy,” said Hansel. He explained that building more manufacturing facilities “creates jobs, provides Smith customers with more localized support and significantly reduces the costs associated with shipping completed vehicles to our customers.
“The Bronx facility is the first one established to serve a specific market—the New York City region—that consumes a lot of trucks,” he elaborated. “Such a facility will enable us to sell to smaller fleet operators that can receive serve and support at our regional facility. That lets us expand our customer base beyond just serving large national-account fleets, such as Frito Lay.”
Hansel said The Bronx facility is slated to start producing trucks in January.
According to Hansel, Smith’s zero-emission electric commercial vehicles are “designed to be a superior-performing alternative to traditional diesel trucks due to their higher efficiency and lower total cost of ownership.”
The company’s two models— the Newton and the Edison-- are found around the world in a variety of applications, including parcel, food, beverage and equipment delivery as well as personnel transport, including school and shuttle buses.
The Newton (14,000-26,400 lbs GVWR) is offered as a chassis-cab in North America. Since this March, it has also been available as a step van fitted with a Utilimaster walk-in van body. And last October, it was announced the Newton was the basis of the eTrans school bus, with body by TransTech Bus.
The Edison (7,700- 10,100 lbs GVWR) is built in the UK for European and Asian markets and is offered as a chassis-cab, a panel van or as a minibus.
Smith’s global customer base boasts numerous firms with large trucking operations, including snack producer Frito Lay, which has deployed North America’s largest fleet of all-electric trucks; Coca-Cola Refreshments, the largest bottler of Coca-Cola products; package carrier FedEx Express; package carrier DHL; office-supply chain Staples; express/logistics operator TNT; the UK’s Royal Mail; and the U.S. Marine Corps.