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The Addition of Another Approved Service Provider Should Help Support HEVI's Growth

HEVI announced the addition of Amerit Fleet Solutions as an Authorized Service Provider to support the company’s electric powered heavy industrial equipment. Amerit Fleet Solutions, which has more than 800 locations nationwide, joins Mid-Atlantic-focused Quality Truck Center as the second multi-location service company that has partnered with HEVI to support customers with its equipment. The addition of another service provider should help boost the growth of HEVI’s products. In addition to expanding awareness of the brand, this should help alleviate any concerns that potential customers might have about supporting and servicing their equipment. Further, we note that Amerit is a nationwide leader in supporting electric fleet vehicles through its EV Maintenance and EV Anywhere programs. Please see /ev-maintenance/ for more details. Partnership ties in with HEVI’s direct-to-consumer distribution model. HEVI sells its product directly to end-users, rather than using a dealership network, which is common in the heavy equipment industry today. The company noted the challenges that the heavy equipment OEMs face with their existing dealer network, such as concerns of EVs cannibalizing the current diesel-powered product line and its embedded service model. Further, we expect that the incumbent heavy equipment OEMs will face similar challenges as automotive OEMs have with EVs and their existing dealer network. HEVI can match the performance of comparable diesel-powered equipment. HEVI’s products can match a similar diesel-powered machine in terms of the key performance metrics—Hydraulic Pressure, Operating Weight, and Load Rating. HEVI guarantees a full shift of uptime from a full charge—nine hours (longer in some cases depending on the work done)—and the machine can be recharged in just two hours. The HEVI equipment also has the same cabin design and features as its incumbent diesel-powered competitors, making it easy for any operators to use without special training. Company catalysts to watch for in 2024. The company expects to see further margin growth in 2024 on the back of a higher-margin product mix and increased efficiencies in the transmission business. The HEVI product line is also expected to see meaningful product adoption in the Mid-Atlantic region, and we look for announcements around the recently announced HEVI Energy division, which should help support the growth of HEVI and add incremental revenues. Strong cash balance gives a platform for growth and provides potential options to enhance shareholder value. Unrestricted cash at 3Q23 was $21.5 million (~$1.50/share), up from $15.2 million at 2Q23. We see the balance sheet strength and the profitable transmission business as important attributes for GTEC as the HEVI business begins to establish itself in the US construction equipment market.