Q3 2020 Blink Charging Co Earnings Call
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Yes.
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Good day, everyone and welcome to todays charging third quarter results call.
Oh I see.
Time, all participants are in a listen.
I will note later you will have the opportunity to ask questions. During the question any discussion you may registered to ask a question that anytime that pressing the star then one on your telephone. Please note I will be standing by if you shouldn't have any assistance.
It is now my pleasure.
Today's call is John Nesbett of I.M.S. Investor Relations. Please go ahead.
Good afternoon, everyone and welcome to bleed charges third quarter 2020, investor call on the call today, we have Michael Farkas, Blake charging founder and CEO, Brett a Jones, Chief operating Officer, and Michael Rama Chief Financial Officer, Let's take a moment to read the safe Harbor statement.
This conference call contains certain forward looking statements as defined within section 27 days security <unk> security shocked at 933 as amended and section 21 E Gift Securities Exchange Act of 1930 fours amended. These forward looking statements in terms such as anticipate expect intend may will should or other comparable terms involve risks and uncertainties.
These because they relate to events and depend on circumstances that will that will occur in the future. These statements include statements regarding the intent belief or current expectations of blanket members of its management as well as the assumptions on which such statements are based prospective investors are cautioned that any such forward looking statements are not guarantees of future performance.
Involve risks and uncertainties, including those described in Blake's periodic reports filed with the FCC and that actual results may differ materially from those contemplated by such forward looking statements, except as required by federal Securities Law think undertakes no obligation to update or revise forward looking statements to reflect a change conditions I will now turn the call over.
Microfocus. Please go ahead Michael.
Good afternoon, everyone. Thank you for joining us for our third quarter Investor call.
There's been a tremendous amount of momentum in the E V space and solid progress and Blake since we last spoke.
In spite of the tendon Nick you have made great progress expanding and upgrading our network adding.
Adding new partnerships.
Executing our acquisition strategy and further positioning right to grow as a leading provider of charging stations around the world.
For the nine months would be 84% to $3.8 million exceeding last year's total revenue of $2.8 million.
Third quarter revenue was.
It's a little bit more than 900000 in line with the most recently published analyst revenue estimate.
Below consensus purely due to the other revenue estimate being an outlier.
C. Wainwright.
No you're still sure about us doing the ATM withdrawal.
Robbie please get over it and stop ready before we get into the specifics of the quarter.
Peter.
I want to make sure we keep sight of the big picture.
The opportunity in front of brink is enormous and few companies are better positioned to capitalize on the anticipated significant grade.
Demand for eating infrastructure as more drivers make the change to electric vehicles.
According to Bloomberg anyway.
Electric vehicle outlook, 2020, which provides a global outlook for an easy market cap.
Passenger TV sales increased from 450000 in 2000 $15 million to $2.1 million in 2019.
And are expected to reach over 15 million by 2040.
Yeah, Bloomberg also expects that more than 50% of new car sales will be easy use by 2040.
That is a staggering transition of our primary method of transportation.
And it will require a very fast ruled out a v. infrastructure.
God House inside.
So is projecting 25% came to our globally in the number of charging stations now through 2030.
And Bloomberg projects that the need for charging stations will top $290 million by 2040 with a value of over $500 billion worldwide.
The long anticipated shift it eases happening.
Blink is uniquely positioned to continue playing a leadership role in laying the groundwork for this transition.
For Blink as an early pioneer in the infrastructure space. These forecasted adoption rates are extremely gratifying to see.
We've just started our 12 here in this business and over the years, we have carefully evolved and sharpened our business strategy to take advantage of the changing landscape.
So I think it's important to highlight a few key tenets of our strategy.
First we have developed a very flexible offering for our customers and partners.
As well from both a blink owned and host owned solutions.
In this developing market one size does not fit all.
Customers want options to choose a solution that is right for them.
We believe our ability to offer multiple deployment models will help us secure the most attractive locations.
As we rollout our charges globally second to fully understand the opportunity in front of US. It is also important to understand that unlike many of our competitors such as charge point Blink owns and operates a growing portion of the Chargers in our network.
As an owner and operator.
We sell the pump and the fuel rather than just the pump in.
In this model, we pay for the charger for the installation and then each time, a quarter's charge, we realized a recurring revenue stream from the margin between what we buy the electricity for.
And what we sell it to the driver.
Over four.
Because utilization of these charging stations is still in the low single digits commensurate with the percentage of EDI sales as a percentage of total fleets, we don't yet generate significant revenue from charging.
However, given that the world is still in the nascent stages of EDI growth.
In infrastructure build out we have great confidence that our owner operator model represents a solid growth opportunity.
Our contract with our property owners or long term exclusive in nature and as utilization of our Blink only charging stations grow this will drive attractive and sticky recurring revenues from Blaine.
And our shareholders, which from our experience far exceeds the value potential of solely transaction based equipment sales like charge 0.3rd another key aspect of our strategy is that by owning and operating our own Chargers were able to control maintenance and can ensure the charger is fully operational and updated.
The latest and greatest technology.
Our host on option is an important part of our flexible deployment models.
Once the charger installed the host is entirely responsible for maintaining the unit.
In many cases, that's fine, but sometimes our host owners allow the units to degrade this is they're not there.
It is not your main meal.
Wheelhouse is now what they do as the main line of business. It sits in every Rogers and historically there are times, we havent been able to do much about it I think.
Think of it like an automobile sales once the car is sold and its off the lot.
The car company no longer has any oversight maintaining that vehicle and as.
As much as a BMW or an equity or afford with load for all their cars on the road to be perfectly maintained unfortunately, they do not have control once that car resold even when the warranty is still in effect.
To combat this issue and to strengthen our brand perception, we have rolled out a strategic infrastructure improvement program.
And the support the upgrade of host owned equipment in the third quarter, we upgraded 89 charging stations to our level to Q2 hundreds this.
This is the fastest level two charging station available in addition to enhancing the driver experience with blinked designed equipment. Many of these upgrades are converting our host owned part.
Partners to Blink owned multi year revenue share agreements.
So the owner operator model provides attractive long term economics, because we realize a recurring economic benefit each and every time someone uses our charger and it also ensures high quality control for the units in the field.
We are currently focused on deploying the most charges we can in the most attractive locations with the most positive potential utilization.
During the quarter, we made a lot of progress expanding our network with the installation sale acquisition or deployment of 668 charging stations.
Across 25 states.
During the midst of coated.
Of which 200 of those charging stations came as part of our acquisition of Blue L.A.
307, charging stations, which showed a deployed commercially with 62% of those green being blink owned and operated.
Which means we pay for that infrastructure, we aim for that investment and we wait for the revenue stream Dicom those do not generate instantaneous revenues 89 of these were swaps from the first generation Chargers in keeping with the initial initiative I, just detailed which is to upgrade equipment in the field when we have that opportunity.
Notably, California represented over 50% of those installations.
As I just mentioned during the quarter, we announced our acquisition of delay which.
Which included an additional 200 Chargers accordingly, we have strengthened our sales force and resources to heighten our presence and drive our efforts to expand our CFO.
On your footprint.
These efforts are especially critical now has the seat recently affirmed just full commitment to ease of use with the announcement of an executive order from government solution, which will ban the sale of new gas powered personal vehicles by 2035.
We have no more gasoline cars only only easy is after that point.
A key component of our growth lies in our ability to continue to expand our footprint.
Both domestically and internationally. So we're very pleased to have significantly increased our market presence despite the pandemic.
Finally, we are working hard.
Attract the most experienced and knowledgeable people to the brink team since.
Since March 2020, Weve hired 25 people with 19 of those been newly created we've added new positions across the organization, including at our headquarters in Miami Beach at our Phoenix facility, our sales and technology positions in California, and several sales.
Two of the sales positions across the country.
These are very exciting times for our industry and our company now I'll turn turn the call over to our CEO Brendan who will review some of our recent progress. Thank you.
All right. Thank you very much Michael and good afternoon, everybody, it's a pleasure to speak with everyone.
It continues to be a very very busy time Atlantic as evidenced by many of our recent developments on the announcements so I'll jump right in and review just a few of the highlights.
In August as Michael mentioned earlier in the call.
We launched a program for existing blank.
Charging.
In locations to upgrade their first generation equipment to blanks, new fast level, two charging station the Q2 hundred.
Our goal in this initiative.
Is to expand and improve the Blink network of equipment and during the past year, we've upgraded over eight.
184 charging stations to the new ATM I Q2 hundred as part of a strategic initiative.
Improved infrastructure as part of this promotional program, we are providing upgraded equipment to existing post when they enter into a new multi year.
Revenue share agreement with blank this.
This offering gives our host partners the chance to provide the best equipment in the marketplace and with the revenue sharing structure Blink becomes a partner with the owner operator, rather than solely providing hardware.
Also in August we received a follow.
On order from enter energy for a 150 level, two and DC fast charging stations to be deployed in the Dominican Republic for.
For this order valued at over $1 million will be fulfilled during the fourth quarter and as a follow on to the company's previously announced 1.2.
<unk> million dollars purchase order for 200 charging stations with NRG energy.
With these orders inner energy has purchased 350 blink level to DC fast Chargers and residential charging stations.
Inner energy through its CPM subsidiary provides energy solution.
Solutions to more than 66% of the national tourism sector in the Dominican Republic, and installation that locations for blinked charging stations will include hotels.
Resorts shopping centers and gas stations.
Following on Michaels comments I also want to highlight the extraordinary as.
To temper announcement of Governor Gavin.
Sims executive order and 79 Dollarstwo banning the sale of internal combustion vehicles by 2035. This is truly a ground breaking announcement, the governor's move to cut greenhouse gas emissions in the country.
But most populous state indicates true leadership in helping citizens of all income levels make the change and choose cleaner.
Cleaner transportation alternatives, we see tremendous opportunity to help further California is environmental mission and we're very excited about the opportunities represented.
During our most recent acquisition of Blue law, the car sharing partner to the city of Los Angeles. This acquisition allowed us to double.
The number of Blink charging station in Los Angeles, while providing affordable enhance PV mobility options to community residents our goal is to reps.
Bifurcate the BLA model in other cities throughout California, and eventually in other urban centers across the country most.
Most recently, we announced several innovative partnerships, including a strategic development and production agreement with SG blocks to bring solar off grid modular evening.
Coupling stations to market now.
FC block recycles cargo shipping containers for use in construction and other uses and working together will bring our charging station to their location than others to deploy a rapid and cost effective EV charging solution.
Additionally, we recently announced.
And the deployment of 44 level to be charging stations at the at least from a residential building in Los Angeles with a focus on green living.
They are truly a pace setter and sustainable living solutions, and we're proud to be part of their suite of residential amenities.
And finally last month we.
And out there working partnership with sustainable Westchester, a leading non profit consortium of local municipalities in Westchester County, New York facilitating the effective collaboration of sustainable solutions, resulting in healthier more resilient communities, we're working with them to promote and.
Build the build out of VB charging stations by providing 50 level too I Q2 hundred Chargers for deployment in the local communities to give you some context around the potential impact of this part partnership Westchester currently has more than 5500 registers Tvs, but only one.
Charging stations per 200 per 22 easy drivers, we'd like to bring that ratio significantly down now I'll turn it over to our CFO, Michael Rama to run through some of the specific results for the quarter. Thank you very much.
Thank you Brendan and good afternoon, everyone link.
Link had a solid third quarter 20.
2020, particularly in light of the continued economic impact of COVID-19 pandemic.
I thought it would be helpful to first remind everyone of our revenue model.
As Michael discussed a unique advantage of the uplink business model is our ability to provide multiple options to our customers.
This flexibility.
He is key in our ability to quickly expand our network.
We offer for business models for E charging equipment and connectivity to our cloud based TV charging network and we work with our property partners to help design a program that fits their needs.
The four options are as follows.
There is a blink owned turnkey option, which is where we own and operate the charging station. It is utilize in high traffic locations with significant potential for high utilization in this model blinked provides the equipment installation operations and administration of the charger deployment and shares.
A portion of the charging revenue with the host.
Next is the Blink owned hybrid option, which is another model, where we own and operate the charging station.
It is our most common business model and it fits more easy charging low to locations.
The hybrid option allows hello.
I want to quickly provide the charging stations to their customers in a cost efficient manner.
Covers cost of equipment operations and administration, whereas a host location is responsible for the installation.
Charging revenue shared under the hybrid model as well.
Third is our is.
Okay host owned option, which is for those who want to be the owner and operator of the EV charging stations. The host location is solely responsible for the costs associated with the deployment of the be charging stations. This includes installation the cost of equipment, the annual network fees and the cost of maintenance and operations in.
The host own option the host location receives the entirety of the charging revenue minus network and processing fees.
In the fourth option is our newest business model, which is blink as a service, which has an exciting option for host locations that want.
Both the flexibility of setting the EBIT charging rates on the.
No it isn't but prefer not to have the upfront capital expenses associated with purchasing equipment.
Great provides equipment maintenance and operations for a low fixed cost for the duration of the contract.
The hosts location received the entirety of the charging revenue minus network and processing fees.
Now.
The Queen not to some financial results for the third quarter of 2020 Red.
Revenue for the third quarter of 2020 grew to $905000 hardware sales hardware sales drove the revenue increase the period with a 74% increase.
This increase was attributable to increased sales from generation to charges home units and.
DC fast Chargers when compared to the same period in 2019.
Third quarter 2020 revenues were impacted by the timing of certain orders that we expected in the third quarter, but are now expected to be completed in the fourth quarter.
For the nine months ended September 32020 revenue grew 84% to 3.8 million.
Million dollars compared to the nine months ended September Thirtyth 2019. This is noteworthy because our revenues for 2020 have already exceeded full year 2019 revenues of $2.8 million.
Targeting service revenues from the company owned charging stations was $163000 for the quarter a decrease from last.
Due to the impacts of cold with 19 fought a doubling of over second quarter of 2012.
A stay at home regulations were lifted we've seen a steady uptick in usage of our charging stations.
We expect over the medium to longer term to see the continued growth in our in the charging service revenues.
From our owner and operator charging stations due to the two due to more electric electronic vehicles on the road and our expansion of the plant network of Chargers.
In terms of expenses operating expenses for the quarter increased to $4.3 million from $2.9 million, primarily driven by increased compensation.
Here's an expense as we continue to scale the business to prepare for and create the dynamic growth we anticipate.
We have strengthened our executive marketing sales in operation departments.
Our net loss was $3.9 million million dollars for the quarter compared to a net loss of $2.6 million last year.
Sales now a few comments about our cash and liquidity at the close of the quarter, we had $14.9 million in cash.
Our financial position and has strengthened and and the capital markets environment in the EPS space has never been stronger.
During the second quarter of 2020, we create a $20 million ATM program from.
Well 17th 2020 through September 32020, we sold an aggregate of 3.5 million shares of common stock under the ATM for aggregate gross proceeds of $19 million.
With that we will now open the call for your questions.
And at this time as.
I would like to ask a question. Please press Star then one on your telephone.
Even withdraw your question at any time by pressing the pound key once again that is star and one.
And we'll take our first question from John Silversun with what our research. Please go ahead.
Good afternoon, everyone.
Michael I wanted to spend.
A little bit of time on deploying our own and operate as a model battery sales some interest in parts to it I guess a two part question is I'm trying to understand how to model. This first can you provide some color on the current utilization rates, but also very importantly, I'm trying to understand you know as you deploy these.
Going forward.
How do we how do we think about utilization rates and timing of that in other words are there just grow with with the v.
Car.
Cars on the road or how do we think about the growth in there faster than the industry slower than the industry and also how the profitability.
Changes on that.
Ovation increases I assume that has a pretty high contribution margin.
Okay.
In regards to utilization during our last call you know we.
Basically stated that we weren't really disclosing utilization rates.
But bottom line is.
If you really look at the TV industry plug in hybrid TV.
The industry [noise].
When looking at that space.
Looking literally at low single digits of of entire fleet sales, if you're looking at passenger vehicles throughout the United States.
And our utilization is very similar it's low single digits, but what we do see is as more cars are available.
On the road.
In tandem with the increase in percentage.
We are also seeing increasing and utilization.
And as more and more cars are on the road are easy is it will directly impact utilization.
And as the utilization goes out as the margin.
Profile for you I mean, not saying I got from 10% to 50%.
70% utilization that single unit somewhere out how do you think about profitability of that particular deployed yet.
Okay. So when you when you're looking at.
From from a perspective of utilization.
One of our charging station.
Switching blink on which is something thats, a turnkey solution, we pay from agency.
At a 5% utilization rate.
We would make about 20 bucks.
Among at about a 10% utilization it would be considerably higher.
The real the real number that that one really wants to look at and trying to figure out.
What value can be brought as an investor where do they want to invest or capital do you want to venture capital in the media space, which is what we are doing infrastructure side as more of the picks and shovels than it is for the searching of the gold I would say the gold searching for is more like on finding the right. The producer who is going to score.
And.
And historically, if you look at the automotive markets and that's really where my background is not going to work in the auto industry, but my passion my entire life.
And automobiles.
Then if you study the market you'd realize at 99% of auto manufacturers have gone bankrupt.
And I'm not joking its actually over 99%, but.
What we do is we supply the cars the matter who makes.
And our weather GM or Ford overseas or BMW or with the end North Tesla.
Or BMW Audi.
We don't Gamble on who that is we're going to make sure that whoever that car, that's being driven around the medical manufactured within one who could supply the fuel and Thats really if you look at transportation on the money is in the fuel on it's not in the.
Car and if not in the gas pump, it's actually the one who supplies the fuel and Thats, where we try to focus brings business on him, but the real thing that one must look at when they're trying to figure out which of the company's infrastructure, especially want to invest which has the most possibly for long term growth.
When you own and operate a charging station in our model.
Model.
And.
Or you're a charging station owner.
A host known unit if you look at our model between Austin charge point.
There is a 10% utilization rate margin will make a whole host owner property owner about $26, a month, where the charge point units only $20 a month.
Their fees are more expenses.
Number one number two our charging stations are more powerful in the fast you're able to get that part we're into the car. The more money you make on it on a per transaction basis, but when you really looking at it from.
Owning the unit like us that we do versus what charge point does.
At 10% utilization when the.
When the units.
We'll make about $300 and change during the $16 a month.
And trucks going to make $20 a month of that same charging station, we make $316 a month.
They make $20 a month, that's a 10% utilization.
At 25% utilization charge.
Our next $27, a charging station per month, and we make $793 a month with.
With our charging station being in our model. So when you look at where you want to go there is no question our model is more sustainable.
And the revenue produced by.
From that charging station is much much greater than just having it on your network and seller get once upon a time.
So that's our topic is clear in the past our current strategy for Blake, obviously much better economics.
Out how does that impact or.
For the capital need, let's say in capital deployment with that in terms of the owner operating strategy that in particular.
Owner.
That expensive to deploy these diverting capital or how do you. How are you getting that deployed in the field from a financing standpoint.
Okay. So yes, there's obviously an investment that we need to make versus a competitor who sells the hardware. They typically make money off the hardware itself and.
And they have a small occurring we have to invest money in the ground and while the payback takes a little while again remember listen to the numbers until yet at 25% utilization. The difference is set at $27 a month in profit for charge point, and we do $793 now at 50% utilization.
And it is a very very high there were $38 and we're at 1500 $88. So yes, you have to invest a little bit more money in order to get that kind of return, but there's a big difference also because in our model. We have exclusive rights for very long periods of time to be the sole provider of BV infrastructure in that low.
Location. So it's not like just showing that a charging station and the owner of that property puts it in a parking space. When we provide our services when we invest our money into our property owner foreigners locations. We have a long term exclusive contracts to provide those services and it's not just that spot rates.
It's every single parking space in that location.
I just have one last question I know, it's going to be a hard on asps and all kind of step back, but when you when you talk with your customers and your partners out there.
Why are they choosing one strategy versus another I know its of having the flexibility to pick one model versus the other but obviously for you the more attractive model being blank owner operated how are you.
He pitched to a customer or partner and why did they pick one versus another just in a kind of a general thought process.
Okay, what we're seeing in the type of customers that we are dealing with when you look at like the Cushman Wakefield win.
When you look at the parking garage operators.
When you look at the Mcdonnell.
And.
These are companies that that manage.
Properties that belong to another party.
So we may have our desire to go down a certain path.
And the manager or whether it's a property manager or as it's a garage management company. They may have their own path property owners for.
I will have their own models on how they operate their business, you're all property owners that outsource every single service.
Whether its washing machines, if you're in multifamily, but they outsource areas there are others.
Property owners, who handle everything from easy no matter what it is so because we need.
Paul.
The company is what has vast scale and they represent different types of owners.
The reason why we're getting selected by them to work with them is because of our flexibility.
Because Mcdonald's has onerous certain ones that want to own the hardware and the other ones that don't want to take technological risk, but they're willing to pay for the entirety of easy and so.
In addition, we have other ones that have a great location. They don't want to put up a nickel or penny. They just want to get rent to a revenue share. So because of lost flexibility, we're able to handle these companies where our competitors sometimes are unable to because not having that same type of flexibility.
Great. Thanks, Michael.
Thank you.
Oh, Thanks again to ask a question that is star and one on your telephone well.
Well pause another moment your line questions. Thank you.
Uh huh.
It does appear that there are no further questions I'll turn the call back over to management team for any closing remarks.
Thank you everybody for joining us and we are looking forward to a very exciting year head.
For us.
With with hopefully with the kovar being behind us and more people traveling on the road it should increase utilization accordingly, and with our new hardware offerings and partnerships were very excited about being able to deploy a lot more equipment over the next year into.
Looking forward to some very exciting times. Thank you everyone.
We appreciate it.
Thank you. This does conclude todays program. Thank you for your participation you may disconnect at anytime.
Okay.
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