Q2 2021 Nuvve Holding Corp Earnings Call
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Good afternoon, and welcome to new the holding corporations second quarter 2021 earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce Joe dorm eight. Please go ahead.
Thank you Gary good afternoon, and thank you for joining us today on the call are Gregory <unk>, Chief Executive Officer, and David Roth.
<unk> have navy.
Before we begin I'd like to remind you that this call may contain forward looking statements. While these forward looking statements reflect movies best current judgment. They are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward looking projections.
These risk factors are discussed in our periodic SEC filings and in the earnings release issued today, which are available on our website newly undertakes no obligation to revise or update any forward looking statements to reflect future events or circumstances with that I'd like to turn the call over to Gregory <unk>, Chief Executive Officer of movie.
Gregory.
Thank you Joe Good afternoon, everyone. Thanks for joining us today to just get their results for the second quarter. We have a lot of exciting work in partnerships underway and are making significant progress executing on our mission to accelerate the electrification of transportation.
Dietary your vehicle to grid, all BTG technology.
We are advancing the implementation of our technology through key partnerships and customers around the world while adoption will take time I pipeline is robust and our future is bright.
They bring on what we said we would do to build that momentum.
Our team is hard at work capitalizing on our resources and opportunities we have maybe Dan and I are looking forward to walking you through our second quarter results recent developments and outlook for the remainder of the year before I dive into the key developments of the second quarter I'd like to welcome investors, who may be in <unk> and provide a brief overview of the difference.
No.
And now he's helping us achieving our mission.
Our mission is to lower the cost of electric vehicle ownership, while supporting the integration of renewable energies.
<unk> and sustainable.
Agreed to take the vehicle platform truly.
Truly fuel the next generation of electric fleets.
<unk> technology allows electric vehicle batteries to store and Destocking energy Wind Park included that from renewable sources, such as solar and wind.
It enables the linking of multiple electric vehicle batteries through EV charging station into it gets you a part of plan of ETP, providing bidirectional services to the electrical grid unique qualified and secured manner.
The transition to electric mobility is among the largest micro microeconomic shifts in our lap.
With tremendous opportunity to accelerate solutions to climate change and we sit at the center of the BTG ecosystem, bringing together utilities.
OEM hardware providers and fleet operators to streamline the adoption and to help integrate renewable energy.
In essence, we are bridging the gap between transportation and energy.
Since our founding in 2010, we have an unsuccessful because your project on five continents and are deploying commercial <unk> worldwide by developing partnerships with utilities can makers and electric vehicle fees.
There is a huge market opportunity for BTG totaling over six trillion dollars.
And <unk> is well positioned to capture this global opportunity.
This is probably very good reasons first our intellectual property includes key patents, making it difficult for competitors to get from BTG functions without diluting our IP alright, thank merger originated within the Academy.
At the University of better way of stocked in 1996, and <unk> had decades of development, but tens of millions of dollars in present funding invested prior to our acquisition of the IP and commercialization of the technology.
Second we are already qualified by multiple transmission system operators, which typically takes anywhere from one to three years to get approval with this qualification it makes it easier for us to expand in other areas.
Third we have a decade of experience our history and strong relationships with key customers optimize our market participation and value proposition.
We have collected a huge amount of data, which is a key element for rapid and accurate developments as well as monetization.
Because of these factors newbie as a significant competitive advantage, which is a key differentiator for US further our global experience allows us to bring the lessons we have learned into each new region, which in turn enables us to bring the unique experience and the incredible benefits of Iot Atg technology to customers at a faster rate.
On our first quarter earnings call, we set out some of our key initiatives and partnerships and I am proud to say, we are continuing to make tremendous progress in all fronts, creating value for our customers and our shareholders in the near and long term.
Some of our recent highlights include the following.
Fourth we completed the formation of our sustainable joint venture the vulnerability that we announced last quarter with some big partners and stomping portfolio company evolved transmission infrastructure. We are very excited about the opportunity that lever will create four new V going forward as part of the joint venture some peak and <unk> plan to deploy from 700.
The $50 million.
Two in aggregate 1 billion capital commitment to levo.
<unk> mission is to rapidly advance the electrification of transportation by funding Vitucci, unable or electric vehicle fleet deployments.
<unk> turnkey solutions simplifies and streamlines electrification lowered the total cost of operation profit honors and support the grid when electric vehicles on the news.
For fixed monthly payments with no upfront cost Evo provide the evs such as electric school buses charging infrastructure powered by new Vitucci platform.
And charging station maintenance energy management and technical advice.
We have previously communicated in the U S. We've been very focused on the electric school buses, which we believe provide an opportunity to solidify our lead in <unk>, while reducing carbon emissions.
If I can score, but there's also remains a top priority for the Baidu and administration.
Within this proposed $1 trillion.
Deposits I mean prospects of framework for $2.5 billion plan to replace thousands of internal combustion engine with zero emission electric vehicles represent only a fraction of the funding needed to exit all school buses and transit bus across the country.
<unk> expertise business model and ability to provide full finance ETP options for school districts and over another fleet owners aims to bring the gap to bridge the gap between the need to electrify the nascent nation transportation fleets and the public funding available to do so.
While the initial focus of Levo at school bus fleet, we see a vast opportunity in other feed verticals such as commercial fleet last mile delivery ride hailing and ride sharing as well as municipal services moving will continue to work with our global industry partners, including developers people owners and operators.
Or is to enable widespread adoption of EQT technology that complements levo is offering.
In short finalizing the JV is.
<unk> got a path forward not only to provide value for our shareholders, but also to expand the reach of our technology.
This is just the beginning of our differentiated approach that can be scaled and replicated to drive future revenue.
One key differentiator about the movie is that we work with those across the value chain from dealerships to school districts to build relationships.
That also translates to customer experience, where we are focused on simplifying the whole process for these dealerships in school district supporting end to end needs.
In the near term we are focused on targeting a handful of states that offer the highest potential return and where we see the fastest path to commercialization.
The long term.
We believe that there is an opportunity to achieve significant annual revenue based on the $750 million commitment from some peak over the life of <unk> bus, which is on average 12 years.
I'd like to turn now to the Great partnership we have with the school bus industry leader of Bluebird as.
As we discussed when I call last quarter that delivered the first a personal BTG typical school bus utilizing our charging technology.
And yesterday, we announced an Mou that extend our partnership covering three key aspects.
The financing of mover at school buses and related profit infrastructure through LIBOR mobility.
The deployment of charging station at key dealerships could demonstrate the solution to local school districts.
Finally, the deployment of a large number of charging station in the parking lot outside of Bluebird production side to demonstrate the scalability of our solution.
These are example of our differentiated technology and important partnerships will lead OEM is to continue to drive the extended implementation not very products across the U S.
During this quarter, we also announced a few of the deployment in California, as well as other states, including our managed school districts and Cowen value School districts. These deployments that include our DC 60 kilowatt solution I expanding the initial deployment and take them and then in the previous quarter.
Some of these deployments are in partnership with key utilities, such as Con Edison SCE Janney.
As well as a few others not yet announced.
The purpose of such deployments goes from simple demonstration of the technology to full scale deployments, including financing supported by utilities and in combination with legal mobility.
We have also been qualified and approved by source, well, which allows us to reach a large number a large number of skus from municipalities and other school district.
During the second quarter, we also announced a collaboration with Romeo power publicly traded energy technology, either delivering advanced electrification solutions for complex commercial vehicle applications.
Through the collaboration we will integrate our communication protocols between movies BTG platform and Romeo power is battery management systems. This collaboration is a great example of how we are continuing to build an ecosystem of solution providers to electrified commercial vehicle fleets.
We need innovation across the transportation and energy industries to create a zero carbon world and this is another step forward in that direction.
Amongst the reach of our technology from battery integration to full financing we'd leave on mobility.
Turning next to an update on our business in Europe.
In Denmark through a subsidiary called movie, Denmark, Etfs, We continue we continue to see the value and they couldnt make variability of <unk> technology, which has been successfully demonstrated and deployed in areas with favorable market conditions.
We also announced during the Colorado, we're working through a partnership with <unk> to market to open new areas like Spain. The promises of <unk> can be fully realized.
As you continue to add growth efforts in the region. We are pleased to have appointed a new leader of Europe pretty syndrome accretion and impressive leadership experience across lots of large domestic and international corporations as well as products. Most recently served as CEO and COO of <unk> group.
Best of luck and innovative renewable energy technology offering it.
Offering and significantly grew the business, we look forward to benefiting from his industry experience along with his broad range of skill set which is home through his 20 plus years carry including driving operational efficiencies managing supply chain operations, and successfully developing and bridging and bringing innovation and innovative products to market.
As you can see we have a lot of exciting momentum underway, which demonstrate the critical role it plays with societies governments and companies across the globe.
As we continue to plan to build on our progress we are seeing strong demand for our technology from customers. We have a strong backlog and that will and David will provide color around how this will translate to revenue over time, including through the Levo JV.
In addition, our <unk>.
Pipeline is growing at an even faster rate.
And our backlog and we have a large number of customers customer contracts in progress through the second quarter.
We believe our strong backlog and robust pipeline is a good indicator of the success, we are achieving the grain customer demand and partnership and strong picture revenue.
Looking ahead, we believe we are well positioned to continue building building in our 10 years of experience in this complex market and continuing to build relationships with key stakeholders, including Oems and other business partners and customers the world that help accelerate the implementation of our technology with our vital to our effort.
And now I will turn the call over to David.
Thanks, Gregory I'll start with an overview of our results for the quarter and our current financial position before getting into our outlook for the remainder of 2021.
As a reminder, we completed the levo joint venture on August 4th and therefore, the results of the second quarter and backlog as of June 30 are not reflective of the potential it presents in.
In the second quarter of 2021, we generated total revenues of $1 million compared to half a million dollars for the second quarter of 2020, an increase of 112%. We saw an acceleration of deployment and installation of our level, two and DC charging stations over the prior year and over the first quarter of 2021.
As a note we expect grant revenues to be a smaller portion of our future revenues as we deploy more hardware and grid services to commercial customers.
Margin on product and service revenues was 53% for the second quarter compared to 59% for the sequential first quarter. The change in Q2 compared with Q1 as a result of DC charger sales, making up a larger share of the revenue isn't carry a lower overall gross margin rate.
SG&A expenses were $5.3 million for the second quarter of 2021 as compared to <unk> 9 million in the year ago second quarter. The increase was primarily attributable to an increase in compensation expenses professional fees and other expenses associated with becoming a public company.
Second quarter, R&D expenses were $1.7 million from $7 million in the year ago period. The increase was primarily attributable to an increase in compensation expenses and subcontractor expenses used to advance the company's platform functionality and integration with more vehicles.
Loss for the second quarter of 2021 was $6.2 million compared to $1.1 million in the second quarter of 2020.
Now turning to our balance sheet, we had approximately $48.1 million in cash as of June 32021, and remain in a strong position with the funding from the transaction and our pipe investment.
Inventory increased to $4.2 million at the end of the second quarter from $2.9 million for the sequential first quarter in conjunction with higher order backlog and industry wide supply chain constraints, which have increased inventory lead times.
During the quarter, we capitalized $43.8 million in deferred financing costs associated with the valuation of 6 million warrants and 5 million options granted to stone peak partners in conjunction with the Levo transaction.
During the quarter, we used $10.5 million in operating cash flows of which $5.3 million resulted from our net loss during the quarter, excluding noncash charges and $5.5 million was used to increase inventories and for the payment of payables and accrued expenses related to our IPO.
We used $3 million in cash for financing activities during the quarter of which $2 million was for the purchase of stock from EDF associated with the IPO at $1 million was used for capitalized professional fees principally associated with the <unk> transaction.
And as Gregory mentioned this quarter, we are introducing one new metric backlog, which will be disclosing going forward backlog represents closed contracts that have not yet been installed and represent future revenues that have not yet been recognized as of June 32.
As in 'twenty, one we had an order backlog of $6.4 million compared to $1.8 million at the end of the first quarter, which is comprised of orders for charging station hardware EV buses in services as we deliver upon the backlog these products and services could be either sold out right to our.
<unk> or finance Relievo if.
If the contracts are financed really low then the revenue recognition period would be determined based on the terms of the financing arrangement.
We are pleased with the backlog levels. We've achieved to date. This year and we are also pleased to see our pipeline growing at even faster rate.
<unk> attorney.
Sure.
Briefly review some of the key financial terms of the Levo joint venture first as we announced last quarter newly owned 51% of the common stock of Levo Stone peak owns 44, 1% and evolve owns four 9% stone peak and evolve the committed to contribute initially up to 700.
$1 million in capital and in return for their capital contributions they will receive preferred stock units, which will which will earn an 8% annual dividend to be paid quarterly.
In addition to their 8% preferred return the preferred shareholders will also be entitled to receive total distributions sufficient to achieve the greater of the 12, 5% IRR and a 155 times myc after which returns are allocated to the common shareholders.
After completing the definitive agreement this month the legal board of Directors was also formed and consists of nine members five appointed by Newsy three appointed by Stone peak and one independent member was appointed.
Over the coming quarters, we will be building out the levo organization and management team to drive forward, the levo product offerings, which we believe will accelerate the electrification of vehicles and accelerate the growth opportunities for levo and movie we look forward to updating you along the way.
Turning to our outlook for the remainder of the year with the completion of our stone peak venture we are demonstrating strong momentum across our business, which is reflected in our increased customer backlog and we expect this momentum to continue based on the even faster growth rate, we are experienced in our pipeline.
With respect to gross margins for the current customers we have under contract in the terms of customer contracts. We are currently negotiating our DC charging station gross margins are still ranging between 20% to 25% on average.
With respect to operating expenses as a new public company. We have made critical investments in building up our sales technology and business development and engineering staff as well as additional efforts. This is critical to why we went public and these expenses are a deliberate part of the business plan. We are executing we can.
<unk> to expect quarterly expenses.
Excluding expenses associated with levo, and excluding the cost of product and service revenues to range between 6 million to $7 million per quarter for the next several quarters, depending on the timing of new head count. We are planning to onboard. In addition, we anticipate additional spending to established a legal entity.
Which we are now forming after the closing of the definitive agreement in August we expect to consolidated expenses of levo into newly given our 51% ownership of the common stock and controlling interests.
We ended the quarter with a cash position of $48.1 million on our balance sheet and we believe is sufficient to grow our business and generate additional revenues, while pursuing our growth opportunities and now I will turn the call back to Gregory.
Okay.
Thanks Vivek in summary, we are pleased with the momentum we are seeing in our business the demand from customers in the exciting partnership underway.
We're continuing to leverage our leading and differentiated technology that meets a pressing need to lower the cost of ownership that is growing rapidly.
We believe the strong demand and robust pipeline will drive significant revenue and shareholder value in the near and long term. We're excited about what's ahead and look forward to continuing to abate to update you on our progress.
Thank you for taking the time to join US today with that I will now turn it back to the operator to begin the question and answer session operator.
We will now begin the question and answer session to.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question is from Eric Stine with Craig Hallum. Please go ahead.
Hi, Gregory Hi, David.
Hi, Eric Eric.
Hello.
Well I appreciate you've given the backlog number that is very helpful. Just any any color you can give on the pipeline.
Clearly, it's expanding in Italy.
It's expanded quite a bit with lethal but any.
Any any details around that.
What you've seen over the last two or three quarters it would be very helpful.
Well I can start and Gregory can add I think as we said, we're seeing the pipeline and even a faster rate than our backlog and now that we just recently announced levo received more interest because of that so we like the speed at which is growing but we're not in a position today to give a quantitative number to it.
That is.
Okay.
That's fair but.
Maybe maybe then just on stone peak.
So that's going to be a big driver of it I mean, obviously right. Now you are you are in early stages. There, but you also know that some of the business that is out there to be add I mean do you feel.
Or how far do you feel youre down the path and educating the market.
This is even an option to finance the school bus for the same monthly payment as a diesel.
Do you feel that the market is sufficiently educated to take advantage of that or is that something that you think will take some more occur going forward.
So.
Let me take that I think that we the market is very different from place to place.
And.
As I said earlier, we are.
We couldnt be everywhere and so we have decided to focus our attention on a handful of states.
And that a handful of states.
What's predicted on multiple factor.
Some of them being the value and potential value of <unk> in those states, but also the level of reception that we've seen.
From the different from what we saw in channels, we've been able to explore is in those territories.
As well as in the case of working with Blue Bird.
The partnership we can establish with the local dealerships that have been local relationships.
And so I think to answer your question, Dave is a broad range, but we see some areas and some other.
As always you have some early adopters that are ready to dive into it and.
<unk>.
We see quite a.
A bit.
A big group of that coming to US right now and I hope, we'll be in position to announce some of them very very soon.
And.
And then it's a question of keeping the education, which is why what we want to do is going through the dealerships setting yet charging station buses demonstrating to the local school districts.
All works together.
As well as doing these demonstration in the parking lot of Bluebird of the full scale deployment.
We led a large number of charging station. We think those are the steps to demonstrate and to accelerate the adoption to show that this is real and to demonstrate to the people about that.
For the school districts.
They can do that they can switch over to electric school buses without impacting their operation right. Their number one priority is transforming the key safely.
And they don't want to Panama and that's why we believe we are putting all the bricks together to achieve that.
One thing I would add Eric which is we just closed on stone peak and.
We're excited to get past that and now were now entities formed in its official we're building out marketing materials as I said in my remarks, we're building out our management team.
And so more of that now can accelerate now that we closed it. So the first step was to close on the transaction and formed the entity, which we've done.
And youre going to see more to come now that that's been completed.
Yes, okay. Good.
Maybe just last one and then I'll turn it over for someone else.
But I noticed that announcement and feedback drives that they're partnering with Nissan in Europe.
Clearly I would expect that you'd be part of that so maybe just kind of what you expect from that and what youre seeing from other Oems.
Yes.
I mean in general.
Two things one is Iot.
<unk> suites and.
And right now we.
Yeah.
We're going to be successful with fleets and that is going to be the entry point.
Now, we think that the reach of the technology can really help across the board and but when you talk to traditional large scale OEM. Therefore, because he is really about how do I bring millions of evs to the to the street right in and we believe that our technology has a strong play in that.
But we are I would say we are tackling this one step at a time and right now our focus is on fleets and even in those partnerships. We've worked with Nissan we have Nissan ENB 200 in Denmark, but theres been no. They have been running on our platform for nearly five years now.
And so we've always been working with Nissan we have a good relationship with Nissan and yes, when when we look at working with Nissan across Europe.
The ABB charging stations that are being.
Being deployed there as well.
That's that's all.
Part of the same same group, but.
Our today as a company our number one focus is.
Midterm Navy duty, especially in the U S. Europe is very important.
Yeah.
Gotcha secondary okay. Thanks, a lot.
Mr side than there was a conference operator. Please continue if you have more questions.
I got to jump to another call.
Yes.
Thank you.
Hey.
This concludes our question and answer session I would like to turn the conference back over to Gregory pull on for any closing remarks.
Yes. Thank you very much. Thank you everybody for being here today, what I need to emphasize here and what I've said is that the.
The fleets are very important for us in the short run which is why we have the partnership with Bluebird.
And that's because they have a much larger contribution to which we are doing that as our number one focus and we are so excited about Europe opportunity.
And with those deployments.
And expect to hear a lot more on that range over the next the next few weeks as LIBOR is being rolled out.
And we can share some exciting news about the progress that we're making so thank you very much.
Sharing with us.
Abate and we look forward to keeping on working with you over the next three months.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Yes.
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Okay.
Okay.
Yes.
Yes.