Q2 2021 EVgo Inc Earnings Call
[music].
Greetings and welcome to the E V go second quarter 2021 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
And what should require operator assistance during the conference. Please press star zero on your telephone keypad.
A reminder, this conference is being recorded it is now.
My pleasure to introduce Tetra of Investor Relations. Thank you may begin.
Hi, everyone and welcome to <unk> second quarter 2021 earnings call.
At Brooks and I head up Investor relations of the company.
Today's call is being webcast and can be accessed from the investors section of our website at investors <unk> E V go desktop called.
The call will be archived and available there.
Company's results Investor presentation, and a transcript of today's proceedings will be available at the events and presentations section of the investors page after the conclusion of today's call.
Joining me on today's call are Kathy easily easy go CEO oldest shoveling cobalt the company's chief financial Officer.
Members of <unk> Senior management.
They will.
We will be discussing would be good latest financial results for the second quarter of 2021, followed by a Q&A session.
During the call management will be making forward looking statements regarding the 2021 fiscal year and our outlook for expected growth and investment initiatives.
These forward looking statements involve risks and uncertainties.
Many of which are beyond our control and could cause actual results to differ materially from our expectations, including among other risks and uncertainties the severity and duration of the effects of the COVID-19 pandemic.
These forward looking statements apply as of today and we undertake no obligation to update these statements after the call.
For a more detailed description of factors that could cause actual results to differ please refer to our form 8-K filed with the SEC today and posted to the investors section of our website.
Also please note that certain financial measures we use on this call are the non-GAAP basis.
For historical periods, we provided reconciliations of these non-GAAP financial measures to GAAP financial measures.
With that I will turn the call over to Kathy Julie E V go CEO.
Yes.
Thanks, Ted I'd like to welcome everyone to today's second quarter of 2021 results call.
Whether you're a current shareholder or just interested in learning more about Eaton goes business and our role in the growing electrified transportation sector. We've got a lot to share with you today.
This is the first time, if you go with reporting results and sharing our outlook since we commenced trading as E. V go on NASDAQ on July 2nd after completing our business combination with climate change real in pest solutions or Chris.
I know I speak for the entire team of D. V go when I say, how pleased we are to be here and how excited we are to be able to discuss the growth and new development for D. V go.
During the second quarter 2021 we achieved growth across all need to go segment, we deepen relationships with our core partners.
We cultivated business with new ones.
The backdrop for easy go success and exciting growth trajectory, it's a rapidly transforming transportation sector as the electric vehicle industry continues to experience unprecedented growth and supportive policy backdrop, both in Washington, and at the state level in the U S and indeed around the globe.
E V sales were brisk in the first half of the year with over 200000 EV sold in the U S strategic.
About one third of 70000 of which we estimate were non Tesla vehicles, reflecting increasing adoption and additional vehicle options available to drivers.
E V sales in the U S for the full year are expected to continue to accelerate driven by long term industry growth fundamentals first OEM commitments.
Globally. The auto industry has reached a crucial tipping point and its support for the electrification of the transportation sector.
This is translating to meaningful financial support with an estimated $330 billion of investment in bringing these to market over the next five years.
The second significant tailwind is favorable regulatory dynamics.
President Biden has announced an executive order aimed at making half of all new vehicles sold in 2030 zero emission vehicles.
Additionally, policymakers are working hard in Washington on proposals that will provide billions of dollars to support charging infrastructure and consumer purchases of E D.
And third shifting consumer preferences. According to a Harris poll conducted in July 48% of Americans said, they would consider purchasing in electric vehicles, a day and that figure is up from 37% in just April of this year and up from around 20% in 2017.
Related to the strength of the easy market E. V. Go added approximately 35000, new customer accounts during the second quarter and more than 53000, new customer accounts year to date.
He goes customer account number now exceeds 275000.
Further driven by the factors of a reopening economy. The March of EV adoption in both the retail and fleet segments, and new take or pay arrangements with some of our fleet customers easy go realized kilowatt hour networks throughput growth of 48% sequentially.
Hundred and 25% versus the prior year quarter.
During the second quarter of 2021 E. V go commissioned 104, new charging stoss, representing an approximate doubling of our first quarter of 2021.
Operating in 68 Metro areas and in 35 States E. D goes total fast charging store count at the end of the second quarter was 1548.
E V go continues to execute on its robust spell buildout them identifying locations that will deliver our targeted financial returns.
Today, we have more than 2000 charging cells and what we refer to as the active engineering and construction or active enc pipeline.
Representing strong visibility into further solid growth.
Roughly 85% of the active E&C pipeline styles are located within the top 20 U S metropolitan markets.
And the majority are part of the G. M. E V go partnerships to deploy 2000, and 750 fast charging cell a 2025.
By definition stalls or added to our active E. N C pipeline only after undergoing a rigorous evaluation process at which point, we have a high confidence sensation completion and E. V go begins investing capital into those projects.
Upstream it after the N C is a pipeline of literally tens of thousands of prospective station locations. The D. V. Go has identified across the us and meet the needs of the rapidly expanding E D market.
We're working closely with others in the charging ecosystem retailing municipals lighthouse electric utilities local government permitting authorities and OEM and state government funding partners to create a charter deployment flywheel the position as the industry to rapidly advance them station concept to energize station.
Well it takes it easy go just four to eight weeks to actually construct the fast charging station.
Typical all in timelines and N station deployment can take them nine to 24 months, allowing for interactions and sign off by host utilities and government permits.
Help compressed project development timeline E V go kicked off an initiative in April called connects the walk in which we are providing a forum for stakeholders like site hosts and utilities to share best practices on charter deployment across their jurisdiction.
<unk>, we're aiming to achieve idea to energize Asian timelines that are more efficient and have meaningfully shorter, possibly removing months or even quarters from the timeline once that flywheel is really spinning.
E V goes market leadership in public fast charging for the retail market have given rise to expanded work with both existing and new partners as the base of E. B applications extends across new segments of the transportation sector.
A recent development I'd like to highlight here is the mid July announcement that E. V. Go was chosen by G. M to serve as a preferred charging provider sports I'll Tee and charge 360 fleet service.
M is in its own words, expanding its opium charged 360 solution to fleet customers in an effort to make it easier for fleets to switch from internal combustion to all electric offering.
Well like G. M. We believe that fleet adoption of electric vehicles is crucial for reducing transportation carbon emission and hence E. V. Go was offering a suite of solutions for the emerging fleet segment that are tailored to meet individual fleet customer needs.
<unk> is proud to be partnered with G. M. I'm pleased and proud to have been.
<unk> broadened our GM relationship beyond the expansion of the public retail network I've. Just described the strength of the G. N E. D. Go partnership is founded on a shared philosophical and commercial commitment to electrification of transportation and zero emission vehicles.
As another example of market expansion into sleep.
E V. Go is now contracted with two leading autonomous vehicle companies to provide each with dedicated fast charging side away from their home base of operations.
This is important for several key reasons.
First dedicated charging depots will allow those autonomous vehicle companies to quickly charged and recirculating vehicles in the cities, where they are commencing operations.
Similar to the use profile of the rideshare vehicle that E. V. Go has served for years self driving vehicles are utilized and very high mileage situations often more than seven times the vehicle miles traveled per annum than a privately owned car.
Second eat it goes momentum in survey autonomous vehicle companies illustrates the value we see it being a first mover and trusted partner to those companies, who like us are unlocking new norms of operating for 20 <unk> century electrified transportation.
Similar to the dynamic that benefited the E V go network with the addition of Rideshare, we expect autonomous vehicle activity to turbocharge throughput growth on either goes networks, given a these higher mileage patterns compared to everyday drivers.
The third reason that the business with these autonomous vehicle companies. That's important is that the contract structure includes take or pay arrangements that provide for revenue minimum E. V. Go in exchange for a guarantee of exclusive charging access increasing both a certainty and reducing risk for both parties as the self driving market continues.
To expand a true win win.
And finally I'd note that the sector is just getting moving.
Vehicle fleets are starting off in dense urban areas with supportive regulatory backdrop the.
The industry's high rate of growth is forecasted to continue more broadly once certain critical technological and consumer thresholds are reached.
Well in July either go also announced a deal to acquire E mobility software company Ricardo for $25 million.
I would like to highlight several key aspects of this acquisition that we're most excited about.
First the purchase reflects a highly strategic and logical extension of the efforts already well underway and even go to create value added software and data driven ancillary services.
For cargoes robust software offering unmatched customer reach and product development pipeline are well aligned with E. D goes vision and growth.
Second <unk>.
Cargo is a well established platform that serves as the go to for so many drivers in the industry.
For cargo was founded in 2009 and will be known to most of you through its club share offering.
I believe well I'm sure has 1.6 million users and $3.3 million app downloads with coverage of more than 61000 level, two and fast charging stations in North America alone.
Users share crowdsource reviews photos and data, helping the whole EV community to facilitate communication and understand and address drivers' needs.
Its emergence and growth over the last several years provides a clearinghouse for communal inside that helps drivers optimize their experience and charging network operators to improve their services.
The third thing, we're really excited about with Ricardo is pay with plug sure.
This proprietary application developed by Ricardo allows for seamless payments across multiple charging networks to expedite and improve the charging experience for EV drivers.
E V go will be moving quickly to adopt pay with pump share on our network and we will encourage other charging networks to do the same.
We are keenly aware of the important role the puncture platform plays within the ecosystem and are committed to maintaining the integrity and independence of the platform for drivers.
Network operators and automakers E. D go will ensure that driver and operational data remain unbiased and secure we will also be enhancing platform features and improving transparency for all parties, including for example, publishing the plug score algorithm to charging network companies.
E V go has steadfastly committed to enabling the rapid development of the EV sector and the integrity of our platform such as punk share is essential to those efforts.
The final development I'd like to share relates to E. V. Go technical leadership, we built the E V go innovation lab and advanced Technical laboratory to test validate and certified charging equipment for safety performance and user experience doing this successfully requires rigorous testing of both hardware and stuff.
Were components of the Chargers.
We design prototype and test all applicable national and international automotive standards for safety efficiency performance and user interfaces and interactions with.
We test for and then ensure seamless interoperability between Chargers and the E vs themselves, including models in operation now and those in preproduction.
The E Dingo innovation lab enables the entire industry to anticipate and remediate technical challenges inherits a young fast moving sectors and it positions E V go to lead the industry in specifications for the next generation of charging equipment and software. We provide this valuable information to E V O N and charger manufacturers for free.
And then we worked together with all parties to address these issues before they impact customers.
In summary, even he goes mission to speed the adoption of electric vehicles through the investment in charging infrastructure is progressing at an accelerating pace.
E D goes build own operate business model has equipped us with the experience and insight to be a market leader it could be a provider of first resort to the rapidly expanding E D market.
While retaining a relentless focus on financial discipline as we invest capital, we're able to offer new and emerging E. D segments charging solutions that meet their particular needs. These include D. C F C or level two or a combination of charter types. They include use of the E. V go public network dedicated depots or both.
E V go owned assets charging as a service or white label services.
We've also crack the code on keeping the most expansive fast charging network in the U S operating at 98% uptime.
Key element of the customer experience and retention.
We've built the E V go innovation lab, which has become a trusted go to resource for automakers to test their new EV models on different types of charges.
We've pioneered a best in class power sharing and power routing configuration for our fast Chargers.
We've integrated proprietary software functionality that can drive margin expansion and delight E V drivers via reservations driver coupons loyalty rewards and behind parking garage pegged it.
We've been a reliable partner for state and local funding agencies are delivering on our commitments to the poor Chargers and offer electric for all and thus we've earned the trust of industry participants across the board I'm proud to be at the helm of such a company and working alongside a truly world class leadership team.
Even though we will continue to offer the growing data of EV drivers and sellers convenient and reliable charging infrastructure, where they want it and when they want it all while making an outsized contribution to addressing climate change.
That I will turn it over to all going to go through some of the particulars in the quarter and our outlook.
Thanks Kathy.
First and foremost I would like to highlight that upon the completion of the business combination with Kris on July 1st Easy go received net cash of $573 million, which will enable us to fund our strategic plan going forward.
As Kevin noted earlier, we're pleased to report solid results for the second quarter of two months, it's been do you want <unk>.
Including strong growth in customer accounts network throughput and revenue.
Please let me take you through some of those numbers and discuss how they support our outlook for 'twenty or 'twenty one.
As Kathy mentioned, we saw 48% quarter over quarter grows in kilowatt hour networks throughput during the second quarter of 'twenty to 'twenty one.
And 126% gross year over year.
Retail and fleet both benefited from a continued reopening of the economy and strong EV sales.
Network throughput was ahead of our forecast for the second quarter and the first half of the year.
And we remain on track to achieve.
Our full year 'twenty. It went to one network throughput targets of 24 gigawatt hours.
Revenue exhibited similar growth churns.
Functionally we saw a 16% increase in revenues.
With this too we remain on track to achieve our $20 million revenue target for full year two inches by two months.
Adjusted gross loss, which does not only include energy usage fees, but also fixed costs, such as the duration and maintenance expenses call center or size leases.
Was negative $61000 for the quarter.
Equating to a margin of negative one 3% for the quarter.
260 basis points from negative three 9% in the first quarter of the year driven by improved energy cost per kilowatt hour due to better leveraging of demand charges.
Easy go Daddy, Kate considerable resources internally to making our operations more efficient while continually striving to reduce costs.
One of the bigger component of our cost base.
His energy and related expenses.
By working with our utility partners to improve redesign too.
To better match, the EV charging use case.
For instance by limiting or eliminating demand charges.
We're able to improve our energy cost.
E V go was able to shift our California stations away from tariffs with demand charges.
Across three major calling for utility territories.
Two of them in the last 18 months.
General and administrative expenses increased to $12.2 million in the second quarter of two is just went into one company.
Compared to $11 million in the first quarter of two lenses one to one.
And $6.8 million in the second quarter of two I just mentioned.
The increase is in line with either goes expectations and primarily driven by the company's ongoing gross investments.
Adjusted EBITDA for the second quarter of two months just went through one was negative $11 million compared to negative $9.8 million in the first quarter of two inches went to one.
Cash flow from operations for the first half of two months. It's been two one was negative $1.4 million, which is $14.4 million higher than during the comparable periods in 'twenty to 'twenty two.
Driven mostly by OEM partner Concha prepayment of $20 million in the first quarter of two inches. Once you won.
Capex was $23.3 million in the first half of two months just went to one as compared to $7.7 million in the same period last year.
As we continue to accelerate and execute on our stone built plant.
Let me take a moment here to emphasize the flexibility of our business model from a financial perspective.
Out of the $573 million, we have raised.
The vast majority well north of $400 million.
Will be invested in buildings charges stoves.
And we have full discretion over the pace of that capital deployment.
We can accelerate charges deployments, if the market's ramps more quickly.
We can also conserve capital if market development is for some reason delayed.
But remember each station investment is discrete moor under $1 million got packs and have lead times of months not years.
Also as Kessel mentioned previously we apply rigorous underwriting criteria to every opportunity.
This combination of factors affords eagle was enormous flexibility to navigate market dynamics and deliver shareholder value.
Yeah.
In order to help you.
The investment community fully appreciate our business model and the robustness of easy goes process for Green lighting project I would like to walk everyone through the unit economics of a typical charging station.
Just mentioned.
Every single project developed by either go undergoes rigorous underwriting process and he's evaluated against pre Sade financial criteria.
The model for every single project.
Three key elements.
First capex.
This includes the cost of construction of the site.
Well, it's Amy investment offsets.
Such us topics incentives from partner contributions public agencies and used to it.
Second operating cost. This primarily includes the cost of energy on the location, but also encompasses non energy costs, such as rent and maintenance for this site, which as a reminder, all in cost of goods sold on our income statement.
And third revenue.
This includes site specific revenue forecast based on a detailed utilization model.
So let us dig more into each of those elements.
First on Capex.
On average a charging station is comprised of four to six stores, which means it can charge for to six vehicles simultaneously.
Topics there stone is roughly hundred $10000, which includes both equipment and third party labor.
Bringing all the installed cost to somewhere between 400 and $700000.
These figures are obviously affected by site layout and equipment.
That's where investment offsets.
It would build a stall in partnership with an OEM for instance general Motors.
Capital outlay may be reduced by up to one third.
In addition, there are state local or you choose your incentive the initial cut patch, maybe offset by anywhere from 5% to 10% to over 50%.
To make this point again.
All of these inputs unknown.
And included in our model when we decide what is it to go ahead with the project.
Yeah.
What's your agent cost side.
Our stores are subject to commercial and industrial you choose the tariffs, which vary greatly across geographies and sometimes are subject to demand charges. In addition to the vol of magic caused the kilowatt hour of androgen salt.
As it stands today.
Our energy costs range from as little as 10 cents per kilowatt hour.
As much assistance sense, and even higher in certain cases.
We work actively and we think effectively with utilities and the regulators to continue reducing these costs.
Energy costs are more stable and tend to center around six to $7000 per installed through year.
This cost includes Iran dropped it to taxes maintenance warrants is third party software call Center and other network related costs and again as a reminder, all sit inside cost of goods sold on our income statement.
Turning to the revenue side.
In order to forecast station throughput or utilization.
We employ proprietary analytics tools developed in house.
We also use these tools to help identify the best site locations and geographies as well.
We do this in two steps.
That's number one.
We determined starting for you one utilization using our proprietary machine learning model.
<unk> enables easy go to for cost utilization down to average census block group in the United States with a high degree of accuracy.
Step number two.
We develop a lifetime station throughput curve using a proprietary market build out trajectory.
Realized an easy go experience and market data on EV sales average vehicle miles traveled vehicle efficiency and other factors.
Charge rate is an important element in projecting the stations kilowatt hours throughput.
And indeed, you do easy charge rate is the rate.
Which each battery can take power from the charging network.
This is entirely driven by particular battery characteristics.
Oh No network, we see average charge rates close to the mid 30 kilowatt hours per hour range.
New vehicle models being introduced over the next several years will have high charge rates and expect to more than double to roughly 80 kilowatt hours to an hour.
This improved batteries mean that you should go should be able to just spend more kilowatt hours over an equivalent time period.
I'm, a public policy and you shoot it also enhanced our operating revenue forecast as carbon reduction standards federal level benefits and state programs or for ways to reduce costs and increase in rebate.
The low carbon fuel standard in California. For instance has contributed approximately 22 to 24 cents of additional revenue per kilowatt hour dispensed in recent periods.
And similar programs are being contemplated in other states as we speak.
Oh for costs only include the policies, which are currently in place.
It's Amy AGA programs get enacted.
It will present, an upside to our forecast.
We hope this helps you understand if it goes unit level economics that.
Finally, I would like to turn quickly to our twin just went to one full year guidance.
We reiterate our financial and operational forecast communicated earlier this year, including toggle revenue of $20 million network throughput of approximately 24 gigawatt hours and adjusted EBITDA.
Of negative $58 million.
With respect to operational guidance, we expect to provide.
Our year end store count expectations.
The third quarter call in November.
As Kevin noted earlier, while a large number of either go projects have reached the active engineering and construction pipeline stage, where we have high confidence in project completion.
There is still a fair amount of volatility to these timelines, especially around permitting and inspection.
We expect to have much clear visibility on this in a few months.
Our mid term and long term deployment goes.
Main unchanged.
We are closely monitoring recent COVID-19 developments.
Brakes linked to the Delta variant and any potential impact on customer activity supply chain raw material costs and the overall macroeconomic situation.
In General we're pleased with our second quarter of two inch it went to one resolved and how all of them to date performance positions either go for the future.
Within this high growth market place.
We've seen growth in existing and utilization ships, we are expanding our product depth and the depth of talent on the easy go team.
And we are executing on operational and financial plans.
With that I would like to stop there and open up the lines for questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue.
You May press star two if he would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for your questions.
Our first questions come from the line of James West with Evercore. Please proceed with your questions.
Hey, good morning, Kathy Olga.
So James.
So the.
First question for me is around kind of behavior of EV drivers now that you've made this acquisition you you've got even more data than you already had and I know you guys had been president of melanoma.
Of data already but.
I think the biggest key to success for especially your business model is this change in behavior to where I E. B owner I'm talking all four charge in places where I go.
Charging to go somewhere I guess, if it does that make sense for you guys.
Are you seeing evidence or have you seen the evidence of this behavioral change.
We expect you know kind of start to happen or are we still maybe too early days with penetration.
You know James actually we are what we see on our network is that the average charging session people are spending about $8.20. So what's what that tells US is that they're not just going all the way down to zero on their battery and waiting and then filling up at the end there they are convenient charging and one of the reasons.
And their convenience charging at E. V go because we are in places where they're gonna be anyway. So the one of the reasons that you see our strategy is going to retail centers is because we don't feel like charging needs to be a separate special destination, you should be able to charge, while you shop, our charge, while you go to the gym or charge, while you're watching your you know your son play softball.
And and that's you know that's that's very much a part of our business strategy. I'd also remind you that that 30% of Americans don't have access to home charging EV goes main business model does not assume that we're going to take any market share from people that do have access to home charging if you've got a if you got to a level two charge your in your garage and it's convenient theyre going to charge.
Most of the time, they're at home and that's fine.
But what we see is with the broadening sort of choice of options for purchasing Evs and the price points that are that are that are actually improving for many different sorts of either buyers or lessors of evs that many of the the demographics are changing so that those folks who don't necessarily have access to home charging also need to.
Charge conveniently away from home. So look we're already seeing that we're pretty confident that we're on the right path here and you know as as as I mentioned in the opening remarks in our in our active engineering construction pipeline. We are in the top metro areas in the U S. So we're gonna be where people want to charge.
Right got it okay. That's good to hear and then perhaps Kathy on the policy side. The we have aimed.
For her bill that it's now past we've got a reconciliation package that we're seeing some of the information from understanding that.
No one's gonna get preferential treatment here.
On an EV charging, but but maybe you have some context with what you could share. How you think this will play out with the bite administration, clearly understanding the chicken or the egg problem in and wanting to drive easy adoption.
Charging networks and how E V go could fit into that.
Yeah. It looks like we're we're pretty excited about this I mean, the the the federal policies that were seeing emerging from Washington, right now are a big accelerant and they're in and they're incredibly important I mean, the U N climate change report of a couple of days ago was it was a wake up call for everybody that hadn't already woken up to where now it's.
Very very quickly to them actually love to accelerating climate solutions across all sectors, and obviously transportation is a big one so again look at the conversations that we have both with the administration and on Capitol Hill. It suggests that you know this is going to the the support for Evs is going to be in the form of through that for the infrastructure.
Bill it's going to be on the charging part of it and through reconciliation, we're going to see more incentives for for drivers to purchase ev's and for and for some other tax credits for the charging infrastructure pieces. So there's there is a potpourri if you will of incentives to accelerate this.
On the charging side, they're probably going to be is it going to be a combination of support for fast charging and level two there's going to be a combination of support for urban and and distributed and there will be some emphasis on making sure that some of that infrastructure money goes into disadvantaged communities and E. V go with like we've got experience at all of that and we're re.
Really really looking forward to participating in it I mean look I can tell you as somebody who administered over $30 billion of infrastructure money. During the Obama administration that this that there will be probably this will be done.
Grants that are competitively secured much of the money will flow to states and again the indications here are that they will flow through the state departments of transportation and you know we V go and our experience to date in accessing on much of the state funding that has come through the Volkswagen diesel gate sediment, we're very well positioned to be able.
To compete for and secure and then deliver on those commitments.
Got it got it if I could.
One more in Covid.
Kathy.
<unk>.
I mean that makes a lot of sense. Besides just plays out.
You had the GM relationship they they've obviously you figure it out they both need to work on their supply chains for batteries and the the end game of charging.
Partnering with you and others.
Or are there other like minded Oems auto Oems that you're talking to that you, perhaps could have similar type relationships with.
And announce in the coming quarters.
Well what I can tell you is that we have you know we have a great relationship with G. M and it just continues to strengthen and broaden and we're really really excited to be partnering with them. We also have an existing relationship with Nissan. That's that's not dissimilar to G M. But it is a bit smaller in scale and on the on the BD side with other Oems with theirs.
Not an OEM globally now that's not investing in Evs and so those conversations are really really active I mean, the the what we're doing with general motors to build 2000, and 750 <unk> fast charges by 2025, it's big and it's important but it's only a drop in the bucket. So we're looking for we're all ears.
For for working with other Oems to you know to partner to get out into into more metropolitan area to create that comfort amongst the driving public debt wherever they go there because there's gonna be convenient reliable charging.
Got it thanks guys.
Thank you Jay.
Your next question comes from the line of Craig Irwin with Roth Capital Partners. Please proceed with your question.
And thanks for taking my questions.
Kathy why kind of really high the one thing that really jumped out to me in your results was the.
Network throughput checkpoint, one gigawatt hours, 48% sequential growth was hoping maybe we could we could tease apart a little bit.
You know when we when we look at the the miles driven data that just came out actually for for the whole country Theres something like 18%.
Miles driven increase one Q2 Q.
And then you you you onboard at a very substantial number of new customers.
Yeah.
I think since your.
Since your spec IPO announcement the numbers 55 shear went you know roughly 19000 to 34601 Q2 to two two.
Can you maybe comment a little bit whether or not you're seeing.
Right out E V growth E V a vehicle.
The coal fleet gross drives drive this this increase in usage or are we maybe seeing People's Hearts.
Slightly better rates in the 5% of miles driven that you were you were thinking in the beginning.
And you know are we seeing you know potential acceleration of people coming over that network as we are you.
You know get more visibility as a public company I mean, just the presence in the media in the end the discussion of the financial opportunity I think draws a lot of attention a lot of ice I mean can you maybe help me choose those different things apart.
Yeah, I'm Gonna toss this wasn't Olga and all in all.
Roundup, if there's anything to add go ahead alder sure. Thanks, great. So what we're seeing there were three major factors driving that 40 sounds in kitchen, our throughput increase one is the growth in our retail traffic and the growth in Iot.
Driven by two factors on its own it.
People are coming back and vehicle miles traveled are growing.
Exactly as you have mentioned so people are coming out of Lockdowns coming back to work on driving more but also we get all of those customers, who add grid demand new traffic to our network.
And the T V.
Hum once it's been to one first John you could see in our results.
Got it.
We used the 50000, new customers that they are driving and network so far.
This contributes to retail the amount of doors in the five.
5% estimate.
Don't have any new data, which will give them on status at this very moment.
As Jason will have mentioned multiple times.
And in various conversations materials would do things that 5% number will grow over time, we don't have any evidence, suggesting that last six months that number has changed. So we don't think that is a factor contributing to growth.
July started contributing to growth is an increase in our fleet traffic and that is driven by two things here as well one is a lot of.
The drivers the rideshare drivers they they have more work to do now because the economy is back on people are just doing things and moving deliveries and more than that.
Themselves, but that's been more locations. So we see the increase of are driving that you don't even know it but also we have seen.
Our partnerships with autonomous vehicles, which casher has spoken in her remarks earlier about and those are that traffic, we see quite a bit of an increase on the take or pay contract, which contributed 48% gross as well so it's pretty much growth across.
All our major segments and its reopening in the economy and it isn't you.
Drivers and all natural beef retail drivers to Beasley drivers.
Thank you for that and thank you for that.
One of the things in there fleets right is it's a very exciting area for the longer run really drives the model for your company can you maybe update us on the experience with public fleets.
What the operators are seeing and you know is it logical for us to assume that these lower operating costs are incredibly something that will support expanding public fleets rapidly expanding public fleets, just because of the relative opportunity for profitability versus an ice vehicle.
And then you know can you update us on medium and heavy duty.
How is this taking shape for E. V. Go you know do you do you see the opportunity for multiple fleet announcements over the next year or two or is this something where we're seeding the market right now and you know.
Medium and heavy duty is something that's going to kick in a little bit further out.
Yeah. So lucky you rightly note that the growth of the fleet segment is important to E V goes business plan and business model.
The first the first area of course, where we were working very closely with fleets was with rideshare and so we've got we've got arrangements with with both Uber and Lyft and its older noted like post locked down those the the Uber and Lyft to the Rideshare segment is coming back and as you know both Uber and Lyft have may.
Commitments to go zero emission by 2030, so they're going to increasingly being electrifying and enabling their drivers to drive east and that's going to accrue to EV goes benefit you know because we've got you know and they're gonna be expanding those offerings to more cities across America. So you know.
Again, those are the particular timing as the newberg and less hands, but we'll we'll we'll keep you posted as we can on that on the second thing that we're already thing. That's really exciting is the E V announcement that I talked about like the fact that we've got two contracts with autonomous vehicle companies that are major players that are there.
With take or pay arrangements because those guys. You know if you're if you're running a navy business you need to know that when those autonomous vehicles.
Out on the road that theyre going to be able to come back and they're going to be able to recharge that so that's super exciting.
We have a winning and again the light duty delivery, there's a whole bunch of activity that's underway and we will you know, we we look forward to being able to share that with you when those those deals become inc.
But the medium and heavy duty as a kind of you've kind of alluded to it's still a it's a supply shortage in terms of the vehicles right. Like we're just like you know well E. V. Go has been partnering with a truck company for a long time that they can get access to one truck and so we've been working with them for a couple of years and Theyre planning for when they're going to get their next tranche of trucks.
They're just it's just you know and that should be coming but youll you guys will have to talk to the supply side to the vehicle companies to get more insight into exactly when I. What I can tell you is that on E. V. Go side is that we are in active conversations with all of those players because everybody's sort of anticipating and seeing that the total cost of ownership of elect.
Eric trucks pencils as soon as you didn't get the trucks and so those charging solutions again, where we can we're happy to either own the charging infrastructure for these folks and operate it for them or if they want to put the charging infrastructure on their balance sheets and we can operate it for them, that's fine with us as well.
No lather rinse repeat model there yet for the fleet segment, but you know, it's a very very I should say very active conversations with with that market as it as it develops.
Understood that makes a lot of sense. Thank you. So my last question.
I guess most of us already have it.
Appreciate the the opportunity of having sort of discretionary network build out right you have the cash from the IPO and you get to choose how quickly you're going to build them build the stations.
The pipeline the 2000 charter stalls. They that you you've discussed a couple of times can you maybe help us understand how many of these you know 2000 installs are already maybe fully permitted or late in the permitting process.
How many of these could could you move quickly on on executing if if there was a very attractive subsidy or something that made that the right decision here.
Oh, so yes, we like it varies wildly I mean, the the they active ANZ pipeline. It means that we are investing capital and you know we got literally got hundreds of those doors are in front of local government authorities right now so that they can they can cut loose Barry.
Fast.
And so we can we can actually move really really quickly once once the permits come good and you know it's funny I was as I was thinking about this about what we're seeing with either whether it's local government authorities or utilities, providing and permits and inspections.
And getting easements. It all reminds me Craig and I think you've been in this space a long time to it reminds me of solar 10 years ago right. When I was when I was at our assistant Secretary of energy during the Obama administration I was literally investing billions of dollars to commercialize clean energy technology like in the forms of grants are tax rebate.
And the common refrain that we heard from like the recipients of these grants with the solar business. The solar businesses was the pay the choke point the pain point is permitting Oh, my gosh, what what what the department of energy eventually did as like issued this sort of best practice set of guidelines that would be a checklist for for the.
Other players in the industry like look this isn't that hard here's what you just need to do to get these rooftop solar projects moving and then we'd like to think that that was quite helpful. And then probably was but the thing that was equally helpful was that.
The industry as an ecosystem got experience with them.
And as that experience took hold the timeframes compressed.
I think if you translate that into where we are with with charging with its E vs and electrification of transportation. We're in the early innings now and all of these players in the ecosystem are just gaining experience and this is why you know E. V. Go was invented this initiative created this initiative called connects to what to help accelerate that and share best practices with <unk>.
Governments with utilities with site hosts retail shopping centers that have never had to set aside a part of their parking lot for charging infrastructure, which has learned how to do that so all of that our expectation is that that is going to start to pick up pace I mean, interestingly a couple of weeks ago I did a ribbon cutting at at Santa Monica Santa Monica.
Before and you can think of that is ground zero for all things environmental setting the first fast charging station.
That was the that was opened in Santa Monica wasn't easy go station eight charges a couple of weeks ago. It took us a D V go seven weeks to construct that but.
But but it was in the planning stages for over 18 months prior to that now we're doing another one in Santa Monica right now that's not going to take so long right because they're now the city of Santa Monica now his experience everywhere, we turn we're seeing that with more experience. The timeframes compressed. So look we've got just to get back to the macro sense of your question.
We have agreements with major national retail chains that that give us a line of sight to a possible literally tens of thousands of possible locations for fast charging stations like literally literally that many and so once the once the spot flywheel starts to spin, we're gonna be able to like ramp up really really.
Quickly again should the project pencil and that's that is a fundamental thing for E V go.
Thank you for that and congratulations for the strong quarter out of the gates.
Yeah.
Yeah, we're really pleased thanks Craig.
Your next question comes from line of Gabe Daoud with Cowen and company. Please proceed with your question.
Hey, good morning, everyone and congrats on ER during the first print on the books and thanks for for all the details. So far Oh go you mentioned supply chain on a or in your prepared remarks I was just hoping we could maybe start there obviously bottlenecks and just component inflation has been well documented.
Curious how inventory management is.
Progressing at this point and how are your suppliers I guess guiding you for for the rest of the year should we expect continued bottlenecks and just again, how does that impact your business moving moving throughout 'twenty one.
Hi, Gabe sure. So what we we haven't been affected by supply chain bottlenecks, yet well, we I can get them.
Various signals from various suppliers and vendors of ours that that might come later and what would have done and we've been doing right from the beginning of the year. We are managing our risks and we're pre emptively place an order as much earlier than we used to do in order to secure our supply so we.
Have done it with charges would come down it was various components and we're constantly monitoring the situation, but we have also done we have identified a few critical components. For example, cables and we started diversifying our vendor base and supply base to make sure that we have S. Five age as possible. So we have.
From our perspective, we have done them all precautions possible, we have pre ordered equipment through Q1 'twenty to 'twenty two pretty much. So we don't have it in our warehouses, but the supply has been secured and we continue very closely with very high degree of attention when you.
All of this situation and react quickly to information. Unfortunately this is the the the world We live in where is this situation changes day by day.
And we are pretty clear eyed about it and are ready to act quickly when we need to but as of now nothing theaters has happened to our rest of the year supply and it hasn't affected us.
Two high degree yeah, it's Mike, but hasn't happened yet.
Okay awesome. Thanks, Olga that's a that's super helpful. And then maybe just sticking to a or just going back to the financials just for a second if I looked at <unk> capital of about 15 million against 100 for installs would imply I guess, a 144000 person per install Oh, I guess, we could recognize.
So it could be other numbers in that capital a figure that could also be timing differences.
Between costs incurred and just kind of cash out the door, but but curious is that is that fair or is that the right way to look at it or.
Again, just kind of maybe worried about cost inflation impacting that install a number per port.
Yeah, that's that that's a fair question.
First we haven't noticed yeah.
Yes, again, we were observing the same cost we were projected in quoted this number multiple times, including early in my remarks, the average of $110000 per store that the math you're doing it is there's a better natural masks, where where are your mind is going but unfortunately, they're probably not the right way to look at it because time and time in effect.
It's huge U U as Kathy mentioned answering the previous question is might take up to 18 months to fully develop the station and despite the fact, the construction and all it takes seven weeks, you'll prepaying. The equipment. You you you you'll start in spending cut backs.
Much earlier than that the station goes into operation. So in that 20 to sleep on similar number of cutbacks in Q2 tons of that is it is not related to those hundred Oh for charges were putting the duration. It's a lot of charges, which are going to go into a person's Q3 Q4, and even Q1. So the time in here is really not a friend when.
You're trying to do that estimate, but again as we've seen in and and our ammonia to order now of course, we haven't seen inflation factors for Edison, which were spent to date, but we will if we see that in fact, we'll update you next time, we speak in Q3.
Great. That's a that's super helpful and makes it makes a ton of sense and then just last one for me and this question comes up a lot amongst investors and it just curious if you could share some thoughts around Tesla potentially opening up its supercharger network and how that could impact your business and potentially take some flow if you will.
On the kilowatt hour basis for E. V. Go is there any kind of level of risk embedded in your forecast for from like the speck materials that the kind of.
The potentially counts for this or just how should we be thinking about this potential moving forward.
Yeah look so gave the the macro driver here is theres going to be a gigantic growth in evs right. I mean, you know be enough updated its forecast at the spring I mean, it's just the so this is significant so we and what we need is if you ask drivers what we need is more charters to satisfy that demand so with that so that's what is the first.
Second point is that even go in Tesla have a really good relationship as you know E. V. Go was the only network that Tesla has sort of made it to have Nick kind of a.
Tesla connector on our charter so that we can charge any car and what we're seeing and we've now got I think 400 of those collectors out there and what we're seeing is about 10% of our new accounts are from Tesla drivers. So we're actually got we've actually got the flow coming in our direction, which is fascinating hum.
The practical implication we think of of what what if Tesla opens up its charging network other non Tesla vehicles, it's likely to happen in Europe first because of the engineering issues associated with the U C. C. S cables on the teslas in in Europe, They don't do that here and so.
There's a you know what we'll all be watching what what are what the tweet say about hum about what was going to do but where we were actually thinking that this is this is.
Overall macro is it the charging network needs to expand and grow. So we're full steam ahead on our build plan and there's nothing particularly that the that the this announcement does do affect our our pop forecast for market share growth of throughput et cetera.
Got it got it very clear thanks, Kathy Thanks again Olga.
Sure.
Thank you. Our next question is come from the line of John Lopez with vertical group. Please proceed with your question.
Okay.
Hi, Thanks very much.
I appreciate you taking the questions I had two quick ones I guess, they're probably mostly for AGA and the first one feels to them. So I apologize for it in advance but.
If if throughput our gigawatt hours were up 49% sequentially why was revenue up 16 like what what what was the offset.
Sure that's not a dumb question John that that's actually the question I'd be asking as well so the the difference here comes.
Mostly from all take or pay contracts take or pay contract by definition, they're they have a fixed Germany income and they come they have when it comes before the soup, Wisconsin. So we see a wrap up of the throughput and we've seen it throughout the second quarter and we the contract started pain and the end of our first quarter and that contributes to that definition.
And the other reason is well we seem to have those membership revenues in our retail sites people paid for them on 799, and then they are they using it and where we have certain break cause you that what we're seeing there was a gross of usage, we see less and less breakage does that contribute to the Q1 had more breakage than Q2.
On a relative basis, so that contributes to that as well and the third factor contributing to it whereas certain promotions in April and May to commemorate the end of pandemic as part of our marketing strategy and we gave people $5 off and that contributed a little bit too.
To kind of a law with kilowatt I realize lower revenue per kilowatt hour in Q2, well, we havent changed pricing or Asian since pretty much 2019, but that short selling promotion that was also contributing to talk with you.
Got you. Thanks, that's really helpful. My.
My second question or just I guess clarifications, if you will about the 2021 commentary excuse me. So the first one is.
Obviously, Rick cargo I guess it was really not contemplated before is there any contribution that you expect from a cargo in the financials for the second half of this calendar year.
Yeah.
So Ricardo is a.
They find that the that it's a very small contribution. It's it's it's a tiny company and they haven't been successful in commercializing their great technology, that's why would keep them at a very attractive valuation and that's what we'll be doing so for the main enough trends had been to one again very small contribution and that's that didn't as material.
We change our guidance, so we decided not to update it.
Gotcha and sorry, the other clarification there I think I heard you say you guys are good at the station count target excuse me in a couple of months, but.
Like if you're not sure on the station count how can you be sure on the revenues.
That's it that's a great question Joseph.
Well, let me explain what's truly drive that Robin is there are two main factors, which drove our revenue one it's a gross in DIR and the new customers were getting when they purchase in the V and to and the ability of all the network to accommodate the traffic to grow in traffic right now all of that work has capacity a joke.
From a days old and your traffic, which has come in then and we do not see our that'd be looked at to be impaired in the short term. So we are absolutely prepared to take old and your traffic was the charges, we have and that doesn't impact our revenue it doesn't impact our throughput in the midterm and long term.
We are committed to constructing more charges to accommodate the growing traffic, but in the short term that doesn't really.
Moving the needle on us junior agents throughput than the revenue because we do have capacity to take old and new customers on.
Gotcha really helpful and sorry, if I could just sneak one last one and I.
Obviously I'm happy to hear your thoughts on that so I'm wondering if you could chime in as well I want to come back to the Tesla dining.
Dynamics, a bit and maybe layering on electrified because in both those cases, I mean, I think electrifying I was planning to double and I think they said, they're going to exceed that initial 2 billion. They were planning to spend in the Tesla dynamics, obviously, new so I guess my question for you here. Cathy is just if you think about stations that you expect out or sites that have <unk>.
Stork, Lee maybe looked attractive to do any of those.
Relationship change would you contemplate maybe a change in supply.
Can you talk to those dynamics at all.
Yeah, well so so I think John is as older outlined we look at every single investment through the lens of other you know kind of looking at it eight years or whats the utilization is likely to be and we can we could take those decisions discretely on a on an investment by investment basis, and then that data is always quite up to date part or the algorithms.
That's in our sort of proprietary utilization tools is how many other charges or nearby so if for example, like.
One of our competitors or or utility decided to build a whole lot in that particular area. We could in a in a you know immediately say you know what let's actually a better use of that capital will be in this other place. So this is the beauty of the of the.
Our business model is that we can kind of pivot on a dime and only build where the projects pencil. So I'm really really it's yeah I've been in the clean energy space for a long time, and alright, and I've been in the energy sector. Since I graduated from college what.
What I love about about this sort of place in the energy ecosystem is the flexibility the granularity of the individual investments that give us so much agility and being able to deliver value.
Uh huh.
Thank you. Our next question is come from the line of Spanish a patent or with Pickering Energy partners. Please proceed with your questions.
Good morning. This is Philip James on for <unk>, Thanks for making time for a question.
With respect to the invest in America Act could you comment on how grants potentially reducing your effective capex per D. C fast charger.
Packed capital investment plans as well as a return on capital and our path to positive free cash flow.
Yeah.
You bet. So the way the the way this is likely to work is if theres going to be chunks of money that get distributed probably to the states at their local departments of transportation and then the rules that you know that the kind of the rules and the guardrails around how that money gets specifically allocated in those jurisdictions are probably going to be done at that level.
Hum.
You know what we've seen is if what we've seen through the appendix you'd Volkswagen granted is any indicator of how the future might work states are doing it differently. So some states like well you know, we've got Virginia, which paid which covered 75% of the capital of rolling out in Virginia with other either other jurisdictions, where they the states decided to do 50% theres, others, where there.
I actually do a kind of a reverse auction.
Possibility so that the the answer is that there's no single answer that but that there will be some sort of you know anywhere I'm guessing from 20% to 80% Capex coverage. What we then do is we put that into our model and it makes you know if its juices. The returns in those particular locations. So it's we haven't modeled that for any of our forward.
Any of the prospective federal money everything that we're building now is based on real.
Grants that are available now so what this does is this will provide some upside and normal will allow us to get into markets that might not otherwise penciled without it. So for example rural locations or corridors that that they're not really in our scheme of now because there aren't enough we've used to make them pencil without the without the grants they will allow us.
To spread our footprint more quickly and profitably.
Great I appreciate the color. Thank you.
Pleasure.
Yeah.
Thank you there are no further questions at first time with that that does conclude today's teleconference. We do appreciate your participation you may disconnect your lines at this time.
Wishing you a great day.