Q3 2022 Ideanomics Inc Earnings Call
Greetings and welcome to <unk> third quarter 2022 earnings call at.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now my pleasure to introduce your host Tony Sklar, Vice President of Investor Relations. Please proceed sir.
Thank you very much operator, and welcome everybody to the idea of Nymex third quarter earnings Conference call. Joining me today I am pleased to have Mr. Alf poor Chief Executive Officer, Mr. Steven Johnson, Chief Financial Officer, and Mr. Baber Mackey President of I D.
Mobility.
Webcast of today's call will be archived and available in the events and presentation section of our corporate website for a minimum of 30 days as a reminder, this conference call is being recorded.
During the call we will make forward looking statements such as dialogue regarding our revenue expectations or forecast for the remaining quarter and full fiscal year 2022. In 2023. These statements are based on our current expectations and information available as of today and are subject to a variety of risks uncertainties and assumptions absolutely.
They differ materially as a result of various risk factors that are described in our periodic filings with the SEC.
As a result, we caution you against placing undue reliance on these forward looking statements. We assume no obligation to update any forward looking statement as a result of new information or future events, except as required by law.
In addition, other risks are more fully described in the idea and I'm in public filings with the U S Securities and Exchange Commission, which can be viewed at www Dot S. E C Dot Gov.
Today November nine 2022, the company filed with the SEC. Its Form 10-Q for Q3, 2022 and afterwards issued a press release announcing the financial results. So participants on this call who may not have already done so who may wish to look at those documents as we provide a summary of those results on this call format for todays call it will be it.
Following this write off.
Pour we'll begin our comments today and speak to the Companys progress and strategic developments.
Jocelyn will speak to the company's operating and financial results for the third quarter 2022.
Robin Mackey President of I D and Alex mobility, each of the company's operating operational activities and mobility and the progress made since our last earnings call and then finally, Mr. Alf poor will make management's closing remarks, which will be followed by our Q&A.
I now hand, the floor over to Mr. Alf poor idea gnomic C E O.
Thank you Tony and thank you to everyone joining our Q3 earnings call today.
On today's call, we will be introducing our new Chief Financial Officer, Steven Johnston.
Steven brings more than 30 years of experience in the automotive industry to audience.
Especially the sector is facing challenges as a result of difficult economic conditions and the slow pace of adoption due to a lack of incentive programs at a federal and state government level inflation reduction Act started to provide some of the programs fleet operators are looking for but suddenly there is more work to be done at the government level in order to.
To support the transition to zero emission transportation.
Despite these challenges we have made progress in each of our businesses as Robin will speak to.
We have made this progress despite implementing cost saving measures across the organization.
I do know what makes continues to support our customers' electrification goes right in mobility and energy verticals.
U S hybrid is a prime example.
We expect that business to be profitable in 2023.
And as you can and so electric I'm, making and selling more products.
Year to date, and magic or so 78% more motorcycles compared to the same period last year.
So electronics, so more attractive in Q3.
And all of 2021.
I also wanted to share a quick story about why.
Just one day after the hurricane and hit Florida, a white wireless charging system in St. Petersburg was back up and running for the local trying to the authority.
This is a testament to the quality of engineering, which has resulted in reliability and durability that wireless charging systems and extreme weather conditions.
I want to highlight that I think I'll make C. D revenues are growing through sounds like key European and U S market.
Previous quarters, our non core Fintech business days, and the China E. B cells business made up the bulk of our revenues the switch is not taking place.
By transitioning away from noncore businesses are market.
We can place our focus on the areas, where we anticipate the more meaningful market opportunity.
I'd also like to provide an update on that.
I think that makes them via teams are working closely on progressing the acquisition.
We believe it can be a force multiplier Friday genomics and vice versa.
Together, we offer a better product that meets customers' needs today and tomorrow.
I think what makes energy and other numbers capital.
We'll accelerate via saddles with that as a service subscription model and offer customers turnkey charging solutions to support the mass deployment of the vehicles.
Yeah.
The wave and via teams are collaborating on the integration of waves and induction charging system onto the platform and that would represent an interesting first that's a fully integrated solution and commercial easy.
This is what our customers in the last mile delivery and logistics markets require a.
A simple integrated and affordable way to electrical.
Before I pass you over to Stephen I would like to address that share price.
Everyone have died genomics is committed to supporting the value of our company and that will stop.
To do this we are focusing on the fundamentals of cost savings and execution in conjunction with pursuing strategic financing alternatives to dilutive equity based plants.
These funding initiatives are currently ongoing.
To sustain our vision, we are focused on building momentum around our successes.
Put simply this means winning more customer contracts and generating higher margin revenues, which will help demonstrate the path to profitability.
As expect.
I will now hand, you over to Steven Johnston, who will take you through our financial results for the quarter.
Okay.
Thank you Alf and thank you to everyone joining this call.
Since I joined out Robin and the team that idea and I'm excited emphasized our focus on disciplined capital investment that will underpin our financing activities.
The entire EV industry continues to face headwinds you see this reflected in market sentiment and share prices across the EV market.
Every company in our sector has been affected in a significant way without exception.
My goal is to ensure that idea and omics can navigate these headwinds.
Focused on ensuring consistent on time delivery of our financial filings.
Driving gross margin expansion and.
And managing our cost structure, all of which will enable us to navigate the current economic environment.
I'll talk more about this but first I'd like to present, you with idea and Omics Q3 results.
Revenue for the quarter was $24.3 million, 9% lower than the same time less last year.
This was primarily due to a decrease in revenue from Temenos start title and escrow services business and a decrease in revenue from our China based E D reshape resale business, which offset growth in our expanding E D businesses in U S and Europe .
This dip at Temenos and an E. D. Resale is primarily caused by temporary cyclical macroeconomic factors.
I'd like to highlight is our work towards generation of higher margin revenue.
E V related I D and Omics manufactured products and services in our core markets in the U S. Europe .
In Q3, we generated $16 $2 million in revenue for EV charging and battery products and services, an increase of more than 50% year over year.
I'd point it million dollars all of that EV charging and battery revenue came from the U S and Europe four times higher than the same time last year.
E D revenues from manufactured products are where our focus remains going forward.
Gross profit was a loss of zero point $7 million, representing a gross margin of negative two 7%. This is down compared to the last quarter. The decrease was primarily due to higher levels of fixed cost in our organization, which we have since begun to address and offset through cost.
Production measures.
As of quarter end, I D and IMAX has cash of $25 $2 million.
Over the past nine months, we used more cash for operations compared to the same time last year as the macroeconomic conditions have temporarily slowed growth for our acquired businesses, who have customers with incentive dependency.
Cash used in investing activities over the last nine months, there's $90.8 million, which was primarily due to expenditures incurred for the acquisition of the nurture.
Yeah.
In response to market headwinds I D and IMAX is implementing a more focused capital investment process The center.
Fluids and emphasis on smart spending prioritizing investments that will deliver a risk balanced returns.
We are also continuing our journey to create a leaner more focused company, 100% committed to becoming a world class provider of commercial abb's charging products and related services Robyn will speak more about this in just a moment.
Looking ahead idea Nymex will continue to raise capital.
We're exploring attractive capitalization opportunities from diverse sources.
We anticipate bringing in additional capital to the business before the end of this year with an emphasis on non dilutive financing as al mentioned earlier.
This includes the potential to secure direct funding to support our growth businesses, such as select track and in our chicken.
The right capital partners with industry experience will enable these businesses to scale faster as well as minimize the cost society and Omics must carry by itself.
As an example, we have agreements with two separate companies to finance dealer expansions for and nurture and Selectric.
This is a validation of our brands and products.
Back to you Toni for more remarks.
Thank you very much Steven and it is really great to have you on our team and our shareholders appreciates on time filings I'd like to now take the time to introduce Robin Nokia.
Mobility, who will discuss mobility and energy verticals in more detail. Thank you Robert.
Thank you Tony.
A reminder, for everybody on the call my focus continues to be on execution and performance improvements across the business.
Building on Alf and Stephen's comments, we've initiated a number of cost saving measures across the organization with business reviews completed at both corporate and operational levels.
These initiatives have enabled us to cover our operating costs, while routine retaining key talent and maintaining a focus on value added projects with the highest returns.
Additionally, we are still experiencing some supply chain constraints and are actively working with our partners to stabilize the supply and improve the predictability of our production throughput.
As Steven mentioned earlier I didn't know what makes generated $16 2 million in revenue last quarter from the sale of Evs and charging infrastructure I.
I would like to briefly touch on some examples.
Our focus on execution has enabled us.
Firstly, our targeted investments in growing production and distribution capabilities of which the clearest examples would be within their chicken and selectric.
<unk> has doubled its production lunched and urged you get inside a business unit introduced new models with a wider market appeal and secured its first fleet orders underpinning. This success is a simple fact.
<unk> makes the world's best electric motorcycles.
For example, we delivered the first 88 and urged you got as asinine bikes to the Indonesian Police force with our partner Utah Corporation.
We will follow up with orders anticipated this quarter in excess of 200 units.
This is an exciting new market segment for us with recently expanded manufacturing capabilities and a growing global distribution network.
Energy is ready to supply police bikes and other municipal fleets across the globe.
Last quarter, that's electric we saw the assembly and sale if the first 44 E 25 tractors from the Nolan manufacturing joint venture in Northern Carolina.
On top of this we recently completed a new high level Assembly line of the company's Windsor facility in Northern California.
Select Chang and I produce up to 120 tractors per month on a single shift and with multiple shifts achieve a stretched goal of up to 360 tractors per month.
So electronic continues to expand its dealer network.
With each dealer, we typically see initial orders of up to six tractors for stock generating immediate revenue.
This dealer expansion will enable us to engage with larger opportunities in the feet and municipal markets.
As reflected in our recent steel supply multiple tractors to a California University.
Okay.
U S hybrid under makes even the Saudis leadership is continuing to expand its strategic partnership with global environmental products.
This resulted in order to provide E V Driveline systems director GE E piece production facility for an additional 62 zero emission sweepers.
The first kids for this order and have already been built and shipped.
Additionally, U S hybrid completed in partnership with a major automotive group a retrofit of a tough stacker unit.
The type of vehicle used to lift and move containers at ports and warehouses.
<unk> it from diesel to hydrogen fuel cell hybrid power.
U S hybrid expects to receive additional orders to retrofit port vehicles and equipment for this emerging market segment.
Next I will talk about our energy vertical and wave.
In quarter three how do you know what makes energy continued to grow its pipeline of opportunities, including additional opportunities unlocked by the direct funding provided under the inflation reduction Act.
These include opportunities in the sports and hospitality markets.
Okay.
Additionally, we recently released an update to where smart a free tool designed to help warehouse operators in southern California become compliant submissions reduction reduction regulations.
And just a few days, we saw an increased sign up rate and begun conversations with several high quality leads.
As a reminder, not every opportunity will translate into a contract but these are strong positive leading indicators showing that we are offering our customers exactly what theyre looking for.
The way, we've begun producing wireless Chargers for phase two of our collaboration with Antelope Valley Transit authority located in northern Los Angeles'.
We are on track to deliberate way wireless charging pads and vehicle receivers to Josephine Transit authority in Oregon in the first half of 2023.
We're progressing the previously mentioned project with a large logistics and delivery customer, which is expected to be completed the first half of 2023.
P. A R containerized DC fast charging investment with parental group is in the final stages of testing with the first system is expected to be delivered in the U S in quarter one of 2023.
Tony back to you.
Yeah.
Thank you Robyn and now finally, we have outboard getting management's closing remarks.
Yes.
Okay.
Thank you Tony.
Before we open the floor to questions I'd like to reiterate I do normally its core value proposition.
Its simple we make electrification fast simple our model more affordable for the commercially the fleet operator.
We do this by combining EV charging and financing under one roof.
On top of that we partner with customers on front end planning to ensure optimal EV charging infrastructure deployment.
Customers want this.
For a trusted partner, who can help them transition from combustion engine vehicles to zero emission.
The warehouse to Robin mentioned is a great example of our customer value proposition inaction.
We created a tool specifically designed to make life easier for warehouse operators in southern California with first in the country to be hit with fines for allowing gasoline and diesel vehicles into next Tel Aviv by Mike.
It is simple and straightforward to understand and mitigate declines we've opened up some very promising dawns, probably I didn't know immix group.
I believe that our ASIC service financing model sets us apart.
Scripture modules make it possible for customers to transition to zero emission vehicles faster by eliminating the barrier of high upfront costs.
In fact, there is nothing new.
I Didnt, Alex Who's one of the first companies to offer it for E beam and charging I.
I believe this is the future of fleet electrification and we're ready with these types of financing programs.
To close as I mentioned in my last call I want to remind you all that I do not mix will continue to raise money.
Looking ahead, we will use this capital to thoughtfully skylab businesses, including via motives.
We are well positioned to win an increasing market share in the high value last mile and local delivery space.
This is one example of where we can focus our efforts as the first thing you got to generate meaningful revenues and in turn shareholder value.
Thank you again to everyone for joining our call I'll hand, you back to Tony.
Thank you very much warehouse and some we're not going to start a company, it's Q&A I'm going to ask.
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Hi, Spiro, Okay. So oh, sorry, operator, I think that's we'll take one of the questions, where we're gonna want people to get their hands up for sure within the telephone queue, but we did have some questions that came in on the same platform and <unk> and the types of questions that were voted all I'm going to ask those ones first and then we'll move into the.
Then we'll move into.
The telephone queue. So office is going to be for you. The top let's say question with the platform that was voted off our shareholders. They want to know a little bit more about the no. We're not gonna finalized and if you could speak to a reverse split.
Atop voted one there.
Okay. Yeah. So the the V. C is working with you I didn't see them on a daily basis to get that deal finalized.
Looking at some creative ways to I'm too.
To get the deal over the line right now and you know, we'll give you some updates in the very near future, but both parties remain motivated finalized as quickly as possible, we consider them out of joint marketing efforts together.
That mix has continued to extend funding throughout Q3 and into Q4 two civilians as well. So watch. This space is the best I can give you at this time of the deal, but what we are looking to finalize in the very near future.
In terms of our reverse stock split we don't believe that is a a viable option providing them except this time. It is suddenly a previously mentioned never been even presented to our board as an option at this point.
We are in contact with the NASDAQ, we will ask them and expect to be granted 190 day extension and the reason why we're not considering a reverse stock split to this time is I, it's typically a negative indicator to the market.
So you'll see the stock kind of settle down below it's split value after the transaction and be the the commercial evening sector has been beaten up pretty badly we actually thought about downtown in the market in February of 2020, one I did not make sense about the dozen or so other peers and we've all been trading in a.
Tightly correlated.
Yeah.
And I think the the recent market pressure on the stock market coming down in general has kind of piled on to the commercial EV sector.
So we've taken kind of a double hit on as part of that we expect to be one of the first questions to emerge when the economy does recover.
For those reasons, we're not we're not looking to hit the panic button and enduro split I don't think it it works for our investors I don't think it works well in all my we have a very liquid stock with us looks good and dilute your liquidity significantly. So I think I'm one of the most attractive propositions about.
Liquidity and.
Below the line like golf, so robust clip.
Here a lot of noise on that Tony and the team recorded on social media other platforms as they gather information and bringing the management team, but not currently something on our on our agenda to to take a look at and we do believe that will make the.
We'll be back in compliance with our a minimum one dollar listing bid and about as soon as the market correction takes place.
Great. Thank you so much the OSM for now we're going to go to the phone lines I'm afraid I believe but separate from Cantor Fitzgerald.
Yes, Andres Sheppard. Please proceed.
Yeah. Good afternoon, everyone. Thanks for taking our question and welcome Steven looking forward to just speaking in working with you going forward.
Maybe a question for al fun and indoor Robyn can you just remind us what are the most important milestones and catalysts that we should be aware of as we head into 2023. Thank.
Thank you.
Robin do you want to you want to take that to start with though you won't be too.
No I'm I'm very happy Hi, Andrea.
For me the focus primarily is on the growth organizations at the moment and we're seeing on quarter on quarter improvement on the throughput of those businesses, specifically I'm talking about energy and Selectric, who are gaining more and more market traction.
Every quarter. So that is one area that I think is a strong indicator for the future also the transition that has been made of U S. Hybrid as we move forward to cash flow breakeven and into profitability through the last quarter of this year, we've seen a transition in there.
And their approach to market from pure engineering and nonrecurring engineering.
I projects into the provision of kits and volume to support other Oems who are moving into the market and then wave I think we'll see some traction them through quarter, one quarter, two and they have transitioned from being heavily predicated on government funding in terms of proof of concept to work.
King closely under the I already with a number of key customers looking to adopt the technology transition from government funded some more commercial projects, albeit still proof of concept during 2023.
Thanks, Robin that's very helpful. Maybe it's a follow up as it pertains to wave specifically can you just give us an update on how you intend to apply for the projects that qualify under the Navy federal funding any color there that you can give us.
I know the projects are still being.
Hum.
They are still being developed but I. My understanding is that you do intend to apply for some of those to qualify for the federal funding. So anything you can share there, perhaps fix yeah I think I think the difference in the pivot from what traditionally the approach has been by an organization like wave four federal dollars.
It's not that we're supporting our customers to apply for those federal dollars and very much more commercial applications.
Previously we've used the department of energy and others to help us develop the technology no I, we're using and working with the customers to apply the technology and I think that's a subtle difference I'm trying in the approach and where we sit at this time.
Okay.
Got it. Thank you maybe a question for Stephen If I May you mentioned on the call that you are exploring capital racing opportunity. So I'm wondering if you could perhaps expand a bit further on this you know what what kind of opportunities are you considering and though in terms of maybe equity versus fixed income and what sort of a timing.
Are you thinking about thank you.
Yeah. Thanks, I'll I'll field, this one and Steven feel free to chime in as well.
There's tremendous interest in 19 Omics at this time, because we've actually got products on the road and in the ground. So to speak. So there's there's really a few different types of conversations taking place.
That's the equity once we Wanna be light touch in the equity market as much as we can we want to respect the share price.
But we we might use equity sparingly.
The close of the next six months.
And there's two really interesting ones that are developing does the debt market.
Which is an obvious place for high Investor returns now if the stock market.
In a state of flux.
So we have ongoing conversations with that provide us that's a longer path than an equity transaction equity transaction, but I look at I did not make share price I look at the volatility. If you look at the volume and the deal is struck in a matter of days to you know maybe a couple of weeks maximum when you're dealing with a debt fund you're talking about three to six months.
Due diligence multiple in management presentations inspection of IP registry as you know the whole kitten caboodle, but there's also another really interesting dynamics a number of our private equity funds.
Forward.
Both with you know some of them got law, she gets G impact focused bombs.
Well they wouldn't normally approach a public company the thing opportunity because of the lack of capital. So there's some really interesting conversations chairman it's been helping facilitate some of those those are really interesting as well.
I could probably be which would be you know some relief to investors like probably could be the cheapest capital we could access because the structures will be less like a third of our mezzanine financing and a more more like a a mix between that and the debt and equity. So now we've got a good opportunity here, there's a lot of.
Interesting dynamics at this time these deals do take time on the line.
But we're in some significant conversations and we expect to include them before the end of the year.
Wanda.
Wonderful. Thank you all for maybe one last one for me if I could.
On strategy going forward, how do you expect to continue to acquire businesses that fit with the overall strategy or are you kind of content with the current businesses that you have on the mobility side specifically thank you.
Yeah, you know I didn't omics, there's a dynamic business.
As you know and just so we never shy to to step into acquisitions.
First phase of the acquisition program that we did was really to capture what we felt was some of the most meaningful technology.
In the space as you know and just whether its way whether its a magica whether it's.
Oh does their own differentiated.
And they're all strong from a technology perspective, unlike a lot of the product in the market, which is just the body design with somebody else's tacked on to meet so that was the first phase of what we're doing we're going to do acquisitions in the future. If they won't be some tech heavy there'll be more focused on revenue generation and post multipliers for generating revenue within the group.
If we go to access.
Acquisitions market, a game and take advantage of that it would be for revenue generating companies that can help multiply the revenues across the group.
Wonderful. Thank you very much congrats again on the quarter and I'll pass it on thanks again.
Thanks, so much.
Our next question comes from Iliad roaming with E train. Please proceed.
Uh huh.
I am an investor in your company and my concern is they're saying all these wonderful things and it's just.
I think you like mastered all this wording it just everything seems like an incomplete thought.
Our next question comes from Garrett Van Wagner.
I'm an investor.
Yeah.
The question is about the skateboard architecture are they delivering products using that skateboard architecture.
Just one off kind of.
People want to see more by wanted to test that and when do you expect volume to be available in the Detroit facility.
I hope I can take that if you wish.
Yeah. Please do Robyn I'll try and answer the previous question as well afterwards.
Okay no problem at all so the actual skateboard a technology at the moment is completed all of its testing and validation for the U S market and from litigation and is ready to go to scale.
We have a number of companies that are interested in utilizing the technology spin.
Specific to for their own applications, we recently announced a very large deal with a merchant bus manufacturer of small shuttle bus manufacturer, who chose the platform. Other other over other competitors as you well know we've been doing significant testing with some large grocery firms and some logistics companies as well.
To answer your second question, we expect to be in the market by quarter, one end of quarter. One 'twenty 'twenty four and are currently looking at both facilities and contract manufacturing partners to enable that.
That I'm serious.
Yeah I was just asking have you delivered any vehicles at all just a couple of know the various people that want to know that.
The we have delivered what I would call validation prototypes, which is a normal process within the automotive industry. Our next phase is building, what we call Alpha and those also vehicles will actually be put into the hands of end users who have expressed an interest and we expect that to be completed by the end of quarter one 2023.
Yeah.
Yeah.
Okay.
Great. Thank you so I'll be happy I'll now I'll be happy to pick up on the other ladies a lady other cold dropped of a cut off for something she said she was somebody tried to it sounds like she was a retail investor we get a lot of these types of a retail investor interaction I think one of the things that's really important to understand here and I've said this in some recent.
Investor presentations like either at some conferences the commercial EV sector is only just starting to mature companies like I did not mix have revenues most of our peers within the industry, especially the industry do mall.
Okay. So I didn't know immix is at the forefront of this wave of technology.
With approach, which is which is paying dividends at this time to us but the industry is immature, okay, which is why you see.
Our subsidiaries like a magicka and select track racing ahead. We're racing ahead, why because that's sold through dealer distributors. So it's more like a consumer purchase right.
The large fleet operators have been holding out waiting and I've said this many times holding out waiting for the government rebates and incentives.
It will help them pay for this legislative legislation transition into E V and zero emission transportation.
Okay. So no fleet in the country is going to do anything other than testing and early vehicle deployment without the government stepping in and paying for what is a legislative change that's what we've been seeing in the commercial EV industry and you can see that when you look at any of our peers because most of them booked zero revenue their revenue zero.
So I didn't know if there's a little bit different because the charging systems. We've got some of the products were purchased in the consumer manner and then we'd obviously go via which doesn't stop production as Robin said until 2020 full reason it doesn't stop production till 2020 full because we did not want the upfront expense without the market being ready to buy.
Many of the companies that they expect an effect are struggling right now with 50 100 million dollar amongst buttons, because that maintaining manufacturing facilities when they don't have any customer orders.
Okay. So that's the answer that Lady's question is we've built a world class company. The market has been slow to mature, but because we've stepped into this with.
Diverse approach, we are actually making revenue somewhat not just purely losing money like many of the many of the other folks in the space I think that's probably the best way I can answer it at this time.
Thank you so much everybody and that is all the time, we have for today. This concludes the IV and Omics Q3, 2022 investors, earning call. We encourage you to need to continue to reach out to them and we can answer any of the questions that you may have individually you can send your questions to us at IR at <unk> Dot.
Comment as you can imagine that mailbox does get a lot of email we have tremendous amounts of investors. Please don't hesitate to continue to get it to the top we are we have the system. We will answer your questions, we'd like to thank our listeners and shareholders analysts and others, who have taken the time to listen to our earnings call. Today Weird you refer to our latest SEC filings.
Any information that you need.
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Thank you you may disconnect your lines at this time and have a great day.
Yeah.