Blink Charging Co. Q1 2023 Earnings Call
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Good afternoon, and welcome to Blink charging first quarter 2023 earnings conference call.
All participants are in a listen only mode there'll be an opportunity for analysts to ask question.
End of todays presentation. If you should if you should need any assistance during the conference. Please press star zero on your Touchtone phone. Please note. This conference is being recorded a replay of this call will be available on the Investor Relations page of the company's website.
At this time at this time I'd like to turn the presentation over to Vitale Senior Vice President of Investor Relations over to you.
Thank you Jenny.
Welcome to <unk> first quarter 2023 earnings call.
On the call today, we have Brendan Jones, President and CEO , and Michael Rama Chief Financial Officer.
The discussions today will include some non-GAAP references these.
These are reconciled to the most comparable U S. GAAP measures in the appendix of our earnings deck.
You may find the deck, along with the rest of our earnings materials and other important content on <unk> Investor Relations website.
Today's discussion May also include forward looking statements about our expectations.
Actual results may be different from those stated the most significant factors that could.
Cause actual results to differ are included on page two of the first quarter 2023 earnings Zach.
Otherwise noted all comparisons are year over year.
Now regarding the Investor Relations calendar.
Boy charging will be participating in the Cowen sustainability week Fireside chat at an investor meeting on the sixth of June .
Needham Automotive technology conference on the seventh of June .
Ross MKS ninth annual London Conference on June 20, <unk>, and 20 seconds and at the same time, the JP Morgan Energy Power Renewables Conference also on June 21st and 20 seconds.
Please fall our announcements.
Or additional investor events in the future.
And now I will turn the call over to Brendan Jones, President and CEO Blaine charging. Please go ahead Brendan.
Sure, Thanks, Vitale and good afternoon.
To everyone and thank you for joining us so before I dive into our first quarter 2023 accomplishments and financial results I'd like to say a few things first I'm honored.
It can be appointed as the president and CEO Blake charging.
Also proud of the incredible team that Blake and all of that we have been able to accomplish for our customers our host our clients as well as our shareholders and employees.
As a company and management team, we would also like to thank Michael Farkas for us.
Time, serving as our founder and CEO .
His commitment and forward thinking have helped shape Blake.
The company is today and that is a leader in the EV charging industry.
We look forward to having Michael on our board and continue to work with them in the future.
That let let's get on with the <unk> earnings call.
We now allow anybody go to slide four I would like to provide a quick refresher on blank and our capabilities.
<unk> is the only fully integrated charging company in the U S market today, we offer the most flexible business models available to property owners, we control our own design manufacturing and network services or products have been designed to meet the charging needs of EV drivers.
Fleet companies municipalities Auto Oems commercial real estate owners and property managers.
We provide a diverse choice of business models, we own and operate Chargers and of course, we sell Chargers and services to our house, we offer a hybrid options were blank provides hardware and software.
And we split the revenue with the host and they provide the capital for installation.
Our flexibility and our vertical integration of advanced software hardware and software is what differentiates <unk> from our competitors in the EV space today now, let's transition to some highlights on slide six our first quarter turtle total revenue increased to one <unk>.
And 21% to $21 $7 million when compared with the first quarter of 2022 now.
Now the service revenue increased by 216% and very importantly, our network fees, which are recurring in nature increased by an impressive 911% now that is a really big number. So I'll say it again that was an increase of 911% and we are very.
Excited about these positive developments in.
In the first quarter, we contracted sold or deployed 6461 Chargers and that represents an increase of 103% compared to the first quarter of 2022.
Additionally, in Q1, Blaine charging dispersed 14 gigawatts of energy across all Blink networks globally and a key thing is most of the charges that that.
That provided this level of energy were all level level too and they did not have demand charges associated with the increases the cost of doing business.
Subsequent to the close of the first quarter in fact.
A little over a week ago, I believe we announced the acquisition of envoy and EV car sharing company by our subsidiary Blake mobility.
Previously, we announced that blank was awarded a $7 million grant by the state of New Jersey to implement ride share services and charging for electric vehicles in underserved communities.
We are pleased to welcome envoy into the Blake mobility family and we'll have more announcements about the synergy of this acquisition as we move forward.
If we jump on to slide seven now on March 16th we announced an IV IQ contract with United States Postal service to provide up to 41500, EV charging stations and network services provided by Blake and others. We are very proud of the play.
To date. This is one of the largest fleet contracts Chargers in services in North America, and the selection process was extremely rigorous.
This successful contract win is a testament not only to our products and our network, but also to our talented team we have already shipped the first order in April and we look forward to continued collaboration with the United States Post office and other government entities.
Let's shift gears to slide eight you will see the growth to date and forecasted growth.
For electric vehicles, and EV Chargers that power them.
The transition to Evs is accelerating.
And with our comprehensive portfolio of charging product and solution and our unique approach to providing flexible business models to meet all preferences. We are ideally situated to capitalize on the expected exponential demand for EV charging as more and more and more even hit the road now.
Let's look at slide nine.
Within the last 12 months blank has contracted sold deployed or acquired over 38000 charges, both domestically and internationally, bringing the total charge to account for the company to nearly 73000 Chargers since <unk> inception.
Now right now 78% of the total company wide charges was deployed in North America, and 22% have been deployed internationally with the majority being in Europe .
On Slide 10, you will see just a partial sampling of our customers. They represent well established commercial entities multifamily complex as planned communities health care facilities fleets. They missed the municipalities around the world.
Our advanced charters combined with flexible business model position us very well to attract new customers and long term contract. For example in addition to the United States Post office, we signed a contract with one of the largest car dealership groups in the nation for a large number of DC fast Chargers.
And overall the automotive segment is very strong for Blake in Q1, we entered into agreements to provide charges for over 600 different dealerships that span a variety of owners and brands and this is out of more of that more than 3000 dealerships that we've already installed to date.
Some of the other notable customers in this quarter include one of the largest parking stroke for operators in Belgium called <unk> and we continue to evaluate sales and installation opportunities with CBRE property management company in Europe and Asia. In addition, we continue to <unk>.
<unk> Chargers to our long term partner inner energy in fact in Q1, we shipped over $1 million worth of Chargers to inner energy now.
Now, let's go and look at Slide 11, you can see examples of our innovative product portfolio.
Now we have a wide variety of projects ranging from residential L. Two chargers to high powered DC fast Chargers as well as our vision charger with these offerings, we serve as both residential and a variety of commercial customers. The Eth for our innovative vision charger is the <unk>.
End of Q3.
Now, let's go look at slide 12.
You can see our current selection of DC fast Chargers, we think it is important to reiterate that Blink is a global company addressing the demand for power and different DC installation settings that vary around the world.
In Q1, we contracted for the sale of approximately 300 D C Chargers and our backlog to date includes approximately another 400 Chargers that we expect to be on the Blake network. Once launched this makes it a minimum of 700 D. C charges that we expect.
The commercialized.
During 2023 and that's the minimum.
Now, let's look at slide 13 in 2022, we completely redesigned and launched our blinked network and Blink charging mobile apps the.
The strength of our network is another competitive advantage as it allows drivers to find Chargers books session faster and they use a lot easier while enabling our site is more flexibility in managing their stations with added features.
See integrating charges into everyday life and as we've said before this is available on both iOS and the Android platform.
Now, let's look at another topic synergies, we announced in Q4, just to remind you and we did this with the help of the Mckinsey consulting we performed an extensive analysis discover and outlines synergies with a focus on our acquisition of semi connect now as a result of this.
Analysis, we identified and are now targeting a total of 28 million in synergies related to this acquisition.
This includes an additional $1 3 million in revenue synergies. We identified during Q1 of 2023 today, we have captured $5 3 million of operating expense synergies as of March 31, 2023, we expect to begin realizing these expense reductions.
<unk> and revenue synergies in Q2, and Q3 of this year.
Now why do we realize the synergies from the semiconductor acquisition. In addition, we expect to achieve.
Incremental synergies globally from integrating the acquired networks into the state of the art Blink network. This summer we will have all blink entities combined under one network. This will eliminate expenses related to engineering and maintenance of legacy networks today.
With this I will pass the presentation on that Michael Rama our CFO Michael.
Thank you Brendan and good afternoon, everyone.
Turning to slide 16 total revenue in the first quarter of 2023 grew 121% year over year to $21 7 million product sales in the first quarter of 2023 were $16 4 million an increase of 104% over the same period in 2022.
Customers purchase greater volumes of our commercial Chargers, DC fast Chargers and residential Chargers.
Product sales for the first quarter of 2023 also include revenues generated from the 2022 acquired companies of semiconductor and EBIT.
First quarter 2023 service revenues, which consist of.
Charging service revenues network fees, and ridesharing revenues were $4 8 million, an increase of 216% compared to the first quarter of 2022.
Year over year growth was primarily driven by greater utilization of our Chargers. The increased number of charges on Blink networks revenues associated with the blade mobility Rideshare program and incremental service revenues from Axa from acquisitions.
Gross profit in the first for the first quarter of 2023 was approximately $4 5 million an increase of 186% over the same period last year as a percentage of revenue gross margin was 21% in the first quarter of 2023 about 40 to 800 basis points improvement when compared with.
Q1 2022.
Operating expenses in the first quarter of 2023 with $35 4 million compared to $16 6 million in the prior year period the year over year increase reflects the increase in noncash share based compensation of $5 8 million in Q1 2023 versus Q1 2022.
Increases in non cash amortization of intangible assets of $1 8 million as well as operating expenses associated with the Q2 2022 acquisitions of <unk> connect and EBIT.
We remain vigilant about cost reduction opportunities and additional synergies as mentioned.
By Brendan earlier adjusted.
Adjusted EBITDA for the first quarter of 2023 was a loss of $17 8 million compared to a loss of $12 4 million in the prior year period, largely due to the higher operating expenses as I just mentioned.
Year over year Q1, adjusted EBITDA improved by over 4400 basis points as a percentage of revenues compared to the first quarter of 2022.
Adjusted earnings per share for the first quarter of 2023 was a loss of <unk> 49.
Our share compared to a loss of 34.
Per share in the prior year period, non-GAAP adjusted EPS as defined as adjusted net income, which excludes significant noncash items, such as amortization of intangible assets and non recurring.
Acquisition related expenses divided by the weighted average shares outstanding now.
Now turning to slide 18, you will see that sequentially. We saw a decline in gross margin when compared with Q4 2022. This is primarily due to blank sellings to get significantly more contract manufactured Chargers, which carry a lower overall contribution margin compared to the units manufactured in house.
As we've discussed we've been expanding our manufacturing capabilities to replace all contract manufactured Chargers with in House produced units. This will result in a significantly improved gross margin profile of our products.
We expect the gross margins for the remainder of 2023 to meet or exceed gross margins realized in the second half of 2022.
Moving to our cash position as of March 31, 2023, cash and cash equivalents totaled $103 $2 million.
All in all Q1 was another strong quarter for Blake, we saw record Q1 product revenues and service revenues, we continue to execute on our strategy and we believe the foundation is strong we see robust demand for our products and services in North America and internationally before I conclude I would like to welcome our New Board member.
Kristina Peterson, who is an experienced public and private company Board member an infrastructure investor with over 25 years of operating experience in the finance electric power generation and tech sectors I will now turn the call back over to Brendan Jones for a few final comments go ahead Brendan.
Hey, Thanks, Michael.
So clearly blinks 2023 is off to a strong start we.
We delivered another record Q1 revenues for blinked and growth in recurring revenue is nine times larger than the first quarter of 2022.
But what is particularly exciting to me is the strength of the blank operating model.
Now when we look at the industry. We appreciate that the industry is under some pressure.
They're all hard question starting to be asked about the path to profitability across the entire EV space, including Blake.
There are a few points here to make about Blake.
We are growing at a very rapid rate and this industry is still in the very early innings.
We have carefully built the structure and capabilities to support a larger company and as anticipated. We are very quickly growing into that structure, we have created and continue to adjust.
In the coming quarters, our operating losses, and we will progressively come down as our business model scales and revenues grow faster than our operating costs, well I don't want to pinpoint an exact timing given we have a lot of moving parts, including such things.
The acquisition integration additional synergies new product launches, what I can share is that achieving sustained and positive free cash flow is our priority and let me make sure everybody understands that this is our priority we have a clear.
The path to get there and we will scale and we will continue to keep you appraised of our progress as we move forward.
As we look to where the industry was and where it was.
Headed we.
We are very excited about the opportunity that lies ahead and extremely optimistic that we have the right team in place building on our success to not only be a player in the energy transition, but to lead it on strength of our innovation experience and continued leadership developed.
<unk>.
And as we implement our forward moving strategy, we are well positioned to continue and accelerate accelerate growth and bring electrification to more markets and more communities than ever before.
Take this role with great confidence in our dedicated and passionate employees around the world to build the future of the companies.
Now before I conclude.
And hand over for the closing remarks, I would like to share a new blend charger for the European and global markets.
This goes hand in hand, with our comments that we are working to replace higher cost contract manufacturer charges with our own built in house.
On Slide 19, you all of the first to see this you can see the final design of our EQ300 connected charger that will come with single and dual mounted plugs capable with our latest network functions discharged fits the needs for most applications.
It has vast addressable market in many in all EU countries and other international countries throughout the world well with this I am going to conclude we are excited about the future about what the future holds for Blake.
With that we will now open it up for questions and remember this is my first time, so be easy on me now.
Okay.
Okay.
Okay.
Questions.
Okay.
Operator, please proceed with questions.
I apologize my line was on mute I apologize thanks.
The floor is now open for questions. If you have any questions or comments. Please press star one on your phone keypad, we ask that while pacing. Your question you. Please pickup your handset if you're listening on to speak fund to provide ultimate sound quality. Please hold also poll for any questions.
Thank you very much our first question is coming from Craig Irwin from Roth.
Okay.
Good evening and thank you for taking my life.
Good evening and thank you for taking my questions first Brandon I'd like to say welcome to the role of Chief as Chief Executive We all look forward to working with you.
And to your leadership.
Michael did an amazing job founding the company in.
We look forward to watching you bring bring linked to the to the next level.
I wanted to ask just a big picture question.
Really around the leadership change so you've been a key person in helping the team execute strategy over the last.
A couple of years.
And.
Played a role in helping form the strategy that's in place.
Is this change in leadership is your assumption of the role of CEO potentially going to lead to a pivot or an alteration of the strategy as far as diversification to international.
Our captive manufacturing.
Our portfolio approach too.
Serving your customers and the other major items in the business strategy at length that we've all been.
Used to and followed the growth and success with.
Yes, so theres no major departures I mean, we're going to continue as we have been under Michaels leadership to evaluate the marketplace and see what the market is doing and this includes in the manufacturing of products, new features and benefits that need to be added to our network strategy and we're going to look.
That both in the U S and globally I mean, we are a global company, we're expanding in the Latin America, right now, which on a percentage basis is one of our hottest markets. We're going to continue to adjust the product strategy to fit all of these markets combined whether it's the charge that we just showed you and that's predominantly for Europe .
Other charges that we're going to have in development that might see some of the needs in Latin America, where they have a little bit of a different standard because they followed the Chinese standard. So we're going to continue on our product and network basis to follow the path and pivot where necessary based on customer and market demand now also we're going to continue to folk.
On the sustainability of revenue that we get from the owner operator model, where we put a charge on the ground and especially when you consider that would <unk> charging does LTE charging is tend to one at a minimum on the cost of installing a DC fast Chargers and when we installed one of those we look at our portfolio today and 50.
2% of our charterers on the owner operator model that are installed are producing in the double digits of utilization today, we're going to keep doing that but we're also going to be fully exploited.
The sales model, where we can provide sales get network fees.
Provide better margins for Blake so they have a better return and also continue to innovate for the fleet space and other spaces, where they don't want to be in the operator, they just want to buy the charters, but we can provide network services fleet services and maintenance contract to have sustainable and reoccurring revenue on that model as well.
So that's the basic strategy that we set out we're going to continue to maintain that and approve upon it and flex where needed as the market develops.
Yeah.
Thank you for that so I really liked that you highlighted the European level two charger because my next question was going to be about gross margins.
Obviously, it's an important item to understand the sequential progression here and I was wondering if you could maybe give us a little bit more color on the.
Mix, we would need to see.
For gross margins above 30% as you indicated in your guidance is it just this this level two charger or are there, possibly other other charges that we should expect vertical integration to benefit margins.
Yes.
It's across the board so as we've talked about before.
In the previous quarter, so were developing two different versions of the DC fast charge or we have the series nine which is the low kilowatt DC, which will have on the market.
Within the next 30 days and that's an in house produced.
Charger at.
Leading margin in the industry.
Then simultaneous to that we're also in full development of the DC fast Chargers, starting at 180 kilowatts and going up from there that'll be manufactured out of the facility that will have open and operating as of July of 2024. So both of those products will allow us to scale innovate new products.
Next from there and have greater margins on the DC fast Charger market then let's look at <unk>. So in the U S. We previously had a dominated we design and contract manufactured the majority of our L. Tubes that is shifting now where 50% plus are going to be.
Have a backlog in deployment visibility and then you know other companies in the space of taste margin headwinds from there steps into D. C. Fast charging you know I know.
Know your vertically integrated I assume this is a vertically integrated product should this be something that uhm has margins consistent with with the targets that you're pursuing.
Mmk. So it's a great question because when you look at D. C. Fast are just there are much higher in gross profit then your L too, but the lower margin right.
So while we continued increase in most of these charges are going into grant programs that we one in the U S.
Going into dealerships, they're going into municipal developments that we've won contracts for et cetera, So but on D. C. What you're gonna get is higher revenue, but lower margin as a rule right L. Two you'll <unk>, you'll have the ability to get that margin up on a consistent.
<unk> basis above 30% on a per <unk> unit retail basis, but D. C is a little harder there as we shift the contract managed to our own away from contracts and to our own manufacturing, we're going to see significant margin improvement on it right. Now. So we are doing third party contract manufacturing.
Most of the D. C right now that will begin to transition with the series nine Charger and then by next summer will fully transition out of that.
Great well, hey, congratulations on the expanded well I'll go and hop hop back into the queue. Thank you.
Perfect.
Thank you very much. Your next question is coming from Max Somerville F. D. A Davidson match your line is life.
So the same same kind of random I Wanna talk about again kind of gross margin sort of issue I mean, if I look a product sales I'm, just rounding 60 million this quarter $16 million last quarter why would there be such a change in mix of units.
Sold that were manufactured by contract manufacturers. That's not just readily apparent to me are you having manufacturing issues in house or their transitory sort of things playing out as you're trying to ramp capacity can you help us understand that a little bit more yeah sure I mean, one of it.
Is.
We had a bit of an overstock situation and contract manufacturing Chargers.
We put an emphasis on the sales team to sell those down.
To clear the warehouse of those units and that are on the legacy units simultaneously the bookings.
We're all basically loaded into the bookings and shipping were loaded in March and April time frame of the higher margin.
Product when we look at on a per month basis, we had one of our best revenue months in March which is indicative of the trend that Michael <unk> pointed out and most of those were the built in the U S charges to rebuild at the belief facility. So it was a bit of season.
<unk> a bit of a Polish on getting rid of the legacy <unk> product in the beginning of the quarter in which we did a great job on we reduce that inventory by 50 per cent.
And the same thing in Europe , where we were pushing to get rid of a lot of the legacy product there and we were able to do that in Q1 is well, we still have a little bit to go but yeah. It was seasonality availability at the same time and keep in mind, we're increasing capacity. So in Booey, Maryland, we were.
We're able to get up to 12000 to 13000 units out of that facility. We have now signed a lease or whereabouts about the signed it to improve the capacity out of that we'll get to by the end of this year up to 30000 units per annual out of that facility just this year.
And we're leasing enough space right now to be able to get that up to 50000. So you got a little bit of availability mixed in there as we sold out some of the series seven and eight Chargers you have a little bit of legacy and that we sold down on well, we crank the numbers and look at bookings what the bookings.
Come in and Bushings. We are you know our best leading indicator of future revenue, we see that the revenue in the margin improves overtime.
And your point might be useful to cite a book to bill metric for product. If you have that available. Similarly, I heard you make a comment on utilization I was wondering if you could sort of frame up utilization rates now may be versus a year ago and what the uptime in the field is for your for your.
In installed base now maybe versus where it was a year ago. Thank you yeah. So to go back to the comment that we made earlier.
Comment specifically looked at 50% of our installed owner, operator Chargers and of those 50 per cent the current utilization.
Is.
Generating revenue and it's in the double digits. We're gonna have the exact number for you we've committed to releasing next <unk>. It's a good number is higher possibly than what some of our competitors are just recently released now simultaneously when you look at our overall portfolio. If you go back to <unk>.
Years, we started instituting a much rigorous process inside benefication for the owner operator model and we will look at those group of Chargers <unk> say, the last three and a half years.
The overwhelming majority of them Aaron that 50% that are in double digits and utilization in revenue. So we're confident now in the system. So we put together to identify high utilization properties and then the cost of installation, which we've been able to reduce.
And that all corresponds to when you're looking at the owner opera amount of model for L. Too. It's a quick return on investment and then it's sustainable revenue for the future as a result of the utilization of those charges and we will continue to sharpen the tool we use a combination of Archie.
I S with some home built software appended with a lot of other data sources in there to make sure. We're accurately pinpointing locations that will be accretive to high utilization and we've been doing that for about three years and it's working.
Okay.
About time.
<unk>.
You just broke up can somebody you repeat the question.
I'm, sorry that was an awesome, just asking about uptime and book to Bill.
Yeah, So uptime right right now in our charges as in the.
Nineties and what we're doing now is we're working with other groups on a quality initiative 97.5 is the minimum uptime you Wanna get for your your your charges, but D C fast burgers and L. T charges combined together, but you also want to make sure that you're building and redundancy in all your bills.
We're not gonna build one charge or even two charges anymore. We're gonna make sure that we install four plus as many as fast as possible. So that way if the charges down we've got redundancy in every station we have across it we're going on a lot of quality.
Measures to improve quality a lot of previous quality issues have been in fact related to legacy Chargers that we have on the market and and <unk> 2022, the sunset of the two G and three G networks old legacy charges that didn't have upgraded systems.
Of course, what went on online and the customers were unable to charge as a result, we replace most but not all of those charges. The ones that are <unk> owned there's not a lot. We can do with a side note. It does not want to upgrade and replaces charges you have to be convinced to do that over time.
<unk>.
[noise] spoke to build I don't have that metric in front of me, but we'll we'll get it for Ya.
Great. Thank you guys.
Thank you very much. Your next question is coming from Chris <unk> of be Riley, Chris Your line of sight.
Hey.
Thanks for taking my question here just on the charging margin sequentially.
<unk> I didn't call you to provide them.
Puts it takes this past quarter I assume the lower sequentially Avenue, just seasonality, but they're charging costs no cheese, both increase any in 70 could provide on the corner and.
We tried there and it would be helpful.
Hey, Michael you Wanna take that one.
Yeah, you're right on the revenue side. It is it is a function of seasonality as you know obviously in the winter months at least in the U S and the West Coast had a lot of rain early in the first quarter. So that caused a lot of you know a lot of.
Target revenue.
Seasonality, if you will and don't worry ill so that but there is also a function or.
They're charging costs that are gonna be.
Cost, regardless will be using the the charges taken or not right. So they're still alive active and.
Some of the costs were seen in Europe are sort of are starting to increase so that that's where we see coming through on the.
In Q1.
Got it Okay and then.
D C rollout.
Are all those product sales or are there plans to use the ownership model for <unk> as well.
Obviously those are higher ticket items take curious how are we should think about you know yeah, there's a little bit of a mix.
There was a mix in there, but the majority are sales with a blink network in a Blink service contract is on the majority of them.
So we're gonna get the network revenue on that we'll get some service revenue on those and the ones that are owner operated will of course get the the the revenue with the owner operators are mixed in there.
[noise] willing majority, maybe with a few exceptions and these would be and they're not included in the sales total that we gave you but there are some charges that were acquiring for replacement of existing charges that needs to be ripped out of the ground, but those are in there we have in most instances grant money kittens to offset the installation.
<unk> of the D C S, where we're going on the owner operator model.
Okay got it and how should we just think about maybe kind of the overall capex for the owner operated for Blink ownership model you know for the whole year I'd be I'd be curious.
Yeah, So, let's let's segment and out I'll have Michael see if he has numbers the compliment when we look at D. C. Fast charging so we're gonna have an initial outlay of cash to get the charges and stuff, but up to about 80% on average of that money is gonna come back so because they're under grant.
Grams, and we have a whole bunch of charge is that going to be installed in those.
There is some one off symbol need the capital, but not bold capital for a new site is where we're replacing existing charges with new and upgraded charges. We don't have to put all the work into the ground Dominoes is basically a rip and replace where there is available power that's gonna be a lower cost mostly.
What it takes to remove and we fit the site, but not bringing a transformer no more transferring none of the high cost items and the installation will occur on that now on L. Two it's all in our forecasts the budget in terms of the capital needed to do to install our forecasts of the amount for the L.
Model and it's all very reasonable based on the much lower cost of installation, but for details if those are available alternative to Michael.
Yeah, and I would just give us a call or obviously as you could sit in a quarter.
We had purchase a property and equipment of about $1 million million and a half but remember that's not just all installation that also includes we had some.
Vehicles for the Rideshare program, but also we another increase in inventory about another $5 million. So right. There if you want to take that on a on a linear between the two you're looking at about 25 to $30 million to $40 million saved Capex I include inventory, because that's really capital in nature. It comes through the cash flow statement is.
Operating but we could see the type of profile going for the remainder of the year and is brenden mentioned some of these dollars that are being spent this year already are for the grant money programs that will expect to see come back probably the latter power twenty-three and it's probably early part to mid part of 24.
Okay and the other thing to add to that is a significant percentage of our L. T charges.
That we're putting in the ground under the hybrid model and under the hybrid model, we provide the service <unk>.
<unk> maintenance, we provide upgrade that this charge a breakdown the site has pays for the installation of that charge. So under the hybrid we don't pay and don't need it upfront capital for installation. They do that we pay for everything else and we split the revenue.
Alright, I'll make sense authenticated. Thank you.
Thank you very much. Your next question is coming from Sammy <unk> F. H C. Wainwright, how may I have your line is nice.
Thanks, Brendan Michael for taking my questions once again, Brandon Brandon Congratulations on your appointment.
Could you just give us a little bit of a bit on the integration of the network in Europe and other.
Cases have you faced any difficulties is it on strike any any color would be Henderson.
Yeah.
It's interesting question if you yeah.
You ask the developer there's any difficult still telling me. It's all on track, but you ask a business person you know you're gonna get a different answer [laughter] you know, it's a herculean task to take four networks and actually five and combine them under one right, but we're fortunate to Blink you you know.
When we made the move two years ago to bring her gender bod over from.
Endeavored at that time and to build a network that is equal or better to what charge point has they built the network with this in mind. So we have the final semi connect immigration is gonna take place in less than 30 days and then blue corner.
Will take place 30 days after that the rest of Europe . The rest of charges, we have in Greece, South America, and and all others will switch over at that time as well. So we've had some minor delays in the development process as we looked at certain function.
<unk> and needs that it had to be in different countries and that was predominantly the big delay yeah different specifications and different rules in Europe , you need what's called the billing engine because they don't use credit cards like we we do so you have a little bit of separate development, there, but overall the emphasis on.
The slowdown has been to ensure that we do the right usability testing and the quality is there and we do it is bug free as possible. So we are very much looking forward in the U S to have one network for 30 days and then throughout the summer, we'll have one network globally and will be one blank and all.
All of that will be nothing but savings for us as we move forward and we redeploy those engineering assets or take to save for the bottom line.
Understood Thanks for that.
Next where she was on the Ivy Aq contract Oh, what is the revenue potential and bottom line impact.
Once the impact of this 23 and.
And maybe 2024.
It's to be determined the margins of those products I'll give us a little bit of feedback on that the margins are good so there are above or target.
On our target our minimum targets 30 per cent or go with 35. So there are above that on on the individual product margins today.
The volume of the contract is being released over time.
And it's a little bit of performance. So how well you perform you could up your share of the overall bucket and I will say this we received positive feedback from United States Post office, we came in on time and earlier than any other provider, we made sure that our network.
Past.
The the tests that are hardware past, the firmware and hardware test and they all did it and fly and colors and we shipped out the order and got it to them in record time. So we're in great position to be able to retire revenues and more of our unfair share of the total of.
The the the 41000 Chargers and I believe we're really well positioned and will continue to put the <unk> emphasis on delivering quality and timeliness to this very important client.
Understood no.
Good luck on that.
And my last question is just if you can shed any update on the right chair spin off have you a link.
Link mobility is a wholly owned subsidiary, but how easy is it to P.
P without an integrated the envoy.
I couldn't do it.
Sure So what we're doing right now.
Is looking at both the Blue L a platform.
And the envoy platform, we're going through another synergy exercise on that as we speak we kicked up off last week. So we're looking at everything from customer service to I T support to development.
To how many agents you have there in the field sales and customer support agents. So we're gonna.
Keep separate business units and envoy and blew away, but yet have shared services.
The scene, so we reduce the overall expenses and from there we will get you know an overall performance on the business and then we'll start you know the road show on the spinoff once we put the business plan together it really helps at.
We have additional grant money coming in from L. A we have the new grant money is 7 million.
Dollars coming in from the state of New Jersey, we have other grant applications that want that so with the spin off with the grant money with the synergies we really believe that we're gonna put together a very very good product for the market. So look for more details on this as we get through the month of May.
May and into June Michael do you have any additional comments stay on line on those.
No I think that's accurate.
Great. Thanks, a lot Brendan Michael and good luck.
Thank you.
Thank you very much. Your next question is coming from all of that one from T. P. H <unk>.
Good afternoon, everyone and thanks for taking our questions. Just a couple of quick ones at this 0.1st one being a follow up is there any color that you all are able to provide with respect to how margins at the buoy facility will ramp.
Once it's kind of fully ramp to that 30000 50000 unit benchmarks on a level two chargers.
So I can provide this and I'll see if Michael if he has some.
Some additional color to add that so buoy when when we did the sermon connect deal. We we wanted the manufacturing footprint when we acquired them right and that's been excellent thus far but also on pure product sales. They had one of the best margins in the industry. It hovered between 40 and 50 per cent. So that same product is the <unk>.
One that we're innovating upon now and we're using that product in place of lower margin products that we've been selling for the last four or five years. So as we continue to have this shipped from blink contract manufacturing to those higher margin.
Products coming out of our buoy facility, you're gonna see this improvement and margin and Michael can elaborate further but when we looked at the company as a whole we liked the Chargers, we liked the manufacturing both in the U S. In India, we liked the margins and we really loved the customer base.
That that they had in those now are all proving very opportunistic as a combined company as we move forward Michael any any other color around that.
Yeah, No I'll I'll I'll add a little more color or not.
Salt in the second half of 2022 and even prior to the acquisition that we saw in due diligence uneven and the what the financials at work file.
Margin profile overall, not just on the product side, but on the total gross margin on summer, including the network fees of a high network capacity and they they drive open large revenue large margin on the on the network side of it as well and that was in excess of 50 per cent. So.
The product might be at the 40 to 50 per cent, but there's additional margin that came from from that that that part of the <unk> of their business. So as we see more of the product I don't want there to be expectations, we're going to start seeing 50 to 60 per cent margin because remember, we're still own and operate in until utilization gets to a higher level.
We'll still have a little bit of cost run on there plus as we put more units in the ground depreciation and amortization effects. The gross margin. So she just wanted to give the expectation, but we're confident.
With the manufacturer product is gonna.
Like the profile that we saw in the second half of 2022 will bring those margins up.
Awesome. Thanks for the color there and just for my second question just on the cost side given some.
Cost reduction initiatives, such as the 5 million from the Sema connect synergies and just some other noise whether from recent acquisitions in stock based comp any sort of Gaetano sent you all are able to provide in terms of compensation and G&A run rates relative to the 30 million or so that we're seeing per quarter over the last couple of.
Yeah, I'll I'll add obviously, we don't we haven't seen the full impact of the synergies that we've we've started in Q1 will start realizing those and seeing this come into play in second more towards the end of second quarter into the third quarter of twenty-three I think I'd opex compensation levels.
We were very conscious of of compensation level sure based comp. If you. If you recall there was an award in the second half of 2022 that is just about fully expense through right. Now so we'll start seeing the sure based comp come down.
And what you'll get we're very conscious on the cash part of competition expensive, we're really monitoring hires integrations and synergies and.
To ensure that the integrations and the synergies our technical effect.
Yeah. So the only comments that I'd say, it's a major focus right.
We'll continue to.
To go to.
All the various entities of the companies both here and in Europe .
And look for these opportunities are <unk> and <unk> that had been achieved as a result of an efficiency gang.
Well also continued to look for these opportunities of where the best cost of labor is going to be for a particular function and we're doing a lot of that work right now as many of you know we have three four different facilities in the United States that are in operations, we got fees.
Next we got buoy, we've got the Miami office, we the office in Los Angeles, we have three offices in Europe .
And we have a major manufacturing facility in the development Center in India. So we will ship jobs to get the best Bang for our dollars will continue to eke efficiencies out of that we still have some G&A reductions that are gonna happen within the U S in Europe .
That we haven't yet taken action on they will hit later this year.
But then also we're gonna have some upticks as we add more manufacturing nation to build and develop more charges as well. So overall, we're gonna continue to get more efficient <unk> go to more system based process away from manual processes as we continue.
More forward and improve the company on <unk> on all access points.
Awesome, Thanks for the time.
Thank you very much that appears to be honest questions.
Does that question answer session I went out to end the call back over to the Italian C. D. I V P as an activation.
Take a journey.
And we thank you all for your interest in billing charging this concludes our call today and you may disconnect now.
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