Q1 2023 Nuvve Holding Corp Earnings Call
Speaker 1: And.
Speaker 1: I.
Speaker 1: I.
Speaker 2: Thank you. You may begin the call.
Speaker 2: our Gregory Paulon, Chief Executive Officer, and David Ropson, Chief Financial Officer of Newby. Earlier today, Newby issued a press release announcing its first quarter 2023 results.
Speaker 2: the call-up questions. Before we begin, I would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect newbies' best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking projections. These risk factors are discussed in the newbies' filings with the FEC.
Speaker 2: and in the earnings release issue today, which are available on our website.
Speaker 2: NUI undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances.
Speaker 2: With that, I would like to turn the call over to Gregory Pualan, Chief Executive Officer of Newby. Gregory? Gregory Pualan-Pualan, Chief Executive Officer of Newby.
Speaker 3: Thanks, Eduardo and good day to all listening in. We thank you for joining our first quarter of the 2023 results call.
Speaker 3: We are extremely encouraged by the improvement in the fundamentals of our business in Q1. 22.83 is so far the ever-bearing the green shoots we have always felt were inevitable. It has just been a question of when, not if.
Speaker 3: This was evidenced by both record orders and deliveries for DC chargers during the period.
Speaker 3: At the same time, we progress on additional lumpy orders, which is helping sustain momentum in order flow and sales of our DC chargers in the near term and evolve our plans to boost megawatts under management and grid service revenue streams more quickly via...
Speaker 3: avenues that are not dependent on large scale hardware rollouts.
Speaker 3: To briefly summarize our key accomplishments in the quarter, while we do not get into specifics on orders and deliveries, we will note the following.
Speaker 3: On the other front, we saw a fall hold increase in order for these seed chargers versus the fall quarter 2022. And so another increase for more than 3.5x on a year over year basis.
Speaker 3: In terms of deliveries, we more than doubled our fourth quarter DC charge shipment sequentially and more than tripled shipment related to Q1 2022.
Speaker 3: One big driver of the increase in both orders and shipments in the first quarter was a previously discussed record size order for 24 units from the Los Angeles Unified School District.
Speaker 3: Only a small portion of orders recognized in Q1 were affiliated with rebates to customers that we directly supported in the 2022 inaugural funding round of the five-year EPA Clean School Bus Program.
Speaker 3: We also thrilled to report that our strategy initiatives aimed at quickly growing and scaling up our mega-administered management by integrating into a established third-party hardware networks led to the partnership we announced with CircleK in February . In summary, our agreements with CircleK initially expected to yield an additional
Speaker 3: across these two countries. We believe that a strong demonstration in this initial program should bode well for expansion in the region.
Speaker 3: For perspective, if all 560 locations were hooked up, this would represent nearly 500 megawatts under management in the Nordics alone. And if you look even further out, we know that Circle K has an estimated 17,000 locations worldwide.
Speaker 3: We have been working closely with our colleagues at Circle Care on integration. As of today, we are integrated and ready to demonstrate our grid service capabilities on the stationary batteries, and we are progressing on integration activities with the charging stations.
Speaker 3: We expect to be generating grid services revenue from this partnership in the back half of the year.
Speaker 3: Turning to recent developments since our last call that underpin our optimism about 2023 and considering a marked improvement in results for newbie over 2022.
Speaker 3: We are pleased to disclose today that it will be secured a new record order from a large fleet operator with 25 DC chargers.
Speaker 3: Translate to approximately 1.1 million in New Vietnam ourselves affiliated with the Penn School District customers that we formally represented in the grant writing and submission process.
Speaker 3: In addition, we are receiving orders for other customers we have facilitated in the process.
Speaker 3: Further, we're pleased to see that in late April , the EPA opened up the second round of funding for the Clean School Bus Program.
Speaker 3: At least initially, they will be awarding $400 million as part of the 2023 round.
Speaker 3: Applications are due this August , with orders expected between November 2023 and January 2024. This is an elongated timeline for approval and reflects a change in the structure of the program related to the 2022 round.
Speaker 3: Run one last year won nearly one billion in rebates through a lottery system.
Speaker 3: With our spreading out of a nearly 400 school districts, the average number of buses per recipient was in the order of a single digit.
Speaker 3: Round two, however, will be a competitive grant-based program, and our words will be for larger scale programs.
Speaker 3: Grants will allow a minimum of 15 and up to 50 buses for applicant school districts.
Speaker 3: And unlike last year, third-party applicants such as transportation companies will be allowed to participate as well. They will be allowed a minimum of 50 and up to 100 school buses serving at least four school districts. The EPA ultimately plans to make only 25 to 50 awards in total in this phase. We believe this new format will play to our strengths.
Speaker 3: With Nui's assistance, we can lead not only the grant writing initiative, but also advise on design, implementation strategy, financing, and project management as we interface with the variety of stakeholders involved in the process. We look forward to partnering with our applicants in the months ahead to build a pipeline for this award win late this year and going into next year. Further, we believe our holistic solution will continue to position us to win new business outside EPA, and we are optimistic that we will have more to say on this in the months ahead. Putting together a solid improvement in Q1 with a contingent momentum, we are seeing all of our plans and information is in progress.
Speaker 3: On the march call, I discussed California Senate bill 233, which aims to make bidirectional charging for electric vehicle banal. And which if-past could facilitate widespread D2G adoption in the years ahead.
Speaker 3: In April , I testified before the California Senate Energy Utility and Communication Committee in support of this proposed legislation.
Speaker 3: The cost of a bidirectional capability is close to zero, as the hard work ability exists today in wise preparation.
Speaker 3: As this bill goes for appropriation and through the Senate, we hope the politician that will recognize the transformative impact that B2G can have on great resilience and EV total cost of ownership.
Speaker 2: And with that, I will now turn the call over to David to discuss our financial results. Thanks, Gregory. I will start with a recap of first quarter of 2022 results. In the first quarter, we generated total revenues of $1.9 million compared to $2.4 million in the first quarter of 2022. Recall that last year's Q1 results were impacted by unique strategic and financial
Speaker 4: alluded to.
Speaker 2: Margins on product and service revenues were 18% for the first quarter 2023 compared to 5% for the first quarter 2022. Margins in the year-go period were depressed due to the just mentioned bus sale. As a reminder, margins can be lumpy from quarter to quarter depending on the price of the bus.
Speaker 2: charger.
Speaker 2: Grid service revenue margins are generally 30%.
Speaker 2: Operating costs, excluding cost of sales, was $8.3 million for the first quarter of 2023, compared to $9.8 million in the first quarter of 2022.
Speaker 2: This decrease was primarily attributable to lower public company fees, payroll, and consulting costs.
Speaker 2: Cash operating expense, excluding cost of sales, stock compensation, and depreciation and amortization was 7.2 million in the first quarter of 2023, declining from 8.2 million in the first quarter of 2022.
Speaker 2: The reduction in costs evidences our previously discussed initiatives to optimize our cost structure, and we believe we can continue to run expenses at approximately $7 million or lower per quarter in the near term.
Speaker 2: Other income was 0.2 million in the first quarter of 2023, versus income of 4.8 million in the year ago quarter. That equine, primary that reflects a $4.8 million non-cash gain from the change in the fair value of warrants in the year ago quarter. Net loss, attributable to new-the-comand-stockholders increased in the first quarter.
Speaker 2: improvement in operating losses of 1.7 million.
Speaker 2: Now, turning to our balance sheet, we had approximately $11.8 million in cash as of March 31, 2023, excluding half a million in restricted cash. On our last call, we provided an update on our capital raising initiatives, but I'll briefly summarize.
Speaker 2: In February , we raised $637,000 through a combination of proceeds from our ATM and a registered direct offering of common stock.
Speaker 2: Further, during Q1, we were presented with an attractive opportunity to monetize our investment in Switch, a leader in charging infrastructure, operation and maintenance software. This resulted in 1.3 million in new cash proceeds received near the end of the first quarter This year we would like to see more?
Speaker 2: We generated a 30% return on this investment in less than 12 months span. Yet we were able to retain the same important commercial and technology benefits of the partnership that we had prior to our divestment.
Speaker 2: Let's go to the quarter end.
Speaker 2: And as previously disclosed, we raised an additional $1 million through a registered direct offering of common stock in April .
Speaker 2: We continue to remain focused on securing capital in the most optimal ways amidst turbulent market conditions.
Speaker 2: This includes using our ATM facility and other potential equity offerings.
Speaker 2: Total cash decreased by $3.9 million during the first quarter.
Speaker 2: Primarily attributed to net cash used in operating activities X working capital of 6.5 million offset by the sale of our investment switch of 1.3 million.
Speaker 2: 0.6 million raised through the sale of equity and the balance from positive working capital.
Speaker 2: As we have previously discussed, we expect to continue to generate positive working capital in future quarters as we bring down our net investment in inventory.
Speaker 2: Inventory decreased by 1.5M during the quarter to 10M. Compared to 11.6M at the end of 2022. This is consistent with expectations and our prior commentary regarding anticipated declines in inventory. It's charger shipments pick up.
Speaker 2: Accounts receivables increased by 1.4 million during the quarter to 2.6 million compared to 1.1 million at the end of 2022. The increase is attributable to higher sales activity late in the first quarter of 2023 compared to last quarter. Now...
Speaker 2: Turn it to our Megawatt's Under Management and Estimated Future Grid Service room of the news. As a reminder, Megawatt's Under Management is a metric we use to quantify the aggregated amount of electrical capacity from the deployment of our V1G and V2G chargers.
Speaker 2: which are primarily deployed in the electric school bus market in the US and in light duty fleet deployments in Europe in addition to stationary batteries.
Speaker 2: Currently, these chargers and batteries are located throughout the United States, Europe and Japan. Megawatts under management increased by 5.7% over the 4th quarter of 2022, up 0.9 to 18.3 at the end of the first quarter 2023 from 17.4.
Speaker 2: In terms of its composition, 8.2 megawatts were from stationary batteries and 10.1 megawatts were from EV chargers.
Speaker 2: On a year-over-year basis, Magerwatt's under management increased by 24.8%.
Speaker 2: While the sequential increase in megawatt's undermanagement from Q422 levels may seem low relative to the aforementioned improvement in chartered deployments.
Speaker 2: This simply reflects the timing issue as many chargers shipped late in the first quarter have yet to be commissioned. As such, we would expect to report an acceleration in growth in megawatts under management with our second quarter 2023 results and in the back half of the year driven by the Circle K ramp.
Speaker 2: As we noted in March, we expect grid service revenue growth to outpace our strong hardware revenue growth in 2023, resulting in grid service revenues, making up a larger share of total 2023 revenues. Relative to a share of 2022 revenues. Depending on the geographic regions of our deployments, our grid service revenue opportunities.
Speaker 2: in Europe we are seeing further grid service revenue opportunities.
Speaker 2: These revenues include a combination of contracted services and merchant exposed services.
Speaker 2: Given the long-term nature of our customer deployments, these revenues are generally recurring.
Speaker 2: up to periods as long as 10 to 12 years. Now turning to backlog, on March 31st, our hardware and services backlog was 4.2 million up from 4.1 million.
Speaker 2: The modest growth reflects the fact that while orders were high, we also shift a record number of units.
Speaker 2: Subsequent to Q1, we saw a strong increase in our backlog, increasing to 5.7 million by the end of April .
Speaker 2: Before turning the call back to Gregory, I would like to reiterate that we believe movie is hot track to deliver strong growth in its key operating metrics in 2023 compared to 2022, including acceleration of megawatts under management, increased charging station revenues, and higher grid service revenues.
Speaker 2: while lowering our operating expense structure.
Speaker 2: We saw this play out in Q1, and while it is still early days in Q2, our key operative metrics are improved as evidenced by the win of our largest single-order and movie history, recognized in April , and a 27% increase in hardware and services backlogged through April compared to the end of Q1.
Speaker 2: while our charging station deployments and megawatts under management continue to increase, at the same time our operating costs have come down.
Speaker 2: As we materially scale up the business and demonstrate our ability to generate valuable grid service revenues through opportunities with ChargePoint operators, such as Circle K.
Speaker 3: And with that, Gregory, back to you to conclude our prepared remarks. Thanks, David. To wrap up, but the record orders and debriaries for our DC chargers in Q1 and Q2 is poised to be another. In the meantime please take care, be warm, and don't be afraid to share.
Speaker 3: strong quarter given a larger award we've already won, others we're working on, and the EPF funded 2022 awards coming in. We are making good progress getting our Circle K partnership up and running and look forward to revenue generation later this year and to momentarily showcase the benefits of this partnership to Circle K, their customers, and ultimately others who we think tend to benefit from such agreements over the balance of the year.
Speaker 3: At the same time, we continue to work on other similar opportunities with charge collaborators that we hope to announce in the coming quarters.
Speaker 3: We thank you for your participation and look forward to speaking with you in August . With that said, I would like to now turn the call back to the operator to begin our Q&A. Operator.
Speaker 5: Thank you. We will now begin our question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.
Speaker 5: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
Speaker 6: Hi, everyone. Thanks for taking the questions.
Speaker 6: taking the questions.
Speaker 6: Hey, so I've been jumping between calls this afternoon, so I apologize if I ask anything that you discussed at the beginning of the call, but you know maybe I'll start just taking a step back. You know it's a question I think I've asked you over time. There's always a lot of noise about vehicle to grid and you know I guess not.
Speaker 6: capabilities, your V2G solution versus others who may call it that, but we're just doesn't have the same functionality. You know, I think in the segments where we have very a presence such as no school bus, for example, here in the US, it is clear and we see that because more and more people are coming.
Speaker 3: leader. Similarly, now we say that the CPO such as Circle K, the reason why they chose us is because they know that our platform is the most advanced platform in order to aggregate those charging stations that they have and to control them at a very fast pace which is where there is the highest value in providing those great services. So the good news is
Speaker 3: awareness is building up. This is why, for example, SB 233, the bill here in the Senate in California, is going through and would mean that by 2027 each electric vehicle sold in California would have bidirectional capabilities. That would be very important for the growth of our business and that shows that
Speaker 3: Now it's not just us, the fleet managers in the school bus business, but also at the political level, the understanding of how critical D2G is building appropriately.
Speaker 6: Got it. That's helpful. And you brought up Circle K. I mean, I know that in that industry, I think I might touch on that, you know?
Speaker 6: people watch what others are doing. I mean, I guess I'd love to hear kind of next steps for Circle K. But beyond that, just thinking about, you know, do you think that this is something you could replicate and have others reached out upon seeing this announcement and just to at least start to think about.
Speaker 6: going that same route or how should we think about that?
Speaker 3: First, on where we are on Circle K, there is some integration work that needs to happen and rolling out potential hardware in some cases on some of the sites in order to create the communication link between our platform and the infrastructure that is already deployed today. We are right in the middle of this and still on plan.
Speaker 3: with our expectations in terms of disintegration and targeting 50 sites to integrate with them. Now how is this refugable? I think first of all Circle K is headquartered in Norway and so they are very exposed to the EV rollout. That's why they understood it so well.
Speaker 3: right? This is fast charger in gas stations. You might have also some charging infrastructure, for example, for transit bus depots where B2G might not be the most suitable but B1G can be very variable in charging those vehicles at the lowest cost and potentially
Speaker 3: reducing the small cost of ownership of the infrastructure that goes with them. So it's a question of use case on the type of CPU implementation but we are very confident that this is going to be all about across a variety of CPUs of a time.
Speaker 6: The demonstration project with Circle K needs to run for a bit before you really see interest coming your way, or is it something that you've already seen some inquiries, just based on the announcement to start?
Speaker 3: We have not announced any of those things. On the overall, from my perspective, what I am looking forward to is the value we can bring to such an infrastructure. Bringing a number on that is going to be a very important outcome of this rollout.
Speaker 6: Thanks for taking my questions. Can you just share with us any color on what you're seeing in the school bus market in terms of pricing? I think in 2022 prices were pretty elevated given a lot of the supply chain issues that were going on and also buses were never even at places like Bluebird.
Speaker 6: spending any time on the lot, they were just leaving right away. So are prices normalizing at all in EVs, coal buses? I don't know. Normalizing, I don't know if this is the term I would use yet. I think, you know, things are still pretty tight.
Speaker 3: Battery sizes are increasing in those school buses. Initially, we had a lot of them that were maybe in the order of 120 to 150 kilowatt-hours. Now, 200 or 300 kilowatt-hours is becoming more of a norm. So, maybe prices are stabilizing, but...
Speaker 3: but the capabilities of those vehicles are increasing at the same time.
Speaker 6: Can you share any color on what you're seeing with your wallbox relationship with the Quasar? Anything on that on the residential front?
Speaker 3: Not anything that we can share at this point.
Speaker 5: or question and answer session. I would like to turn the conference back to Gregory Pualon for any closing remarks.
Speaker 3: Thank you very much everybody and we are looking forward to seeing you in 90 days for some very, hopefully very exciting news at the time. So thank you very much. Bye bye.
Speaker 5: And thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker 1: I have.
Speaker 1: Will.