Q3 2023 Nuvve Holding Corp Earnings Call
Good afternoon, and welcome the New V holding corp's third quarter 2023 earnings call.
As a reminder, this conference is being recorded it is now.
My pleasure to introduce Eduardo Ryan.
Thank you you may begin.
Thank you on today's call are Gregory <unk>, Chief Executive Officer, and David Robson, Chief Financial Officer of newly earlier today <unk> issued a press release announcing its third quarter 2020 results. Following prepared remarks, we will open the call up for questions before we begin I'd like to remind you that this call may contain forward looking statements. While these forward.
Looking statements with like maybe 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 May we filed with the SEC and in the earnings release issued today, which are available on our website movie undertakes no obligation to revise or update any forward looking statements to reflect future events or.
Yeah.
I would like to turn the call over to Gregory Paula <unk>, Chief Executive Officer.
Great. Thanks, Eduardo and getting dual thank you for joining our third quarter 2023 results call.
We came into 2023 to meet them that we were going to expense, but well overdue inflection in growth business.
In the first half of the year, we began laying the foundation of these two play out with record orders and much higher sales than in 2022.
Momentum continues to build in the third quarter and so far in Q4.
As discussed on our August call, we continue to evolve our AI capabilities by integrating <unk> into <unk> could Buck chaff management.
In July.
The enhanced functionality outlook maintained our differentiated to edge and comes at a critical time as we accelerate deployment of our software hardware.
With a 97% accuracy rate.
Set to maximize revenue generation and bolster our BTG technology globally, revolutionizing EV usage and preparation.
In October we deployed a record number of 38 AC and DC bidirectional charging station connected through our <unk> platform.
While grain maybe I wasn't the management does not immediately correlate to revenue dollars. It is critical to our growth strategy.
One it increases.
Klein of potential future grid services revenue.
And two with more and more people benefiting from the value of our <unk> software market awareness expand which in turn accelerates demand for our products and services.
These deployments were carried out by <unk> 12, which was only launched in June of this year in order to provide a full range of services.
Fleet electrification from North American did in transportation.
We expect Puerto Rico deployments in Q4 are the supply chain challenges that have plagued the last two years continue to abate.
Last month.
Got to hit a big milestone by launching in Texas with EPA funding. The V. K 12 was able to achieve the Martinsville Independent School district.
In converting their five diesel bus fleet with five Blue Bird electric buses.
<unk> level, two chargers and our innovative AI powered <unk> feedstocks to Donald Trump's management software.
With this deployment, we understand at Martinsville.
The first all electric school bus fleet in the U S.
Finally in California, we were honored to have received the highest score among applicants.
Proposed outwards of $1 9 million from the California Energy Commission for our Revolutionary with Cool BTG project.
This recognition underscores our commitment to leveraging bidirectional EBIT school buses to enhance California grid resiliency marketing not just a milestone fund movie, but a leap for the energy ecosystem.
In Q3, we continue to see steady growth in grid service revenues, which came in at three four times the level recorded during the corresponding period last year. We were also pleased to tell the five months, we have been carrying on our balance sheet for some time, which helped sustain the revenue growth trend for the first half of the year while.
Margin dilutive with freed up working capital through the bulk sales.
Altogether this puts us on pace to grow total company revenue by more than 50% year over year in 2023 with one quarter left to go.
As stated before however growth can be lumpy, especially when they are substantial government as far as electric school bus fleet customers to go chase, which can and does impact the timing of orders and sales.
Further we have no doubt operating against the capital market backdrop that has seen a continued deterioration in sentiment towards clean tech is something that that seems to have only worsened in recent weeks with original and commensurate from fintech companies and about the EV landscape.
With that Katherine why we felt this backdrop gives us no choice, but to continue raising capital piecemeal fashion at depressed equity prices as we did last month movie.
Moving forward, we will continue to evaluate all options to methodically and incrementally finance our business, while we await for an improvement in market conditions.
These may include additional liquidity financing and our debt financing. For example, we may continue to work towards putting in place an asset backed lending facility, which David will expand upon.
We have also been working on reducing our cost structure, yet again to optimize our cash runway.
Specifically, we are working towards lowering our cash expense rate to at or below $5 million per quarter as we get into 2024.
This is the result of reducing our cost across administrative and legal functions. We are still investing into our platform in a manner that is commensurate with our focused priorities.
In October we issued a press release discussing our patent hedging behind putting out this really should be clear we haven't been at this for a long time investing significant resources into growing our BTG patent portfolio and developing a comprehensive EQT solution.
With IP and expertise around areas, such as our private flow control Sharps management and power capacity and as we push our technology. Further ahead with our three II, we have a market leading offering and remain the only pure play public company today with a proven track record in the plane commercially available and scalable.
To grid technology worldwide.
Our belief in and commitment to our role in the transition.
And bearing and we expect both the macro and capital market backdrop to get back on track. After the current rough patch, we expect <unk> to be there throughout <unk> forms a critical piece of the energy transition and as we March towards a critical inflection point in EV adoption in the second half of this decade.
The 2020 through addition of EPA Clean School bus program was a big tailwind for our increased orders and sales in the first half of 2023, and we are excited about the sip sequence around sort of data on this.
The next installment of 400 million competitive grant funding round closed vitrification process notice of already is expected to start trickling out later this month and running through January with awards to be issued later in Q1 2024.
Since our last call. The EPA has also opened up with subsequent $500 million.
Funding rounds.
This installment will look more similar to a round one and 2022 I think it will be a rebate process.
Yes application window for this round is expected to be up until the end of January.
Prepaid recipients are expected to be notified in April 2024, after which winners and placed purchase orders and related short order and submit for reimbursement.
We look forward to hopefully I think even more success in this round as we did in 2022 with our new V. K 12, you need we're confident we are even better positioned.
Before passing it over to David to discuss our financial results. We spoke a lot earlier in the year about a circle K partnership in the Nordics.
It's part of our strategic initiative to accelerate growth in megawatts under management through deployment of our gift platform on third party charge port operator hardware.
As of today, we are largely completely integrated our software with their hardware, we expect to begin participating into market and generating revenue prior to the end of the year more importantly, we are paving the way for more material revenue generation starting in 2024.
And for exponential growth in megawatts under management in the region and beyond over the long term.
David over to you.
Thanks, Gregory I will start with a recap of third quarter 2022 results in the third quarter, we generated total revenues of $2.7 million compared to $6 million in the third quarter of 2022.
The increase was primarily driven by a large increase in charter hardware sales.
Higher good service revenues and the sale of five buses.
This service revenues up $6 million.
Represented 21% of total revenues this quarter.
A three four times increase from the prior year quarter.
Year to date through September 30 of 2023 grid service revenues were $8 million.
Which compares with <unk> 3 million for the prior year period.
We're sending approximately a three fold increase.
Margins on product and service revenues were 9% for the third quarter 2023, compared to 43, 3% in the year ago period.
Margins were heavily impacted by the aforementioned sale of five buses.
As a reminder, margins can be lumpy from quarter to quarter, depending on the mix between charges gross margins our standard pricing generally range from 15% to 25% while 18 charges gross margins are approximately 50%.
But in dollar terms are a small fraction of the revenue of the DC charger.
Grid service revenue margins are generally 30%.
Operating costs, excluding cost of sales was $8 8 million for the third quarter of 2023 compared to $8 9 million in the third quarter of 2022.
Mainly due to lower payroll and public company fees offset by higher consulting and legal expense.
Cash operating expenses, excluding cost of sales stock compensation, and depreciation and amortization was $7 6 million in the third quarter of 2023 versus $7 7 million in the third quarter of 2022.
$7 3 million in the second quarter of 2023.
Other income was <unk> 3 million in the third quarter of 2023 down from $194 million in the year ago quarter.
The year ago period benefited from a $185 million non cash gain from the change in the value of warrants.
Net loss attributable to common stockholders increased in the third quarter of.
2023 to $8 3 million.
A net loss of $6 7 million in Q3 of 2022.
The increase was also primarily a result of the just mentioned noncash gain in the year.
Arago quarter.
Now turning to our balance sheet.
We had approximately $13 9 million in cash as of September 32023.
$5 million in restricted cash.
<unk> in our cash balance was approximately $9 8 million of EPA funds received.
In fact, there were a lot these funds to customers during the fourth quarter.
Net cash generated from operating activities was $2 8 million in the third quarter of 2023.
Excluding the benefit from the incremental ETF funds received in Q3 of $6 3 million net cash used in operating activities was $4 million for the third quarter.
During the third quarter inventories declined by $2 1 million driven by improvement in inventory turnover of charging station along with the benefit of selling five buses we held in inventory.
As we had previously discussed the improvement in inventory turnover as what we had expected as we continue to sell through the inventory investments. We made in the back half of 2021 to mitigate industry wide supply chain constraints.
During the third quarter, we raised net cash of $2 1 million through our aftermarket or ATM facility.
At quarter end, we raised an additional $3 2 million in gross proceeds through two separate offerings in October as previously disclosed.
As we said last time, we remain focused on up to lies in our ability to raise capital.
Continuing to work on putting in place a long term asset based lending facility or ABL, which can provide additional liquidity.
Borrowing capacity in the ABL is based upon our underlying inventories and accounts receivables.
This type of debt facility aligns well with our business model given the ongoing inventory and accounts receivable amounts we carry on our balance sheet.
Now turning over to megawatts under management and estimated future grid service revenues as a reminder megawatts under management is a metric we use to quantify the aggregated amount of electrical capacity from the deployment of our <unk> and <unk> and Chargers, which are primarily deployed in the <unk>.
Electric school bus market in the U S and in light duty fleet deployments in Europe.
In addition to stationary batteries.
Currently these chargers and batteries are located throughout the United States Europe and Japan.
Megawatts under management in the third quarter increased six 1% over the second quarter of 2023 to 21 two.
20.
In terms of its composition eight two megawatts.
We're from stationary batteries and 13 megawatts were from EV Chargers on a year over year basis megawatts under management increased by 30%.
We continue to expect an acceleration of our megawatts under management as we go through the second half of the year.
This is evidenced in the press release, we issued last week, which we noted that the following record installations in the third quarter megawatts under management as of October and increased to $22 seven or seven 1% and only the first months of the fourth quarter.
Depending on the geographic regions of our deployments are grid service revenue opportunities will vary.
We are currently seeing good service revenue opportunities for vehicle to grid services, ranging between $85 per kilowatt year up to $300 per kilowatt year in certain key markets, we are focusing on.
And with our planned expansion of <unk> charging management services in Europe, we're seeing further grid service revenue opportunities.
These revenues included a combination of contracted services and merchant exposed services, given the long term nature of our customer deployments.
These revenues are generally recurring.
After periods as long as 10 to 12 years.
Now turning to backlog on September 30th.
Hardware and service backlog was $5 6 million down from $6 1 million on June 30.
Order activity slowed in Q3 relative to elevated levels in the first half of the year, which Dennis benefited from EPA funding.
Looking out to the fourth quarter, we expect full year revenues for 2023 to exceed $8 million and we expect operating expenses excluding cost of sales for the full year at the end of $34 million.
As Gregory mentioned, we have also implemented several cost reduction initiatives, which will reduce our cash operating expenses further.
Which we expect to trend at approximately $5 million per quarter in 2024.
This concludes my portion of the prepared remarks, Gregory back to you to wrap up.
To finish up I would like to discuss the big picture and provide a high level view of the main revenue drivers of our business as we look ahead.
One new Vicki as well, which I briefly touched earlier on.
The value proposition here relies on vehicle readiness energy management and battery life extension.
Offering 45 in a strong position as a service provider in the space with more than 500 school buses connected through our platform today.
<unk> will keep on leading in this segment.
Ooh stationary storage, where our growth is accelerating in 2023.
Copies Nancy to provide great services with highly unreliable batteries as evs can be unplugged at any time.
As a result, you should not come as a surprise that we can also who went out of stationary storage.
With our advanced platform, we believe that we can extract more value for these batteries than any other player in the space such as batteries are included into our deployment today with circle K. The University affiliated funds out San Diego and the University of Delaware.
More and more developers and battery manufacturers are coming to us to manage battery deployments that are underway. We see these other pathways to accelerate growth in mega funds under management and fixing our grid services muscles with over the multiple megawatts into pipeline.
And nicely three Australia forecasting capability for transport operators on Cpus and utilities.
Fundamental work on predictive analytics, which is based on our partnership with 2021 about AI as led us to developing very advanced features that allow us to predict with a very high level of confidence when an electric vehicle is going to be connected to a charging station and the amount of kilowatt hour it will need to onboard during the session.
This allows us to offer energy services to CPU companies and provide great usage forecast utilities.
The ability to predict where EV charging bottleneck seems likely to happen over the subsequent two or three days is a very valuable service for utilities, the ability to speak by adjusting charging time without impacting end users.
It is critical to enabling an incredible cost of energy, while we go through the EV adoption period.
Beyond this we also continue to explore opportunities in the micro grid and consumer maybe fee.
And with that we thank all of you not only for joining us today, but for sticking with us during what have been challenging times Youll trusting our vision and technology continues to propel us forward and we remain grateful.
Operator, please open up the line for any questions.
If you would like to ask a question. Please press star one on your telephone keypad now.
And you will be placed into the queue in the order received please be prepared to ask your question when prompted.
Once again, if you would like to ask a question. Please press star one on your phone now.
Once again to ask a question. Please press star one on your phone now.
At this time, there appears to be no questions.
Turn the call back over to Gregory for closing remarks.
Thank you very much for listening to US today, we are again very excited about the opportunities that lie in front of us and remain a bit about the time, if any of our shoulders as any question for us. So thank you very much and have a good evening.
This concludes today's conference call. Thank you for attending.
The host has ended this call goodbye.
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