Q2 2024 EVgo Inc Earnings Call

Unknown Executive: During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance. Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings, including in the Risk Factors section of our most recent annual report on Form 10-K and quarterly report on Form 10-Q. The company's SEC filings are available on the Investor section of our website. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. Also, please note that we will be referring to certain non-GAAP financial measures on this call. Information about these non-GAAP measures, including a reconciliation to the corresponding GAAP measures, can be found in the earnings materials available on the Investor section of our website.

During the call management will be making forward looking statements that are subject to risks and uncertainties, including expectations about future performance.

Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings, including in the risk factors section of our most recent annual report on Form 10-K, and quarterly report on Form 10-Q.

The company's SEC filings are available on the investors section of our website.

These forward looking statements apply as of today and we undertake no obligation to update these statements after the call.

Also please note that we will be referring to certain non-GAAP financial measures on this call.

Information about these non-GAAP measures, including a reconciliation to the corresponding GAAP measures can be found in the earnings material available on the investors section of our website.

Badar Khan: With that, I'll turn the call over to Badar Khan, EVgo's CEO. Good morning, everyone, and thank you for joining us today. We delivered yet another excellent quarter. We achieved record revenues of over $66 million, and charging network revenues grew 2.4 times compared to last year, becoming the seventh sequential quarter of double-digit growth in charging revenue and the sixth consecutive quarter of triple-digit year-over-year growth in network throughput. The level of utilization and throughput we have in the network today, the annualized per stall unit economics have improved over 300% in just a short time. Providing yet more confidence, we will complete our path to profitability and deliver adjusted EBITDA breakeven in 2021.

With that I'll turn the call over to Badar Khan <unk> CEO.

Badar Khan: Good morning, everyone and thank you for joining us today.

Badar Khan: With the operating leverage we have in the business, once fixed costs are covered in 2025, all personal cash flows fall straight to the bottom line, conservatively resulting in over $200 million in adjusted EBITDA in three to five years' time. If we're only growing at the rate we are this year, a higher rate of stall growth would result in even stronger events. Let's look at some key highlights from this past.

Badar Khan: <unk> delivered yet another excellent quarter, we achieved record revenues over $66 million.

Speaker Change: <unk> network revenues grew two four times compared to last year, becoming the seventh sequential quarter of double digit growth in charging revenue and the sixth consecutive quarter of triple digit year over year growth in network throughput.

Speaker Change: With the level of utilization and throughput we have in the network today.

Speaker Change: Annualized per store unit economics have improved over 300%.

Speaker Change: Just a short six months provide.

Speaker Change: Providing yet more confidence we will complete our path to profitability and deliver adjusted EBITDA breakeven in 2025.

Speaker Change: So the operating leverage we have in the business once fixed costs recovered in 2025, all per store cash flows fall straight to the bottom line conservatively, resulting in over $200 million and adjusted EBITDA in three to five Years' time, if we're only growing at the rate we are this year.

Speaker Change: The higher rate of store growth would result in even stronger EBITDA.

Speaker Change: Let's look at some key highlights from this past quarter.

Speaker Change: Our second quarter was yet another great quarter charging network revenue more than doubled driving an increase in total revenues. We grew our operational stores by 37% compared to last year and are on track to add 800 to 900, new owned and operated stores this year.

Badar Khan: Our second quarter was yet another great quarter; charging network revenue more than doubled, driving an increase in total revenue. We grew our operational stores by 37% compared to last year and are on track to add 800 to 900 new owned and operated stores. Customer accounts continued to grow faster than VIO growth in the second quarter.

Speaker Change: Customer accounts continued to grow faster than V. I O growth in the second quarter I need to go recently surpassed 1 million customer accounts and exciting milestones.

Badar Khan: And EVgo recently surpassed 1 million customer accounts, which is exciting. We continue to see clear evidence of the operating leverage that we've talked about on our last few calls, with both expanding adjusted gross margins, especially in our own and operated business, and adjusted G&A improvement, translating into strong bottom line improvement year over year. Given our strong results and the consistent operational improvements in the business year to date, we have raised the midpoint of revenue and narrowed our adjusted EBITDA guidance for the, which Stephanie will provide more color on.

Speaker Change: We continue to see clear evidence of the operating leverage that we've talked about on our last few calls with both expanding adjusted gross margins, especially in our owned and operated business and adjusted G&A improvement translating into strong bottom line improvement year over year.

Speaker Change: Given our strong results and the consistent operational improvements in the business year to date, we have raised the midpoint of revenue and narrowed our adjusted EBITDA guidance for the full year with Stefanie will provide more color on later.

Speaker Change: In Q2, EV sales in the U S weeks over 300000, including a record quarter for non Tesla EV sales in the U S.

Badar Khan: In Q2, EV sales in the U.S. reached over 300,000, including a record quarter for non-Tesla EV sales in the U.S. Non-pestless sales in the second quarter grew 35% compared to last year and accounted for more than 50% of EV sales for the first quarter.

Stefanie: Non pass the sales in the second quarter grew 35% compared to last year and accounted for more than 50% of <unk> sales for the first time.

Badar Khan: Non-Tesla EVs make up the majority of throughput on the EVgo network today, and we expect this trend to continue, which supports the future growth opportunities at EVgo. The EV market in the United States is at a tipping point, moving from early adopters of EVs to mass adoption. Today, 8% of new vehicles sold are electric, up from just 2% a few years ago. The key driver of mass adoption is more affordable. There are over 70 EV models available in the U.S., and many more are coming. J.D.

Speaker Change: Non Tesla Evs make up the majority of throughput on the <unk> network today, we expect this trend to continue which supports the future growth opportunity at <unk>.

Speaker Change: EV market in United States is at a tipping point moving from early adopters of Evs to mass adoption today, 8% new vehicles sold our electorate.

Speaker Change: Up from just 2% a few years ago. The key driver of mass adoption is more affordable vehicles. There are over 70 EV models available in the U S. Today, and many more coming J D. Power's future vehicle calendar counts 38, new affordable models for those with an expected MSRP of 35.

Badar Khan: Power's future vehicle calendar counts 38 new affordable models for those with an expected MSRP of $35,000 or less coming to market in the next 18 months. That's incredible. EV buyers will have more choice, including exciting models such as the Chevy Equinox, next-generation Chevy Volt, Hyundai Ioniq 3, and Kia EV3, just to name a few. And this is expected to accelerate adoption. Looking at the total market, Bloomberg New Energy Finance forecasts that EVs are expected to sell for a lower price point than ICE vehicles in 2020.

Speaker Change: Dollar's rise coming to market in the next 18 months that's incredible.

Speaker Change: EV buyers will have more choice, including exciting models, such as the Chevy Equinox next generation Chevy bolt Hyundai Ionic three and <unk> just to name a few and this is expected to accelerate adoption.

Speaker Change: Looking at the total market Bloomberg, New energy finance forecast that Evs are expected to sell at a lower price point that ice vehicle in 2026.

Badar Khan: Significantly, it's important to note that BNF estimates that the total cost of ownership for EVs is already lower than for ICE vehicles. On top of VIO growth, EVgo benefits from multiple additional short and long-term tailwinds that are drivers of why throughput and charging revenue are growing and are expected to continue to grow faster than VIO growth, ride share is increasingly electrifying, and they will tend to charge at DCFC, not L2 Faster charge rates also not only lead to higher overall EV adoption, but being able to charge faster will decrease customers' reliance on home charging, thus increasing the share of public charging.

Speaker Change: Significantly it's important to note that <unk> estimates that the total cost of ownership for Evs is already lower than ice vehicles today.

Speaker Change: On top of the I O growth, even though benefits for multiple additional short and long term tailwind that are drivers of why throughput and charging revenue are growing and are expected to continue to grow faster than vio growth.

Speaker Change: Rideshare is increasingly electrified and they will tend to charge at D. C. S C not L. Two locations.

Speaker Change: Faster charge rates also not only lead to higher overall, EV adoption, but being able to charge faster will decrease customers' reliance on home charging thus increasing the share of public charge.

Speaker Change: More affordable vehicles, not only key to overall EV adoption, but we tend to attract more customers without access to home charging will be reliant on public charging.

Badar Khan: More affordable vehicles are not only key to overall EV adoption but will tend to attract more customers without access to home charging, who will be reliant on public charging. Autonomous vehicles are a major long-term driver, as these cars will be electric and will charge at either public or dedicated DCSC levels. Finally, as the MAX cable is introduced, we expect EVgo to benefit more than other DCFC owner-operators because we expect to be able to attract more Tesla drivers, who represent roughly 60% of current VIO as our stations are located closer to where drivers live and work versus highway-focused charging.

Speaker Change: Autonomous vehicles are a major long term driver as these cars will be electric and we'll charge it either public or dedicated Dcs relocations.

Speaker Change: Finally at the Max cable is introduced we expect <unk> to benefit more than other dcs over the operators because we expect to be able to attract more tesla drivers represent roughly 60% of current vio as our stations are located closer to where drivers live and work versus highway focused charge.

Speaker Change: <unk> company.

Badar Khan: DCFC hardware companies and those that operate but do not own DCFC networks and instead sell equipment to site hosts and other customers will benefit to a lesser extent for many of these drivers because they generate one-time equipment sales versus recurring charging revenue that owner operators generate.

Speaker Change: DCF see hardware companies and those that operate but do not own DCF see networks and instead sell equipment to site hosted all the customers will benefit to a lesser extent for many of these drivers because they generate one time equipment sales versus recurring charging revenue that owner operators.

Speaker Change: Steve.

Speaker Change: Only some of these drivers benefit out to companies and again those benefits are limited to one time equipment sales versus recurring charging revenue and is consistent with expectations of public DCF see gaining share of total energy delivered over time due to all the drivers listed here in the U S. There was only one <unk>.

Speaker Change: Company that is exclusively focused on the owned and operated DCF C space public equity investors can invest in and that is <unk>.

Speaker Change: As we've discussed in our prior calls this year, we have very compelling unit economics. This is due to our proprietary network planning, resulting in carefully selected site locations and conservative underwriting and they have grown considerably in the last six months.

Badar Khan: We reach a level of scale in kilowatt hours per stall that enables us to generate positive annual cash flow on a per stall basis by the end of this year. Let's now turn to progress on our four key priorities that I described in our last call. Improving the customer experience, operating in CapEx efficiencies, and capturing and retaining high-value customer experiences. This level of reduction in capex for stores is what drives the even stronger returns I showed on the unit economics. We also continue to make great progress on our growth priorities. I'll now hand over the call to Stephanie, who will run through our strong financial performance for the second quarter of this year. Thank you, Badar.

Speaker Change: We reached a level of scale in kilowatt hours per store that enable us to generate positive annual cash flow on a per store basis by the end of last year.

Speaker Change: At that time, the top 15% of our stores were generating over $30000 per store on an annual basis.

Speaker Change: In Q2 this year, our entire network is now generating over $7000 annualized per store and the top 15% is now over $40000.

Speaker Change: This is driven by a minor increases in utilization of charge rate as a reminder, steady throughput per store is the product of charge rate and utilization multiplied by 24 hours.

Speaker Change: If we continue to see the absolute increase in annual cash flow per store over the next suite six month periods.

Speaker Change: We continue to grow store count at the rate. We are this year than the simple math results in total network cash flow exceeding fixed costs and thus adjusted EBITDA breakeven in 2025.

Speaker Change: Three to five Years' time, we expect to have around 7000 stores. If we're only adding stores at the rate. We are today at that point, we would expect cash flow per store across the whole network to be just under $40000 per stall annually.

Speaker Change: Mostly by increased charge rates since one of the many tailwind due to the increasing mix of higher charge rate vehicles, and a very conservative utilization assumptions far lower than the top 15% of our stores today.

Speaker Change: Faulting and a level of throughput also lower and the top 15% of our stores today.

Speaker Change: We had the same utilization of three to five Years' time is the top 15% of our stores today with 80 kilowatt charge rates, we would double the cash flow per store to over $85000 annually.

Speaker Change: These unit economics, not only provide very compelling adjusted EBITA growth, but they also deliver very compelling project Ottawa.

Speaker Change: With the decline in gross Capex per store, we are targeting from our next generation Chargers and even with much lower capital offset some we are seeing today, we would expect to see net capex per store in the $80000 range in other words, a one time investment of $80000 conservatively, returning almost 40000 annually.

Speaker Change: That is an excellent return on investment.

Speaker Change: Once fixed costs recovered next year, given the very strong operating leverage all stall based cash flows fall straight to the bottom line, resulting in very strong EBITDA growth potential as.

Speaker Change: As I've said, we're assuming here that we continue store growth at only 800 to 900, new stores per year, which is our current growth rate of course, if we are successful in securing new financing, we would expect to materially increase that rate of growth.

Speaker Change: Therefore, our annual adjusted EBITDA in three to five years is simply 7000 stores times cash flow per store in the prior slide minus fixed costs with very significant continued growth beyond that in fact every 1000, new stores adds almost $40 million and <unk>.

Speaker Change: Just that EBITDA annually, because we've already covered fixed costs based on our expected unit economics in three to five years' time that is very compelling adjusted EBITDA growth potential.

Speaker Change: Sometimes get asked whether all the best sites have been developed and the answer is most definitely not <unk>.

Speaker Change: First we have over 10000 stores that currently pencil and meet our return expectations and as EV adoption grows more sites pencil and secondly, our site selection algorithms and quality of stores are just getting better and better. This chart shows daily throughput per store or stores in our network in Q2 depend.

Speaker Change: <unk> on when they went online with 2023 stores some of which would have been just over three months old bearing better than all prior years.

Speaker Change: Let's now turn to progress on our four key priorities that I described on our last call improving the customer experience operating and capex efficiencies, capturing and retaining high value customers and securing financing to get to free cash flow breakeven.

Speaker Change: Improving the customer experience remains our first priority and we continue to make progress on all the key metrics. We have discussed on prior calls increasing the number of sites per sole so customers don't have to wait for a charge.

Speaker Change: Installing higher power Chargers. So they can fill up quickly having a reliable solution that works right on the first try and growing the number of sessions that have a hassle free payment process with customers just plug the connector rain and the payment is processed automatically.

Speaker Change: This last feature gets particularly rate reviews and in Q2, we released an auto enrollment capability for some EV models and expect to expand that to many more EV models in the second half of the year driving up the penetration of auto charge plus.

Speaker Change: We believe we were able to execute these improvements because of the scale advantage. We have over 40 much smaller dcs the operators in the U S and will ultimately result in customers, gaining further confidence and public charging driving up utilization and throughput on our network.

Speaker Change: We've made excellent progress this quarter on driving efficiencies across both Opex and Capex.

Speaker Change: We completed offshoring of most of our coal volumes, which as I said on our prior call or a sizable portion of our sustaining G&A cost.

Speaker Change: You may have noticed from the unit economic slide earlier, we have already made substantial progress on lowering sustaining G&A cost per store and continue to expect a reduction of around 15% from those costs in Q4, this year versus last year, which is well on the way to the 40% or so reduction we're targeting in the three to five years' time.

Speaker Change: On the Capex side, we have already delivered a 5% improvement in gross capex per store for FY 'twenty for vintage Capex and we previously guided for this year as a result of the work on the prefab skids various incremental improvements to component sourcing and EPC improvements.

Speaker Change: Given the strategic imperative of this effort I am excited to tell you we hired a new EVP of engineering Martin shook up over the past 14 years held leadership roles in the development of multiple generations of Tesla supercharger in fact over a third of our new hires in the second quarter came from Tesla.

Speaker Change: We've also passed key internal milestones on the joint development of next generation architecture with an industry, leading partner that aims to lower gross capex per store by 30% and would represent a step change in customer experience due to a customer focused design with improved firmware.

Speaker Change: Would you expect to incur additional costs in the second half of this year to drive the strategically important effort, but we are not adjusting the midpoint of our adjusted EBITDA guidance due to expected improvements elsewhere.

Speaker Change: This level of reduction in Capex for store is what drives the even stronger returns I showed on the unit economic slide and will be a key source of competitive advantage over the dozens of other smaller fast charging operators in the United States.

Speaker Change: We also continue to make great progress on our growth priority.

Speaker Change: The share of what I consider base slow demand in our network continues to be strong with 56% of throughput in the quarter coming from higher usage relatively predictable customer segments that represent stickier kilowatt hours.

Speaker Change: And we've added to that demand with the extension of a charge in credit program with Subaru.

Speaker Change: We also continue to attract new customers at higher rates than the growth in vio up almost 60% year over year.

Speaker Change: Our goal is to attract customers across all hours the potential utilization as well as ensure we are attracting the right customers at the right times to maximize margin capture.

Speaker Change: We went live with a new customer data on engagement platform that allows us to do just that and are deploying segment specific and low cost campaigns to identify attract and retain customers to get the usage profile we are targeting.

Speaker Change: We also expect to continue rolling out dynamic demand based pricing across more of our network that I mentioned on the prior call.

Speaker Change: Unlike most of the more than 40 charging operators in the U S. Today.

Speaker Change: <unk> has reached a level of scale that allows us to even contemplate these kinds of objectives and deliver on them, resulting in a key source of competitive advantage over most of the rest of the industry.

Speaker Change: On financing. We've also made solid progress this quarter capital offsets for our 2024 vintage stores are now expected to be around 50% this year versus the 40% we previously indicated.

Speaker Change: This was driven by a higher share of GM and grant funded sites than we originally planned and our continued focus on maximizing the amount of grant funding from all available funding sources.

Speaker Change: We continue to await finalized 30 C guidance from Treasury and expect to execute our first 30 C transaction in the second half of this year for the 2023 vintage stores.

Speaker Change: Our application to the Doe loan program office for a loan under the title 17 clean energy financing program is continuing we made significant progress this quarter, increasing our confidence of the conditional commitment in 2024, we believe we have a high quality loan application that addresses the need for charging infrastructure to be built.

Speaker Change: Out at scale across the U S and supports a core part of president of items agenda in terms of vehicle electrification.

Speaker Change: One of the many strengths and differentiating factors with our <unk> application is that we do not expect to need to issue new equity to reach financial close this benefits, both our shareholders and expedites our ability to reach financial close.

Speaker Change: As I've said before if we are successful we believe it will be sufficient to not only expedite our jewelry to self financing, but also increase the annual rate of store growth by up to double or more.

Speaker Change: On top of our Doe loan application, even though is experiencing continued interest from the commercial bank market in relation to non dilutive financing structures for owner operated DCF C charging stools.

Speaker Change: <unk> is a proven developer and operator of Dcs C and D. CSC as an asset class is showing strong correlation between revenue generation and vio growth as demonstrated by growth in <unk> throughput.

Speaker Change: The positive outlook for long term vio growth creates the kind of cash flow certainty required to support debt financing.

Speaker Change: We also expect to incur additional costs in the second half of this year to prepare our financial systems to accommodate project financing, but again, we are not changing the midpoint of our adjusted EBITDA guidance because of upsides, we're expecting elsewhere.

Speaker Change: We continue to have sufficient capital to continue our capex plans well into 2025 without the benefit of any of these project financing efforts.

Speaker Change: I'll now hand over the call to Stephanie who will run through our strong financial performance for the second quarter of this year.

Stephanie: Thank you bought our EBITDA has delivered another strong quarter performance in Q2, exhibiting the seventh sequential quarter of double digit charging revenue growth and the sixth consecutive quarter of triple digit year over year throughput growth.

Stephanie Lee: EVgo delivered another strong quarter of performance in Q2, exhibiting the seventh sequential quarter of double-digit charging revenue growth and the sixth consecutive quarter of triple-digit year-over-year throughput, as we had significantly higher one-time equipment sales to the pilot company last year. And over 23% of our stalls had utilization greater than 30%. We expect charge rates to continue to grow over time as the EV-VIO mix shifts towards EV models with faster batteries. Additionally, we expect to see continued improvement in our operating leverage, which is a significant driver for achieving adjusted EBITDA breakeven in 2025. As I mentioned earlier, revenue grew 32% in the second quarter of 2024 to $66.6 million.

Stephanie: Revenue in the second quarter was $66 6 million, which represents a 32% year over year increase.

Speaker Change: This growth was primarily driven by increased charging network revenue.

Speaker Change: Retail charging revenue of $22 $3 million grew from $9 1 million in the second quarter of 2023, exhibiting a 146% year over year increase.

Speaker Change: Commercial charging revenue, which primarily includes revenue from our rideshare partnerships are $7 1 million increase from $2 4 million in the second quarter of 2023.

Speaker Change: Exhibiting a 193% year over year increase.

Speaker Change: Extend revenue of $27 $7 million declined as expected compared to the second quarter of 2023.

Speaker Change: We had significantly higher one time equipment sales for pilot company last year.

Speaker Change: We added over 220, new operational staff in Q2, including extend.

Speaker Change: Total sales and operation where approximately 3440 at the end of June 2024, including 190 <unk> expense increase.

Speaker Change: Increasing 37% from the end of June 2023.

Speaker Change: During the second quarter of 2024, <unk> added over 131000, new customer accounts.

Speaker Change: 60% increase versus Q2 of 2023.

Speaker Change: <unk> ended the quarter with more than 1 million customer accounts and exciting milestone on our growth trajectory.

Speaker Change: During the second quarter of 2024 network throughput increased two six times from last year to 66 gigawatt hours.

Speaker Change: We continue to benefit from many factors that are driving this accelerated growth such as EDI buyers moving from early adopters and NASA adopters with a higher portion of multi unit dwellings, who may not have access to home charging.

Speaker Change: Our rapid growth in rideshare increase.

Speaker Change: Increased EV vehicle miles traveled.

Speaker Change: Creasing, EDI chartering and heavier less efficient in the model.

Speaker Change: One of the metrics driving our network throughput CRO is utilization.

Speaker Change: EBIT those network throughput continues to grow nearly four times faster than the growth in the aisle.

Speaker Change: Our utilization averaged over 20% across the network in the second quarter of 2024, nearly doubling from a year ago.

Speaker Change: Over 58% of our staff had utilization greater than 15%.

Speaker Change: Over 44% of our solid utilization greater than 20%.

Speaker Change: And over 23% of Archstone had utilization greater than 30%.

Speaker Change: We therefore believe that we are on a strong trajectory to hit the utilization level of 23% EBIT achieved the unit economics on our previously discussed.

Speaker Change: Our increased network through growth is driven by our increasing network size through solid deployment and how much energy each solid dispensing on a daily basis.

Speaker Change: Average daily throughput personnel more than doubled versus last year, reaching 227 kilowatt hour with average daily throughput per store for the month of June 2024, averaging 242 kilowatt hour.

Speaker Change: Utilization on the network also nearly doubled year over year with utilization in the month of June 2024, averaging 21%.

Speaker Change: Chartering, which measure the amount of electricity deliberate over the same period of time increased 12% from prior year to 47 Terawatt hours.

Speaker Change: We expect charter rates to continue to grow over time as <unk> mix shift towards EDI model with faster batteries and.

Speaker Change: And our network mix becomes increasingly faster as we add primarily 350 kilowatt charterers.

Speaker Change: The profitability that our core owned and operated network delivers is improving which is demonstrated through the growth in our charging network margin.

Speaker Change: In Q2 are charging network margin was 34, 2% improving from 19, 1% in Q2 2023.

Speaker Change: Average daily throughput personnel increases.

Speaker Change: We expect to see continued improvement in our operating leverage which is a significant driver for achieving adjusted EBITDA breakeven in 2025.

Speaker Change: Our charging network revenue already cover our solid dependent cost of sales, which includes fixed costs, such as site rent property tax and some maintenance and variable costs such as energy costs.

Speaker Change: As a reminder.

Speaker Change: Analogy in our charging network margin.

Speaker Change: Electricity tariffs are higher and winter tariffs.

Speaker Change: As I mentioned earlier revenue grew 32% in the second quarter of 2024 to $66 6 million.

Speaker Change: Adjusted gross profit was $17 7 million in the second quarter of 2024.

Speaker Change: From $12 9 million in the second quarter of 2023.

Speaker Change: Adjusted gross margin was 26, 5% in the second quarter of 2024, an increase of 110 basis point comparison second quarter last year.

Speaker Change: Adjusted G&A as a percentage of revenue also improved from 46, 3% in the second quarter of 2023 to 38, 5% in Q2 of this year.

Speaker Change: Demonstrating the operating leverage effect.

Speaker Change: Adjusted EBITDA was negative $8 million in the second quarter of 2024, and $2 $6 million improvement versus negative $10 6 million in the second quarter of 2023.

Stephanie Lee: A $2.6 million improvement versus negative $10.6 million in the second quarter of 2023. Now, turning to our 2024 guidance. As a reminder, we incur CapEx in advance of the vintage or operational use. Namely, getting adjusted EVA to breakeven for the full year of 2025. Good morning.

Speaker Change: Cash cash equivalents and restricted cash was $162 7 million as of June 32024.

Speaker Change: We generated cash from operations of $7 6 million in the second quarter of 2024, due primarily to timing of working capital changes.

Speaker Change: Capital expenditures were $24 2 million in the second quarter of 2024.

Speaker Change: Capital expenditures net of capital offset was $13 8 million in Q2 of 2024.

Speaker Change: Our capital expenditures net of capital offset first.

Speaker Change: First half of 2024 reflects lower 2024 vintage capex for the operational staff, which benefited from a combination of cost reductions mixed.

Speaker Change: Mix shifts the silos that were relatively cheaper and faster to build as well as mix shifts to solve that qualify for GM funding and higher amounts of grant funding.

Speaker Change: Now turning to our 2024 guidance.

Speaker Change: EBITDA was increasing the midpoint of our 2020 for revenue guidance by $10 million and we expect full year 2020 for revenue to be in the range of $240 million to $270 million.

Speaker Change: We expect to see quarterly sequential growth in charging network revenue.

Speaker Change: Extend revenue will remain relatively consistent in the second half of 2024 and will be primarily comprised of construction revenue, which has lower margin than equipment sales.

Speaker Change: We're retaining the midpoint of our 2024 adjusted EBITDA guidance, but are narrowing the range to negative $44 million to $34 million.

Speaker Change: As Bob mentioned, we expect to make increased investments in the joint development of our next generation architecture as well as our financial systems to support project financing in the second half of 2024, which we expect will be sufficiently covered by the revenue upside.

Speaker Change: We expect capital expenditures net of capital offset to be in the $90 million to $105 million range with the main use of Capex at 800 to 900 <unk> This year.

Speaker Change: As a reminder, we incurred capex in advance of the vintage or operational year.

Speaker Change: As a result of our efforts over the past few years to build our growth engine we have.

Speaker Change: Successfully decrease lead time between mobilization and construction completion to enable us to incur less capex in advance of the vintage year and we have historically done to maintain the same rate of solid growth.

Speaker Change: We remain fiscally prudent and only built cells that meet our return hurdles.

Speaker Change: As part of our renewable program. We also expect to remove or replace 150 to 200 illegal one films in 2024 to improve reliability of our charters and our customer experience.

Speaker Change: We are as confident as ever that EBITDA was on a clear path to an important inflection point in our business, namely.

Speaker Change: Namely hitting adjusted EBITDA breakeven for the full year of 2025.

Speaker Change: This is based on the expectation that <unk> will continue to grow and that <unk> will continue to expand its network and realize operational efficiencies.

Speaker Change: We look forward to continuing to share our progress in 2024 with you throughout the rest of the year.

Speaker Change: Operator, we can turn the call over to questions.

Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you will.

Speaker Change: To withdraw your question simply press Star one again.

Chris <unk>: First question comes from the line of Chris <unk> from RBC capital markets. Your line is open.

Chris <unk>: Yes, good morning.

Chris <unk>: Hi, good morning, and congratulations on the good quarter.

Speaker Change: Thank you I guess, maybe to start things off you mentioned the next cables that are coming in and the opportunity to service more Tesla vehicles as a result.

Speaker Change: Can you maybe share where.

Speaker Change: I guess, maybe what portion of the revenue today is a result of charging Tesla vehicles and then how you all are kind of internally thinking about what the uptake might be from.

Speaker Change: The access to being able to charge more for more Tesla vehicles without cable. Thanks.

Chris: Yes, Thanks, Chris.

Speaker Change: We're very excited about the next cable.

Speaker Change: For the reason you decided.

Speaker Change: <unk>.

Speaker Change: We expect to be able to start deploying next cables towards the end of this year.

Speaker Change: And we will start to roll them out across the rest of our network over time, we're excited about them because as I said before in prior calls.

Speaker Change: Our locations are urban suburban locations, they tend to be closer to where people live and work.

Speaker Change: For instance, we have one six times the amount of these with.

Speaker Change: In walking distance of our locations versus a Tesla as the average customer site.

Speaker Change: And so.

Speaker Change: We're expecting to be able to through our more sophisticated.

Speaker Change: Marketing and growth programs be able to target those customers that live closer to our locations.

Speaker Change: Therefore get.

Speaker Change: Growing portion of Tesco drivers today Testa drivers represent a very small minimal share on our network and so this represents a pretty significant upside for the company. If we're able to attract a roughly 60% of vio that our Tesla vehicles today.

Speaker Change: Got it Okay, and then and then I guess as a follow up here.

Speaker Change: You mentioned that Nextgen charging infrastructure that you all are working on and some of the incremental investment going into that later this year.

Speaker Change: I guess can you provide maybe a preview of a little bit of.

Speaker Change: What is what changes there is that more just operational changes around around the charging stall or is there a structural changes.

Speaker Change: It looks like and then I think you also mentioned that that.

Speaker Change: Hopefully improve some of the customer experience so that would be just a bit more details on what this is going to look like.

Speaker Change: Yeah quick question I mean, just to begin with we've reached a level of scale in the company, where we can actually become a strong partner to our suppliers because of the enormous number of customer interactions that we bring to the table a lot of these suppliers don't actually interface with customers directly of course, we got to 1 million customers and so we have a.

Speaker Change: A very good sense of customers' frustration and pain points, we bring that to the design process and I think that's an advantage that we have over the the very large number of smaller operators in the United States for <unk> today.

Speaker Change: And with that experience, we expect to be able to deliver a different site configuration.

Speaker Change: A distributed architecture.

Speaker Change: A different design for the equipment for the dispenser.

Speaker Change: So it's focused primarily on the equipment as opposed to the construction but of course the site. The figuration should result in some improvements in the construction timelines as costs and timelines as well.

Speaker Change: And Thats really what we are working on and we've been working on it for a good part of year I think the addition of the additional talent that we've just had over the past quarter, particularly some very strong leadership from folks who've been very closely involved with the leadership of Tesla supercharger listing ads adds to that.

Speaker Change: All of that experience and we expect to be able to have something in the market by the second half of 2026 with prototypes much earlier than that and we're targeting as I said on the call 30% improvement in the gross capex per store.

Speaker Change: Got it thank you.

Speaker Change: Thanks, Chris.

Speaker Change: Next question comes from the line of Bill Peterson from Jpmorgan. Your line is open.

Bill Peterson: Yes, Hi, hi, good morning, Thanks for taking the questions nice job on the quarterly execution.

Speaker Change: On the three to five year model you presented an updated here in this quarterly presentation.

Bill Peterson: You illustrate nearly 50% and adjusted profit margin gross profit margin, which is up from I believe it was around 40% at the midpoint in your presentation from the first quarter.

Speaker Change: Like to revisit this in light of what appears to be increasing power prices broadly.

Speaker Change: Competition from other networks, which from what I can tell generally charged at a lower price point or maybe lower gas prices going forward, which obviously impacts tcl. So I guess, what im getting at is can you unpack your expectations around pricing price increases power prices inflation and other factors that are driving it to this adjusted gross margin target and more importantly.

Speaker Change: We are equally importantly, what's changed in your view to raise this this gross margin target by 10 percentage points at the midpoint.

Speaker Change: So I don't think with the gross margin target has changed essentially bill for the three to five year outlook.

Speaker Change: We are assuming that prices.

Speaker Change: Unit prices and unit costs that we're seeing today are intact in three to five years' time.

Speaker Change: And the reason, we believe that is because theres tremendous demand for charging infrastructure that exceeds supply and with Tesla slowdown or withdrawal or whenever it is I think just further reinforces demand exceeding supply.

Speaker Change: For charging infrastructure.

Speaker Change: In the long term, we I think as we said before we are really in our in the early stages around the level of sophistication of pricing towards a little bit about pricing in prior calls in terms of.

Speaker Change: Time of use pricing clearly, obviously location based pricing, but we are introducing and we have begun introducing automated dynamic demand based pricing relatively small portion of the network and expect that to continue and so for all those reasons. We felt that there is really.

Speaker Change: Only upside actually in in the margins as I look forward over time, the real drivers here of course is the tremendous tailwind of charge rates charge rates are rising because vehicle mix.

Speaker Change: Batteries and the vehicles that Americans are buying are getting faster and we're deploying faster.

Speaker Change: Chargers on the road in our fleet together with a relatively modest utilization assumption and generate some very compelling cash flows per store.

Speaker Change: Just to be clear in the first quarter, you had a range of adjusted gross profit of $220 million to $300 million and our revenue of $600 million to $700 million midpoint.

Speaker Change: The midpoint is 40%.

Speaker Change: In this presentation you have $3 14, adjusted gross profit at a revenue of 640, so thats closer to 50%, we could take that offline, but it is a difference.

Speaker Change: My next question is in the.

Speaker Change: Just a final round election risk. So you talked about the dealer loans program, but now you are engaged in a process, but how much timing risk should we think about this in advance of the election do you have a sense of urgency to get this funding done before the election.

Speaker Change: I guess more broadly what is your current thinking around policy support or any potential changes that we could see interchange in government.

Speaker Change: Yes, I think a couple of things here I mean, I think as we've said in prior calls.

Speaker Change: People are buying electric vehicles across the United States.

Speaker Change: Some of the states that were seeing the strongest demand for charging are actually states like Texas and Florida.

Speaker Change: A handful of other red or purple state so.

Speaker Change: We're seeing what we're seeing on the ground are people buying electric vehicles across the United States and are charging.

Speaker Change: Demand is occurring across the United States Red States and Blue States.

Speaker Change: So I think that's I think that just speaks very well to the underlying demand.

Speaker Change: We think our business is successful and thrives under any administration.

Speaker Change: <unk>, particularly is delivering hundreds of billions of dollars of investment in a number of key states across United States. So I think thats.

Speaker Change: That's a very solid ground.

Speaker Change: They could have gone after the Navy program, although it's not a core part of our business today as I said before.

Speaker Change: Tend to be Red Republican States and that's what we've seen over the course of the last year and a half so we feel.

Speaker Change: Very good ground with regardless of what happens in the election in terms of BOE E. L. P. O you will have seen.

Speaker Change: The OPO TMR our very.

Speaker Change: Are working very hard to get more.

Speaker Change: Implications through their pipeline and together with the work that we've had over the course of this last quarter, we feel pretty confident in being able to get conditional commitment this year.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Craig Irwin from Roth Capital Partners. Your line is open hi, good.

Craig Irwin: Thanks for taking my questions. I definitely appreciate the update on the financing. In your prepared remarks, you talked about the eligibility of certain 2023 stalls, 2023 vintage stalls. In the presentation, you said 24 vintage is now supposed to have 50% capital offsets. It was $160 million spent, or just under, on CapEx in 2023. Can you maybe help us sort of frame out what this incremental funding would be proportionate to the CapEx that was spent last year?

Craig Irwin: Thank you.

Craig Irwin: Good morning, Thanks for taking my questions.

Craig Irwin: Yes, I definitely appreciate the update on the financing.

Speaker Change: Your prepared remarks, you talked about.

Speaker Change: The eligibility of certain 2023 stalls.

Speaker Change: 2023 vintage stalls in the presentation you said.

Speaker Change: 24 vintage is now supposed to have 50% capital offsets. It was 160 million spend or just under on Capex in 'twenty. Three can you maybe help us sort of frame out what this incremental funding would be.

Speaker Change: Proportionate to the Capex that was spent last year.

Speaker Change: Sure Stephanie if you want to do you want to take that first.

Stephanie: Yeah. Thanks for the question, Greg I think it's a little bit interesting because when we talk about fiscal Capex first advantage capex.

Speaker Change: Yes, a little bit interesting because from a physical capex perspective, right we spend in advance.

Speaker Change: The year of the vintage so as I mentioned in our prepared remarks.

Speaker Change: In terms of the amount that we have to spend now incrementally in advance.

Speaker Change: Because we have shorter lead time between mobilization and construction start physical capex gets a little bit interesting, so I'd, rather stick to more the vintage kind of concept and so from a vintage perspective, when we look at the 2024 and vintage what's driving the higher percentages of capital office is really the mix.

Speaker Change: One being that it's a higher mix of the GM solid that we've got to we've got higher reimbursement from from the GM side of the partnership as well as just we've just been much more successful we have been very very focused.

Speaker Change: In the past year with with trying to maximize grant funding and our site selection. So what youre seeing in the vintage side is really the result of a lot of the work the hard work that's gone on with really focusing on maximizing.

Speaker Change: The grant funding as well as their party fee coming into play as well and so that's really what's driving the 50% and so the 2023 vintage style didn't have some of those elements.

Speaker Change: And there are the extent that we have now and so the mix was also very different in 2023 vintage.

Speaker Change: It's a little bit more challenging to compare some of that but hopefully that provides color with the success that we're seeing with the <unk> 2021 'twenty 'twenty four vintage we don't expect that same level of 50%.

Speaker Change: To continue and as Barbara mentioned, when he spoke to the unit economics.

Barbara: Talking about the 80% Capex expectation in a three to five years, even if we had a lower percentage of capital offsets.

Barbara: With the architecture that we're targeting that's really where we're going to see a lot more of the improvement in our cost structure.

Craig Irwin: Can I just add that the team has done a fantastic job of building stalls this year that have higher offsets, choosing stalls that are cheaper sites, and building cheaper on the site that we were expecting to build. And I think all of that actually shows the flexibility that we have in our development pipeline, where we can, in fact, move to sites that have higher and more attractive cash flow profiles, as we did this past quarter. Yeah, it's a good question, Craig.

Greg: Thanks, Greg.

Speaker Change: Can I just add I think the team has done a fantastic job.

Greg: All of.

Speaker Change: Building stores this year that have higher offsets.

Speaker Change: Choosing stores that are cheaper sites building cheaper on the site that we were expecting to build and I think all of that actually shows the flexibility that we have in our development pipeline, where we can in fact move to sites that have these higher or more attractive cash flow profiles as we've done this.

Speaker Change: Last quarter.

Speaker Change: Understood understood.

Speaker Change: My next question I guess, it's something bill was touching on it but I'll ask it a different way right. If you look at the Big picture right electricity rates are up about 30% in the last year year and a bit here in North America, you're charging gross margins have gone from 19% to 34%.

Speaker Change: The utilization and efficiencies that you just mentioned are clearly going to benefit you now and going forward, but can you maybe unpack for us what you're doing that's allowing you to pass through the price increases what sort of protection do you have or what sort of <unk>.

Speaker Change: Competitive dynamic is there that's allowing you to pass through.

Speaker Change: <unk> these higher electricity costs, given that it is having a material impact in other areas of the economy.

Speaker Change: Yes, it's a good question, Greg and just to be as a reminder, we have not increased prices.

Unknown Executive: And just to be as a reminder, we have not increased prices for the foreseeable future. [inaudible] So normally, with some of our partnership contracts, we have breakage that happens. Our largest contract that had breakage was our Nissan contract in Q1. And so that is not recurring. There's also, in Q2, we didn't have any sort of material, large one-time adjustments. They were a series of smaller ones, so there wasn't anything of that magnitude kind of all in there.

Speaker Change: We are seeing.

Speaker Change: Banding charging margin because of the operating leverage that sits within cost of sales.

Speaker Change: The end of last year, roughly 40% of our cost of sales was fixed and so as utilization expands.

Speaker Change: As we're getting more usage on a per store basis, which is exactly what we've been seeing for the better part of a year and a half now and we would expect to continue to see we will see expanding charging margin without any impact on prices and I think that is I think thats. The beauty of the economic model that we have here.

Speaker Change: Tremendous operating leverage in both cost of sales and tremendous operating leverage in G&A were roughly 70% of our G&A is fixed so once the stall based cash flow.

Speaker Change: The cash flow from stores from store base times, the number of stores exceeds the fixed costs.

Speaker Change: All of those cash flows straight this fall straight to the bottom line with respect to margins and prices beyond the operating leverage that expansion that we have driven expansion that we've been seeing as I said before there is very strong underlying demand for charging and fast charging infrastructure.

Speaker Change: The reasons I laid out both underlying growth in battery electric vehicles, but also the several tailwind that is shifting and growing the share of public charging.

Speaker Change: Im not even covering.

Speaker Change: The charging that we may expect to get from Tesla Tesla Vio, that's not currently showing up on our network I think all of those reasons are support margin unit margins prices minus costs on a cents per kilowatt hour basis.

Speaker Change: <unk> robust.

Speaker Change: For the foreseeable future.

Speaker Change: Thank you.

Speaker Change: My next question.

Speaker Change: I should probably start with.

Speaker Change: I appreciate the significant improvement in.

Speaker Change: Disclosures over the last couple of quarters.

Speaker Change: Charging network gross margin is one of the items that all of US looking closely are kind of back filling in our models. This as we get.

Speaker Change: The incremental quarters as you as you print them so.

Speaker Change: You mentioned the seasonality right we did have.

Speaker Change: Of that.

Speaker Change: 550 basis points sequentially and these charging network gross margins, which was more than the year ago quarter.

Speaker Change: Can you maybe talk us through how things played out last year did we trough in the second or third quarter.

Speaker Change: And.

Speaker Change: I guess, the math says, we obviously trough.

Speaker Change: In the third quarter, but.

Speaker Change: How do we expect things to play this year as far as charging network gross margins.

Speaker Change: Given given the network charges and the other items that impact <unk>.

Speaker Change: Short term margins here and then are there any of the items that.

Speaker Change: There is an apparent acceleration of stalled <unk> maybe.

Speaker Change: The company.

Speaker Change: Are any of those those expenses going to be there in the charging network gross margins as you disclose them at this point.

Craig Irwin: Quite a few things in there Craig but.

Speaker Change: Let me also ask Stephanie to step in we did have.

Greg: Some.

Stephanie: One offs in Q1, which we talked about on the last call that.

Stephanie: Pushed to charging margin of about five percentage points in terms of going forward.

Greg: Q2, Q3 is typically the low point, it's where we have the highest tariffs for electricity that we buy.

Stephanie: It's definitely do you want to expand on either of those two points sure yes, exactly it butter. So Q1 as a reminder, we did have some breakage revenue the onetime breakage.

Stephanie: Revenue that impacted and drove favorability is that with all 100% charging margin there.

Greg: And that was with roughly $2 5 million that we saw is that one time sort of adjustment and then.

Greg: Q2, you do start seeing some of the summer tariff hit, especially in the month of June is when you start seeing the cost right. The Q2 actually does already you start to see the seasonal shift.

Greg: And the charging network margin and then where you see it full bore clearly is in Q3 and so even last year I think there every period sort of has some.

Greg: Some one time adjustments.

Greg: And we did also have some one time adjustments in the Q2 2024.

Greg: Charging network margins as well.

Greg: And so sometimes it does create.

Greg: Some unexpected variances that you would see and so but going forward you know really what you need to sort of focusing on is what the expected margin is with the seasonality.

Greg: So even as Youre looking at to your forecasting for Q3 and Q4 again, you would expect to see that that margin hit in Q3, and then bump back up.

Greg: Improve in Q4.

Speaker Change: And you mentioned that two and a half from the first quarter.

Speaker Change: Was the delta in the second quarter, either positive or negative and can you, possibly share that number with us.

Speaker Change: The big.

Speaker Change: So normally with with some of our partnership contracts, we have breakage that happened our largest.

Speaker Change: The largest contract that had breakage in there was with our Nissan contract in Q1.

Greg: And so that.

Speaker Change: It is not recurring.

Greg: So.

Greg: In Q2, we didn't have any material large onetime adjustments there were a series of smaller ones. So there wasn't anything of that magnitude kind of all in there.

Unknown Executive: So nothing to call out from that perspective, Craig, that we would adjust the charge rate of a similar magnitude, just a series of smaller one-time adjustments in various areas, charge rates over the next couple of years. And EVgo continues to install mostly 350 kilowatt chargers, so our mix of 350 kilowatt charges across our network expands. It's gone from 20% in the beginning of 2023 to just over 40% today, and hopefully it will get up to about 50% by the end of this year. That'll continue as it's mostly what we're deploying.

Greg: So nothing to call out from that perspective, Craig.

Greg: We would adjust over time.

Greg: Magnitude.

Greg: A series of smaller onetime adjustments in various areas.

Greg: I think Greg if you if you take out the the breakage that definitely talked about in Q1. It gets you to about the same more or less the same charging margin. This quarter, we've clearly seen a slight improvement in utilization and you can see from the unit economic slide any improvements in utilization and charge rate.

Greg: Bruce charging margin, but we also have lower CFS price this quarter than we had in the first quarter.

Speaker Change: That's that's impacted the charging margin little bit, yes, and Lcs asking as a percentage of total revenue is shrinking with less than 5%, but LTE is also a 100% margin. So that the <unk> plant that will drive also volatility in your attachment with margin.

Speaker Change: As you know.

Greg: In terms of Lcs that pricing right now are consistent with the rest of the market I think we're expecting that it will hold to the current levels through the rest of this year, but.

Speaker Change: That clearly also will have.

Speaker Change: It can have an impact on the tracking that with margin.

Speaker Change: Great. Thanks for the detail and congrats on the strong progress.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of William Griffin from UBS. Your line is open.

Speaker Change: Hi.

William Griffin: Hey, EBITDAR.

David: Hey, David.

David: Good to speak with you all.

William Griffin: My first question here was just going back to the charging margin again here.

Speaker Change: Do you see implementation of dynamic pricing as potentially helping to drive more stable charging margin going forward.

Speaker Change: Around the volatility or variability you see in wholesale rates or do you see this more as a.

Speaker Change: Just increasing your ability to capture a higher margin during times of higher customer demand.

Speaker Change: Really what we're doing is.

Speaker Change: And I spoke about this on the on the call just now on the in the.

Greg: Main part of the call. We are I think we have reached a level of scale and sophistication, where we are able to not just build chargers and hope people show up at whatever time of the day they want.

Greg: But actually build Chargers and increasingly.

Greg: Impact.

Greg: When customers recharging.

Greg: So charging throughout the day, where we've got utilization across all 24 hours without.

Greg: And so therefore growing utilization without.

Greg: Having.

Greg: Challenges with queuing and secondly.

Greg: Shifting to demand, where we're trying to get the.

Greg: Right customers if I, if you will charging at the right times of the day, we were maximizing margin capture.

Greg: That's what our that's that's what we're that's what we're doing and that requires us to have sophisticated pricing.

Greg: Not this time of use and location based pricing, but demand based pricing. It also requires different subscription programs.

Greg: And it also requires sophisticated outreach.

Greg: Outreach to customers going live with the new customer database and customer data and engagement platform as we did in the second quarter allows us to achieve all of that.

Greg: Okay.

Speaker Change: Got it and just on the OEM partnerships to the extent you can speak to it would be curious to hear.

Speaker Change: How how conversations with GM had been going as you continue to partner with them and then.

Speaker Change: To the extent you've had conversations with other Oems about potentially establishing.

Speaker Change: Similar partnerships here in the future.

Speaker Change: The GM partnership is great and we had a very strong and very long standing relationship with them.

Speaker Change: As Stephanie and I, both said over the call one of the reasons we have.

Speaker Change: <unk> done a nice job on cash this quarter is that we've had more stores than our GM funded two operational and we expect at the beginning of the year and Thats a result of a strong partnership with them.

Speaker Change: So that's going great that's going very well in terms of other OEM discussions. We did do we did announce a very very small kind of pilot infrastructure.

Greg: Deal with Toyota.

Greg: Earlier, this year, where they funded.

Greg: The construction of a couple of a couple of locations for us.

Greg: So we are involved and we're engaged in dialogue with that almost a dozen oems ranging from either infrastructure dialog to charging credits to data integration to help their drivers will take the charging stations that we have so.

Greg: Pleased with the dialogue and we intend to continue with it.

Speaker Change: Very good that's all for me thanks.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Chris Pearce from Needham <unk> Company. Your line is open.

Speaker Change: Chris.

Chris Pearce: Good morning, everyone.

Chris Pearce: I'm looking at slide 19, and if you think about charge rate as the tip of the spear.

Speaker Change: Whats kind of what can you control here like what's the governor should we see.

Speaker Change: Like step function improvement in charge rate based on new cars are being released and the new stuff that you're putting out there because that.

Greg: That drives throughput per style that challenge utilization thats, where it seems to be the tip of the spear I just kind of what I was thinking about the right way to think about it.

Speaker Change: Sure you bet over the next couple of years.

Speaker Change: Yes, I mean, well I mean.

Speaker Change: If you go back to our unit economic slide Chris.

Speaker Change: We are expecting charge rates to get up to about 80.

Chris Pearce: Three to five years and that's that is simply a function of assuming that Americans are buying electric vehicles with the same mix they were last year.

Speaker Change: So the same mix of higher charge versus lower charge rate vehicles.

Chris Pearce: And <unk> continues to install mostly 350 kilowatts charger so our the mix.

Chris Pearce: <unk> 350 kilowatt charges across our network expands its gone from 20% at the beginning of 2023 to just over 40% today, hopefully get up to about 50% by the end of this year that will continue as it's mostly what we're deploying those two factors just by themselves will result in charge rates getting up to that level.

Unknown Executive: Those two factors just by themselves will result in charge rates getting up to that 80 level in three to five years. That assumes no improvement in technology. That assumes OEMs don't bring out faster charge rate cars, which of course they will. In other words, it assumes the vehicles that were on the market last year.

Chris Pearce: In three to five years that assumes no improvement in technology that assumes.

Greg: The Oems don't bring out faster charge rate cars, which of course they are in other words. It assumes the vehicles that were on the market last year. So yes, I would expect to see charge rates continue over the next several years and as you pointed out charge rates and utilization of the two inputs into daily throughput per store, which is.

Unknown Executive: So yeah, I would expect to see charge rates continue over the next several years. And as you have pointed out, charge rates and utilization are the two inputs into daily throughput per store, which is all about the operating leverage that's growing the charging margin quite nicely for us, and hiring in the summer. Okay, and then... With the 10,000 solves of the pencil, according to your prepared remarks, how are you doing?

Speaker Change: Which is all about the operating leverage that's liquids growing charging margin quite nicely for us.

Speaker Change: Okay, I will say this charge racism, okay. Good.

Speaker Change: I would say that charge right. There is some seasonality in charge rates, so charge rates tend to be.

Speaker Change: Lower in the winter months.

Speaker Change: And higher in the summer months.

Speaker Change: Okay and then.

Speaker Change: With the 10000 solve the pencil. According to your prepared remarks, how are you.

Speaker Change: I'm assuming competition for these thoughts has lessened.

Speaker Change: I don't really know if Tesla is using the same design.

Speaker Change: So I would say installed et cetera.

Speaker Change: Have you thought about trying to increase the pace of store growth or.

Unknown Executive: Growth, or I'm just kind of curious what the competition is like for these sites versus industry changes in the past six months. In terms of, you know, competition, it's, it's, I think it's, as long as we're generating these returns. Thanks for the detail.

Speaker Change: Just kind of curious what the competition is like for these sites versus industry changes in the past six months.

Speaker Change: Yeah, So look we.

Speaker Change: Yes.

Speaker Change: We've got excellent relationships across the board.

Speaker Change: We were talking about the relationships with Oems just a minute ago, but we've got fantastic relationships with site hosts as.

Greg: As well as other partners in the ecosystem I think that's what differentiates you could go from the dozens of smaller operators in the U S. I think it would also differentiate the company as our very sophisticated site selection and proprietary algorithms that go into where we locate our stores I put up a chart on the prepared.

Speaker Change: Remark solved.

Greg: The sites are just getting better the stuff that we're the charging stations that we installed in 2023 are better than everything we've sold every year prior prior and so we feel we feel very good that there is a great set of sites that are out there.

Greg: For us.

Greg: In terms of.

Greg: Competition.

Greg: It's I think it's still relatively early days in terms of tesla's slowdown our withdrawal or whatever it is but we expect to be able to continue the journey that we're at in terms of accelerating our growth.

Greg: Stores I mean, the financing that I've been talking about for the last couple of quarters. The goal is to be able to accelerate.

Greg: The pace of our stores.

Greg: And so.

Speaker Change: <unk> talked about potentially accelerating that by up to two times or more and that depends upon the quantum of the financing that we're able to to achieve clearly.

Greg: If we installed no more stores next year, and reaching EBITDA breakeven, we would actually be cash flow positive at that point of cash flow breakeven, but with the economics and the returns that I think the stores present.

Greg: Shareholders would expect us to continue to deploy at faster rates.

Greg: Long as we're generating these returns.

Speaker Change: Okay. Thanks for the detail.

Greg: Yes.

Speaker Change: Your next question comes from the line of Andrew Schaeffer from Cantor Fitzgerald. Your line is open.

Andrew Schaeffer: Hi, Hi, good morning, everyone. Thanks for taking our questions and congratulations on the quarter.

Speaker Change: A lot of our questions have been asked by now, but maybe to take a step back.

Speaker Change: I'm wondering if you could elaborate on the 20% average.

Speaker Change: Utilization rate that you've experienced.

Speaker Change: In your view.

Speaker Change: Does this compare with the industry average and what do you attribute to this 20% average usage. Thank you.

Badar Khan: Well, we've seen tremendously strong underlying demand that is both in terms of growth in the sales of battery electric vehicles, and again, to point out, the majority of our network today are non-Tesla vehicles, which we've seen new sales of non-Tesla vehicles grow 35% year over year, Q2 versus Q2 last year. We're also seeing multiple tailwinds that we expect to continue to see for the foreseeable future that are growing the share of public charging.

Speaker Change: Well we've seen.

Speaker Change: Tremendously strong underlying demand that is both in terms of growth in the sales of battery electric vehicles and again to point out the majority of our network today are non Tesla vehicles, which we see new sales of non Tesla vehicles grew 35% year over year Q.

Speaker Change: Two versus Q2 last year, we're also seeing multiple tailwind that we expect to continue to see for the foreseeable future. That's growing the share of public charging so thats electrifying rideshare, that's electrifying affordable vehicles, attracting people without charging at home over time autonomous vehicles.

Badar Khan: So that's electrifying, you know, ride share that's electrifying, affordable vehicles attracting people without charging at home, over time, autonomous vehicles, faster charge rates, the earlier question actually encourages people to charge in public locations because they're able to charge much faster.

Speaker Change: Faster charge rates to the earlier question actually encourages people to charge at on public locations, because they are able to charge much faster. So all those things are driving underlying demand. It's why throughput on our network has grown four times faster than the growth the growth in throughput has grown four times faster than <unk>.

Badar Khan: So all those things are driving underlying demand. That's why throughput on our network has grown four times faster than the growth in VIO. That's what's driving utilization from 11% to 20%. And, as Stephanie said, that's 21% for the month of June.

Speaker Change: The growth in Vio, that's what's driving utilization from 11% to 20% and I think as Stephane said, that's 21% for the months of June and so we're very pleased with that.

Unknown Executive: And so we're very pleased with that. In addition, as I said on the call, we are now deploying reasonably sophisticated campaigns to encourage customers to charge at all hours of the day, where we don't experience queuing issues that maybe less sophisticated charge point operators are experiencing. And that concludes our question and answer session. I will now turn the call back over to CEO Badar Khan for some closing remarks.

Speaker Change: In addition, as I said on the call. We are now deploying reasonably sophisticated campaigns to encourage customers to charge at all hours of the day, where we don't experience queuing issues that may be less sophisticated charge point operators.

Speaker Change: Are experiencing today.

Speaker Change: Got it that's helpful, but I guess specifically to E V go.

Speaker Change: No.

Speaker Change: How does that 20% average utilization rate for DC fast charging and public locations.

Speaker Change: Payer to maybe the industry average and in your view. Thank you.

Speaker Change: Well I don't know if anybody has the data.

Speaker Change: To be able to answer that question definitively my expectation is that we have better stronger utilization rates for a number of reasons.

Andrew Schaeffer: <unk>.

Speaker Change: We are deploying these sophisticated programs to be able to get customers to charge throughout the day.

Speaker Change: Through subscription programs marketing efforts, the pricing programs and B, our locations tend to be in urban suburban locations versus highway locations and we've been deploying some very sophisticated algorithms to choose sites that have the best performance.

Speaker Change: Which keeps getting better over time through part of the chart I showed in terms of new vintage stores, having higher throughput.

Andrew Schaeffer: Throughput in prior years, so I think for all those reasons I expect that we're performing better than the market average.

Andrew Schaeffer: And that concludes our question and answer session I will now turn the call back over to CEO Badar Khan for some closing remarks.

Andrew Schaeffer: Okay.

Badar Khan: Great. Thank you.

Badar Khan: Well, look, thank you, everyone. We've had, I think, yet another great and record quarter that continues to have strong underlying demand and multiple tailwinds that public fast charging operators will continue to benefit from for years to come. EVgo has reached a level of scale where we now have multiple sources of competitive advantage over the dozens of smaller operators in the States. And the trajectory value in economics, I think you can clearly see that we are on a path to EBITDA break even in 2025. And more importantly, with the operating leverage that we have in the business, there is very strong EBITDA growth and return potential.

Badar Khan: Well look thank you everyone. We've had I think yet another great and record quarter that continues to be strong underlying demand and multiple tailwind that public fast charging operators.

Badar Khan: The benefit for years to come <unk> go has reached a level of scale, where we now have multiple sources of competitive advantage over the dozens of smaller operators in the states and the trajectory of our unit economics. I think you can clearly see that we are on a path to EBITDA breakeven in 2025 and more importantly, with the operating.

Badar Khan: Leverage that we have in the business.

Andrew Schaeffer: There is very strong EBITDA growth and returns potential and I look forward to providing more updates to you on future calls thanks very much everyone.

Unknown Executive: And I look forward to providing more updates to you on future goals. Thanks very much, everyone. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: [music].