Q4 2024 EVgo Inc Earnings Call
Yeah.
Sure.
Regina: Hello, and thank you for standing by my name is Regina and I will be your conference operator today at this time I would like to welcome everyone to the E V go fourth quarter and full year 'twenty 'twenty four earnings conference call all lines have been placed on mute.
Regina: Any background noise. After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad to withdraw your question Press Star one again.
Speaker Change: Kindly ask that you. Please limit your questions to one and one follow up I would now like to turn the conference over to Heather Davis, Vice President of Investor Relations. Please go ahead.
Speaker Change: Good morning, and welcome to <unk> fourth quarter and full year 2024 earnings call. My name is Heather Davis I'm, the Vice President of Investor Relations at E V go.
Speaker Change: Joining me on today's call about our Con Ebitdas, Chief Executive Officer, and Paul Dobson, EBIT, those Chief Financial Officer.
Speaker Change: Today, we'll be discussing ebitdas fourth quarter financial results.
Speaker Change: Outlook for 2025, followed by a Q&A session.
Speaker Change: Today's call is being webcast and can be accessed on the investors section of our website at investors thought E V go Dot com.
Speaker Change: The call will be archived and available there along with the company's earnings release and Investor presentation. After the conclusion of this call.
Speaker Change: During the call management will be making forward looking statements that are subject to risks and uncertainties, including expectations about future performance.
Speaker Change: 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 reports on Form 10-Q.
Speaker Change: The company's SEC filings are available on the investors section of our website.
Speaker Change: These forward looking statements apply as of today and we undertake no obligation to update these statements after the call.
Speaker Change: 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 measure can be found in the earnings material available on the investors section of our website.
Speaker Change: With the anticipated growth in dedicated stalled or stalled for commercial partners such as autonomous vehicles that are not open to the public we have now broken out our cell counts into three categories public dedicated and excess throughput.
Speaker Change: Throughput shown and discussed today is for a public network only revenue for dedicated site has been reclassified from charging revenue commercial.
Speaker Change: Ancillary revenue this quarter and the associated costs have been recast for charging network cost of sale. The other cost itself. We've provided a quarterly update for these changes for 2000 2023 and 2024 in the appendix of our Investor presentation.
Speaker Change: Update your models appropriately for the impacted period.
With that I'll turn the call over to art <unk> CEO.
Speaker Change: We have to grow had yet another strong record quarter.
Speaker Change: Customer consumption in our network continues to rise with average daily throughput for public school pricing by 37% versus the same quarter last year.
Speaker Change: More than fivefold in three years.
Speaker Change: <unk> network reached what we believe is an industry leading 24%.
Speaker Change: 5% from a year ago, and now already within the range of our recently updated and therefore still conservative long term forecast.
Speaker Change: Full year revenues from our core charging business more than doubled year over year in Q4 represented the ninth sequential quarter double digit growth.
Speaker Change: Full year revenue grew 60% year over year.
Speaker Change: 12 fold growth in just three years.
Added a record 480, new operational stalls in the fourth quarter.
Speaker Change: <unk> dedicated and extended schools, which made it a record year with over 12, new stores added in the year and now have over 4000 operational skills.
Speaker Change: And as you all know offered 18 months process. We finally closed on a $1 billion to $5 billion loan guarantee with the department of energy loan program office fully finances, our ability to more than triple our installed base over the next five years throughout the United States.
Speaker Change: We received our first and fast in January for approximately $75 million, leaving us with approximately $200 million in cash in January.
Speaker Change: <unk> is not yet scheduled next quarterly inbox.
Speaker Change: Taking a step back we know that new sales of battery electric vehicle in the U S have grown considerably over the past several years. However, we are falling behind other markets and in particular, China, which is currently winning.
Speaker Change: Mr Faithfull race towards electrifying transportation globally.
Speaker Change: China already outsell, the U S and automotive sales globally.
Speaker Change: The result of extensive and prolonged state sponsorship with the CBD industry.
Speaker Change: U S automakers say their EV production simply responding to come out two biggest drivers in survey after survey.
More U S fibers have already made the switch to electric vehicles.
Speaker Change: The price of the vehicle.
Speaker Change: The fact of a total cost of ownership is already lower.
Speaker Change: The availability and charging infrastructure.
Speaker Change: The good news is that there are more and more electric vehicle models available in the U S that are becoming increasingly affordable how.
Speaker Change: However, U S electric vehicles remained more expensive.
Speaker Change: On the electric vehicles subsidized in China.
Speaker Change: This is why U S autos Ceos do not support the elimination of incentives and regulations to support the scaling up of Evs in the U S.
Speaker Change: On charging China has more than five times, the DC fast charging infrastructure for electric vehicle that in the U S.
Speaker Change: Creasing the supply of charging infrastructure stimulates demand for electric vehicles, which allows U S. Automakers to increase scale would use unit costs generate profit on their businesses and as a result.
Speaker Change: <unk> improved our competitiveness against Chinese Oems.
Speaker Change: That's one automotive CEO plant for Global Street fight this taking place in the automotive sector.
Speaker Change: The U S needs of CEB businesses to scale up to be able to compete against China and preserve $2 4 million automotive manufacturing jobs in the United States.
Speaker Change: Building out public charging infrastructure is a key enabler of that call.
Speaker Change: As you know if it goes charging revenues are not linked to new sales in any one year, but by the growth of electric vehicles in operation only be higher.
Speaker Change: The availability of charging infrastructure in fact, we estimate that less than 10% of <unk>.
Speaker Change: 25 revenue will likely be driven by new first time drivers of Evs in that ratio will continue to fall each year.
Speaker Change: Demand growth for our business represented by the growth in <unk> has been outpacing supply growth charging infrastructure for years.
Speaker Change: As one of the reasons utilization of our network has grown fourfold in three years.
Speaker Change: In fact quarters that we've.
Speaker Change: We've had flat growth of new DC fast charging in the U S for the past six quarters.
Speaker Change: Resumed Lee this lack of investment has been driven by the industry's expected slowdown in EV sales, even though sales have in fact continued to grow.
Speaker Change: This demonstrates the resilience of our business model as.
Speaker Change: Television sales rise utilization on our network rises because charging supply cannot grow fast enough.
Speaker Change: Sales for the supply to the pace of new Charger development move forward faster as we've already seen a utilization on our network rises.
Speaker Change: Okay says existing Vio will continue to underpin strong unit economics and demand for our Chargers.
Speaker Change: Because we know that the availability of charging infrastructure is one of the most important factors in whether people switch to electric this means increasing supply actually stimulates demand and utilization on our network rises in other words. It almost every scenario we have a resilient business.
Speaker Change: Model, where we see growth in our business.
Speaker Change: We further benefit from the fact that <unk> is more focused on growing usage of our network and some other charging companies, maybe and therefore, it's likely capturing a greater share of kilowatt hours.
Speaker Change: Other fast charging type things, where either high wastefulness chasing nephew awards, where utilization is lower.
Speaker Change: <unk> charging stations to sell cars versus maximizing utilization or our non owners, whose revenue is based on equipment or software sales and not on utilization.
Speaker Change: Finally, as we've said many times, we also benefit from multiple other tailwind instead of a proven up and we will continue to drive up utilization.
Speaker Change: Horst is rideshare electrification companies, such as Uber and Lyft have internal goals to get more drivers to switch to electric and this is supported by policies requiring bites share become fully electric large cities, such as New York City.
Speaker Change: When a rideshare driver needs to charge up during their shift unusually do so on D. C. S. E networks. So they can get back on the road quickly.
Speaker Change: As EV adoption moves from early adopters of the mass market driven by more automobiles.
Speaker Change: More EBIT drivers are expected to leave multifamily housing without access to home charging.
Speaker Change: As we've detailed in the past multifamily EV drivers charged two times more than our network single family you'd be drivers.
Speaker Change: Third as vehicles increased surcharge rates or the speed at which they can take electrons from Chargers. The use case for DC fast charging becomes more compelling to drivers.
Speaker Change: Fourth autonomous vehicles are beginning to hit the road several market pilots from a few companies.
Speaker Change: Actual use case for <unk> requires them to April electric and highly utilized therefore like with rideshare drivers when avs needs charge unused fast charging even though already has partnerships with leading avi firms at 110 dedicated hub stores and operation.
Speaker Change: Presenting what we estimate to be approximately 20% share of all dedicated fast charging stores 40 AAV sector.
Speaker Change: We plan to continue to expand this segment in 2025 and expect this to be an area of growth that may occur faster than previously thought.
Speaker Change: And finally, the standardization of the charging cables to Jay 3400, commonly referred to as next is an opportunity for <unk> today, only a small percentage of drivers that use our network our testify of us as we add next falls to our network yard in a unique position to attract roughly 60% of <unk>.
Speaker Change: <unk> to our network.
Speaker Change: Currently using our network today.
Speaker Change: As I've mentioned before illegal stations tend to be in urban and suburban areas closer to amenities and many test those patients today.
Speaker Change: Correct.
Speaker Change: Earnings call, we've begun a pilot rollout of the next cable and while it's very early days, we believe the results are promising.
Speaker Change: The combination of all these factors and what results in a resilient business model for E V go driving growth and adjusted EBITDA.
Speaker Change: Let's now turn to progress on our four key priorities, improving our customer experience operating and capex efficiencies, capturing and retaining high value customers and securing additional complementary financing to accelerate growth.
Speaker Change: As always improving our customer experience remains our number one priority and our strong momentum caps off an excellent year.
Speaker Change: Customers want a charter to be available when they pull up to an easy go station. We are deploying larger sites rush standard configuration is now six to eight stores per site at the end of 2024, 20% of our sites at six stores or more.
Speaker Change: With a record number of deployments during the fourth quarter, we reached our goal of 50% of easy go stores served by our higher power $3 50, kilowatt Chargers compared to 34% a year ago.
Speaker Change: Auto charge plus continues to gain traction with a big step up in the fourth quarter to 24% of sessions initiated by the seamless plug in charging experience, you're gaining significant traction with auto enrollments Oems that have auto charge plus in April.
Speaker Change: And finally, our key customers for sex metrics, what I'm done increased four percentage points this quarter versus last year with 95% of sessions, resulting in a successful charge on the first try in summary, another great quarter of achievement and improving our customer experience.
Speaker Change: We've also made excellent progress on our efficiency priorities, most notably we took the Mou itself electronics, we signed last October and converted it into a signed joint development agreement to co develop the next generation of charging architecture.
Speaker Change: And Delta are making meaningful progress in this initiative and expect to lower our gross capex per store by 30%.
Speaker Change: We anticipate production of these stores to begin in the second half of 2026.
Speaker Change: To have a prototype for the second quarter of this year and 2024, we achieved a 9% reduction in our gross Capex first of all for our current generation of Chargers to multiple ongoing efficiency efforts.
Speaker Change: <unk> reductions are underway in 2025.
Speaker Change: Look forward to sharing our continued progress.
Speaker Change: First sites built without pre fabricated skids are operational and yield savings and build cost and construction time lines.
Speaker Change: Correct around 40% by 2025 deployments will utilize pre fabricate skids.
Speaker Change: We continue to drive operational efficiencies in our business with total adjusted G&A as a percentage of revenue delivering a 22, one point improvement over 2023.
Speaker Change: In 2025 Eagle remains focused on operating efficiencies and we anticipate further improvements in G&A as a percent of revenue while investing in the growth of our business.
Speaker Change: We also continue to make great progress on our growth priority of capturing and retaining high value customers.
Speaker Change: 56% of those throughput came from rideshare OEM charge in credit and subscription accounts in Q4, which provides easy go with a relatively predictable baseload level of demands of our network.
Speaker Change: We go now has over one 3 million customer accounts growing over 50% from two from 2023 as.
Speaker Change: As a result of our investments earlier in the year and our customer marketing platform.
Speaker Change: Implementing multiple targeted customer lifecycle campaigns that are generating strong growth in retail throughput, which we will continue to prioritize throughout the year.
Speaker Change: Last year, we began rolling out dynamic pricing in our network and by yearend, we expanded that to 100% of our existing fast charging sites.
Speaker Change: <unk> seen the benefits of all of these efforts through expanding margins, but also significantly expanding throughput.
Speaker Change: We expect the next major update to our dynamic pricing algorithms and the second half of this year.
Speaker Change: And finally as I mentioned earlier, we installed native Max connectors, and our first site in early 2025.
Speaker Change: We're excited to be able to share the results of this pilot project with you throughout the year.
Speaker Change: Looking ahead, we expect us expand or signed new partnerships with psychosis that are capable of scaling similar to the expanded partnership we announced in November with Myer at Midwest grocery store chain, where we expect to add 480, new public fast charging stalls admire properties over the next three.
Speaker Change: Three years.
Speaker Change: In 2025, we also plan to launch the first of 400 with new flagship stores in partnership with G. M. With the goal of delivering an elevated customer experience. As a reminder, these sites will feature up to 20 stores and come with ultra fast $3 50 kilowatt Chargers canopies ample lighting.
Speaker Change: Pull through stations and security cameras and like all the video sites will be located near a diverse set of amenities that customers can take advantage of while charging.
Speaker Change: Finally, we expect to expand the number of dedicated stores, serving autonomous vehicle partners, which could represent a very attractive source of potential growth for <unk>. Given we estimate we have a 20% share of operational sites, serving this segment today.
Speaker Change: As for financing the growth of the business, even though closed in the $1 5 billion loan guarantee <unk> in December 2024, with the first role for 75 million occurring in January 2025.
Speaker Change: Sloan ensures we are fully funded to at least seven 5000 stores more than tripling our installed base over the next five years.
Speaker Change: Timber we completed the transfer of our first 30 C income tax credits for our 2023 vintage stores and expect to complete the transfer of our 2024 vintage portfolio. This year.
Speaker Change: Over the course of this year, we expect around 30% of 2025 vintage capex to be offset from state local and federal grants utility incentives OEM payments and 36.
Speaker Change: Federal incentives in the form of technology neutral 30 seen alternative fuels credit and nervy represent approximately 10% of our 2025 vintage capex as.
Speaker Change: As we said before this is not a business, particularly relying on federal incentives and our next generation charging architecture program is targeting at least a 30% reduction in gross capex fall significantly more than the value of these federal incentives.
Speaker Change: Finally, given the very strong cash flows from our operating assets.
Speaker Change: Turning to receive inbound interest and evaluate additional complementary non dilutive financing opportunities that would help fund the growth of any charging stations not included the Doe loan funding to accelerate our growth.
Speaker Change: Paul Dobson <unk> CFO will now cover our strong financial performance in the fourth quarter and full year 2024, together with our outlook for 2025.
Bob: Thank you Bob.
Bob: <unk> delivered another excellent year in 2024.
Bob: Our operation team mobilized and operationalize many sites in the fourth quarter and we ended the year with 4080 operational stops.
Bob: A 37% increase over 2023.
Bob: As Bob mentioned, we continue to add new customer accounts throughout the year and ended 2024 with over $1 3 million customer accounts.
Bob: Throughput on the public network for 2024 was 277 gigawatt hours, 116% increase compared to last year.
Bob: Revenue for 2024 was $257 million.
Bob: It represents a 60% year over year increase this growth was primarily driven by charging network revenues.
Bob: Tony charging network revenues of $155 $7 million grew from $74 2 million in 2020.
Exhibiting a 110% year over year increase with retail commercial and OEM charging revenue.
Bob: Each individually at least doubling over the prior year.
Bob: Extend revenues of $86 6 million decreased from $72 4 million in the prior year delivering growth of 20%.
Bob: Both charging network gross margin and adjusted EBITDA margin significantly improved in 2024 months, demonstrating the operating leverage in our business model.
Bob: <unk> public network throughput growth continues to outpace <unk> growth driven by multiple factors since 2021, a public throughput has grown almost 1000% compared to <unk> growth of over 200%.
Bob: In the fourth quarter number to utilization increased to 24% up from 19% a year ago.
Bob: I think in detail a bit more 65% of our stores have utilization greater than 15%, 53% of our staff have utilization greater than 20% and 32% of our staff have utilization greater than 30%.
Bob: Each of these utilization categories grew throughout the year with the distribution of the entire utilization curve.
Bob: Our portfolio shifting to the right.
In the fourth quarter, the average daily throughput for the owned and operated public networks was 269 kilowatt hours compared to 197 last year.
Bob: Looking at the top 15% of our network. The average daily throughput for public stock was 599 kilowatt hours versus $4 50 in the prior year.
Bob: Top 15% of our Dot work is already exceeding where we conservatively think the average store will grow too when we reached 11000 public stock.
Bob: We made significant progress on the profitability of the owned and operated public charging network. This year.
Bob: Charging network gross margin for 2024, it was 37, 6% up from 26% in 2023.
Bob: Higher throughput for public store allows for leverage of installed dependent costs, such as rent and property taxes.
Bob: Revenue for the fourth quarter grew 35% compared to last year with total revenue of 67 5 million.
Bob: While strong charging revenue continued to meet our expectations.
Bob: Timing issues cost $4 million of extend refuse to move into the first quarter of 2025.
Bob: Adjusted gross profit was $22 8 million in the fourth quarter of 2024 up from $13 3 million in the fourth quarter of 2023.
Bob: Adjusted gross margin was 33, 7% in the fourth quarter of 2024, an increase of 720 basis points compared to the fourth quarter last year.
Adjusted G&A as a percentage of revenue also improved from 54, 4% in the fourth quarter of 2023 to 46, 2% in Q4 of this year demonstrating the operating leverage effect.
Bob: In the fourth quarter, adjusted G&A increased $4 million sequentially as we are hiring to support our next generation architecture.
Bob: Adjusted EBITDA was negative $8 4 million in the fourth quarter of 2024, a $5 6 million improvement versus negative $14 million in the fourth quarter of 2023.
Bob: For the full year 2024 revenue was $256 8 million an increase of 60% over 2023.
Bob: Adjusted gross profit was $75 7 million in 2024 up from $41 8 million in 2023.
Bob: Adjusted gross margin was 29, 5% in 2024, an increase from 26% last year.
Bob: Cost management continues to be a priority pretty equal.
Bob: With nearly $100 million increase in revenues, we managed our expenses well and adjusted G&A on an absolute basis increased by only $7 5 million for the full year to $108 2 million.
Bob: With this leverage adjusted EBITDA improved to a loss of $32 5 million for the year.
Bob: $26 $4 million improvement over 2023.
Bob: Cash cash equivalents and restricted cash was $121 million as of December 31, 2024. We also received our first draw of $75 million under our <unk> in January 2025, which brought our cash cash equivalents and restricted cash to approximately $200 million.
Bob: We're improving our cash flow profile as well in 2024, and we used $7 3 million in cash for operations compared to cash use of $37 1 million in 2023.
Bob: Gross capital expenditures for $94 $8 million in 2020 for capital expenditures net of capital offsets was $46 4 million.
Bob: Let's now take a look at our unit economic model.
Bob: We've made a couple of updates to remove to dedicated staff and associated throughput revenue and cost to focus solely on public stops.
Bob: Also with cost of sales all energy demand charges from now when we put dependent cost of sales, whereas it previously was split between stall dependent and throughput dependent cost of sales.
Bob: And finally on sustaining G&A per store, we are looking at a trailing 12 months of G&A.
Bob: To reduce the volatility that occurs when you annual annualized quarterly number SG&A as accounting adjustments from time to time that can cause noise.
Bob: The growth in average throughput per store drove the increase in revenue per store at the average revenue per kilowatt hour increased by just one Seth.
Bob: Throughput dependent cost of sales decreased by <unk> <unk> per kilowatt hour or roughly 8% as we continue our geographic expansion, including in Texas and Florida.
Bob: Tariffs are generally lower.
Bob: We're spreading our demands for charges for a greater network book.
So all dependent cost of sales increased year over year, primarily driven by maintenance expense is utilization on the network has increased.
Bob: Sustaining G&A per store decreased roughly 5%.
Bob: It's quite revealing to see the leverage in the eco Mod and annual cash flow per public saw increased five times per last year and the top 15% of our network is now generating roughly $50000 per store per year, which is higher than even the top end of our long term branch.
Bob: Utilization is now already within the range of our updated but still conservative long term utilization range. The enormous tailwind, we enjoy faster charge rate batteries and newer models combined with faster at the speed of our network from our 350 kilowatts charger.
Bob: Much of the remaining increase in daily throughput per store and our long term assumptions.
Bob: Looking at the longer term, we should see leverage install dependent costs driven by material improvements in the maintenance costs driven by the Nextgen architectures improved maintenance profile.
Bob: Our sustaining G&A per stop we expect this number will increase in 2025, because we are making investments installed.
Bob: Back half weighted.
Bob: We are targeting this to reduce to 7000 in a long term as we build a larger network and fixed G&A expenses are allocated.
Bob: There are three times larger store base.
Bob: As we build critical supply of fast charging infrastructure over the next several years and reach a scale that roughly 11000 stores a leverage of the model is expected to generate annual returns of 50% per store.
Bob: Taking a simple math approach to our unit economics.
Bob: To a much larger business in the long term he is clear.
Bob: At 11000 public stores, we expect to generate around $1 billion in annual revenue.
Bob: With charging network gross profit of $550 million. There are some investments in G&A to be made our growth rates anticipated gross profit scale much faster.
Bob: 7000 public stores, the core owned and operated business at igo could be generating $300 million to $425 million in annual adjusted EBITDA.
As a reminder, this excludes contribution from any other business lines are dedicated hubs of growth outside of <unk>.
Bob: Our growth engine, we built at <unk> will continue to deploy stores at a greater rate in 2025, and we achieved in 2024.
Bob: We anticipate owned and operated public and dedicated staff of 800 to 902025.
Bob: With the vast majority of <unk> stores or the public shower.
Bob: As a reminder, we prudently held back capital towards the end of 2024 awaiting the closure of the Doe loan and as such our 2020 build plan will be back half weighted.
Bob: We anticipate roughly 50% of the stores planned for 2025 will be in the fourth quarter of 2025.
Bob: We expect to build another 450 to 550 stores in 2025 or <unk> extend partners.
Bob: This increase in total deployments in 2025 shows we're on the path to deliver 7500 stores under the <unk> as.
Bob: As a reminder, the public network stall build plan for 2025% to 2029 shown here supported by the deal flow.
Bob: So if were successful in lowering Capex first of all in line with our stated plans, we would be able to build approximately 1600 more stores.
Bob: Without an increase in the Doe loan.
Bob: Finance starting from 2027 onwards upon release of our next generation architecture in 2026.
Bob: We expect to add even more dedicated staff for JV partners in 2026 and beyond.
Bob: Our build plan for the private company for extend contract is currently expected to be completed by 2027.
Bob: <unk> continues our topline growth and path to profitability in 2025.
Bob: We expect total revenues in the range of 340 million to $380 million.
Bob: We continue to target adjusted EBITDA breakeven in 2025 with a range of negative 5 million to positive tenure.
Bob: Additional color behind these ranges are as follows charging network revenue is expected to comprise approximately two thirds of our total revenue in 2025.
Bob: And charging network revenue anticipate sequential quarterly growth throughout 2025 Q.
Bob: Q1 is typically flat to Q4.
Bob: As it is the lowest quarter of the year historically per vehicle miles traveled.
Bob: Extend revenues are expected to be roughly flat in 2025 to 2024 with growth in the second half of the year.
Bob: And similarly revenues are expected to grow in 2020 with most of the growth coming in the fourth quarter of 2025, driven by the dedicated business.
Bob: Total adjusted gross profit and adjusted G&A as a percentage of revenue.
Bob: Started to improve in 2025 driving bottom line adjusted EBITDA.
Bob: Yeah.
Bob: Adjusted G&A is expected to increase modestly from the Q4 run rate throughout 2025, reflecting continued investments in technology and efficiency less inflation, we expect physical capex net of offsets to be in the range of $160 million to $180 million for 2025.
Bob: 2025 will be a pivotal and exciting year for <unk>. So operator, we can now open the call for Q&A.
Bob: At this time I'd like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad and as a reminder, we kindly ask that you. Please limit your questions to one and one follow up our first question will come from the line of Bill Peterson with Jpmorgan. Please go ahead.
Bill Peterson: Yes, hi, good morning, and thanks for taking the questions.
Speaker Change: And also a nice result in 2024, when looking back at your guidance from last year coming in at the high end on both.
Bill Peterson: Revenues and adjusted EBITDA, So nice execution.
Bill Peterson: My first question is on the on the on the loan and the status of alone.
Bill Peterson: Of course, you can.
Bill Peterson: You had some light on when do you expect the second draw down to occur is there any conditions that must be fulfilled.
Bill Peterson: Sure.
Bill Peterson: We're happy with the administration.
Speaker Change: What avenues do you have the kind of any attempts to claw back the lauder or.
Bill Peterson: With this loan apparently being delayed.
Just kind of wondering what you have there and then really in the worst case scenario you talked about some financing it absolutely, but I assume those are near term but can.
Bill Peterson: Can you shed some more light on your non dilutive financing options with or without the loan for example, I'm, assuming maybe project financing.
Bill Peterson: <unk> equity partners, but what is the appetite look like for such options today.
Bill Peterson: Sure Hey, Bill.
Speaker Change: So look.
Speaker Change: We haven't we have a very productive relationship with the with the L. P O team.
As we've said here on this call before we see charging infrastructure is key to the long term competitiveness of U S auto industry as it competes against China.
Speaker Change: As you know and I think as everyone knows this is not a conditional commitment, but a legally binding contract that we're spending too much on it.
Speaker Change: 1000 jobs.
Speaker Change: All government funding is under review that I think everybody knows that.
Speaker Change: But we believe that they see what what we see and what you're looking at today.
Speaker Change: Assets have very strong performance loan is a is a good deal put the U S government.
It's been carefully structured to provide protection to the government and also flexibility for us and so our confidence in the loan really hasnt changed.
Speaker Change: We received our first quarterly advance in January.
And it's obviously too early for the next the next quarter, which would be in Q2.
Speaker Change: As we said.
Speaker Change: In December and as were saying today, we'd become EBITDA breakeven this year and Levered free cash flow positive in 2026 meeting if we havent financed this growth with the Doe loan there are likely many others that we would have.
Speaker Change: And so Paul do you want to just comment on that we are also we've been talking about additional non dilutive financing all year last year at the beginning of this time last year. It was as an option as an alternative to do low and of course, its now we consider as complementary to the <unk>.
Speaker Change: For additional financing, but you want to make sure that yes, yes. So it's just about or mentioned, we're looking at complementary financing to sit alongside the Doe loan.
Speaker Change: First of all you know any projects that you know.
Speaker Change: Installs can't go into the dealer loans, because theyre not public.
Speaker Change: And also we just think it's good practice to have alternative sources of funding available lots.
Lots of businesses to do that and I think that's a good thing for you to pursue so we have been talking with various institutions banks and <unk>.
Speaker Change: <unk>.
Speaker Change: What they like about our model is to steady and predictable cash flows exceeding argument economics <unk> everything.
Speaker Change: And we've shown in the past and so we're looking at structures that are somewhat similar to the deal. We always of course not at the same length of term.
Speaker Change: Our project financing to straight debt or some sort of a hybrid.
Speaker Change: Here we are.
Speaker Change: Sure that we want to pursue non dilutive funding as well so.
Speaker Change: But like I said the reception from the banks has been extremely positive and they like the a proven developer.
Bill Peterson: As you mentioned Bill you know execution.
Bill Peterson: And see the execution happening and they can see the cash flows as well so.
Bill Peterson: Confidence, we're going to be able to execute on them on a complementary sources of financing.
Bill Peterson: This year.
Speaker Change: Okay, Okay, Sputter and Paul for that and then my second question I'd like to kind of unpack a little bit about the full year guide again in the context of last year proved to be conservative.
Speaker Change: So I guess, what can drive the outcomes to the negative or positive end.
Speaker Change: Is that any of us depend on the OE alone deployments or.
Speaker Change: Perhaps you can shed some more light or quantify how much G&A increase birstall is going up maybe especially offset by factors like utilization charging rate and network throughput and how should we think about those factors as part of the guidance should we use for the fourth quarter is kind of a guide posts are you seeing any improvement relative to the to the exit.
Speaker Change: From 2024.
Speaker Change: Yes, Bill let me pull out let me just ask Paul to respond to that but just one thing I will say.
Speaker Change: In response to that question upfront I did say in my script that we expect.
Speaker Change: Less than 10% of our revenue to come from new sales of electric vehicles at 2025, which is simply a reflection of not only reduce over time. It's a reflection of that this is a business model that's dependent on total vio rather than annual sales, but maybe Paul you could provide some.
Speaker Change: Color on spirit builds so it's just a brief background on me on the guidance. So we said revenue.
Speaker Change: 348 million to 380 billion, we said two thirds of that is.
Speaker Change: As charging revenue and so the range, we put around that really does reflect some variability not much but plus or minus 5% on throughput plus there is some risk around <unk>.
Speaker Change: <unk> pricing as well.
Speaker Change: The other third of revenue.
Speaker Change: As the non charging revenue in that range.
Speaker Change: Due to some timing just timing differences on contracts.
Speaker Change: And when we get a contract signed permitting logistics and then some heavy risks as well.
Speaker Change: We've also sat G&A, we expect will increase modestly from our Q4 run rate.
Speaker Change: Which reflects our investments in technology.
Speaker Change: Plus some inflation.
Speaker Change: We said our adjusted EBITDA range is minus five.
Speaker Change: <unk> 5 million to 10 million positive.
Speaker Change: So with all of that above you can you can.
Speaker Change: And looking at our 2024 results should.
Speaker Change: It should be able to derive what our adjusted gross margin would be.
Speaker Change: Using the midpoint of all of.
Speaker Change: Of those ranges.
Speaker Change: And Youll see that our adjusted gross margin percentage for both the charge and business to add the non charging business is increasing as well.
Speaker Change: Yeah.
Speaker Change: Yeah. Thanks for sharing his insights and a nice job on the execution in 2024.
Speaker Change: Thanks, Bill Thanks Bill.
Speaker Change: Our next question comes from the line of Kristen <unk> with RBC capital markets. Please go ahead.
Speaker Change: Thank you and good morning, and echoing bills.
Speaker Change: Those comments.
Speaker Change: But good year last year.
Speaker Change: Maybe just to start out and following up on the prior question as it relates to Trump executive orders and I guess the question is.
Speaker Change: If if there is like a funding hall this year or next year or something like that.
Speaker Change: How would you all respond would you would you curtail activity or would you look.
Speaker Change: Yes, you mentioned back filling with with some other opportunities for.
Speaker Change: Maybe that funding so would that be the option to continue the growth cadence that you are on right now.
Speaker Change: Chris are you talking about the executive orders and their impact on electric vehicles sales.
Speaker Change: Is that just on the Doe loan was was paused then David I guess took you all to court to try to fight it and not enough on that.
Speaker Change: Right right. Okay. So yeah look we as we said before on the last question on Bill's question.
Speaker Change: We feel very confident in the loan.
Speaker Change: Before you'll be out the loan assets themselves are performing very strongly.
Speaker Change: It's really a it's a good deal for the U S government with you know a lot of protections for the government. So we felt pretty good about it in terms of funding and cash flow, but we have.
Speaker Change: Very strong cash balance.
Speaker Change: Starting the year with about $200 million and so we feel very very good about that yeah, what any other colo. So so that's right. So you know as we mentioned.
Speaker Change: We've got around $200 million cash, including the drawdown, we took him in January.
Speaker Change: You step back and look at our model.
Speaker Change: Primary uses of our cash cash from operations and Capex.
Speaker Change: So since we are going to be.
Speaker Change: EBITDA breakeven in 2025 that implies that our operating cash flow was close to breakeven as what you saw in 24, our cash from operations, we used $9 million.
Speaker Change: Which was a significant improvement over 2023. So you can catch that forward, you say, that's more or less breakeven as well in 'twenty five.
Speaker Change: So that means capex is kind of a swing factor. So our net capex is expected to be $160 million to $180 million, which.
Speaker Change: Which includes build out not only for the 2025 stores, but also for 2026 entities as well and we have the option of course to either speed up or slow down the deployment of those stores, if we choose depending on funding or for any other reason.
Speaker Change: Just to reiterate we are pursuing complementary non dilutive financing.
Speaker Change: I'm confident we'll be able to put something in place this year.
Speaker Change: Got it Okay, and then maybe as a follow up you highlighted some opportunities on EV charging stations.
Speaker Change: Private installs can you maybe.
Speaker Change: I guess talk about the strategy, there and how does that compare with the public network station.
Speaker Change: Thank you.
Speaker Change: Yeah, absolutely yeah. It looks so we've been we've been building and operating these dedicated.
Speaker Change: Sites dedicated hubs for autonomous vehicle fleet partners actually for a couple of you know for a number of years last year, we more than doubled the number of stores that are I don't want that our operational ease dedicated home schools from to 110, and that's why we actually separate it out from the public network.
Speaker Change: We know these are.
Speaker Change: We received a fixed dollar amount.
Speaker Change: For the on a monthly basis for the stores, where the electricity is a pass through and so.
Speaker Change: We considered you know it's a different revenue model.
Speaker Change: Terms of relative attractiveness margins for this business are a little less a little lower than our public owned and operated quite a bit higher than the margins from our extend business, but of course, they don't come with any utilization variability and so we we actually quite like this segment.
Speaker Change: And I think as we said last.
Speaker Change: Last year at the end of last year, we actually think that this autonomous vehicle robo taxi space, you know could grow quite a bit faster over the coming years and maybe we had thought previously, especially since the election and so we're quite excited by this we estimate there's not a lot of data on this but we estimate about <unk>.
Speaker Change: One 8% share of dedicated hubs for autonomous vehicle partners today.
Speaker Change: Got it thank you.
Speaker Change: Yep.
Speaker Change: Our next question comes from the line of Douglas <unk> with Evercore ISI. Please go ahead.
Douglas: Thank you Hey team. Thanks for having me on I was just curious about how the strategy has maybe shifted on the prioritization of geographic growth over the next few years, you know I understand the commentary about tripling the number of stores, but.
Speaker Change: Is this current administrations, we will call it more limited scope on electrification had you guys, rethink, which states or markets to focus on.
Douglas: Maybe those where EV density is already.
Speaker Change: Critical mass.
Speaker Change: Yes look let me just just comment a little bit on the.
Speaker Change: The impact on electric vehicles sales as I said in my remarks.
Speaker Change: Our business is driven by the difference between the supply of DC fast charging and demand in terms of overall vio not annual sales and that supply has exceeded demand for years. It's why we have seen a fourfold increase in utilization.
Speaker Change: Over the last three years.
Speaker Change: And so that's really what's driving the economics in our business as demand grows we benefit with better utilization.
Speaker Change: If demand slows what we have already seen is the supply of fast charging fast to get this from industry seems to slow and therefore, we benefit because we got supply it seems to bat if charging supply grows in other words. If other companies are charging companies, who are building out charging infrastructure, we know that stimulates to me.
Speaker Change: This is not a zero sum game and we also benefit we actually think we benefit because we've got better located stores and we are singularly focused on usage. Unlike many other charging companies and so this is actually a pretty resilient business model in terms of your specific question around geographic expansion we are.
Speaker Change: We are increasing the share all of our of our store growth and network expansion outside California. That's been a trend that's been underway for a number of years and the fourth quarter of last year, we saw usage.
Speaker Change: Inflect for the first time, where the rest of the United States is now greater than California, and we're seeing very strong utilization in many of these non California markets and that's that's what he will be following demand.
Speaker Change: We're going to build our network plan is designed to follow the bad and that's really what we're doing.
Speaker Change: Yeah.
Speaker Change: Awesome that makes a lot of sense. Thank you team.
Speaker Change: Yes.
Speaker Change: Our next question comes from the line of Gabe Daoud with TD Cowen. Please go ahead.
Gabe Daoud: Thanks, Hey, good morning, everybody.
Gabe Daoud: I was hoping we could maybe oh, maybe focus on Capex just for a minute and is.
Gabe Daoud: Has there been any sensitivities are studies that you guys have done with respect to potential tariff.
Gabe Daoud: How that impacts your per store capex figure overtime.
Gabe Daoud: Again, we really have sort of minimal impact from these tariff direct impact from these tariffs.
Gabe Daoud: You don't source, our charters from China, I think as you know.
Gabe Daoud: Our you know our supply chain is really not impacted by Canada or Mexico tariffs.
Gabe Daoud: Our hardware vendors have operations in the United States for Baba compliant that shipments and.
Gabe Daoud: If.
Gabe Daoud: If things continue to change for whatever reason.
Gabe Daoud: We ramp up that production, if we need it.
And the reality, we really have a lot of options in our supply chain.
Gabe Daoud: And we are in discussions with our supply chain.
Gabe Daoud: In different geographies pretty much all the time and so at this point with respect to what's been announced we really don't have much impact in our direct business in terms of our charging infrastructure and in terms of indirect impact.
Gabe Daoud: Impact on EV demand as I said already.
Gabe Daoud: Our business is a resilient business model, where our economics and our utilization is driven by the delta between supply supply of ABB.
Gabe Daoud: Versus.
Gabe Daoud: <unk> versus supply charging infrastructure and that's been an imbalanced for years.
Gabe Daoud: And that's really what's driving that growth.
Gabe Daoud: Thanks, that's helpful.
Gabe Daoud: And then I guess, just as a follow up on.
Gabe Daoud: On the demand towards Sud.
Could you maybe give us an update on where you stand with some utilities in some jurisdictions on.
Gabe Daoud: Extending or instituting demand towards holidays and Keith.
Gabe Daoud: Do you think there's maybe a risk over time is there is obviously significant.
Gabe Daoud: The expected load growth in the U S for the first time, maybe ever on AI data centers et cetera, but maybe how does that potentially impact like demand charges and demand towards holidays. Thanks guys.
Gabe Daoud: Yeah, we've got demand charge reduction.
Gabe Daoud: Productions of holidays across.
Gabe Daoud: The vast majority of our kilowatt hours.
Gabe Daoud: Today.
Gabe Daoud: And ours as utilization and throughput per store on a per site basis continues to grow.
Gabe Daoud: Clearly the impact of of demand charges, just becomes smaller frankly overtime and so it's it's one of the reasons why we're seeing operating leverage in gross margin.
Gabe Daoud: And as a throughput per store continues to grow as you've seen throughput per stall has grown fivefold.
Gabe Daoud: Throughput per store will go over our network over the last three years.
Gabe Daoud: The impact of demand charges, just becomes more and more over time.
Gabe Daoud: Got it got it makes sense. Thank you.
Gabe Daoud: Yeah.
Speaker Change: Our next question comes from the line of Patrick <unk> with Stifel. Please go ahead.
Matt: It's Matt on for Steven Thanks for taking the questions.
Matt: Would you be able to give us details on how you think of utilization evolving in 2025 based on your guidance.
Speaker Change: And longer term is there sort of a sweet spot of utilization across the network that you are targeting understanding that if utilization gets up to I imagine in the 70 plus percent range, then drivers would be waiting to charge at your stations.
Speaker Change: Yeah, Let me I'll ask Paul just to comment on 2025.
Speaker Change: But I mean, just at a very high level.
Speaker Change: We're at 24% utilization, we just updated our long term target just at the end of last year.
From our previous target and where we're already up to 23 points to 22 to 26 of them already in that range as you saw in one of the slides.
Speaker Change: Two thirds roughly two thirds of our charging installs are already over 15% almost a third are already over 30% and so we might find ourselves over the course of this year update in that long term target again in terms of taking a step back.
Speaker Change: We have the scale and the sophistication today to deploy pricing.
Speaker Change: And customer marketing, because we have the scale and the sophistication to do this to be able to to be able to go from not just building charging stations at hoping people people show up to actually.
Speaker Change: Influencing and shaping who is charging when and at some point where right now there's not enough density of these charging stations, there's enormous white space and that's pretty.
Speaker Change: And we're doing that to allow us to see increases in charging without congestion.
Speaker Change: And so we think we're quite sophisticated there and over the course of this year, we may find ourselves updating utilization again as a reminder, throughput per stoll as both utilization and charge rate, we havent charge rate tailwind.
Speaker Change: Because the faster batteries in the cars and our network is getting faster and faster every month as we spoke to you, but you've got a watt Chargers those two things are what drives.
Speaker Change: The volume in our price times volume Formula, but Paul you want to comment on so again without repeating too much of what you just said about it but if you look at our utilization.
Speaker Change: On the slide that we showed.
Speaker Change: Economics.
Speaker Change: We went from 19% in 2023 at the end of 2023 or Q4.
24%, so five inch.
Speaker Change: Increasing in one year.
Speaker Change: That I mentioned in our guidance.
Speaker Change: Three to 26 were already in the range now so when you are modeling for 2025 eight encourage you to put utilization at the highest end of the range.
Speaker Change: You mentioned it we may revisit top.
Speaker Change: In 2020 later on this year as we as we kept for information about the performance of our stores and then charge rate Similarly, increasing from 43 kilowatts to 47 kilowatts.
Speaker Change: 24, so up for <unk>.
Speaker Change: We continue to see that increasing as newer vehicles.
Speaker Change: <unk> charged speeds hit the market.
Speaker Change: And we deploy more 250 kilowatt charters out there to be able to accommodate that.
Speaker Change: So we see a big increase there and increase their throughout 2025.
Speaker Change: That are mentioned in terms of you know it's not just utilization is one thing that we're learning as well.
Speaker Change: Time of day is just it's almost just as important in terms of how we manage utilization. So we're finding in some cases, we have chargers.
Speaker Change: Lloyd where they're being utilized at 15% utilization at three o'clock in the morning, which is incredible.
Speaker Change: C, but how.
Speaker Change: How we influence when those charters are being used to pricing signals and other means other marketing is going to be important for us to manage utilization going forward.
Speaker Change: Yeah.
Alright, great that's very helpful.
Speaker Change: Just a follow up I know in the past you've said non Tesla vehicles make up the majority of the throughput on the network, but just curious if you've seen any uptick in Tesla vehicles charging on the network, especially since it opened its network to other Oems.
Speaker Change: Yeah, I mean look with so you know Tesla vehicles generally as you know as we've said before.
Speaker Change: Don't charge Havent historically charged on our network.
Speaker Change: With the introduction of the next cable Steven we are really excited to be able to start charging at attracting Tesla vehicles on our network without an adapter with a native connector.
Speaker Change: And that represents another source.
Speaker Change: All of increase in throughput on our network without any impact all without any increase in PPP I O. Our first site with IMAX cables are now deployed it's a pilot site.
Speaker Change: So it's too early for me to comment on the data I will say I'm excited that we've got the next cable deployed and we are seeing clearly we're seeing you know Tesla vehicles charged not that worked at high rates that we've ever seen before but it's too early to be able to project that out across the rest of our network and we will be looking to increase the deployment of these.
Speaker Change: Next cables throughout the course of this year.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, so much I'll turn it back.
Speaker Change: Yep.
Speaker Change: Our next question comes from the line of William Griffin with UBS. Please go ahead.
William Griffin: I will thank you and good morning, everybody.
Speaker Change: My first question here was just based on.
William Griffin:
William Griffin: The skip based hardware that you've talked about deploying gear in 2025.
William Griffin: I I don't think you gave the number but.
William Griffin: To what extent could that drive some cost reductions for 2025 vintage capex and could could that potentially offset.
William Griffin: The loss of 36 tax credits should that actually happened.
William Griffin: Yeah, I mean look the.
William Griffin: I mean, let's just quickly just take a step back on the 30 <unk> tax credits. These are.
William Griffin: This is I think less than a half a percent of the total cost of the eye or a.
William Griffin: C.
William Griffin: It's their technology neutral the bipartisan supported because they are incentives for all types of charging infrastructure not just electric vehicles and.
William Griffin: These federal incentives are they represent about 10% of our gross capex per store.
William Griffin: And so.
William Griffin: That's why I keep saying our business is really not relying on federal incentives.
William Griffin: The charge or Capex reduction program that we have in place.
William Griffin:
William Griffin: Two the Mou.
William Griffin: Signed agreement now with Delta is looking at a 30% improvement in gross Capex per store, we have seen a 9% improvement in 2024 versus what we were expecting for 2024, we see a modest improvement next year.
William Griffin: In the overall average gross capex per store, which includes the impact of the the higher percentage of pre fab. It's that we've got going on as well as other efforts around equipment site design.
Construction processes we.
William Griffin: Any reason why it's an average it's a modest improvement is because we're introducing flagship stores. This year. As a reminder, we were deploying about 400 flagship stores over the next few years to our GM relationship they come with a higher price. They obviously come with a significantly higher offset.
William Griffin: To make it an economically attractive deal for us, but in other words absent that when normalizing for that we're continuing to see incremental improvements in gross capex per store before our next generation of charging equipment, which will take us to a 30% improvement.
Got it and then just wanted to follow up here on the pilot site with the next connector I know you said it was early but could you.
William Griffin: Speak to you know what maybe some of the early observations have been here in terms of charging behavior and maybe mix of vehicles.
William Griffin: Well, it's really too early.
William Griffin: We've got more test vehicles charging clearly and so we're excited by that.
William Griffin: We've done very little marketing or low marketing frankly, those pesticides and so until we've done that.
William Griffin: It's hard for us to be able to say okay. Now. This is something that you could take it that we can take as a data point with format deployment over the course of the rest of this year.
Speaker Change: We're thrilled that.
Speaker Change: Fair enough I appreciate the time.
Speaker Change: Yeah.
Speaker Change: Go ahead.
Speaker Change: Our final question will come from the line of Chris Harris with Needham. Please go ahead.
Speaker Change: Hey, not to belabor the taxes the next.
Speaker Change: Tesla and hacks point, but is that something you plan to accelerate this year given prior expectations given sort of.
Speaker Change: Public sentiment towards the leadership, there or again too early to kind of make any statements.
Speaker Change: Chris I think in terms of the deployment of Max connectors.
Speaker Change: There we are.
Company, we charge all electric vehicles, that's been our policy and our philosophy and our strategy.
Speaker Change: We are charging in our charging lab out in California, we are bringing in and testing all electric vehicles, including Tesla vehicles.
Speaker Change: We're excited about the standardization of the tables I think its a it actually simplifies the customer experience.
Speaker Change: And so we're we're excited about deploying next cables have been talking about it all year last year.
Speaker Change: Where we've got the first site now with the next cable it's a pilot.
Speaker Change: We expect to be able to deploy those Max cables.
Speaker Change: Throughout our network either through retrofit I think starting probably with retrofitted and then into two new stores I'll, probably late this year or next year.
Speaker Change: And as I said, it allows us to grow through it.
Speaker Change: Without that increase in V. I O. It's another one of the reasons why.
Speaker Change: This model in our company in particular is so resilient.
Speaker Change: Okay, and then you sort of hit on the director Directorate of the business, regardless of what happens on EV adoption or you know competition on the charging side of the world. So when you see someone like I own a move from beta to national or at least talking about 40000 fast Cherokee started this.
Speaker Change: Here, what are your kind of like at a high level. How do you think about that and how do you think about it kind of I just kind of want to get your thoughts on that from a competition perspective.
Speaker Change: Yes, I mean this is I mean.
Speaker Change: We've been saying for a while this is not a zero sum game business. Unlike many other sectors of the economy is charging companies deploy charging infrastructure demand increases we know that we know that one of the reasons. There's two reasons why customers are still on the fence on whether to switchover to electric vehicles. One is the upfront.
Speaker Change: Prices by Tcl being lower and the second is charging infrastructure, we have people worried about range anxiety and so as people are deploying charging infrastructure. It just stimulates demand which is good for us.
Speaker Change: With respect to Iona the Youre right its been almost a couple of years since I autonomous announced that I'm I'm glad to see that they've got a handful of sites now finally operational we obviously look at those sites.
Speaker Change: And our perspective, we've got as you know are very sophisticated network plan and site selection algorithms. It doesn't appear to us that those sites or sites that we would look at in terms of maximizing utilization and but again many of these charging companies have goals under that utilization once chasing that.
Speaker Change: Awards for instance are clearly not focused on utilization because theres just not a lot of growth of utilization of highways and I automate indeed have other goals beyond utilization.
Speaker Change: For the network either way for Us increase.
Speaker Change: Increasing charging supply results the increase in demand and because we've got well located sites. We think we're getting a disproportionate share of kilowatt hours.
Speaker Change: Okay, basically the detail and good luck.
Speaker Change: Yes.
Speaker Change: And that will conclude our question and answer session and I will now turn the call back over to that archon for closing remarks.
Speaker Change: Great well. Thank you everyone. We had yet another record quarter, finishing off a record year the charging infrastructure we're building.
Speaker Change: The key ingredients for long term competitiveness and sustainability of the U S automotive industry and that's one of the reasons why what we do is so important unlike others in the charging space. We have a resilient business model that is set to deliver another year of strong growth and reaching EBITDA breakeven.
Speaker Change: And I look forward to providing updates on our progress on this and our priorities on our earnings calls throughout the year. Thanks very much everybody.
Speaker Change: Yes.
Speaker Change: That will conclude today's call. Thank you all for joining you may now disconnect.
Speaker Change: Yeah.