Nuvve Q3 2024 Earnings Call Transcript

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November 12, 2024

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Earnings Conference Call
Nuvve Q3 2024
00:00 / 00:00

There are 3 speakers on the call.

Operator

Good afternoon, and welcome to the Nuvi Holding Corporation Third Quarter 2024 Earnings Conference Call. Please note this event is being recorded. On today's call, we have Gregory Poien, Chief Executive Officer and David Robson, Chief Financial Officer of Nuvi. Earlier today, Nuvi issued a press release announcing its Q3 2024 results. Following prepared remarks, we will open the call up for questions.

Operator

Before we begin, I would like to remind you that this call may contain forward looking statements. While these forward looking statements reflect NuV's best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward looking projections. These risk factors are discussed in Nuvi's filings with the SEC and in the earnings release issued today, which are available on our website. Nuvi undertakes no obligation to revise or update any forward looking statements to reflect future events or circumstances. With that, I would like to turn the call over to Gregory Poyan, Chief Executive Officer of Nuvi.

Operator

Gregory?

Speaker 1

Thank you, and good afternoon to everyone here today. Welcome to our Q3 2024 results call. This quarter has been a very active one and has been very active in many ways, and we are excited to share more details with you today. Though this Q3 has remained challenging for Nuvi, we are seeing that the fruit of multiple efforts we have been carrying out during this period is now paying off. We have been able to reduce our expenses with minimum impact to our operational capabilities.

Speaker 1

We have been increasing our margins, while our top line sales are finally picking up. Some of it is driven by the kickoff of our hub project with the Fresno Economic Opportunity Commission. In the meantime, we have been working with new investors on a convertible loan that we have closed post end of the quarter. Through that period, David and myself have provided a bridge loan to the company, showing our engagement and support in this business. Sales in our school bus business are finally picking up after an extremely sluggish start of the year, driven by a slower than expected process from the EPA, notifying school districts that they were approved for funding.

Speaker 1

The new progress is based on EPA Round 2 and Round 3 releases. Though we will see some benefits in our Q4 revenue, we also expect revenue will slide into 2025. And we are now working on our EPA Round 4. Q3 also allowed us to finally recognize some revenue from the project with the Fresno EOC Commission in the Fresno County. This key project has been for a long time in the making.

Speaker 1

It does not only bring us some critical cash through a project management fee, it's also securing a strong baseline revenue for 2025. As a reminder, Nuvi GIL software platform will be connected to a variety of resources such as solar generation, storage, charging stations, electric vehicle and a microgrid manager, providing the ability to manage and optimize site energy consumption and to aggregate resources across multiple sites to participate into ancillary services and other grid services market. The platform is acting as a true grid monetization platform, allowing fleet operators to save money, transition to EV fleet faster and optimize capital asset life. Concerning our collaboration with Highpower Corporation, we have now signed a contract with our partner E Formula and a breaking ground event will most likely happen mid February after the Chinese New Year. We are in the process of finalizing the date.

Speaker 1

As a reminder, this project includes a total deployment of 90 plus charging stations and a stationary storage and is using the same technology being deployed in our Fresno EOC project. This Taiwanese project has a 20 year life and the scaling of the deployment will be adjusted based on local demand. The first phase is targeting a small fit of equal to grid compatible shuttles, providing transportation services to employee for local companies in Hsinchu going from the train station to the company buildings. Other projects are coming up on the island of Taiwan, and we hope to share more with you soon. Concerning our joint work with Wise EV LLC addressing public infrastructure, multiple sites have now signed up with us and the TEP application have been are in the process of being submitted to NV Energy.

Speaker 1

In parallel, we are negotiating with different parties to provide debt financing to these SPVs supporting these deployments. As a reminder, these SPVs are allowing us to accelerate newbie technology deployment, save money for EV drivers by providing attractive energy cost pricing and reliable equipment and bring non dilutive cash to Nuvi in the form of prepaid services. The first SPV will be financed through debt provided to the SPV for the whole project cost of $1,200,000 We believe the SPV structure we have adopted makes our future revenue more forecastable and provides cash upfront. Revenue recognition might be delayed in some cases, but again, this will make our future revenue more forecastable. As a short update on our engagement with Capital Global, working on key strategic investments, we are still making progress and we hope to share with you some update very soon.

Speaker 1

Finally, a couple remarks on the outcome of the election. At this point, I want to emphasize that Nuvi is not just an EV company. The GIVE platform creates a bridge between the needs from the grid and assets such as stationary storage, local energy generation, EV and other significant loads. For the first time since 1990, the load in the United States grid is increasing and energy volatility is getting larger and larger. The GIVE platform capabilities allows us to drastically reduce the peaks on the grid and is ideal for grid modernization.

Speaker 1

Without such a platform, the cost of energy will be prohibitive. The need for a platform exists with or without federal ED mandates. Less regulation can offer the opportunity to scale our business faster. And now, I will let David take you through the details of our financials. David?

Speaker 2

Thanks, Gregory. I will start with a recap of Q3 2024 results. In the Q3, we generated total revenues of $1,900,000 compared to $800,000 in the Q2 of 2024 and $2,700,000 in the Q3 of 2023. The $1,100,000 quarter over quarter revenue increase this year was driven by a $900,000 increase in service revenues and a $200,000 increase in hardware revenues. Dollars 600,000 of the service revenues earned this quarter relates to our hub project in Fresno, California, which we kicked off earlier this year.

Speaker 2

When compared to last year, the 3rd quarter decrease in revenues of $800,000 was impacted by the non recurring EV school bus sales sold last year of $900,000 offset by higher service revenues. Year to date revenues through September 30, 2024 were $3,500,000 compared to $6,700,000 for the prior year period or a decline of 3,200,000 dollars The $3,200,000 decline was impacted by a reduction in charger hardware sales of $2,400,000 and the non recurring EV bus sales of $900,000 dollars This year, we have seen delays in EPA funding awards when compared to last year, which has negatively impacted the pace of hardware sales this year. Despite the reduction in revenues over last year, we have improved our gross margins. Gross margins for the Q3 2024 were $1,000,000 compared to $300,000 for the Q3 last year. Year to date gross margin through September 30, 2024 were $1,500,000 compared to $900,000 for the same period last year.

Speaker 2

The increase in gross margins is primarily due to improved pricing on hardware sales and a higher mix of service revenues compared with last year. As a reminder, margins can be lumpy from quarter to quarter depending on the mix. DC charger gross margins at standard pricing generally range from 15% to 25%, while AC charger gross margins are approximately 50%, but in dollar terms are a small fraction of the revenue of the DC charger. Grid service revenue margins are generally 30%, while software and engineering service margins are as high as 100%. Operating costs, excluding cost of sales, were $2,800,000 for the Q3 of 2024 compared to $6,000,000 for the Q2 of 2024 and $8,800,000 for the Q3 of 2023.

Speaker 2

The $3,200,000 decrease over last quarter was primarily due to lower payroll and consulting expenses. We continue to focus our efforts on improving operating efficiencies, which has resulted in lower overhead costs. Cash operating expenses excluding cost of sales, stock compensation and depreciation and amortization expense declined to $2,200,000 in the Q3 of 2024 versus $5,400,000 in the Q2 of 2024 and $7,600,000 in the Q3 of 2023. Other income was $187,000 in the Q3 of 2024, up from $130,000 in the year ago quarter. The current period benefited from non cash gains from the change in fair value of warrants, offset by interest expense.

Speaker 2

Net loss attributed to Nuvi common stockholders decreased in the Q3 of 2024 to $1,600,000 from a net loss of $8,600,000 in the Q3 of 2023. The $6,900,000 improvement was a result of higher gross margins of $700,000 lower operating expenses of $5,900,000 and increased other income of 300,000 Now turning to our balance sheet, we had approximately $300,000 in cash as of September 30, 2024, excluding $500,000 in restricted cash, which represents a decrease of $1,100,000 from June 30, 2024. The $1,100,000 decrease in cash was a result of cash operating losses of $1,000,000 negative working capital of $2,600,000 offset by $2,500,000 in cash received from the issuance of short term promissory notes. Subsequent to the quarter ended September 30, 2024, we received an additional 3 $100,000 in proceeds from the issuance of convertible notes this October, which will be paid off in monthly payments with interest in either cash or equity beginning in February 2025 through April 2026. During the quarter, inventories decreased by $300,000 to $5,700,000 at September 30, 2024 as we continue to reduce inventory levels.

Speaker 2

Accounts payables at the end of the Q3 of 2024 was $2,200,000 an increase of $300,000 compared to the Q2 of 1,900,000 dollars Accrued expenses at the end of the Q3 of 2024 was $3,300,000 a decrease of $1,700,000 compared to the Q2 of $4,900,000 The reduction in accrued expenses was principally due to lower accruals for payroll and consulting expenses. Regarding our joint venture with Stonepeak and Evolve, their conditional capital contribution commitments in our subsidiary, Levo Mobility, expired on August 4, 2024 as defined in our LLC agreement. Along with the expiration of their capital commitment, during the Q3, we purchased from Stonepeak and evolved their interest in Levo Mobility for a nominal amount, which resulted in a reduction in our mezzanine equity to 0 as well as the cancellation of $5,100,000 of liabilities associated with the joint venture, including the derivative liability for the non controlling interest and dividend liability due to Stonepeak and Evolve. Now turning to our megawatts under management and estimated future grid service revenues. As a reminder, megawatts under management is a metric we use to quantify the aggregated amount of electrical capacity from the deployment of our V1 gs and V2 gs chargers, which are primarily deployed in the electric school bus market in the U.

Speaker 2

S. And in the light duty fleet deployments in Europe, in addition to stationary batteries. Currently, these chargers and batteries are located throughout the United States, Europe and Japan. Megawatts under management in the 3rd quarter increased 7.7% over the Q2 of 2024 to 29.2 Megawatts from 27.1 Megawatts, a 37.3% increase compared to the Q3 of 2023. In terms of its composition, 7.1 megawatts were from stationary batteries and 22.1 megawatts were from EV chargers.

Speaker 2

We continue to expect further growth in our megawatts under management as we go through the remainder of the year and continue to commission our backlog of customer orders we have earned, in addition to new business we anticipate winning, which we have visibility to in our pipeline for both EV chargers and stationary batteries. Now turning to backlog. On September 30, our hardware and service backlog decreased by $700,000 to $17,500,000 from $18,200,000 reported at June 30, 2024. Year to date backlog this year has increased by $13,600,000 from $3,900,000 at December 31, 2023, which is primarily related to the large hub project in Fresno, California, which was closed during Q1 of this year and revenue has begun to be recognized this quarter. As we look out to the next several quarters, we expect to see more activity on the Fresno hub opportunity as this project gets built out.

Speaker 2

We also anticipate improvements in our cash burn resulting from the benefits of lower operating cost and improved gross margins compared with last year. This concludes my portion of the prepared remarks. Gregory, back to you to conclude.

Speaker 1

Thank you, David. Though this Q3 2024 has remained challenging, we see it as a turning point. We have finally been able to close on some of our big projects, not only securing short term cash, but also solidifying our 2025 revenue. We have been managing our cash tightly, personally supporting the company when required. We still see the expansion of our reach within segments where we can bring significant value and where government support is essential, diversifying our resource of revenue and bringing more quarter to quarter stability.

Speaker 1

These are also deployments where we feel like we have a better control on the timing. Mandates for renewable generation, storage and in some cases, EV deployments are being implemented in many places in the U. S. And in Europe. With such mandates, we see Nuvee GIVE platform as a key grid modernization tool.

Speaker 1

Finally, we hope to share the progress we are making in our strategic path very soon with you. Thank you very much.

Operator

We will now begin the question and answer Seeing no questions, this concludes our question and answer session. I would like to turn the conference back over to Gregory Poullian for any closing remarks.

Speaker 1

Thank you for listening to us today and we are looking to be able to share with you more with you soon. Thank you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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