Tritium DCFC Limited

Good morning and welcome to Tridium's 2023 Fiscal Year Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker, to Cary Siegel, Head of Investor Relations. Please go ahead.

Thank you, Operator. Good morning or evening to everyone. We're glad you could join us today for Tritium's full fiscal year 2023 earnings conference call. On today's call are Chief Executive Officer Jane Hunter and Chief Financial Officer Rob Topol. Tritium has issued its results in a press release that can be found on the investor section of our website at tritiumcharging.com. As a reminder, our comments on this call include forward-looking statements which are subject to various risks and uncertainties. Statements may be based on certain assumptions and thus could cause actual results to differ materially from those predicted in the forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. Factors that could cause actual results to differ materially can be found in today's press release and other documents filed with the SEC by the company from time to time, including our annual report on Form 20F. During this call, we may also refer to certain non-GAAP financial measures, including EBITDA and adjusted EBITDA. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. More detailed information about these measures and a reconciliation to the most comparable U.S. GAAP measures is contained in the press release issued today, which is available in the investor section of our website and was furnished on Form 20F with the SEC. A recording of this call will also be available on the investor section of our company website. With that, I am pleased to turn the call over to Jane Hunter, Tritium's Chief Executive Officer.

Thank you, Kerry. Hello, everyone, and thank you for joining us. We're excited to be reporting on the fiscal year ending June 30 and Tritium's achievements over the first half of the 2023 calendar year. The highlights are record revenue that beat guidance for the first half of the calendar year and material gross margin improvement year over year. The Tennessee factory continues to scale successfully with record unit production, and we've secured some exciting new strategic customer partnerships. Service revenue achieved record levels and highlights a growing source of recurring and high margin business for the company. We've long held the belief that the virtuous asset cycle of hardware installations will resemble the razor blades to razors analogy, where the charger becomes a multi-year source of recurring revenue throughout its 10-year operating life and beyond. Working with our customers to upgrade their fleets to the latest model technology at the right time for their business is another beneficial aspect of Tritium's lifecycle mindset. This vision is coming to fruition as we enter more service level agreements with our customers with many under negotiation. We're also starting to see the very start of older fleets seeking charger upgrades to our modular technology, and we're both capturing revenue and saving expense via parts that can be reconditioned and cycled back into service, both in and out of warranty. We ended the production of our first generation of fast chargers this year, and we're now building two key product lines, our RTM 50 and 75 kilowatt chargers, and our PKM 150 kilowatt charger. Both of these models are part of our modular scalable charging platform, which is achieving on average an improvement of one and a half to two percentage points higher average uptime than our non-modular technology, as we've modeled for this latest generation product suite. This change has simplified manufacturing, filled services and inventory, and it's contributing to us achieving record uptime across our global fleet, where we've sold over 13,000 DC fast chargers across 47 countries. mainly in the US, Europe, and Australia and New Zealand. Of these more than 13,000 fast charges, there are close to 5,000 charges on our remote service and support network, both in and out of warranty, which are providing us with rich telemetry data that we're working on with our partners at Palantir to monetize through our new MyTridium software platform, which we plan to launch before the end of the year. We continue to supply our valued customers, including BP, Shell, Enel, Revel, and EB Networks, among many others, and we thank them for their ongoing trust in our products and for their partnership and support. In the second half of 2023 and into 2024, we anticipate sharing details of new customer partnerships that we expect to add considerably to our sales order and pipeline. Overall, this was a great year for Tritium on a number of fronts. but I wanna highlight today that the company is reporting revenue results that reflect the best fiscal and first half calendar year in Tritium's history. Fiscal year 2023 revenue was 185 million, an increase of more than 115% over the previous fiscal year revenue of 86 million. We achieved record revenue of 112 million for the first half of the 2023 calendar year an increase of more than 286% over the 29 million revenue from the first half of the 2022 calendar year, meaningfully exceeding the midpoint of the company's previously updated guidance for the calendar year published in May 2023. The company achieved a gross margin of 4% for the first half of the 2023 calendar year, a very significant improvement compared to a gross margin of negative 18% for the first half of the 2022 calendar year. This nearly 2,200 basis point improvement in the year-over-year period reflects the successful ramp-up of our Tennessee factory, which was being fitted out and staffed from March through August of 2022. This margin improvement also reflects the price increases we've negotiated for our products to counter the inflationary impacts of COVID and the component and freight premiums that were headwinds during 21 and 22. The easing of supply chain disruption has materially improved our default or delivery in full on time, which was 92% on June 30. It's also significantly reduced the use of air freight for finished goods, which dropped by 68% in the second half of the fiscal year compared to the first half. We're very proud of these results, which we achieved despite the challenges of continued long lead time for semiconductors, though they're now reducing. rising prices of raw materials, a tight labor market and the scale up of our new factory in Tennessee. Sales orders were $146 million for the fiscal year and $56 million for the six month period ending June 30. Order backlog was approximately $99 million on June 30. We have a strong sales pipeline and we anticipate sales orders and the pipeline will grow in the second half of the calendar year. as customer forecasts for 2024 and 2025 installations are expected to translate into purchase orders, and some new large customers, both secured or in the final stage contract negotiations, can be expected to place their orders. As a result of our current backlog and the strong revenue performance in the first half of this calendar year, we're reconfirming our revenue guidance in the range of $210 million to $225 million and our gross margin guidance in the range of 10% to 12% for the 2023 calendar year. The company set a new production record for the fiscal year ended June 30, building 7,800 units compared with 3,700 units for the prior fiscal year. Additionally, the company set a new production record for the six-month period ending June 30, building 5,100 units compared with 2,700 units for the previous six-month period. We've seen an increasing trend of sales of our higher power PKM 150 kilowatt charger versus our RTM 50 and 75 kilowatt charger. The PKM 150 has a higher average sales price and gross margin, but a slower tack time and a lower production rate. So we therefore expect to see less than 11,000 units built in the 2023 calendar year, while guidance on gross margin and revenue remains as previously published due to this higher power product mix. along with the benefit of charges with price increases now hitting our production line. We continue to believe that Tritium has the largest published production plans for DC fast charges outside of China and the largest planned production capacity onshore in North America. Tritium's working capital and cash balance have been a topic of concern for our shareholders as we see greater liquidity in advance of our guided EBITDA positive status in 2024. The technology sector and the EV category in particular have been depressed across the United States capital markets, and global macroeconomic conditions continue to dampen equity capital activity in Australia. These headwinds have made it difficult for listed green tech companies to raise funds in the US and in Australia. Despite this macroeconomic environment, in September 2023, following this reporting period, the company secured a financing commitment of up to $75 million with an initial funding of $25 million. This is on top of the $40 million that we secured in May from two of our existing large shareholders. The company intends to use the proceeds to invest in working capital to meet expected continued strong customer demand in the 2024 calendar year. Additionally, the company had inventory assets valued at $140 million at June 30, comprised of finished goods, raw materials and work in progress, compared to total inventory assets valued at 56 million for the same timeframe in the prior fiscal year. The company maintains a differentiated DC fast charger with a patented design remaining the world's only fully liquid cooled IP 65 rated fast charging technology. Preem's PKM 150 kilowatt charger also has a unique distributed architecture compared to the distributed architecture of our competitors. allowing for site services and outages to impact only the charger being serviced or with a fault rather than the entire charging site. Plus seamless one kilowatt incremental power sharing also means there are no underutilized power modules. Our technology roadmap sees us launching a Buy America and NEVI compliant 400 kilowatt modular and scalable charger in 2024, which will be a fully liquid cooled and IP65 rated distributed charging system. we've already received a high level of interest from existing and potential customers to purchase units as soon as they become available in the second half of 2024. This model will allow customers to add 250 miles of range to their EV in about 10 minutes, which we expect to appeal to public charging network operators as well as fleet and commercial customers. While many of our customers have an interest in this higher power category, we continue to see a sizable and growing demand for our current suite of modular scalable solutions, particularly our 150-kilowatt charger, which is right-sized for the charge curves of the majority of current EV batteries, while our RTM50 and 75 is perfect for retail and urban top-up use cases. Customers pursuing installations of products requiring greater pull from the grid are facing increasing delays, costs, and permitting challenges, and the scalable 150-kilowatt charger is a right-sized solution for sites allowing customers to start with fewer modules, then increase their charger power levels when they increase their site power capacity and as driver utilization grows at their sites. Our product roadmap also includes a 50 kilowatt fleet product with 24 50 kilowatt wall units running off the PKM 400 rectifier unit on a DC bus architecture, as well as a one megawatt charger for ferries, buses, and trucks. We anticipate sharing more news on these efforts in 2024. On sales, we've secured several new strategic customer partnerships over the fiscal year. More recently, including a major European utility, a US headquartered company with a global fleet, and a global automotive OEM. Additionally, we have some near-term major customer agreements in the final stages of contract negotiation. We look forward to announcing these partnerships in conjunction with the preferred timing of our valued customers. We were very pleased to secure a large order from ChargeNet the biggest network in New Zealand, to upgrade their hardworking fleet of RT 50 kilowatt chargers with our latest modular RTM 75 kilowatt charger. We're very proud of this partnership and the trust and existing customer places in Tritium's technology to upgrade their fleet. This sale will extend our longevity, brand and driver trust in the New Zealand market for many years to come. In July, we announced an order to supply all the chargers for the state of Hawaii's first round of National Electric Vehicle Infrastructure Funding, becoming the first charger manufacturer to secure an order through NEVI. And we've since received a second order for PKM 150s from the state of Hawaii through their partnership with Sustainability Partners. We were very excited to win this state funding. Hawaii is the most isolated island community on the planet and a trailblazer in promoting sustainability. We started our sales campaign in the Middle East, which we see as a growing market opportunity for electrification, especially well suited to Tritium's IP65 rated liquid cooled charges due to the heat and dust, which plays significant load on air filtered charges. In July, we hosted an important event at our Brisbane facility as we welcomed the US Secretary of State, Antony Blinken, and US Ambassador to Australia, Caroline Kennedy, to the company's headquarters. to discuss the importance of bilateral economic partnerships between the US and Australia. We expect the sales of service level agreements and remote monitoring services to grow significantly in the coming year due to a combination of a rapidly expanding installed base of charges, increasing driver and government demand for high uptime for charging equipment, and an evolving customer base with more large customers. These service contracts will provide a guarantee of rapid response times to our customers and the driving public, and are expected to become a long-term source of recurring revenue for Tritium. Services revenue was $9.3 million for the fiscal year, an 86% increase from last year, with gross margin growing to 39%. Our commitment to product quality spanning our hardware, software, and service offerings is a key differentiator and competitive advantage for Tritium. In recent months, we've been proud to see our EV charging customer BP Pulse achieving over 97% uptime across their Tritium charger networks in Australia and New Zealand. UK customer Evive also recently published their achievement of 98% uptime across their fleet of 150 Tritium fast chargers. And the CEO of Australia's largest public fast charging network, EV Networks, advised me today they're achieving 98% uptime per charger across their Tritium fleet. These high uptime achievements are a major strategic objective for the business and a verification of our world-leading technology. Beyond those named customers, our global fleet data shows a growing number of customers across the fuel, fleet and charging network segments who are achieving between 97% and 99% uptime across their Tritium charger networks. We're very pleased to deliver these excellent revenue and margin results for our shareholders, and we intend to continue our operational execution to plan. As we look forward, we're excited about the potential growth of our services business and the launch of our MyTritium software platform, as well as the ongoing development of our PKM 400 ultrafast liquid-cooled charger. and most importantly, about supporting our customers' charging requirements. We're extremely proud of the world-leading uptime we're achieving in comparison with our peers, and each one of our customers who reaches the 97% to 99% club is a cause for celebration across our team. Finally, as the leader of this company, I want to thank the Tritium team for their incredible efforts and their dedication to our mission and to our customers. I and my leadership team are very focused on increasing shareholder value. We think that gets done by meeting and exceeding our market guidance. And that's what we've done. Despite the headwinds of two consecutive years of a capital constrained market for a pre-profit business. We're laser focused on becoming EBITDA positive. And we think these revenue and margin achievements were the right milestones to focus on in order to attain that goal. We greatly appreciate your interest in Tritium. And with that, I'll turn the call over to our CFO, Rob Topol.