EVgo Inc.

Greetings and welcome to EVGO first quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ted Brooks, Investor Relations. Thank you. You may begin. Hi, everyone. Welcome to EVGO's first quarter 2022 earnings call. My name is Ted Brooks, and I head up investor relations at the company. Today's call is being webcast and can be accessed from the investors section of our website at investors.evgo.com. The call will be archived and available there, and the company's results, investor presentation, and a transcript of today's proceedings will be available at the events and presentation section of the investors page after the conclusion of today's call. Joining me on today's call are Cathy Zoe, EVGO's CEO, and Oleg Shevarankova, the company's chief financial officer. Today, we will be discussing EVGO's latest financial results for the first quarter of 2022, followed by a Q&A session. During the call, management will be making forward-looking statements regarding the 2022 fiscal year and our outlook for expected growth and investment initiatives. These forward-looking statements involve risks and uncertainties, many of which are beyond our control and could cause actual results to differ materially from our expectations, including, among other risks and uncertainties, the severity and duration of the effects of the COVID-19 pandemic. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. For a more detailed description of factors that could cause actual results to differ, please refer to our Form 10-Q filed soon with the SEC and posted to the Investor section of our website. Also, please note that certain financial measures we use on this call are on a non-GAAP basis. For historical periods, we provide the reconciliations of these non-GAAP financial measures to GAAP financial measures. The investor presentation can be found on the investor section of our website. With that, I'll turn the call over to Kathy Zoe, EVGO's CEO. Kathy?

Thanks, Ted, and good morning, everyone. EVgo had a strong first quarter, advancing our position as the nation's most expansive public fast charging network for electric vehicles. Our results, including the recent partnerships we've signed, demonstrates the advantages of being a pure play EV charging company with a robust and rapidly growing DC fast charging network. Our ability to drive technological innovation and deliver new products and solutions for both consumers and partners alike will continue to provide us with a competitive advantage in an exponentially growing EV charging market. First quarter of 2022 shows that we are on the right path to achieving this growth. EVgo realized revenue of $7.7 million, an 86% increase compared to the first quarter of 2021, with throughput growing by 95% to 8 gigawatt hours relative to the same quarter last year. We ended the quarter with 375,000 customer accounts, which represents a 51% increase over the first quarter of 2021. Q1 of 2022 was EVgo's best quarter ever for operational and mobilized charging stalls, representing a 166% increase in newly mobilized and newly operational stalls when compared with the first quarter of 2021. Newly operational stalls in the month of March alone exceeded every previous full quarter except for one. Total stalls in operation or under construction reached approximately 2,100 at the end of the first quarter, putting EVGO on track to achieve our full-year target. We achieved this impressive performance despite continued headwinds from supply chain issues and inflationary cost pressures. We increased our active engineering and construction development pipeline an important progress gauge for our business, to more than 3,300 stalls, which marks a considerable jump from the 1,500 stalls in the end of the first quarter of 2021. This growth in the funnel has been substantial, largely due to the experience of our team and EDGO's reputation as a dependable partner. As EDGO has been scaling operations to capture the demand growth for fast charging, we have focused both on increasing the size of our development pipeline and the capacity of the sites themselves, both in terms of stalls per location and power level of the chargers. OEMs have started to produce EVs with bigger batteries with more powerful charging capacities, and they intend to sell lots of them. In anticipation of this market evolution, EVgo's standard station configuration will be built with 350 kilowatt charging and at least six stalls and more if the site-hosted utility grid can accommodate it, This is an exciting development for the overall EV industry. Turning to business development and new partnerships, in the last several weeks, we have signed and announced partnerships with Toyota and Subaru, growing our list of OEM partners. Together, our OEM partners are responsible for more than 40% of vehicle sales in the U.S. Those partnerships are moving into the implementation stage, with software and marketing integrations underway as Subaru has announced pricing for the Solterra, and begun making orders available to reservation holders. Both Toyota and Subaru anticipate delivering new EV models in Q2 and Q3 of this year. EVgo also entered into a partnership with Chase Bank to add DC fast charging stations at many of its retail banking locations across the US. And we already broke ground at the first Chase site that will host EVgo fast chargers in Indiana, continuing to make charging more convenient and accessible for drivers. On the site host front, we also went live with our first five EVGO fast charging sites at Meijer Grocery Stores in Michigan and Ohio, expanding our presence in the Midwest as EVs increase in popularity across the country. EVGO also opened new sites with existing retail partners like Wawa, Whole Foods, and Albertson Safeway, and with Brixmore and Regency shopping centers in markets from Worcester, Mass., to Tacoma, Washington. EVGO also launched the implementation of a data sharing and roaming agreement with Shell Recharge Solutions, which provides drivers with accounts on either charging platform access to the other's network. Agreements like these enhance the interconnectedness of the charging ecosystem and put drivers first, making it easier for them to find a fast, reliable charge. This latest agreement allows EVgo drivers access to approximately 50,000 charging stations across the US and brings drivers using the Shell Recharge Solutions charging app to the EVgo network, further increasing our throughput. Demonstrating the broadening geographic diversity and wide reach of EVs, EVgo also announced a partnership with the city of Portland, Maine, building on our long history of serving as a partner of first resort to deliver innovative charging solutions to forward-leaning municipalities. This new partnership will bring EVgo fast chargers and Level 2 chargers to city-controlled properties and provide a direct commercial relationship with the City of Portland municipal fleet vehicles, helping to accelerate their ability to reach their sustainability goals. Fleets beyond municipalities continue to take advantage of the benefits EVs can offer. And this week, the EVgo team is exhibiting at the ACT Expo in Long Beach, California. It's kind of like the Woodstock for Clean Transportation, where we are highlighting EVgo Optima and our other customized charging solutions for fleets of all strikes. This past quarter, EVgo and Uber launched a new joint marketing program. including direct in-app messages to drivers on the Uber platform, informing them of the special pricing available to them on the EVgo network. Those efforts are yielding real results, as monthly EVgo throughput from drivers on the Uber platform increased by almost 50% in April from the average first quarter usage this year. Also during the quarter, we continued successfully securing funding awards from governmental agencies and utility partners we worked with across the U.S., including the California Energy Commission and New Jersey's Public Service and Electric and Gas, as well as many others. EVgo continues to deliver software-driven ancillary services like EVgo Advantage and EVgo Reservations, which have demonstrated solid success and provide us with a competitive differentiation in the charging market. We have observed a steady increase in customer demand for reservations and have doubled the number of easy-go locations where reservations are available. We are now offering reservations at nearly 50 sites across seven different states in the U.S. and plan to roll out the offering more broadly. We currently charge $3 per reservation with a $2 no-show fee. such services have the potential to be highly accreted to our financial profile, as these fees fall directly to the bottom line and enhance our margin profile. As EV penetration grows, we expect to offer a wide array of ancillary software-driven services that, like reservations and EVGo Advantage, set EVGo apart and allow us to efficiently monetize driver interactions. Also in the software vein, In the last quarter, we launched EVGo Inside, a suite of application programming interfaces that enable third parties to embed the full EVGo charging experience into their own applications. This capability allows third parties, like Auto OEM, to provide holistic experiences for their new EV owners that include the complete EVGo charging experience. As an example, we are currently working with Toyota as they leverage EVgo inside and build their integrated driver application within the Toyota app. As you can see, this quarter we have been executing on each and every element of the business that makes EVgo stand apart. Infrastructure build-out in locations where drivers want to charge, partnership development with marquee names in the transportation space, and addition of value-creating software services that delight our customers and partners alike. We are excited to build on this momentum in the quarters to come. And with that, I'll turn it over to Olga to discuss our financial results. Olga?

Thanks, Kathy. I will begin with a review of the key operational highlights. As Kathy noted, Stalls in operation or under construction were 2,110 at the end of the first quarter, with a total of 1,772 stalls being in operation and 338 under construction. This total is a 23% increase from the first quarter of 2021. our active engineering and construction development pipeline more than doubled year over year to 3,344. Altogether, during the first quarter, we placed stalls into operation in 12 different states. For example, aside from California, we have been active in Michigan, Ohio, We're extremely focused on accelerating the pace at which sites are selected, developed, constructed, and commissioned, while making sure that we retain our profitability and return targets. Evigo continues to work collaboratively with others in the charging ecosystem, utilities, governments, site hosts, and equipment suppliers to get the charger development flywheel spinning. And as illustrated by Evigo's banner months in March, we're making progress in shrinking those development timelines. In parallel, though, we're implementing a variety of process improvements internally that are already bearing fruit in terms of cost and time savings. Notable among them is the use of drones to speed up and automate part of the site survey process. By increasingly utilizing drones instead of physical on-site walks, EVGO can achieve the same or better information accuracy at a much lower cost. As a result, our overall survey activity in the first quarter increased by almost 25% as compared to the fourth quarter of 2021. Network throughput was 8 gigawatt hours for the quarter, with March being our highest throughput month in the history of EVGO. As a reminder, vehicle miles traveled for both ICE and electric vehicles have some seasonality, with the spring and summer being the busiest time on U.S. roads. Volume tends to fade in the fall and winter, usually bottoming out in January and February. While we saw a repeat of that trend in this year's first quarter, coupled with the Omicron spike at the beginning of the year and fleet throughput volatility, we still delivered network throughput that was 95% higher than the first quarter of 2021, as more consumers in the U.S. transitioned to EVs and the COVID recovery continues. Turning to financial results, we reported $7.7 million of revenue in the first quarter of 2022, which represented an 86% increase over the first quarter of 2021. Charging revenue was up 66% over the first quarter of 2021. Ancillary revenue was up 265%, and regulatory credit sales were up 142% over the same period. In charging revenue, retail growth was the main driver, posting a 94% increase. Ancillary revenue continues to benefit from the addition of Black Share in July 2021. It is worthwhile to dive a bit further into the realized increase in regulatory credit sales during the first quarter. As many of you know, pricing of LCFS credits has come down in the last year. We have historically had a two-quarter lag between generating and monetizing these credits. But beginning in the first quarter, we have a new trading partnership that allows us to reduce the lag to just one month. This means that for the first and second quarters of 2022, we will be bringing forward five months of credit monetization. So you should expect an elevated regulatory credit sales line from us for Q1 and Q2. After that, we expect the line item to normalize. Adjusted gross margin was 37% for the first quarter and benefited from this regulatory credit sale acceleration. Even without the benefit reference, we estimate our adjusted gross margin would have been 29%, an increase of approximately 10 percentage points from the first quarter of 2021. As expected, CAPEX has increased materially year over year, as our pace of charger deployment has accelerated significantly. G&A expenses remain in line with our expectations. we reported adjusted EBITDA of negative $18.2 million, which was in line with our expectations as well. We started the year consistent with the ramp-up as expected and are on track to achieve our financial and operational guidance for full year 2022. We look forward to seeing many of you in the coming weeks. That concludes our prepared remarks. And with that, I would like to turn the call back to the operator to open up the line for questions.