EVgo Inc.

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 EVGO fourth quarter and full year 2024 earnings conference call. All lines have been placed unused to prevent any background noise. After the speaker's 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. We 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.

Good morning, and welcome to EVgo's fourth quarter and full year 2024 earnings call. My name is Heather Davis, and I'm the Vice President of Investor Relations at EVgo. Joining me on today's call are Badr Khan, EVgo's Chief Executive Officer, and Paul Dobson, EVgo's Chief Financial Officer. Today, we will be discussing EVgo's fourth quarter financial results and our outlook for 2025, followed by a Q&A session. Today's call is being webcast and can be accessed on the investor section of our website at investors.evgo.com. The call will be archived and available there along with the company's earnings release and investor presentation after the conclusion of this call. During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance. Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings, including in the risk factors section of our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. The company's SEC filings are available on the investor section of our website. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. Also, please note that we will be referring to certain non-GAAP financial measures on this call. Information about these non-GAAP measures, including a reconciliation to the corresponding GAAP measures, can be found in the earnings material available on the investor section of our website. With the anticipated growth in dedicated stalls or stalls for commercial partners such as autonomous vehicles that are not open to the public, we have now broken out our stall counts into three categories, public, dedicated, and exempt. Throughput shown and discussed today is for our public network only. The revenue for dedicated sites has been reclassed from charging revenue commercial to ancillary revenue this quarter, and the associated costs have been reclassed from charging network cost of sales to other cost of sales. We've provided a quarterly update for these changes for 2020-23 and 2024 in the appendix of our investor presentation so you may update your models appropriately for the impacted periods. With that, I'll turn the call over to Badar Khan, EVGO's CEO.

EVGO had yet another strong and record quarter. Customer consumption on our network continues to rise, with average daily throughput per public stall rising by 37% versus the same quarter last year, and up more than five-fold in three years. Utilization of our network reached what we believe is an industry-leading 24%, up 5% from a year ago, and now already within the range of our recently updated and therefore still conservative long-term forecast. Full-year revenues from our core charging business more than doubled year over year, and Q4 represented the revenue grew 60% year over year, a near 12 fold growth in just three years. We added a record 480 new operational stalls in the fourth quarter, including dedicated and extend stalls, which made it a record year with over 1200 new stalls added in the year and now have over 4000 operational stalls. And as you all know, after an 18 month process, We finally closed on a $1.25 billion loan guarantee with the Department of Energy Loan Programs Office that fully finances our ability to more than triple our installed base over the next five years throughout the United States. We received our first advance in January for approximately $75 million, leaving us with approximately $200 million in cash in January. EVIGO has not yet scheduled our next quarterly advance. Taking a step back, we know that new sales of battery electric vehicles 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 in an unmistakable race towards electrifying transportation globally. China already outsells the U.S. in automotive sales globally as a result of extensive and prolonged state sponsorship of its EV industry. US automakers say their EV production is simply responding to demand. Two biggest drivers in survey after survey for why more US drivers have not already made the switch to electric vehicles are the upfront price of the vehicle, despite the fact that the total cost of ownership is already lower, and the availability of charging infrastructure. The good news is that there are more and more electric vehicle models available in the US that are becoming increasingly affordable. However, U.S. electric vehicles remain more expensive than the electric vehicles subsidized in China. This is why U.S. auto CEOs do not support the elimination of incentives and regulations to support the scaling up of EVs in the U.S. On charging, China has more than five times the DC fast charging infrastructure per electric vehicle than the U.S. Increasing the supply of charging infrastructure stimulates demand for electric vehicles, which allows US automakers to increase scale, reduce unit costs, generate profit on their EV businesses, and as a result, improve their competitiveness against Chinese OEMs. As one automotive CEO put it, a global street fight is taking place in the automotive sector, and the US needs its EV businesses to scale up to be able to compete against China and preserve the 2.4 million automotive manufacturing jobs in the United States. Building out public charging infrastructure is a key enabler of that goal. As you know, EVGO's charging revenues are not linked to new sales in any one year, but by the growth of all electric vehicles in operation, or VIO, and the availability of charging infrastructure. In fact, we estimate that less than 10% revenue will likely be driven by new first-time drivers of EVs, and that ratio will continue to fall each year. Demand growth for our business, represented by the growth in EV BIO, has been outpacing supply growth of charging infrastructure for years. This is one of the reasons utilization in our network has grown fourfold in three years. In fact, according to the DOE, we have had flat growth of new DC fast charging in the U.S. for the past six quarters. Presumably, this lack of investment has been driven by the industry's expected slowdown in EV sales, even though EV sales have in fact continued to grow. This demonstrates the resilience of our business model. As EV sales rise, utilization on our network rises because charging supply cannot grow fast enough. If EV sales fall, it's likely the pace of new charger development will fall faster, as we've already seen, and utilization on our network rises. In all cases, existing VIO will continue to underpin strong unit economics and demand for our chargers. And 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, in almost every scenario, we have a resilient business model where we see growth in our business. We further benefit from the fact that EVGO is more focused on growing usage in our network than some other charging companies may be, and therefore is likely capturing a greater share of kilowatt hours. Other fast charging companies chasing NEVI wards where utilization is lower, who are building charging stations to sell cars versus maximizing utilization, or are non-owners whose revenue is based on equipment or software sales and not on utilization. Finally, as we've said many times, we also benefit from multiple other tailwinds that have driven up and will continue to drive up utilization. First 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 rideshare become fully electric in large cities such as New York City. When a rideshare driver needs to charge up during their shift, they'll usually do so on DCSC networks so they can get back on the roads quickly. Second, ZV adoption moves from early adopters to the mass market driven by more affordable vehicles. more EV drivers are expected to live in multifamily housing without access to home charging. As we've detailed in the past, multifamily EV drivers charge two times more in our network than single-family EV drivers. Third, as vehicles increase their charge rate or the speed at which they can take electrons from chargers, the use case for DC fast charging becomes more compelling to drivers. Fourth, Autonomous vehicles are beginning to hit the roads in several market pilots from a few companies. The financial use case for AVs requires them to be both electric and highly utilized. Therefore, like with rideshare drivers, when AVs need to charge, they'll use fast charging. EVGO already has partnerships with leading AV firms and has 110 dedicated hub stalls in operation, representing what we estimate to be approximately 20% share of all dedicated fast charging stalls for the AP sector. 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. And finally, the standardization of the charging cables to J3400, commonly referred to as MAX, is an opportunity for EVgo. Today, only a small percentage of drivers that use our network are Tesla drivers. As we add NAC stalls to our network, we are in a unique position to attract roughly 60% of EVVIO to our network that isn't currently using our network today. As I've mentioned before, Indigo stations tend to be in urban and suburban areas, closer to amenities than many Tesla stations today. In fact, as of this earnings call, we've begun our pilot rollout of the NAC's cable. And while it's very early days, we believe the results are promising. A combination of all these factors are what results in a resilient business model for EVgo, driving growth in adjusted EBITDA. Let's now turn to progress on our four key priorities. Improving our customer experience, operating in CapEx efficiencies, capturing and retaining high-value customers, and securing additional complementary financing to accelerate growth. As always, improving our customer experience remains our number one priority. and our strong momentum caps off an excellent year. Customers want a charger to be available when they pull up to an EVgo station. We are deploying larger sites where our standard configuration is now six to eight stalls per site. At the end of 2024, 20% of our sites had six stalls or more. With a record number of deployments during the fourth quarter, we reached our goal of 50% of EVgo stalls served by our higher power 350 kilowatt chargers compared to 34% a year ago. AutoCharge Plus continues to gain traction with a big step up in the fourth quarter to 24% of sessions initiated by the seamless plug and charge experience. We are gaining significant traction with auto enrollments for OEMs that have AutoCharge Plus enabled. And finally, our key customer success metric for one and 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 in improving our customer experience. We've also made excellent progress on our efficiency priorities. Most notably, we took the MOU with Delta Electronics we signed last October and converted it into a signed joint development agreement to co-develop the next generation of charge EVGO and Delta are making meaningful progress in this initiative and are expected to lower our gross CapEx per stall by 30%. We anticipate production of these stalls to begin in the second half of 2026, and we plan to have a prototype for the second quarter of this year. In 2024, we achieved a 9% reduction in our gross CapEx per stall for our current generation of chargers through multiple ongoing efficiency efforts. Additional reductions are underway in 2025, and we look forward to sharing our continued progress. The first sites built with our prefabricated skids are operational and yield savings in build costs and construction timelines. We expect around 40% of our 2025 deployments will utilize prefabricated skids. We continue to drive operational efficiencies in our business with total adjusted G&A as a percentage of revenue delivering a 21-point improvement over 2023. In 2025, EVGO 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. We also continue to make great progress on our growth priority of capturing and retaining high-value customers. 56% of EVGO's throughput came from rideshare, OEM charging credit, and subscription accounts in Q4. This provides EVGO with a relatively predictable baseload level of demand at our network. EVGO now has over 1.3 million customer accounts, growing over 50% from 2023. As a result of our investments earlier in the year in our customer marketing platform, we've been implementing multiple targeted customer lifecycle campaigns that are generating strong growth in retail throughput, which we will continue to prioritize throughout the year. Last year, we began rolling out dynamic pricing in our network, and by year end, we expanded that to 100% of our existing fast charging sites. You can already see the benefits of all of these efforts through expanding margins, but also significantly expanding throughput. We expect the next major update to our dynamic pricing algorithms in the second half of this year. And finally, as I mentioned earlier, we installed native NAX connectors in our first site in early 2025. We're excited to be able to share the results of this pilot project with you throughout the year. Looking ahead, we expect to expand or sign new partnerships with site hosts that are capable of scaling, similar to the expanded partnership we announced in November with Meijer, a Midwest grocery store chain where we expect to add 480 new public fast-charging stores Meyer properties over the next three years. In 2025, we also plan to launch the first of 400 new flagship stalls in partnership with GM with the goal of delivering an elevated customer experience. As a reminder, these sites will feature up to 20 stalls and come with ultra-fast 350-kilowatt chargers, canopies, ample lighting, pull-through stations, and security cameras. And like all EVO sites, will be located near a diverse set of amenities that customers can take advantage of while charging. Finally, we expect to expand the number of dedicated stalls serving autonomous vehicle partners, which could represent a very attractive source of potential growth for EVgo, given we estimate we have a 20% share of operational sites serving this segment today. As for financing the growth of the business, EVGO closed the $1.25 billion loan guarantee with the DOE LPO in December 2024, with the first draw for $75 million occurring in January 2025. This loan ensures we are fully funded to add at least 7,500 stalls, more than tripling our installed base over the next five years. In September, we completed the transfer of our first 30C income tax credit, for our 2023 vintage stalls and expect to complete the transfer of our 2024 vintage portfolio this year. 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 30C. Federal incentives in the form of the technology neutral 30C alternative fuels credit and NEVI represent approximately 10% of our 2025 vintage capex. As we've said before, this is not a business particularly reliant on federal incentives. And our next generation charging architecture program is targeting at least a 30% reduction in gross capex per stall, significantly more than the value of these federal incentives. And finally, given the very strong cash flows from our operating assets, we continue to receive inbound interest and evaluate additional complementary non-dilutive financing opportunities that would help fund the growth of any charging stations not included in the DOE loan funding to accelerate our growth. Paul Dobson, EVGO's CFO, will now cover our strong financial performance in the fourth quarter and full year 2024, together with our outlook for 2025.