This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk08: Greetings and welcome to the Ideanomics second quarter 2021 earnings call. At this time, all participants are in 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. Please note that this conference is being recorded. I will now turn the conference over to our host, Tony Sklar, Senior Vice President of Investor Relations. Thank you. You may begin.
spk01: Thank you, Operator, and welcome everybody to the Ideanomics Second Quarter 2021 Earnings Conference Call. Joining me today, I'm pleased to have Mr. Alf Poor, our Chief Executive Officer, Ms. Kristen Halsall, our Chief Revenue Officer, and Mr. Connor McCarthy, our Chief Financial Officer. A webcast of today's call will be archived and available in the events and presentation section of our corporate website for a minimum of 30 days. And as a reminder, this conference is being recorded. During the call, we will make forward-looking statements such as dialogue regarding our revenue expectations or forecast for the quarters and full fiscal year 2021 and 2022 related to our business. These statements are based on our current expectations and information available as of today and are subject to a variety of risks, uncertainties, and assumptions. Actual results may differ materially as the result of various risk factors that have been described in our periodic filings with the SEC. As a result, we caution you against placing undue reliance on these forward-looking statements. We assume no obligation to update any forward-looking statement as a result of any new information or future events, except as required by law. In addition, other risks are more fully described in the ID Anomics public filings with the U.S. Securities and Exchange Commission, which can be viewed at www.sec.gov. Today, August 16, 2021, the company filed its 10-Q with the SEC and afterwards issued a press release announcing its financial results. So participants on this call who may not have already done so may wish to look at those documents as we provide a summary of the results on this call. The format for today's call will be as follows. Mr. Alfpour, our CEO, will speak to the company's overview, business strategy, and contacts around the activities and developments for the second quarter of 2021 and into Q3 so far. Ms. Kristin Halsall will speak to the company's second quarter revenues and further revenue growth opportunities. Mr. Connor McCarthy, our CFO, will speak to the company's operating and financial results for the second quarter of 2021. It is now my pleasure to hand over the conversation to our CEO, Mr. Alfred Poor.
spk04: Thank you, Tony, and thank you, everyone, for joining our Q2 earnings call. We're excited to be in front of our investor community today. We have come out of the blocks hard and fast in 2021. driving and upgrading all aspects of our business, and this has us well positioned for the continued execution of our strategy. Ideonomics has continued to strengthen its business quarter over quarter, and Q2 was another significant quarter for the company. We operate two distinct business units, Ideonomics Mobility and Ideonomics Capital, and both are positioned to take advantage of the growth opportunities in their respective sectors. Our M&A and investment strategy has remained steadfast and has brought some incredible companies and leadership teams into the Ideonomics Mobility family in 2021, including Wave, Energica, Selectrac, US Hybrid, and P. This gives Ideonomics the most complete offering to meet the needs for commercial fleet operators in the transition to zero-emission vehicles. I will begin my update with the Ideonomics Mobility Business Unit and the operating companies onshore here in the U.S., Ideonomics is executing on what we believe is one of the most compelling, vertically integrated offerings in the EV sector. We have best-in-class leading technologies and the talent required to leverage our presence in the most significant global markets. These, coupled with innovative financing and cross-selling opportunities, are enabling us to unlock demand from fleet operators. We're a global company with operations in several companies, so as I said, I will start with our U.S.-based operations and WAVE. our wireless inductive charging business, which is benefiting from assimilating into the Idenomics family, and we are seeing the uptick in orders and interest that we anticipated when making the acquisition. In terms of pipeline development, which Kristen will elaborate on, we are working with a number of transit authorities, port systems, and commercial fleet operators who recognize the advantages of utilizing high-power wireless charging systems. This has us confident we will achieve significant revenues from these types of commercial customers. Fleet operators are also showing heightened interest in Wave systems for use in conjunction with autonomous vehicles, as wireless charging is a critical part of making driverless commercial fleets a reality. In recognition of the incredible potential of Wave, we are also investing in our IP and patent strategy for both the existing and future Wave products. We completed the acquisition of US Hybrid late in Q2 And this provides us with access to a very meaningful set of technologies and components, from hydrogen fuel cells through to vehicle integration capabilities. And we are preparing to help them scale their capacity to service both Amadichi brand, as well as developing their ability to service OEM partners at scale. This is an outstanding acquisition by Ideonomics Mobility, and like Wave and Selectrack, is transformative for us, as well as the value of its contributions to the broader group. We also completed the acquisition of Selectrac late in Q2, which means Ideonomics Mobility has the only made-in-America EV tractor in market at this time. We have invested in an exceptional CEO and management team to help scale the Selectrac business to meet the market demand, as Kristen will speak to shortly. Our Medici Motorworks division continues to work with OEM partners to bring a range of competitive commercial vehicles to market. with an emphasis on those commercial vehicles which offer us attractive margins, such as buses, tour buses, yard tractors, trucks, and other types of vehicles in the heavy commercial sector. In addition to the OEM partner capabilities, we are working to integrate wave and U.S. hybrid capabilities into our vehicles, and we anticipate having those vehicles in market in 2022. We will begin to start to show some of this over our social media channels. In the meantime, we will continue our marketing and homologation efforts, which you will be seeing more of in the coming weeks and months ahead. And to that end, the first 125 kilowatt wave unit has been delivered to an OEM partner for integration into the yard tractor product. This integration is an important milestone for future sales in the port and warehousing markets and keeps us on schedule for our 2022 plans. Looking at our overseas businesses, Our MEG business has been entirely reorganized in the first two quarters of the year, and we are now referring to it as Ideonomics China as we begin to extend the products and services available beyond MEG's current scope and offering. We are progressing our introduction of the Wave charging system in China, and this is in response to market interest. The process for Wave to enter the region will take us into 2022, as high-power charging systems are subject to local certification standards. To help us market WAVE more broadly in Asia, we have developed new partnerships and other strategic OEM relationships, and we are pleased with the level of interest in our vehicle procurement, financing, and now WAVE systems from ports, transit authorities, and commercial fleet operators. The deal we had previously announced with BYD and DD for 2,000 units of the D1 ride-hailing vehicle is being restructured at this time, as the timing for proceeding was interrupted by conditions on the ground in the PRC. We'll provide further updates in the future. And in the meantime, the deposit for this deal remains held at BYD and will be satisfied in the future restructured deal. In our two and three-wheeled businesses, Treelectric has been impacted on an ongoing basis in COVID-19, the Delta variant specifically, but has been able to make progress despite the challenges the pandemic introduced. And Kristen will elaborate further on that during her remarks. Our investment in Energica has performed well, with an increase in the value of the share price up around 70% since our investment, based on our investing at 1.78 euros and the stock's current trading range of 3 plus euros. They continue to lead the EV performance motorbike industry globally. We recently visited with Energica and Silk EV in Italy, and we are pleased to report that both companies are building exceptional products for the performance market, supported by what I would consider to be the strongest technical teams available anywhere globally. As you will see from our recent announcement, we concluded the investment into P, which is a division of Predil, a German global tier one supplier of electronics and components to some of the world's largest automotive manufacturers. The deal includes an agreement to be the exclusive sales distributor in North America for P. In addition to the association with Predil, which is arguably among our strongest partnerships to date, given their tier one OEM clients, Their technology is best in class and will be an important entrant into the grid-edge sector, with energy storage and ultra-high-power smart charging systems, which can be deployed on a temporary, semi-permanent, and permanent basis, using a blend of clean, renewable, and grid-based energy. This is an important product for the charging market and one which will be a key revenue driver for our new infrastructure division, which will be announced in the coming weeks. I want to conclude the United Dynamics Mobility Division by stating that that we have put together an exceptional offering across the full value chain of commercial EV and zero-emission vehicles. This offers our shareholders the ability to participate in the tremendous potential of the entire commercial fleet sector, with the added advantage of being diversified within a single stock. We have purposely assembled over the course of the past couple of years, and more specifically the past 12 months, the most comprehensive offering of EV assets anywhere globally, and we are now in the execution phase of what will be exciting times for the company and its shareholders going into 2022 and beyond. Our vision for the next 36 months is to help shape the future of commercial fleet operations across the three key areas evolving as part of the transition into zero-emission transportation, which are vehicles, charging, and energy. In addition to the reduction on carbon emissions and the reduced total cost of ownership benefit versus gasoline and diesel-based fleet, we are also introducing innovative financial products which will enable fleet operators to switch their capital investment model from capex to opex by offering charging as a service and vehicle as a service and also energy as a service in deregulated markets. We believe the shift from capex to opex will have a profound effect on fleet operators, accelerating the adoption of zero-emission fleets by removing the obvious barrier to entry of having to invest in new products and infrastructure. Turning our attention to Ideonomics Capital, I want to start with Timios, who had a record quarter in Q1, a strong quarter in Q2, and has got Q3 off to a strong start as well. Kristen will speak more about their business in her segment, but it has been a pleasure working with the Timios team through the acquisition and assimilation into the Ideonomics family, and we have some exciting initiatives that we'll be working on in the coming weeks and months to further increase their revenues, including working with the MDI Keepers Fund, which we recently invested in. MDI Keepers is a for-profit fund with partnerships at more than 100 minority banks and lenders, and that initiative will see Ideonomics and Timios working to help our minority communities through both cost savings and wealth creation, while bringing in revenues for Timios. So we're excited to be working with the fund on such a meaningful project. Delaware Border Trade, or DBOT for short, is going to relaunch later in the year as Justly, an impact investing platform focused on ESG-based investments. We will have more on that for you in the coming weeks, but I would like to share with you that we've recruited exceptional talent to come in and support the relaunch, and I'm excited to see this project underway. We have recently concluded the follow-on investment with TM2 after their successful launch of their technology metals exchange after a couple of months ago, and many of the metals they are helping to bring to market are essential for the development of the EV automotive and aerospace sectors, and providing the supply and demand sides of pricing discovery for these metals for the first time is going to help the market manage the ever-increasing demand for increasingly important metals such as indium and rhenium. In addition to the increasing value of their business and, in turn, Ideonomics investment, this provides Ideonomics with informational access into the supply chain and pricing for the raw materials which are becoming prominent in the markets we are active, including precious metals in batteries, electric motors, and hydrogen fuel cells, the insight into which helps inform planning and decision-making within Ideonomics mobility. TM2 has the potential to become a market leader in this space, and their team has impressed us with their ability to navigate the launch of their platform, which included NASDAQ as their partner, and the growth they are currently experiencing. As I have outlined today, Ideonomics is in an extremely privileged position, and I want to say a big thank you to everyone involved in helping us build a world-class organization, and that includes, of course, our large and diverse investor base. Shane McMahon has recently taken on the role of chairman. has come in to help us with the anticipated growth by bringing his energy, his network, and his public profile for the benefit of Ideonomics and its shareholders. I would like to say finally to our shareholders, your interest in our business has provided us with the ability to pursue our strategy, and we are both humbled and thankful for the tremendous investor support we receive. We're here first and foremost for our shareholders, and I want to thank you for joining us on this journey as we enter the next phase of our business and unlock the full potential of our family of synergistic operating companies. and deliver back to you the share price appreciation you joined us for. Thank you again for joining us on today's call. I will now hand you over to Kristen Helsall, Ideanomics Chief Revenue Officer.
spk02: Thank you, Al. Joining Ideanomics in the second quarter of 2021 as the Chief Revenue Officer meant I spent the majority of my time during the past 90 days meeting and working with our team, developing our businesses, identifying new and synergistic opportunities, and executing our plan. We acquired U.S. Hybrid and Selectrac toward the end of the quarter, and I know both will be strong contributors to the future of IBMomics. We continue on the path toward leading worldwide transportation electrification and delivering on our commitment to build a company that offers outstanding solutions in clean tech, charging infrastructure, components, vehicles, and financing, to enable and speed EV fleet adoption. With the anticipated infrastructure bill as a driver and IDEXX mobility as a beneficiary, we are very well positioned. One of the joys of my role is that I can spend time at each of the businesses in our current EV ecosystem, working at the subsidiary level to strengthen these operating companies, build the sales pipeline, and deliver financial results. For example, I recently had the opportunity to work with Dr. Abbas Ghadarzi, our U.S. hybrid CEO, and his leadership team to identify and pursue opportunities to commercialize their most popular products, which range from DC-DC converters to hydrogen fuel cells. As we look at the ideonomics mobility EV infrastructure business moving forward, we continue to expect strong growth in the U.S., positively propelled by favorable legislation from the Biden administration. Q2 was exceptional for Waves, our wireless charging subsidiary, with continued revenue improvement over Q1. The team has been able to add much needed resources and worldwide demand for wireless charging is growing as companies recognize the benefits of installing Waves charging infrastructure. Our Salt Lake City-based team has added engineering, manufacturing, sales and marketing resources, expanded facilities, and we now have a strong pipeline heading into Q3, accompanied by a growing multimillion-dollar backlog. Since joining Ideanomics, we have helped Wave shift their strategies to open up new lines of revenue and new markets. Our goal is to have Wave become the charger of choice. It is abundantly clear that every major commercial vehicle manufacturer is committed to vehicle electrification, and that, plus the potential for autonomous vehicles, make the wave product very attractive. These partners are drawn toward the safety and cleanliness from the elimination of messy cables, especially during a global pandemic. With greater than 92% measured efficiency, coupled with the millions of vehicle miles and thousands of megawatts of power that have run through our many successful wave deployments, we expect aggressive adoption of the system across the transit, port, and commercial vehicle sectors, with our sales pipeline today exceeding $100 million. For example, our source well win was significant, as WAVE is the only wireless provider, and we expect this will positively impact our revenues for the next four to five years. In Q2, Ideanomics purchased the balance of SelectTrack, taking our ownership position from about 20% to 100%. We have hired industry veteran Manny Iyer as CEO, and we are thrilled with his impact on the business. Manny has spent his career in the tractor industry, and his leadership has already allowed us to attract a team that is mission aligned with vast and deep tractor knowledge. We currently have reservations for more than 100 e-tractors, which will deliver more than $3 million in revenue when fulfilled, with the number growing steadily. The launch of our new E70N model was flawless, and there is strong demand throughout California for tractors in this segment that are specifically designed with a narrow body and are powerful enough for commercial level farming and vineyard operations. Select Tracts will continue to market its products directly, but will benefit enormously in 2022 from work we are doing to establish a dealer and distributor network. This aligns with how tractors are sold today. and will help Selectrak achieve mainstream brand recognition while we ramp our production capabilities. We are hopeful that the current supply chain issues plaguing most of the hardware industry can be resolved quickly and that we will have a very strong finish in 2021 and rapid growth for Selectrak in 2022 and beyond. Agriculture is a very large market, both domestically and globally, and it's currently underserved for EVs. Our e-tractor solutions are clean, more powerful, and offer a lower total cost of ownership while protecting operators, their employees, and their surroundings from toxic greenhouse gas emissions. We intend to take full advantage of our first mover position to capture market share and build an exceptional brand which every farmer, both large and small, can rely on for zero-emission performance and reliability. The innovation engine at USHybrid continues to have strong forward momentum. In Q2, we were able to close on this acquisition and look forward to implementing a plan for commercializing many of their most popular products while continuing to develop the EV future, including hydrogen fuel cells. We are actively growing this team in response to anticipated market demand for their products And as part of that growth, we are helping them to move into a facility close by, which is nearly four times as large as their current headquarters location, to facilitate the transformation of their business. Already, U.S. Hybrid has delivered a strong multimillion-dollar backlog for the balance of 2021, and we expect our influence and investment into U.S. Hybrid to begin bearing fruit from a commercial perspective in early 2022. The second quarter was difficult for our tree electric team in Malaysia. COVID continues to ravage the country, leaving them in complete lockdown until vaccination rates increased significantly in the region. Work continued slowly and carefully in our new showroom and in our new assembly facility. The tree electric management team has been using this time to identify new partners to expand and refresh our current vehicle offerings. The vaccination rate in Kuala Lumpur has surged in recent weeks, which makes us hopeful we can achieve significant deliveries on our large existing contracts in Indonesia, Malaysia, and Thailand, while looking at expansion into adjacent markets like the Philippines. That optimism is tempered by the COVID Delta challenges throughout other ASEAN markets, and especially in Malaysia outside the capital. We are targeting a strong finish to 2021 as this team returns to selling our two wheel bikes. The first 2000 vehicle units of the T 70 are arriving at our assembly facility between August and September, which will allow us to move quickly toward that goal. Our Medici motor works division continues to provide a significant opportunity for our team to homologate important commercial vehicles into the U S market. and leverage our wave and US hybrid technologies. We expect that we will have demo units in the market in 2022 and significant activity in 12 to 24 months from two wheelers to yard tractors. Our China team had a tremendously successful second quarter, nearly doubling their revenues versus Q1. As Alice mentioned, the deal we had previously announced with BYD and DD for 2,000 units of the D1 vehicle is being restructured. That said, we expect continued growth in both the EV ride-hailing sector and several new initiatives that should impact the Ideanomics China revenue during the second half of the year. Turning toward the Ideanomics capital business, Timios, despite a nationwide downturn in the refinancing market in Q2, which was mostly due to market uncertainty about short-term interest rates and inflation, was able to limit their decline during a quarter that was only slightly below their record Q1. At the same time, the Timios organization took advantage of the emergence from COVID to launch a new revenue stream with their default division, and growth in the appraisal division has been terrific. Moving forward, I expect Timios to continue their positive revenue trend with a focus on both new customer acquisition and existing customer engagement for Q3 and Q4, as we anticipate sustained low interest rates to continue to fuel both new home sales and refinance markets. In Q2, as our ideonomics ecosystem expanded, we continued to double down on our fundamentals around developing a strong pipeline, delivering top-line results, and building backlogs. That focused activity will increase and continue into Q3 and beyond as we begin to look at preparation for 2022. I also anticipate that the second half of the year we'll see our Ideanomics Capital and Ideanomics Mobility teams working together to move metal while changing the business model for our customers from the CapEx to OpEx line, including vehicle as a service, charging as a service, and energy as a service. We are working consistently to eliminate the barriers to entry for fleet electrification and we'll make available financing products that enable and promote commercial EV fleet adoption. Recently, we have also begun looking at new programs to leverage our capital strength into our Ideanomics mobility business. In addition to charging as a service and vehicle as a service opportunities, we are working with our partners at Energica on a dealer floor plan program to help to expand their dealer footprint in the U.S. and at the same time make it easier for those dealers to finance motorcycles. The Energica product is the best in the market and has high first mover demand. Adding dealer points in the U.S. makes sense, and we fully expect this financing model will be applicable to our select tractor business as well as other pieces of our ecosystem, including Treelectric. We expect the Energica dealer points in the U.S. to have strong interest in our Trielectric two-wheel products once they are homologated into this market. Ideanomics continued to hire aggressively and align our sales, business development, and operations teams to focus on driving cost out and achieving scale in the U.S. and across the markets we serve. This effort was supported by ongoing investments in both human and working capital, and we expect that trend to continue and grow during the second half of the year. We consistently attract the top talent required to help position our business for success, with our HR and recruitment partners identifying and recruiting the best candidates, including strong leaders who are excited to join a dynamic company that is making a difference. A synergistic organization is emerging from the operating companies we have brought together. Moving forward, Ideonomics Mobility will deliver across a broad global footprint to nimbly address new markets with unique solutions across both products and services. In addition to the commercial electric vehicle opportunity, our organization is poised to go after a large portion of the worldwide charging infrastructure market, which BNEF has at $190 billion in 2040. We have already made exciting announcements in Q3, including new products like the E70N at Selectrac, new opportunities like the multi-year Sourcewell Award at WAVE, and a look to the future with Pretl PIA and our high-power charging infrastructure opportunity. All of these new products and services will take time to mature, but we expect to see strong, positive movement each quarter with more exciting announcements to come. Finally, having successfully created an EV charging infrastructure business back in 2009, I am very aware that one of the keys to wide EV adoption is ubiquitous charging infrastructure availability. That need is impacting almost all of our ID Anomics mobility entities from wave to U.S. hybrid to our new Predyl P activity around hypercharging. The addition of an end-to-end charging infrastructure company would help us to speed the adoption of many of our products and services, while better enabling our charging-as-a-service and vehicle-as-a-service offerings. It would also provide Ideanomics with a platform for some anticipated products around verticals, such as energy storage and software. We are excited to move forward with the creation of this infrastructure initiative, which we will announce later in Q3. In closing, I expect that 2021 will be a very strong year for both Ideonomics Mobility and Ideonomics Capital. Our focus on delivery and scaling will remain, and our story will continue to unfold positively and with clarity in Q3 and beyond. I will now hand this over to our CFO, Connor McCarthy, to detail our financial performance for Q2 2021. Thank you, Kristen.
spk05: The work done in 2020 made the foundations for the acquisitions completed in the first six months of 2021, which give Ideonomics a group of synergistic businesses providing commercial EV customers with end-to-end service to convert their fleets to EV. During this quarter, we had our sixth consecutive quarter of revenue growth. The revenue for this quarter was $33.2 million, with a gross profit of $9.3 million. The first quarter included the revenues from U.S. hybrid, Ideonomics' powertrain business, and from Selectrac, our tractor businesses. Both businesses were acquired in June 2021 and only contributed a small amount of revenue to the second quarter. We ended the quarter with $396 million of cash on our balance sheet, which provides a deep pool of capital for investment in our Ideanomics mobility and capital business units. I would now like to discuss the financial performance in greater detail. Revenue for the quarter was $33.2 million, which represents the sixth consecutive quarter of growth, demonstrating the increasing strength of Ideanomics business. Revenue from electric vehicles was $6.1 million, an increase of almost 10 times from the second quarter 2020 revenues of $0.7 million. Revenues from charging batteries and power trains were $2.7 million for the second quarter. This included a small amount of revenue from our U.S. hybrid acquisition that was completed in mid-June. Revenue generated by Timios, our title and escrow services business, was $24.4 million. Gross profit for the second quarter was $9.3 million, representing a gross margin of 28%. This compares very favorably with the gross profit of $0.3 million and a margin of 55.4% generated in the prior quarter. Operating expense for the second quarter was $20 million as compared to $16.5 million in the prior quarter, an increase of $3.5 million. Selling general and administrative expense was $13.1 million in the current quarter as compared to $6.7 million in the prior quarter. The increase in expense was driven principally by the acquisition in the first quarter of this year of Timios and Wave and hiring in the U.S. corporate functions and in the China business. Professional fees in the second quarter were $7.4 million as compared to $2.4 million for the prior period. The growth was related to an increase in legal fees, consulting services, and investor relations-related expense. The increase in legal fees was driven by advice on mergers and acquisitions, responding to regulatory inquiries, and advice in relation to the class action lawsuits. The loss from operations was almost $10.7 million as compared to $16.3 million in the prior period. The loss from operations of the prior period included an impairment loss of $6.2 million. Interest expense for the period was $.6 million as compared to the prior period expense of $8.9 million. The prior period expense included charges related to the application of US GAAP to the variable conversion price in the then outstanding convertible debt, which was repaid in full in 2020. we recorded a net loss of $10.5 million as compared to a net loss of $26.4 million in the prior period. To conclude, the work and achievements over the past 18 months position Ideonomics to be a winner in the commercial EV sector. During this quarter, we achieved a number of important milestones. We have ended the quarter with $396 million on our balance sheet, providing a war chest a war chest to address the pipeline of attractive opportunities that exist, continued momentum in the business as evidenced by our sixth consecutive quarter of revenue growth, and we completed the U.S. hybrid and select track acquisitions, further enhancing Ideonomics' end-to-end solutions for commercial EV operators. In summary, I believe that Ideonomics is very well positioned to take advantage of the great opportunities ahead of us, That concludes my remarks. Handing it back to you, Tony.
spk01: Thank you so much, Conor. And that concludes management's prepared remarks. And I know that at this time, it is everybody's favorite time, our question and answer session. So, operator, if you could just tell everybody how they are allowed to raise their hand, that would be great. We'll give folks some time to get in the queue.
spk08: Thank you. And at this time, we'll conduct our question and answer session. To ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press the star key followed by the number 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset pressing the star keys. Once again, to ask a question, press star 1 on your telephone keypad. To remove your question, press star followed by the number 2. We'll pause for a moment to pull for questions. Thank you. And thank you. Our first question comes from Craig Irwin with Roth Capital Partners. Please state your question.
spk09: Good evening. And first, I should say congratulations on the strong quarter. Really nice execution, guys. Alf, my question really is about Wave. You know, the EV charging space is such a hot space, and you're the only one sort of visibly pushing inductive charging as a solution for fleets and for municipal and commercial transit. You guys have had some big wins in the quarter. Can you maybe frame out for us the breadth of the sales funnel that Wave is looking at these days? And can you maybe clarify for us I understand it was fairly close to profitability. Is this a business where you're pumping it with resources and maybe that impacts a possible EBITDA contribution, or is this one of the early EV-related businesses that gets to profitability for Ideanomics?
spk04: Thanks, Craig, for the question. It's a very good question. I'll take the first part of it. I'll allow Kristen, our Chief Revenue Officer, to answer. to discuss the pipeline because she works directly with the business on that on a daily basis. We are putting investment into Wave at this time, but we do anticipate it to be profitable within a relatively short timeframe. When the business came to us, it had a significant backlog and none of the balance sheet to be able to buy the components to service that backlog. So that was the first thing we needed to do was to help them get the product, the supply chain, bringing in the components, and having our components in stock to fulfill the backlog, and then start to grow the business with them, which Kristen's been doing very aggressively. I'll hand over to Kristen now to speak more on the pipeline side of it, because she touched on that within her remarks.
spk02: Thank you, Alex. I would say our three major focuses from a pipeline perspective are municipalities and their bus transportation, We have a hugely successful deployment with the Antelope Valley Transit Authority in northern L.A. County, where we have literally millions of miles and thousands of megawatt hours that have gone through that system in its multi-year deployment. And, you know, we anticipate that system growing. And that is serving as a template for the many other municipal deployments we have. And we expect, you know, that to continue to roll out. We're seeing municipal customers actually demand waves to start with, which we find very exciting. We're also beginning our activity in multiple ports across the country with, you know, a focus on certainly the West Coast and the East Coast ports. And finally, you know, our commercial customer activity really started very quickly with last quarter with a number of customers coming to us saying that, you know, they just wanted to look at starting with Waves and eliminating sort of cutting the cord, so to speak. So we expect that, you know, activity to continue. And that's really helped us to build up more than 100 million sales pipeline. And we expect that also to continue to grow throughout Q3 and Q4.
spk09: Thank you for that. My second question is about Timios. So this has been a really nice revenue contribution to the company. And, you know, I understand it's also pushing some cash flows, which is always positive. You have been quite conservative about the linearity of the revenue contribution given its property-related business activity. Can you clarify for us, you know, Do you expect this business to maybe see a little bit of a cooling off as we see the real estate markets cooling off into the back end of the year? Or are similar levels of cash flow and EBITDA contribution probable over the next number of months?
spk04: We did see after the first quarter, Craig, and it's a good question. We did see the hesitancy in the markets to understand where inflation was going. caused the interest rates to spike slightly for a couple of months. And of course, now they're back down again in record lows. But a large part of Timios' revenue is from the refinance business, or refi business as we like to call it. So they did start to see some slowdown in that because that is a very interest rate driven business. People are obviously looking to cut their rate and cut their payment or get cash out of their home without increasing their rate. So We did see a little bit of softening there. It seems to have recovered fully in the meantime. But that is an interest rate-driven business. Because that's the majority of their revenues, the refi business, we've really encouraged them to invest in the mortgage home purchase business and also develop their appraisal business and their default business as well. And as Krista mentioned in her comments, the default business and the appraisal business are starting to grow quite quickly. So we anticipate bringing in those diverse revenue streams so it's not so dependent on refi should allow the business to continue to grow its revenue base. And, you know, we'll always keep the business profitable. It has the ability to, you know, contract and expand along with the economy. So we wouldn't envision a situation where Timios wasn't profitable. But certainly with historically low rates now, you know, we would expect to continue to see them to continue to develop their revenue, as I said. I don't know if you have any further comments, Kristen.
spk02: No, I do think, though, that the Timio's team, which is very nimble and agile, has been, you know, continuing to look at new markets. You know, they're continuing to look and see where that can expand. They're also looking at, you know, expanding their relationships. And with COVID ending, you know, you know, really aggressively pursuing, you know, some new customers. So it is a team that, you know, works hard and smart to grow the business. And, you know, I expect that, you know, whatever the market contractions and growth, Timios will be at the very top of performance of that.
spk09: Thank you for that. So jumping back to commercial electric vehicles for my last question, if I may. Really exciting acquisition in U.S. hybrids. Congratulations on getting that done. Can you maybe talk a little bit about the potential for product announcements as far as specific repeat products or technology packages that you would be looking to supply either internally or externally from this business? How do we see the commercial development here given that now you're building on this history that's pretty amazing, actually, at U.S. Hybrid, but it hasn't been sort of as focused on commercialization. How should we look about that transition over the next few quarters and visibility for what the revenue potential is there?
spk02: Thank you, Craig. I think that is a really good question, and you're right. USH is one of our most exciting companies, you know, acquisitions. What we've been focusing on now is USH had a lot of products that had strong customer demand, which they were never able to essentially have product on the shelf, you know, ready to fulfill it. And we're immediately trying to change that, you know, situation into one where, you know, we're hoping by Q4 or early 2022, If you show up and want one of their most popular products, DCDC Converter or some of their other offerings, if you order them, you can get them. And we're looking to put a complete commercial team in place to not only develop these products, but develop the ones that we know their customer base and their expanding customer base are going to want. And we hope that will encourage that will quickly include our fuel cells. We see a lot of demand for our fuel cell products across the board, and, you know, we plan to absolutely be part of that fuel cell future and offer those products in a commercial way.
spk04: And I would just add to that to echo Kristen's comments in the prepared remarks, Craig. We're able to find an expanded premises for the U.S. hybrid in the same part of L.A. where they're currently based. So we kept them in the same neighborhood. But the new facility, much more modern, four times the size. So we're going to be able to help them, you know, grow those production lines and other things. So, as Kristen said, so we can start to fulfill the order demand that there is for their products and their technology.
spk09: Okay. That actually bridges to an area that I just wanted to follow up on, right? you know, the revenue visibility over the next few years. If you're going to Forex the floor space, can we expect the potential to probably be, you know, a mid to upper single digit multiple on sort of where they've been if they knock the cover off the ball?
spk04: Do you want to take that one, Kristen, or shall I?
spk02: You can go ahead. I'll take it now. Thanks.
spk04: Yeah, look, if we look at acquisitions like Wave and U.S. Hybrids, These are really critical technologies for what is happening now in EV. So the upside potential for these businesses is quite dramatic in a positive way. We believe businesses like U.S. Hybrid, like Wave, which without the public company ecosystem, without the public company's hefty balance sheet, we're mid to upper seven-figure businesses Obviously, what we want to see ourselves do is quickly transform them into eight-figure revenue businesses and then on to nine-figure revenue businesses and potentially beyond that as well. If you look at US Hybrid, as we said, we're seeing just tremendous inquiries coming in for that product, the same as we are with Wave. And I think there's an opportunity there for, as I mentioned in my remarks, for US Hybrid to become a tier one supplier to global OEMs.
spk02: And I just would add to that that the demand for Wave is a worldwide demand, you know, from China to Europe to Latin to the U.S. I mean, you know, this is just a product that people understand has to be part of the future of electrification. So I do not see, you know, I see that business growing very quickly over the years. And as we are able to expand into these new markets, to really be able to conquer those as well.
spk09: Excellent. Congratulations on the progress. I'll hop back in the queue and let other people ask.
spk04: Thank you.
spk08: Our next question comes from Damon Felton. Please go ahead with your question.
spk03: Thank you. Good afternoon, Alf and Kristen. How are you doing? Good afternoon, sir. How are you? All right. So thanks for taking my question and congratulations on the core. I was wondering if you could elaborate on the sales pipeline that was mentioned. Could you explain how the company came up with the $100 million figure? I assume this doesn't include Ideanomics China. And could you also elaborate on Ideanomics China's pipeline? I know it was mentioned in prior conference calls in 2020. Specifically, what's the status of some of the big ticket items in that particular pipeline?
spk02: Sure. I can start with that. I can start with the wave pipeline. You know, we, as most companies do, have, you know, a very active sales team who are accumulating opportunities, both commercial opportunities, expansion of our current municipal port and commercial opportunities, and also, you know, beginning to look at other markets. But the $100 million that I referred to is strictly North American opportunities as categorized. And these are the ones that we have, you know, highly in development. So these aren't ones where people are making initial inquiries. These are ones that have been heavily qualified.
spk03: And when you say that 100 million, are these things that have been secured or are these anticipated contracts?
spk02: Anticipated contracts and secured.
spk03: And as it relates to China, I know there was some information provided last year regarding that particular pipeline, buses, mining vehicles, things like that. What is the status of that particular pipeline?
spk04: Yeah, thanks. That's a really interesting conversation. As you can see, we continue to be able to readily finance the smaller ticket items, which are the taxis. One of the challenges in the China market has been putting in place the financial products in a highly regulated market, which is difficult to navigate for some of the larger orders that we have. We've engaged some expert consultants and our legal teams on the ground, and we're trying to come up with the right products that can help us unlock some of those orders. But as of this time, it's very difficult to get financing in place for the larger ticket items in China. We've been working for several years. As you know, China's financial landscape, as you've seen for some large prominent public companies that are based out of China, continues to change. And we continue to work with the fleet operators, the ports, and others who have interest in purchasing those vehicles to find the right solution for them.
spk08: Thank you. And our next question comes from Robert Wheeler with Acorn Management Partners. Please state your question.
spk06: Thank you, Al, for the presentation. My question regards the financing of the company and your relationship now with Cancer Fitzgerald. Can you add a little color on how that relationship developed and what made you choose Cancer to run your ATM?
spk04: Yeah, absolutely. Thank you. It's a very good question. The reason that we've been talking to several of the Wall Street banks, including Kenneth Fitzgerald, is obviously there's an interest in ideonomics and what we're doing from their side. And in our side, there was an interest to look at companies that could help us with our exposure to institutional funds. We traditionally had a very large retail audience, which we love. It gives us tremendous liquidity in the stock, but obviously it's As we start to scale and grow our business, we do need to get more institutional investors into our shares. So we've joined the Russell indices again this year. That's brought some institutional in on top of what we already had. But generally speaking, part of lifting the company's profile, part of starting to garner that share price appreciation that we know we can achieve, for the businesses we have now is getting a closer connection to Wall Street. And Tender Fitzgerald is an excellent firm. And we're able to, you know, work with them to get the ATM in place. And, you know, that should see us bring in additional institutional investors. Thank you, Al.
spk08: Thank you. Our next question comes from Robert Keekhofer. Please go ahead with your question.
spk07: I have a question concerning solar trucks. Is there any possibility in the future to design, manufacture zero-turn commercial lawnmowers as a lower-end EV vehicle? Because I did some research, and Deere and Toro don't currently produce any of those products. Thank you.
spk04: That's a really interesting question, and I wish Manny Aya were on the call with us, the CEO of SelectTrack, because it echoes some of what he's represented to the management team at Ideanomics as well. There's two reasons for wanting to move into that market. A, it's a very large market in terms of sales revenues. But the second part of it is, I don't know if anybody here is aware, but typically a The industrial lawn care products that are out there that landscapers and others use have no emissions regulations on them whatsoever. And your average commercial-grade landscaping lawnmower actually spews out way more diesel particles than a truck does. So there's an environmental reason to pursue that, and then there's a business reason to pursue it as well. But these are areas that Manny Ayer understands very well, and he wants to take a good look at those that area of business and see if that's something select track can, can, can break into. Certainly we have the skills in terms of engineering and production capacity to make those types of vehicles. So, um, it'll be Manny's decision along with the ideonomics management team, but it's an area that he certainly expressed interest in. And, um, I'd like to mention at this point, uh, we're going to have select track US hybrid wave, um, ideonomics mobility, um, at the act conference, um, in Los Angeles at the end of this month. And, and, uh, into early September, a few days before Labor Day. That's a good opportunity to come and meet the SelectTrack team and our other operating companies and understand their products and what they're producing both today and for the future.
spk07: Thank you for your response.
spk08: Thank you. There are no further questions at this time. I'll turn it back to Mr. Tony Sklar for closing remarks. Thank you.
spk01: Thank you very much, operator. I appreciate that. And just... So I'm just going to hand it back to Kirsten for one more time to talk about our ACT conference and our fall conference lineup, some of the exciting things that we're going to be speaking about.
spk02: Thank you, Tony. As Alf mentioned, we are going to be at the ACT conference. It will be the debut of our, you know, sort of our multi-company synergistic display, including Selectrack, U.S. Hybrid, Wave, and others. We expect to take that act on the road later in the fall, both in the U.S. at a number of conferences where we'll, of course, roll out the synergistic display at the MOVE conference and often, but also, you know, each of our individual operating companies will begin attending conferences with WAVE going to a number of places, including municipal bus conferences and USH and SelectTrack doing the same. I also expect international participation for some of these folks in both Asia and Europe going forward in the fall. So we expect a strong finish in 2021 and lots of exposure for our companies moving forward.
spk01: Thank you. Thank you so much. And thank you to all of our C-suite who prepared the remarks today and for the questions and answers. This is all the time that we have for today, and this concludes the Ideanomics second quarter 2021 investors conference call. We encourage our community to continue to reach out to us, and we can answer any of your questions that you have individually. You can send your questions to us at ir.ideanomics.com, although I know many of you have that on your speed email list. We would like to thank all of our listeners, shareholders, analysts, and others who have taken the time to listen to our earnings call. We urge you to refer to our latest SEC filings for any of the information that you need. This call will be available on our website in the investor section, and you can find the link there. To be alerted to news events and other information in a timely manner, we recommend you following us on social media channels, sign up for our newsletter, and explore our website at www.ideonomics.com. Thank you, everyone, for participating and listening on the call today.
spk08: Thank you. This concludes today's conference. All parties may disconnect. Have a great day.
Disclaimer