Nuvve Holding Corp.

Good day, and welcome to the new V Holding Corporation second quarter earnings conference call. All participants will be in listen-only mode. Switching to assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note today's event is being recorded. On today's call are Gregory Pallant, Chief Executive Officer, and David Robson, Chief Financial Officer of Navi. Earlier today, Navi issued a press release announcing its quarterly report and fiscal year report. Following prepared remarks, we will open up the call for questions. Before we begin, I would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Navi's best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking projections. These risk factors are discussed in the V's filings with the SEC and in the earnings release issued today, which are available on our website. The V undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances. With that, I would like to turn the call over to Gregory Powell, Chief Executive Officer of the V. Gregory?

Thank you, and good afternoon to everyone here today.

Welcome to our Q4 2024 and fiscal year 2024 results call. I'm not going to try to sugarcoat it. 2024 has been an extremely challenging year. I should say horrible as for the first time since 2021, our revenue went down compared to last year. We know that we are not an isolated case as it has been for most of the companies in our industry, with many of them going out of business. delays have been hitting us across the board. Concerning our K-12 school bus business, during the first two quarters of the year, many of the school district partners were expecting to receive the final EPA approval letters, which arrived sometimes with up to six-month delay, forcing them to hold on their purchase orders until they got the final approval letter for their grants. Q3, Q4 then picked up, but the damage was already done. In the same way, I heard projects have been impacted with delays due to their financing taking more time than initially thought. And though we are confident their financing will go through, we are still finalizing some terms. But we did not stay passive. First of all, we have been working hard on reducing our costs, especially our cash expenses. For fiscal year 2024, both our cash and non-cash operating expense, excluding costs of sales, went down by 33% compared to our fiscal year 2023 expenses. We are working every day on reducing our cash expenses, trying to minimize the impact onto operations, product development, and product qualification. I will give you more insight in a few minutes. We have also been working hard on expanding our business in order to reduce our exposure to governmental funding, especially federal subsidies, and accelerate the revenue. With this potential reduction on electric vehicle subsidies, we have decided to move more aggressively into the stationary battery business. Our GIVE platform is very good at managing how to predict batteries availability from electric vehicles such as school buses. It also does an exceptional job at managing stationary batteries and can help extract more value from these batteries. From our perspective, stationary batteries are essential to provide grid modernization either behind a meter or in front of a meter, keeping the cost of energy equitable. We have now announced our first battery and service model in the United States. Our battery as a service business model for electric cooperative allows the co-ops to deploy stationary batteries, reducing their exposure to coincidental peaks, a situation where the system is experiencing a peak consumption while the transmission system they are connected to is also experiencing a peak. These peaks make the cost of the kilowatt hour very expensive. Our service allows co-ops to keep the cost of energy low by reducing peaks while also providing more resiliency to their members. We are also expanding our stationary battery business in Japan, as we announced recently. The Japanese battery aggregation market has been expanding rapidly, and value for a platform like ours is strong. Therefore, we have announced a couple weeks ago we're establishing a new entity in Japan. This company is in the process of pursuing capital raising activities locally. We intend to keep a controlling interest in the new entity while bringing aboard local investors to support the local business entity capital needs. This is our second approach to reducing our cash expenses. sharing some equity of our local subsidiaries while leveraging our existing expenses in Japan in addition to generating potential future cash flow for newbie holding for services and access to the platform. Now, the last but not the least, back in the U.S., we have also been selected by the state of New Mexico to deploy a variety of electric vehicles and the corresponding infrastructure. The addressable market opportunity is estimated at $400 million off capital deployment, which is large, complex, and requires a significant focus from our organization, which is why we have decided that Ted Smith, our COO and president, will be 100% focused on this opportunity and will become the CEO of our local organization. Ted has been driving this effort from the beginning and has created an amazing consortium of companies that we will be announcing very soon. The purpose for which the company is organized is to serve as the designated local presence for the execution of the State Purchase Agreement, SWPA, awarded to Nuvi Holding Corp., pursuing the Electrify New Mexico initiative, and to develop, construct, finance, and operate a comprehensive suite of green energy and transportation electrification solutions in New Mexico and surrounding states. These business activities include, without limitation, A, a turnkey electric vehicle charging infrastructure and related site development services, B, vehicle-to-grid D2G technology deployment and aggregation, C, stationary battery energy storage system, D, microgrid and resilience hubs, E, electric corridor charging network and deployable charging system, F, vehicle procurement, leasing and financing, and G, the valuation, acquisition, removal, and replacement of internal conversion engine, ICE, vehicle, fleet, and related infrastructure to accelerate fleet electrification. This new LLC will also seek investment for local investors while leveraging newbie holding existing cash expenses and providing potential future cash flow to newbie holding through its services provided to the new LLC. In summary, Though 2024 is extremely challenging, we have been able to survive it, sometimes at an expensive price. During these periods, we have been working on transforming the company, but we feel that we are now very well positioned as a grid modernization and vehicle to grid company to close on our key opportunities and accelerate our business expansion, working with both Capelo Global and Roth Capital. And now, I will let David take you through the detail of our financials. David?

Thanks, Gregory. I will start with a recap of fourth quarter 2024 results. In the fourth quarter, we generated total revenues of 1.8 million compared to 1.6 million in the fourth quarter of 2023. The increase was primarily driven by higher charger hardware sales versus the same period last year. During the full year 2024, total revenues were 5.3 million, which compares to 8.3 million for the prior year period. The year-over-year decrease in revenues is also primarily driven by the reduction in charger hardware sales due to the timing of EPA funding awards this year versus last year, as well as the sales school buses in the prior year period. Margins on products, services, and grant revenues were 15.8% for the fourth quarter of 2024, compared with 29% for the year-ago period. Our gross margin percentage in the fourth quarter of 2024 was impacted by competitive pricing pressures on the sale of DC chargers to a single large customer. Year-to-date margins through December 31st, 2024 were 33.1% compared with 16.2% for the year-ago period. The increase in the gross margin percentage was primarily due to overall higher pricing on hardware sales, non-recurring EV bus sales, and a higher mix of service and grant revenues compared with last year. Excluding grant revenues, margins on product and services were 11.4% for the fourth quarter of 2024, compared to 24% in the year-ago period. On a full-year basis, not including grant revenues, the margins on product and service revenues was 27.5% in 2024, compared with 12.8% in the prior year. As a reminder, margins can be lumpy from quarter to quarter, depending on the mix. DC charge of gross margins at stated standard pricing generally range from 15% to 25%, while AC charge of gross margins are approximately 50%. but in dollar terms are a small fraction of the revenue of the DC charger. Grid service revenue margins are generally 30%, while software and engineering service margins are as high as 100%. Operating costs, excluding cost of sales, was $5.9 million for the fourth quarter of 2024, compared with $2.8 million for the third quarter of 2024, and $7.9 million for the fourth quarter of 2023, We have continued to drive efficiencies throughout 2024, resulting in lower overhead costs. We expect the lower operating costs we have realized this quarter to continue into future quarters. On a full year basis, operating expenses decreased from 33.5 million in 2023 to 22.2 million in 2024, primarily driven by lower payroll, legal, public company expenses, and consulting expenses. Cash operating expenses, excluding cost of sales, stock compensation, and appreciation and amortization expense, increased to $5.1 million in the fourth quarter of 2024 versus $2.2 million in the third quarter of 2024, and decreased by $1.8 million from $6.9 million in the fourth quarter of 2023. Other income was $515,000 in the fourth quarter of 2024, up from $130,000 in the year-ago quarter. The current period benefited from non-cash gains from the change in fair value of convertible debt and warrants, offset by higher interest expense related to short-term loans. Net loss attributable to new economic stockholders decreased in the fourth quarter of 2024 to 5.1 million from a net loss of 7.5 million in Q4 of 2023. The improvement was primarily a result of lower operating expenses. Now, turning to our balance sheet, we had approximately 0.4 million in cash as of December 31st, 2024, excluding 0.3 million in restricted cash. which represents the decrease of $1.2 million from December 2023. The decrease was primarily the result of $15.7 million used in operating activities, offset by net capital raise of $8.5 million, and cash receipts from short-term loans and promissory notes of $8.5 million. Subsequent to the year ended December 31st, 2024, During the first three months of 2025, we raised an additional $2.6 million in gross proceeds through the combination of equity and debt offerings. During the quarter, inventories decreased by $1.1 million to $4.6 million at December 31st, 2024, as we continued to reduce inventory levels. Accounts payable at the end of the fourth quarter of 2024 was $1.9 million, a decrease of $0.3 million compared to the third quarter of $2.2 million. Accrued expenses at the end of the fourth quarter of 2024 was $3.4 million, an increase of $0.1 million compared to the third quarter of $3.3 million. Now, turning to our megawatts under management and estimated future grid service revenue. As a reminder, megawatts under management is a metric we use to quantify the aggregated amount of electrical capacity from the deployment of our V1G and V2G chargers, which are primarily deployed in the electric school bus market in the U.S. and in light duty fleet deployments in Europe, in addition to stationary batteries. Currently, these chargers and batteries are located throughout the United States, Europe, and Japan. Megawatts under management in the fourth quarter increased 5.2% over the third quarter of 2024 to 30.7 megawatts from 29.2 megawatts, a 22.2% increase compared to the fourth quarter of 2023. In terms of its composition, 7.1 megawatts were from stationary batteries and 23.6 megawatts were from EV chargers. We continue to expect Further growth in our megawatts under management as we continue to permission our existing backlog of customer orders we have earned. In addition to new business, we anticipate winning, which we have visibility to in our pipeline for both EV chargers and stationary batteries. Now turning to backlog, on December 31st, our hardware and service backlog increased to 18.3 million, an increase of 0.8 million from 17.5 million reported at September 30th This increase was related to contracts with customers that are expected to convert into sales in 2025. Year-to-date, backlog has increased by $14.4 million from $3.9 million at December 31, 2023, which is primarily related to a large hub project in Fresno, California, which we began recognizing revenue in Q3 2020. and continue to recognize revenue through Q4. As we look out to the next several quarters, we expect to see more activity on the Fresno Hub opportunity as this project gets built out. We also anticipate improvements in our cash burn resulting from the benefits of lower operating costs and improved gross margin dollars compared with last year. That concludes my portion of the prepared remarks.

Gregory, back to you to conclude.

Thanks, David.

Though very challenging from a revenue perspective, 2024 has allowed us to work on our expense reduction, and we are keeping on further reducing our cash expense without impacting our operations and opportunities. Finally, concerning our strategic path, expect to hear soon from us.

I want to thank you and open the floor to questions.

Thank you.

If you would like to ask a question, please press star 1 on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from queue, please press star then two.

We'll pause for just a moment to assemble our roster. And this concludes our question and answer session. I'll turn the conference back over to Gregory Pallone for closing remarks. Thank you, everybody. Thank you. This concludes today's conference call. We thank you all for attending today's presentation.

You may now disconnect your lines and have a wonderful day.