Blink Charging - Earnings Call - Q2 2020

Transcript

Speaker 0

Greetings, ladies and gentlemen, and welcome to Blank Charging Second Quarter twenty twenty Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. It is now my pleasure to introduce your host, Mr. John Nesbitt of IMS Investor Relations.

Thank you, sir. You may begin.

Speaker 1

Good afternoon, everyone, and welcome to Blink Charging's second quarter twenty twenty Investor Call. On the call today, we have Michael Farkas, Blink Charging's Founder and CEO Brendan Jones, Chief Operating Officer and Michael Rama, Chief Financial Officer. I'd like to take a moment to read the Safe Harbor statement. This conference call contains forward looking statements as defined within Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. These forward looking statements and terms such as anticipate, expect, intend, may, will, should or other comparable terms involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future.

These statements include statements regarding the intent, belief or current expectations of Blink and members of its management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in Blink's periodic reports filed with the SEC, and actual results may differ materially from those contemplated by such forward looking statements. Except as required by federal securities law, Blink undertakes no obligation to update or revise forward looking statements or reflect changed conditions. Okay. I will now turn the call over to Michael Farkas.

Go ahead, Michael.

Speaker 2

Good afternoon, everyone. Thank you for joining us for our inaugural quarterly earnings call. We're pleased to have this opportunity to review our results for the 2020. Let me begin by saying that this is an incredibly exciting time in our industry. As many of you may know, Blink was founded in 02/2009.

Since then, we have been known as pioneers in electric vehicle charging technology. Someone would say we were ahead of the curve. In fact, in many ways, we still are. So although we have a lot to do, it is particularly gratifying to see the recent momentum in the EV industry. It is evident that EVs are better for the environment than their traditional internal engine counterparts, and their adoption is a huge step forward in our stewardship of the planet.

This is an important element of our business. But I also founded the company because I've always been a car guy as well as an entrepreneur, and the opportunity to combine these pursuits was irresistible. I said the word car just after I said the word mom, my father never forgave me for it. And I have loved the evolution of the automobile and the electric cars and their increasingly effective performance since their inception. I knew that as EVs became more accessible to the general public, there would be a massive need for infrastructure to support the inevitable sea of change that would follow.

I also saw a potentially amazing business. Historically, if you look at the transportation market, 99% of car manufacturers have gone bankrupt. It's the fueling side of the business where there's real growth and where companies have truly thrived and been very profitable. That is what we are building here at Blink for the EV space. This was an amazing quarter in 2020 for us.

Despite the economic challenges of COVID-nineteen in the first six months of twenty twenty, we have already surpassed our revenues for all of 2019. That is an amazing feat. But it's more important to understand that to be successful in our industry, we must get our equipment deployed in the right spots in order to have that utilization. It's setting up a land grab of sorts. With that in mind, we are laser focused on rolling out our network of charging stations across the country and globally.

This will be a key to driving our long term value. We have now deployed more than 23 charging stations throughout The U. S, and we have the knowledge and experience to build that number exponentially. We have registered memberships of more than 180,000 EV drivers and growing as more consumers choose electric. While very focused on organic growth, we have made six acquisitions since our inception and acquisitions are a very important part of our strategy.

To that end, in the 10 Q we just filed, we announced that we are now buying certain assets of another EV charging operator that was done subsequent to the closing of the quarter. I can't really say much on this project, although I would love to, but I can tell you that it's beyond an amazing strategic fit for us as we look to expand our network. The company that we're acquiring has some substantial grants that will allow us to develop and build out more charging stations using government capital, free money. It's very exciting and there's more of this to come. If we're looking at the broader industry, the EV industry is set to emerge from COVID-nineteen stronger than ever before.

Demand for electric vehicles continue to grow and the lawmakers in many states, including our home state of Florida, have taken notice. We're publicly committing their money to the governments to building out EV infrastructure. They're passing EV infrastructure legislation and they're only further impresses upon the importance and the timeliness of our business and paves the way forward for Blink's success. At Blink, we were excited to see a recent market report by Bloomberg NEF project that the need for charging points will top $290,000,000 by 02/1940. That's over a value of $500,000,000,000 worldwide.

Another forecast from Research and Markets estimates the global EV charging infrastructure market will reach $140,000,000,000 by 02/1930. It's growing at an estimated 31 kVAR until then. Unlike traditional automobile makers who have had to deal with the oil market's volatility, the EV industry can by and large sidestep the commodity turmoil. Whether oil prices are high or low, electric vehicles remain a significantly cleaner alternative traditional vehicles and are widely considered the next significant evolution in transportation. The big oil companies and utilities are taking notice.

Giants like BP, Shell, Total are making major investments in EV charging as they recognize the industry transformation is well underway. As more EVs take to the road, more charging stations will be needed. In the coming months, car companies have announced plans to unleash a wave of new plug in models in an effort to catch up with Tesla and meet government's tightening restrictions related to vehicle pollution levels. We're excited about the momentum we're experiencing in the EV space, which drives increased interest in our products and services. As electric vehicles become more accessible and commonplace on the road, charging stations' location and availability become increasingly critical.

In fact, Apple Computer recently announced that its new Apple Maps on 14 will include EV charging routing, which will include routing to our Blink charging stations. This investment by Apple signals a significant shift in electric vehicles becoming mainstream. I'll just close out by saying we have also strengthened our capital position to support our growth. And in total through August 10, we've sold 3,400,000.0 shares of common stock under our ATM for aggregate gross proceeds of approximately $17,800,000 And as of August 12, we have a cash position of approximately $16,000,000 I would like now to turn the call over to Brendan Jones, our Chief Operating Officer.

Speaker 3

Well, thank you, Michael. Good afternoon. It is a pleasure to speak with everyone today. As you might imagine, we have been very busy at Blink as demonstrated by many of the recent developments at the company. I'd like to take this time to review some of those highlights with you.

And as we start, it's one of the key ways that we can scale our business is through the identification and the execution of our strategic partnerships. As such, Blink has entered into some very noteworthy relationships over the past few weeks and I'm going to take some time here to go over those. We recently announced an exciting multiyear joint venture agreement with Envoy Technologies. Now Envoy is a leading provider of shared on demand community based electric vehicles. The venture brings electric vehicles and EV charging to urban residents across The United States.

Now this is by deploying charging stations at every Envoy property location. Envoy's community based electric vehicle mobility platform grew an astonishing three fifty percent over the past two years and we think our charging technology will be a great complement to their operations. Additionally, we had another great announcement just recently as regards to Virginia Clean Cities Association. They have been a long term partner of ours. Blink was awarded a grant to deploy 200 Blink IQ 219 kilowatt charging stations across the Mid Atlantic region.

Now this is an exciting initiative that brings together local and regional partners to create what we'd like to term an enduring regional ecosystem to promote the support and the use of electric vehicles to the build out of convenient EV charging stations and we are really proud to be part of that activity. And to add even more good news, we recently signed a partnership with Cushman Wakefield and that has a lot of us here at Blink very excited. For Blink, the relationship with Cushman who is a leader in real estate across The United States. This agreement provides marketing and deployment opportunities for Blink charging stations and services across all their client locations. Through the agreement, Cushman and Wakefield, they will engage their brokerage team and the expansive network of property managers to offer blank equipment and services as an amenity to the commercial properties they represent, which is an astonishing amount.

Given the reach of Cushman Wakefield's platform, this agreement is a huge opportunity for Blink to sell additional chargers and services over an extended period of time. Also as we shift to the technology front, we recently announced a development agreement with Intersys, the global leader in stored energy solutions for industrial applications. Now this agreement is a little different. What it will do, it will help Blink in developing high powered wireless and enhanced DC fast charging solutions with battery storage capability. We're going to combine this with Blink's inductive parking bumper technology, which is underdeveloped, and this will enable EV owners to charge their vehicles without physically interacting with the charging station while providing a faster and even more effortless charging experience.

Also, by developing DC fast charging stations with what we term next generation integrated energy storage capabilities, we can make state of the art charging technologies more affordable and even more accessible. Now I want to shift a little bit and focus on internationally where we continue to expand our footprint by making progress with our ongoing deployments in The Dominican Republic, Israel and our joint venture with Unis Energy in Greece. Blink's charging stations are now deployed across six countries and three continents and we fully intend to leverage our strategic partnerships and advanced charging station technology and expand our worldwide presence even further. We have made a lot of structural improvements to the company across the board, including expanding and improving our sales, service operations and product development teams. We are now very well positioned to support anticipated growth ahead of us as mentioned by Michael earlier.

And as you can see, recently the progress has been realized through multiple avenues. And these avenues will drive growth going forward. I want to end by saying I'm very proud of our team for making this progress possible, especially during the constraints of COVID-nineteen, and they've done a great job. I'm now going to turn this over to Michael Rama, our CFO, to run you through some specifics for the results of the quarter. Here you go, Michael.

Speaker 4

Thank you, Brendan, and good afternoon, everyone. Blink had a great second quarter, particularly in light of the COVID-nineteen pandemic. I thought it would be helpful to provide you with a quick overview of our business model. One unique advantage of the Blink business model is that we provide multiple options for our customers. This flexibility is key in our ability to quickly expand our network.

Blink offers four business models for EV charging equipment and connectivity to our cloud based EV charging network. We work with our property partners to help design a program that fits their needs. I will give you an overview of each of these models. First, we have the Blink owned turnkey model, which is utilized in high traffic locations with significant potential for high utilization. In this model, Blink provides the equipment, installation, operations and administration of EV charger and shares a portion of the charging revenue with the host.

Next is our Blink owned hybrid model, which is our most common business model and fits more EV charging station locations. The hybrid option allows the location to quickly provide the charging station to their customers in a cost efficient manner. Blink covers the cost of equipment, operations and administration, whereas the host location is responsible for making the site ready for electrical wiring. Charging revenue is shared under the hybrid model. Third is our host owned model which is for those who want to be the owner and operator of EV charging stations.

The host location is solely responsible for the costs associated with the deployment of EV charging stations. This includes the electrical wiring, cost of the equipment, annual network fees and cost of maintenance and operation. In the host owned option, the host location receives the entirety of the charging revenue minus network and processing fees. And the fourth option is, which is our newest business model, is Blink as a Service, which is an exciting option for host locations that want both the flexibility of setting the EV charging rate on the equipment but prefer not to have the upfront capital expenditure associated with purchasing the equipment. Blink provides the equipment, maintenance and operations for a low monthly cost for the duration of the contract.

The host location receives the entirety of the charging revenue minus network and processing fees. Now moving on to some financial results for the 2020. Revenues for the 2020 grew 120% to $1,600,000 compared to $716,000 for the 2019. Hardware sales drove the revenue increase for the period with an increase to $1,300,000 for the quarter, up from $282,000 last year. This increase was attributable to increased sales from our Gen two chargers as well as our increased sales in our DC fast chargers when compared to the same period in 2019.

Revenues for the six months ended 06/30/2020 grew 122% to $2,900,000 compared to $1,300,000 for the six months ended June 3039. What is noteworthy here about the total revenues in the 2020 surpassed the total revenues for the entire year of 2019. In terms of expenses, operating expenses for the quarter increased $3,400,000 from $2,700,000 primarily driven by increased compensation expense as we continue to retool, reposition and strengthen our executive, marketing, sales, IT and operations departments. We are unquestionably investing in people, in part in preparation for and in part to create the dramatic growth we anticipate. Our net loss was $3,000,000 for the 2020 compared to a net loss of $2,200,000 for the 2019.

And now a few comments on our cash and liquidity. At the close of the quarter, we had $4,000,000 in cash and marketable securities. Our financial condition has strengthened and the capital markets environment in the EV space has never been stronger. During the 2020, we created a $20,000,000 ATM program. Since 04/17/2020 through 06/30/2020, we sold an aggregate of 1,700,000.0 shares of common stock under the ATM for aggregate proceeds of $4,000,000 However, in total through 08/10/2020, we sold 3,400,000.0 shares of common stock under the ATM for aggregate gross proceeds of approximately $17,800,000 As of 08/12/2020, we had cash of approximately $16,000,000 With that, we'd now like to open the call for questions.

Speaker 0

Thank you. Ladies and gentlemen, we will now be conducting a question and answer

Speaker 5

session.

Speaker 0

Our first question comes from the line of Sameer Joshi with H. C. Wainwright. Please proceed with your question.

Speaker 6

Hello, Michael, Mike, Brendan, nice to talk Congratulations on a good quarter. The six sixty two units that you sold this quarter, under what model were they sold? Were they sold as owned by the owner or was it one of the other models?

Speaker 4

I'll take that one. This is Michael Ram. Hey, thanks for joining the call today. Those units were actually deployments between our turnkey and hybrid model units. That is exclusive of any hardware sales that we did.

Those are strictly deployments of new in the Blink owned services.

Speaker 6

Okay, okay. The utilization, do you have any metrics on utilization of units that you have already installed? I think you have around 15,151 units deployed. Do you know how much they are being used by location?

Speaker 2

Sameer, at this time we're not disclosing utilization numbers. We may do so in the future, but at this point, we're not. Sensitive business information. It's we need to keep that close to heart at this point.

Speaker 6

Understood. That's fair. As far as all these agreements that you have been signing and actually good relationships with Envoy and Krishnan and Wakefield, do you have any like in the next six to twelve to twenty four months the scale of deployments, what are the revenues, number of units that you expect to deploy at these locations and also with the Greek relationship?

Speaker 2

To get into any specific numbers would be somewhat difficult right now. All we could tell you is the business is growing at substantially the same rate as we've been growing before. Now with COVID, I would say, being a little bit more under control, we should see even greater strides ahead of us.

Speaker 6

One last one before I jump back in queue. The charging service revenue understandably was lower, I guess, because of less people driving. But going forward or rather in July, August, have you seen any revival in that? It was $87,000 for this quarter related to roughly $340 to $320 average last year, last five quarters?

Speaker 2

Michael, you

Speaker 5

have Yeah,

Speaker 4

in July, yeah, we've definitely seen an uptick in the utilization and the charging station. It's supporting the people getting out, starting to do things. And so we expect that to continue as we work through the pandemic and the issues that are related to it. But we're definitely starting to see an uptick in the utilization in the charging station stations.

Speaker 6

Got it. Thanks for taking my questions and congratulations on

Speaker 2

a good quarter. Thanks. Thank you.

Speaker 3

Thank you.

Speaker 0

Our next question comes from the line of Sean Severson with Water Tower Research. Please proceed with your question.

Speaker 5

Thanks. Good afternoon, gentlemen. I had a question regarding the international side of the business and wanted to dig into that a little deeper. One, kind of help us understand what the mix is today and do you have a target or longer term target? And then second to that, which of the four models seems to be most successful or do you anticipate to be most successful international?

And are there any energy services opportunities on the back of some of those bad grid locations where you might be deploying units and managing units?

Speaker 2

In most of our international deployments, we're selling hardware and we have a recurring revenue model. In our Greek relationship, we participate in the deployment of those hardwares with ongoing revenue participation. So it's not just the hardware sale. We're trying to model our business outside The U. S.

Similar to the way we do so in The U. S. And we want to make sure that we provide our customers with a solution that's right for them. If you look at our current deployments and and due to the fact that we have amazing hardware and by far surpasses any of our competitors, we are seeing a big uptake as you can see from our numbers in hardware sales. And we expect that to continue.

We do want to focus our efforts on deploying as much hardware as possible, using our own capital and we are looking for ways to deploy hardware without having to dilute our current shareholders.

Speaker 5

I guess that's a good lead into my next question. That's regarding the services versus hardware, long term service business is very attractive from cash flow and usually consistency as well. I mean, does it work when you approach, let's say, a new customer? Are they getting the sense that they were trying to keep more of that services revenue? Or do you think there's a real value proposition that you can pitch to them that they that you both make a lot of money and do well with the services side?

I'm just trying to understand if they're getting the mindset, well, we want to capture this ourselves or whether you're able to continue pushing a higher value proposition.

Speaker 2

Well, what we try to do is give the customer what they want. Property owners have their own models. Some of them want to own all infrastructure in their locations. That's their model. Others don't.

They outsource all different services. What we try to do instead of pushing what we want to give the customer, we really look and evaluate what the customer is currently doing in all the other types of deployments and then we try to fit it in accordingly.

Speaker 5

Thanks. And last one, just on the acquisition strategy. I mean, how can you give us an idea what the pipeline you see out there? I assume that a lot of highly fragmented market and a lot opportunities. But I mean, are you looking at a pipeline of 10 deals or two deals or 20 deals that you would be interested in out there from a consolidation standpoint?

Speaker 2

As mentioned earlier, we were the original consolidator, the first phase consolidation done in this space. I think it's six companies and us and we believe that there is a tremendous future in not only organic growth as we've been achieving, but really being able to buy some of our competitors. There's more than a couple of handful of really good potential acquisition targets out there and we're constantly looking for the right partners from a perspective of technology, footprint number one and also very important people. There are a lot of small businesses in this industry unfortunately who really can't finance their growth properly. One of the things I mentioned before was about having grants.

There are smaller companies, minority businesses that are able to get these grants, but unfortunately they don't have the capital to put down and wait ninety days and then get reimbursed. So we're going to be able to take advantage of a lot of opportunities out there. And the team is very, very experienced in M and A. And I believe that as in the past, we grew through acquisitions, I believe that is a central focus of ours.

Speaker 7

Thanks guys. I'll step back in the queue.

Speaker 0

Thank you. Our next question comes from the line of Pam Stanley with Carter Management. Please proceed with your question. Hi. Congratulations on the quarter first.

My question is about the Cushman Wakefield deal. It's certainly very exciting. But could you provide a bit more insight into how you are collaborating with them and what the breadth of the opportunity is?

Speaker 2

The opportunity is tremendous. For us, Cushman is really a very natural partner. They have control over a tremendous amount of real estate that need infrastructure. They're going be using their sales staff to go to all of their properties and whatever type of properties across the board from a to z, and they are going to, sell the Blink services for us. There are also gonna be, opportunities for them to handle from a to z, not only site acquisition, but fulfillment and deployment of infrastructure.

Cushman has tremendous reach. They have a lot of capabilities and we believe that it's going to be a game changer for the company.

Speaker 0

Great. Okay. Thank you. That's all for me now. Thank you.

Our next question comes from the line of Jennifer Wolfertz with Comstock Partners. Please proceed with your question.

Speaker 7

Hi, good afternoon. You guys are obviously in a competitive space and I'm just wondering if you could give us a little more color around the competitive landscape and kind of specifically what differentiates the Blink model from some of the competitors you're seeing out there.

Speaker 2

I actually I'm very happy you asked that question. It's a really important question because Blink is quite unique. When we talk about competition, yes, there are competitors, but there are none that are as vertically integrated as we are. There are three different categories of EV charging companies, hardware vendors, hardware manufacturers, network companies and own and operate companies. And on the hardware side, you have the likes of BTC and Tridium and ABB.

And then you have network companies like GreenLots, which is now owned by Shell or Drives. And then you have companies that provide both, like ChargePoint, SEMA Connect, and and a couple others. Then you have the own and operate companies, Electrify America, EasyGo. But we're the only ones who does everything. There's a certain thing that you gain, certain knowledge, experience that you have from site acquisition to host partner partner relationships, dealing with them with information and data they need, going out there and evaluating the sites themselves, doing the installations, maintaining and operating those charging stations and ultimately dealing with the customer who pays you for the service, the EV owner.

That knowledge and that information that we gathered from that stage of EV charging, we were able to incorporate into our hardware. And what we've done in our Level two AC charging stations has really changed the game. Our charging stations are much, much faster than our competitors. And while they try to build in obsolescence, we try to build out obsolescence. Why?

Because we own the charging stations. So we make them a little bit better. We spend a little bit more because we want them to last longer because that's our model. Our competitors really want you to have to upgrade them, throw them in the garbage after a few years and buy new equipment. We've designed this hardware for our own use, for us to own and operate in the field, to be very, very simple to maintain and install and very easy on interacting with the consumer, the end user, And having tremendous amount of robust data that we could share with the host owners.

It's something about practical experience that you could build in the hardware. It's much more difficult to go design a piece of a hardware when you're living in an ivy tower and don't know what it's like to install them or own them. And the same thing that we've done for Level two charging stations, we're now about to do with DC fast chargers and inductive charging stations. And we're gonna go integrate energy storage into these DC fast chargers and make it a very practical way to fuel your car. Because today using DC fast chargers, it's extremely expensive because the cost of electricity is a bit more because of the hardware costs, demand charges, others.

But to answer your question, we're very unique. And because we offer multiple different business models, one is owning and operating them ourselves, others is selling the hardware to the property owner partner, or partnering with them and doing what we call a hybrid deployment where we both contribute to that deployment. Our competitors have to walk out of the room when one of these customers say, Hey, I want to do this, and it's not something they do. We're able to satisfy every single location because of our flexibility in deployments of hardware, models to deploy hardware. And that's really what separates us from our competitors.

While there's definitely competition, a lot of our what we call competition we collaborate with in many ways interoperability and other things. But the industry is really at its, I would say, embryonic phase, although we're about to embark on our twelfth year of doing this, really we're at the beginning stage. If you look at the entire market and the amount of charging stations that are needed in the future, we haven't even started.

Speaker 7

Wow, I think that's so comprehensive. I appreciate all that detail. Thank you.

Speaker 2

You're welcome.

Speaker 0

Thank you. Our next question is a follow-up from Sean Severson with Water Tower Research. Please proceed with your question.

Speaker 5

Hey, I just want to go back to kind of the expansion of the overall industry and kind of the pressure that that would put of course on the grid as it stands today, which takes me to your energy services business. And I'm just trying to understand what the opportunity is for you. I understand using partners through that, but looking at microgrids and DEG as primary solutions for a lot of the upcoming strain that will be on the grid. Just kind of getting your view on that and how that affects Blink and how you can profit from it actually.

Speaker 2

It's a great question. When we started Blink, we really looked at the company as getting access to different properties and we really viewed it as a land grab. When we first started, there really wasn't even charging stations that were available to install. We really predated the industry completely. But we ultimately knew that once we partnered with the property owner and we had charging stations there and we built a relationship with them, that we'd be able to introduce other products and services at those locations that have to do with EV charging.

And whether that's being able to get renewable energy at that location or discounted power or, in order to deal with capacity issues, maybe, recommend a a a LED conversion or some battery storage. There are a lot of opportunities to work with the sustainability groups that we deal with at these locations and introduce other services and at the same time make money doing so. And our plan is to be able to assist our property owner partners that we have thousands of and being able to aggregate our energy buying along with them and be able to help them reduce their cost of energy. It helps us and it gives our customers the ability of having a cheaper EV charging session. So there are lot of ways for us to monetize our locations.

There are also opportunities that we haven't really dealt with in the past that we're now going to incorporate into our business model, which is we have a lot of real estate on our charging stations. There are many, many opportunities to be able to make money off of it, even today more so than we're making on the charging stations, utilizing advertising capabilities on these charging stations. They're very noticeable. So we are looking to unlock our relationships with our property owners and have them participate in the revenues that we're going to generate and increase Blink's revenue base by introducing other types of services that we can use through our charging stations.

Speaker 7

Thanks. That was helpful, Michael.

Speaker 0

Thank you. Ladies and gentlemen, at this time, I would like to turn the floor back to management for closing comments.

Speaker 2

Thank you everyone for joining us. We are very excited about the increasing interest in our EV charging offering, our extended footprint, growing of our customer base and our new partnerships and we look forward to speaking with you again next quarter. Thank you everybody.

Speaker 0

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.