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Good afternoon. And welcome to the Blink Charging First Quarter 2023 Earnings Conference Call. All participants are in a listen-only mode. [Operator instructions] At this time I like to turn the presentation over to Vitalie Stelea, Vice President of Investor Relations. Over to you.

Thank you, Jenny. Welcome to Blink's First Quarter 2023 Earnings Call. On the call today, we have Brendan Jones, President and CEO; and Michael Rama, Chief Financial Officer. The discussions today will include non-GAAP references. These are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You may find the deck along with the rest of our earnings materials and other important content on Blink’s investor relations website. Today’s discussion may also include forward-looking statements about our expectations. Actual results may differ from those stated. The most significant factors that could cause actual results to differ are included on Page 2 of the first quarter 2023 earnings deck. Unless otherwise noted, all comparisons are year-over-year. Now, regarding the investor relations calendar, Blink Charging will participate in the Cowen Sustainability Week fireside chat and investor meeting on the 6 of June; Needham Automotive Technology Conference on the 7 of June; ROTH MKM 9th Annual London Conference on June 21 and 22; and at the same time the JP Morgan Energy, Power and Renewables Conference also on the 21 and 22. Please follow our announcements for additional investor events in the future. And now, I will turn the call over to Brendan Jones, President and CEO, of Blink Charging. Please go ahead Brendan.

Sure, thanks, Vitalie. And good afternoon everyone. And thank you for joining us. So, before I dive into our first quarter 2023 accomplishments and financial results, I would like to say a few things. First, I am honored to be appointed as the President and CEO of Blink Charging. I am also proud of the incredible team at Blink and all of that we have been able to accomplish for our customers, our hosts, our clients, as well as our shareholders and employees. As a company and management team we would also like to thank Michael Farkas for his time serving as our Founder and our CEO. His commitment and forward-thinking have helped shape Blink to become the company it is today, and that is a leader in the EV charging industry. We look forward to having Michael on our Board and continue to work with him in the future. And with that, let’s get on with the earnings call. So, if we now allow everybody to go to Slide 4, I would like to provide a quick refresher on Blink and our capabilities. Blink is the only, fully integrated charging company in the U.S. market today. We offer the most flexible business models available to property owners, we control our own design, manufacturing, and network services. Our products have been designed to meet the charging needs of EV drivers, fleet companies, municipalities, auto OEMs, commercial real estate owners and property managers. We provide a diverse choice of business models. We own and operate chargers, and of course, we sell chargers and services to our hosts. We offer hybrid options where Blink provides hardware and software and we split the revenue with the host and they provide the capital for installation. Our flexibility and our vertical integration of advanced software – hardware and software is what differentiates Blink from our competitors in the EV space today. Now let’s transition to some highlights on Slide 6. Our first quarter total revenue increased to 121% to $21.7 million when compared with the first quarter of 2022. Now, the service revenue increased by 216%. And very importantly, our network fees, which are recurring in nature, increased by an impressive 911%. Now that’s a really big number, so I’ll say it again, that was an increase of 911%. And we are very excited about these positive developments. In the first quarter, we contracted, sold or deployed 6,461 chargers, and that represents an increase of 103% compared to the first quarter of 2022. Additionally, in Q1 Blink Charging dispersed 14 gigawatts of energy across all Blink networks globally. And a key thing is most of the chargers that provided this level of energy were all Level 2, and they did not have demand chargers associated, which increases the cost of doing business. Subsequent to the close of the first quarter, in fact, a little over a week ago, I believe, we announced the acquisition of Envoy, an EV car sharing company by our subsidiary, Blink Mobility. Previously, we announced that Blink was awarded a $7 million grant by the State of New Jersey to implement ride share services and charging for electric vehicles in underserved communities. We are pleased to welcome Envoy into the Blank Mobility family, and we’ll have more announcements about this synergy of this acquisition as we move forward. If we jump on the Slide 7 now, on March 16, we announced an IDIQ contract with the United States Postal Service to provide up to 41,500 EV charging stations and network services provided by Blink and others. We are very proud of the Blink team. To date, this is one of the largest fleet contracts, chargers, and services in North America, and the selection process was extremely rigorous. This successful contract win is a testament not only to our products and our network, but also to our talented team. We have already shipped the first order in April and we look forward to continued collaboration with the United States Post Office and other government entities. So, now let’s shift gears to Slide 8. You will see the growth to date and forecasted growth for electric vehicles and EV chargers that power them. The transition to EVs is accelerating, and with our comprehensive portfolio of charging products and solution, and our unique approach to providing flexible business models to meet all preferences, we are ideally situated to capitalize on the expected exponential demand for EV charging as – more and more EVs hit the road. Now let’s look at Slide 9. Within the last 12 months, Blink has contracted, sold, deployed, or acquired over 38,000 chargers, both domestically and internationally, bringing the total charger count for the company to nearly 73,000 chargers since Blink’s inception. Now, right now, 78% of the total company-wide chargers were deployed in North America, and 22% have been deployed internationally with the majority being in Europe. On Slide 10, you will see just a partial sampling of our customers. They represent well established commercial entities, multi-family complexes, planned communities, healthcare facilities, fleets, and municipalities around the world. Our advanced chargers combined with flexible business models, position us very well to attract new customers and long-term contract. For example, in addition to the United States Post Office, we signed a contract with one of the largest car dealership groups in the nation for a large number of DC fast chargers. And overall the automotive segment is very strong for Blink. In Q1, we entered into agreements to provide charges for over 600 different dealerships that span a variety of owners and brands. And this is out of more than 3,000 dealerships that we have already installed to date. Some of the other notable customers in this quarter include one of the largest parking truck for operators in Belgium called APCOA. And we continue to evaluate sales and installation opportunities with CBRE property management company in Europe and Asia. In addition, we continue to provide chargers to our long-term partner, InterEnergy. In fact, in Q1, we shipped over $1 million worth of chargers to InterEnergy. Now let’s go and look at Slide 11. You can see examples of our innovative product portfolio. Now we have a wide variety of projects ranging from residential, L2 chargers, to high-powered DC fast chargers, as well as our Vision charger. With these offerings, we service both residential and a variety of commercial customers. The ETA for our innovative Vision charger is the end of Q3. Now let’s go and look at Slide 12. You can see our current selection of DC fast chargers. We think it is important to reiterate that Blink is a global company addressing the demand for power and different DC installation settings that vary around the world. In Q1, we contracted for the sale of approximately 300 DC chargers, and our backlog to date includes approximately another 400 chargers that we expect to be on the Blink Network once launched. This makes it a minimum of 700 DC chargers that we expect to commercialize during 2023, and that’s the minimum. Now let’s go look at Slide 13. In 2022 we completely redesigned and launched our Blink Network and Blink Charging Mobile Apps. The strength of our network is another competitive advantage as it allows drivers to find chargers book sessions faster and easier, while enabling our site hosts more flexibility in managing their stations with added features seamlessly integrating chargers into everyday life. And as we've said before this is available on both iOS and the Android platform. Now let's look at another topic Synergies. We announced in Q4 just to remind you, and we did this with the help of McKinsey Consulting. We performed an extensive analysis to discover and outline synergies across the focus on our acquisition of SemaConnect. Now, as a result of this analysis we identified are now targeting a total of 28 million in synergies related to this acquisition. This includes an additional 1.3 million in revenue synergies we identified during Q1 of 2023. Today, we have captured $5.3 million of operating expense synergies as of March 31, 2023. We expect to begin realizing these expense reductions and revenue synergies in Q2 and Q3 of this year. Now while we realize they're synergies from the SemaConnect acquisition, in addition we expect to achieve incremental synergies globally from integrating the acquired networks into the state-of-the-art Blink network. This summer we will have all Blink entities combined under one network. This will eliminate expenses related to engineering and maintenance of legacy networks today. With this I'll pass the presentation on Michael Rama, our CFO. Michael?

Thank you, Brendan, and good afternoon everyone. Turning to Slide 16, total revenue in the first quarter of 2023 grew 121% year-over-year to $21.7 million. Product sales in the first quarter of 2023 were $16.4 million, an increase of 104% over the same period in 2022 as customers purchase greater volumes of our commercial chargers, DC fast chargers, and residential chargers. Product sales for the first quarter of 2023 also include revenues generated from the 2022 acquired companies of SemaConnect and EB. First quarter of 2023 service revenues which consist of charging service revenues, network fees and ride-sharing revenues were $4.8 million, an increase of 216% compared to the first quarter of 2022. The year-over-year growth was primarily driven by greater utilization of our chargers. The increased number of chargers on Blink Networks, revenues associated with the Blink mobility ride-share program, and incremental service revenues from acquisitions. Gross profit in the first – for the first quarter of 2023 was approximately $4.5 million, an increase of 186% over the same period last year. As a percentage of revenue gross margin was 21% in the first quarter of 2023, about 4,800 basis points improvement when compared with Q1 2022. Operating expenses in the first quarter of 2023 were $35.4 million compared to $16.6 million in the prior year period. The year-over-year increase reflects the increase in non-cash share base compensation of $5.8 million in Q1 2023 versus Q1 2022 increases in non-cash amortization of intangible assets of $1.8 million, as well as operating expenses associated with the Q2 2022 acquisitions of SemaConnect and EB. We remained vigilant about cost reduction opportunities and additional synergies as mentioned by Brendan earlier. Adjusted EBITDA for the first quarter of 2023 was a loss of $17.8 million compared to a loss of $12.4 million in the prior year periods, largely due to the higher operating expenses as I just mentioned. Year-over-year Q1 adjusted EBITDA improved by over 4,400 basis points as percentage of revenues compared to the first quarter of 2022. Adjusted earnings per share for the first quarter of 2023 was a loss of $0.49 per share compared to a loss of $0.34 per share in the prior year period. Non-GAAP adjusted EPS is defined as adjusted net income, which excludes significant non-cash items such as amortization of intangible assets and non-recurring acquisition related expenses divided by the weighted average shares outstanding. Now turning to Slide 18, you will see that sequentially we saw a decline in gross margin when compared with Q4 2022. This is primarily due to Blink selling significantly more contract manufactured chargers, which carry a lower overall contribution margin compared to the units manufactured in-house. As we've discussed we've been expanding our manufacturing capabilities to replace all contract manufactured chargers with in-house produced units. This result in a significantly improved gross margin profile of our products. We expect the gross margins for the remainder of 2023 to meet or exceed gross margins realized in the second half of 2022. Moving to our cash position. As of March 31, 2023 cash and cash equivalent totaled $103.2 million. All in all, Q1 was another strong quarter for Blink. We saw record Q1 product revenues and service revenues. We continue to execute on our strategy, and we believe the foundation is strong. We see robust demand for our products and services in North America and Internationally. Before I conclude, I would like to welcome our new board member, Kristina Peterson, who is an experienced public and private company board member and infrastructure investor with over 25 years of operating experience in the finance, electric power generation and tech sectors. I will now turn the call back over to Brendan Jones for a few final comments. Go ahead, Brendan.

Hey, thanks Michael. So clearly Blink 2023 is off to a strong start. We delivered another record Q1 revenues for Blink and growth is in recurring revenue is 9 times larger than the first quarter of 2022. But what is particularly exciting to me is the strength of the Blink operating model. Now, when we look at the industry, we appreciate that the industry is under some pressure and that there are hard questions starting to be asked about the paths to profitability across the entire EV space, including Blink. There are a few points here to make about Blink. We are growing at a very rapid rate, and this industry is still in the very early innings. We have carefully built the structure and capabilities to support a larger company and as anticipated we are very quickly growing into that structure we have created and continue to adjust. In the coming quarters our operating losses will progressively come down as our business model scales and revenues grow faster than our operating costs. While I don't want to pinpoint an exact timing given we have a lot of moving parts including such things as acquisition, integration, additional synergies, new product launches. What I can share is that achieving sustained and positive free cash flow is our priority, and let me make sure everybody understands that, this is our priority. We have a clear path to get there and we will scale and we will continue to keep you appraised of our progress as we move forward. As we look to where the industry was and where it was headed, we are very excited about the opportunity that lies ahead and extremely optimistic that we have the right team in place, building on our success to not only be a player in the energy transition but to lead it on strength of our innovation, experience and continued leadership development. And as we implement our forward moving strategy, we are well positioned to continue and accelerate – accelerate growth and bring electrification to more markets and more communities than ever before. I take this role with great confidence in our dedicated and passionate employees around the world to build the future of the companies. Now, before I conclude and hand over for the closing remarks, I would like to share a new Blink charger for the European global markets. This goes hand-in-hand with our comments that we are working to replace higher cost contract manufactured chargers with our own built in-house. So on Slide 19, you all the first to see this, you can see the final design of our EQ 300 connected charger that will come with single and dual mounted plugs capable with our latest network functions. This charger fits the needs for most applications and has vast addressable markets in many and all EU countries and other international countries throughout the world. Well with this, I'm going to conclude we are excited about the future, about what the future holds for Blink. With that, we will now open it up for questions, and remember this is my first time so be easy on me now. Questions?

Operator, please proceed with questions.

I apologize. My mic was on mute. I apologize. Thank you very much. The floor is now open for questions. [Operating Instructions] Our first question is coming from Craig Irwin from Roth MKM. Craig your line is live.

Good evening, and thank you for taking my questions. First, Brendan, I'd like to say welcome to the role of Chief Executive. We all look forward to working with you and to your leadership. Michael did an amazing job founding the company and we look forward to watching you bring Blink to the next level. So I wanted to ask just a big picture question really around the leadership change. So you've been a key person in helping the team execute strategy over the last couple years and played a role in helping form the strategy that's in place. Is this change in leadership is your assumption of the role of CEO potentially going to lead to a pivot or an alteration of the strategy as far as diversification to international captive manufacturing, portfolio approach to serving your customers and the other major items in the business strategy at Blink that we've all been used to and followed the growth and success with?

Yes. So there's no major departures. I mean, we're going to continue as we have been under Michael's leadership to evaluate the marketplace and see what the market is doing. And this includes in the manufacturing of product, new features and benefits that need to be added to our network strategy and we're going to look at that both in the U.S. and globally. I mean, we are a global company. We're expanding in the Latin America right now, which on a percentage basis is one of our hottest markets. We're going to continue to adjust the product strategy to fit all these markets combined, whether it's the charger we just showed you, and that's predominantly for Europe or other chargers that we're going to have in development that might suit some of the needs in Latin America where they have a little bit of a different standard because they followed the Chinese standard. So we're going to continue on a product and network basis to follow the path and pivot where necessary based on customer and market demand. Now also, we're going to continue to focus on the sustainability of revenue that we get from the owner operator model where we put a charger on the ground, and especially when you consider that with L2 charging because L2 charging is 10 to one at a minimum of the cost of installing a DC fast charger. And when we install one of those, we look at our portfolio today and 50% of our chargers on the owner operator model that are installed are producing in the double-digits of utilization today. We're going to keep doing that, but we're also going to be fully exclusive of the sales model where we can provide sales, get network fees, provide better margins for Blink, so they have a better return, and also continue to innovate for the fleet space and other spaces where they don't want to be in the operator, they just want to buy the chargers but we can provide network services, fleet services and maintenance contracts to have sustainable and reoccurring revenue on that model as well. So that's the basic strategy that we set out. We're going to continue to maintain that and approve upon it and flex were needed as the market develops.

Thank you for that. So I really like that you highlighted the European Level 2 charger because my next question was going to be about gross margins. Obviously it's an important item to understand the sequential progression here. And I was wondering if you could maybe give us a little bit more color on the mix we would need to see for gross margins above 30% as you indicated in your guidance. Is it just this this Level 2 charger, or are there possibly other chargers that we should expect vertical integration to benefit margins in second half?

It's across the board. So as we've talked about before in the previous quarter, so we're developing two different versions of a DC Fast Charger. We have the Series 9, which is the low-kilowatt DC, which we'll have on the market within the next 30 days. And that's an in-house produced charger at a leading margin in the industry. Then simultaneous to that we're also in full development of the DC Fast Charger starting at 180-kilowatts and going up from there. That'll be manufactured out of the facility that will have open and operating as of July of 2024. So both of those products will allow us to scale, innovate new products from there and have greater margins on the DC Fast Charger market. Then let's look at L2s. So in the U.S. we previously had dominated. We designed and contract manufactured the majority of our L2s, that is shifting now where 50% plus are going to be non-contract manufactured and by the end of the year as we up capacity in our Bowie facility, we'll be able to increase that to 60%, 70% and 80% of the chargers sold in the U.S. market are produced by Blink at a greater margin. We have some inventory that we have to play out, which you saw here in Q1 and some sell down strategies on some legacy products both in Europe and the United States. We're going to continue to push through all of that inventory in the coming quarter, but based on the bookings that we're looking at, we have a great influx of bookings and that's new sales order that are on the newer higher margin product. So as Michael indicated in his comments, we expect much improvement on margin as we move into Q2 and indeed that should manifest fully in Q3.

Excellent. And then last question, if I may this 700 DC chargers you expect in 2023 is a pretty solid number. Can you maybe talk to us about the diversity of customers and installations you expect there? Do we need to see any of those customers announced for you to have backlog and deployment visibility? And then other companies in the space have phased margin headwinds from their steps into DC Fast Charging. I know you're vertically integrated, I assume this is a vertically integrated product. Should this be something that has margins consistent with the targets that you're pursuing?

Okay. So it's a great question because when you look at DC Fast Chargers, they're much higher in gross profit than your L2, but they're lower in margin, right? So while we continued increase and most of these chargers are going into grand programs that we have won in the U.S. they're going into dealerships, they're going into municipal developments that we've won contracts for et cetera. So – but on DC what you're going to get is higher revenue, but lower margin as a rule, right? L2 you're going to – you have the ability to get that margin up on a consistent basis above 30% on a per new unit retail basis. But DC is a little harder there as we shift the contract to our own away from contract and to our own manufacturing, we're going to see significant margin improvement on it right now. So we are doing third party contract manufacturing on most of the DCs right now, that'll begin to transition with the Series 9 charger and then by next summer we'll fully transition out of that.

Great. Well, hey, congratulations on the expanded roll. I'll go and hop back into queue. Thank you.

Perfect.

Thank you very much. Your next question is coming from Matt Summerville of D.A. Davidson. Matt, your line is live.

Thanks. Thanks, Brendan. I want to talk about again kind of the gross margin sort of issue. I mean, if I look at product sales I'm just rounding $16 million this quarter, $16 million last quarter. Why would there be such a change in mix of units sold that were manufactured by contract manufacturers? That's not just readily apparent to me. Are you having manufacturing issues in-house? Are there transitory sort of things playing out as you're trying to ramp capacity? Can you help us understand that a little bit more?

Yes, sure. I mean, one of it is we had a bit of an overstock situation in contract manufacturing chargers. We put an emphasis on the sales team to sell those down to clear the warehouse of those units and that are all in the legacy units. Simultaneously, the bookings were all basically loaded into – the booking and shipping were loaded in the March and the April timeframe of the higher margin product. When we look at on a per month basis, we had one of our best revenue months in March which is indicative of the trend that Michael Rama pointed out. And most of those were the built in the U.S. chargers that we built at the Bowie facility. So it was a bit of seasonality, a bit of a push on getting rid of the legacy product in the beginning of the quarter, and which we did a great job on. We reduced that inventory by 50%, and the same thing in Europe where we were pushing to get rid of a lot of the legacy product there. And we were able to do that in Q1 as well. We still have a little bit to go, but yes, it was seasonality, availability at the same time keep in mind we're increasing capacity. So in Bowie, Maryland we were able to get up to 12,000 to 13,000 units out of that facility. We have now signed a lease or we're about to – I'm about to sign it to improve the capacity out of that. We'll get to by the end of this year up to 30,000 units per annual out of that facility just this year and we're leasing enough space right now to be able to get that out up to 50,000. So you got a little bit of availability mixed in there as we sold out some of the Series 7 and 8 chargers, you have a little bit of legacy in that we sold down on. When we crank the numbers and look at bookings what the bookings will come in and bookings are our best leading indicator of future revenue. We see that the revenue and the margin improves over time.

Got it. And then to your point might be useful to cite a book-to-bill metric for product if you have that available. Similarly, I heard you make a comment on utilization. I was wondering if you could sort of frame up utilization rates now maybe versus a year ago and what the uptime in the field is for your install base now, maybe versus where it was a year ago? Thank you.

Yes. So to go back to the comment that we made earlier, that comment specifically looked at 50% of our installed owner operator chargers, and of those 50% the current utilization is they're generating revenue and it's in the double digits. We're going to have the exact number for you. We've committed to releasing next quarter, it's a good number. It's higher possibly than what some of our competitors have just recently released. Now simultaneously, when you look at our overall portfolio, if you go back three years we started instituting a much rigorous process and site identification for the owner-operator model. And we would look at those group of chargers that have installed and say last 3.5 years, there the overwhelming majority of them are in that 50% that are in double digits in utilization and revenue. So we're confident now in the systems we've put together to identify high utilization properties and then the cost of insulation, which we've been able to reduce. And that all corresponds to when we're looking at the owner-operator model for L2, it's a quick return on the investment and then it's sustainable revenue for the future as a result of the utilization of those chargers. And we will continue to sharpen the tool. We use a combination of our GAS with some home-built software pending with a lot of other data sources in there to make sure we're accurately pinpointing locations that will be accretive to high utilization, and we've been doing that for about three years and it's working.

And I was also asking about uptime and then book-to-bill?

You just broke up. Can somebody hear it? Repeat the question.

I'm sorry. I was also just asking about uptime and book-to-bill?

Yes. So uptime right now on our chargers is in the high-90s and what we're doing now is we're working with other groups on a quality initiative 97.5 is the minimum uptime you want to get for your chargers, both DC Fast Chargers and L2 chargers combined together. But you also want to make sure that you're building in redundancy in all your builds. We're not going to build one charger or even two chargers anymore. We're going to make sure that we install four plus as many spots as possible. So that way if a charger's down, we've got redundancy in every station we have across it. We're going on a lot of quality measures to improve quality. A lot of previous quality issues have been in fact related to legacy chargers that we've had in the market. And in 2022, the sunset of the 2G and 3G networks, old legacy chargers that didn't have upgraded systems, they of course went online and the customers weren't able to charge. As a result, we've replaced most, but not all of those chargers. The ones that are site hosts owned there's not a lot we can do with it. The site host does not want to upgrade and replace his charger. He has to be convinced to do that over time.

And book-to-bill?

Book-to-bill, I don't have that metric in front of me but we'll get it for you.

Great. Thank you guys.

Thank you very much. Your next question is coming from Chris Souther of B. Riley. Chris, your line is live.

Hey guy's thanks for taking my questions here. Just on the charging margins looked down sequentially, any color you can provide there on the puts and takes this past quarter. I assume the lower sequential revenues and seasonality, but the charging costs and host fees both increased. So any incentive could provide on the quarter end, kind of the trend there would be helpful?

Okay. Michael, you want to take that one?

Yes. You're right. On the revenue side, it is a function of seasonality as you know, obviously in the winter months at least in the U.S. and the West Coast had a lot of rain early in the first quarter. So that caused a lot of call it charging revenue seasonality if you will, and don't [indiscernible], so that – but there's also a function or part of the charging costs that are going to be cost regardless if you're using the charger station or not, right? So, they are still live active and some of the costs that we're seeing in Europe are starting to increase. So that's what we're see coming through in Q1.

Got it. Okay. And then on the DC rollout, are all those product sales or are there plans to use the ownership model for DC Fast as well? Obviously those are higher ticket items, so curious how we should think about…

Yes, there is a little bit of a mix. There is a mix in there, but the majority are sales where the Blink Network and a Blink service contract is on the majority of them. So, we're going to get the network revenue on that, we'll get some service revenue on those. And the ones that are owner operated will of course get the revenue. Where the owner operators are mixed in there, the overwhelming majority, maybe with a few exceptions. And these would be – and they are not included in the sales total that we gave you, but there's some charges that we're acquiring for replacement of existing charges that need to be ripped out of the ground. But those are in there. We have, in most instances, grant money [indiscernible] to offset the installation of the DCs, where we're going on the owner operator model.

Okay. Got it. And how should we just think about maybe kind of the overall CapEx for the owner operated – for the Blink ownership model for the full year, I'd be curious?

Yes so, let's segment it out and I'll have Michael see if he has numbers to compliment. When we look at DC Fast Charging, so we're going to have an initial outland cash to get the chargers installed, but up to about 80% on average of that money is going to come back, because they are under grant programs and we have a whole bunch of charges that are going to be installed in those. There is some one-offs and we'll need the capital, but not full capital for a new site. It's where we're replacing existing chargers with new and upgraded chargers. We don't have to put all the work into the ground on those. It's basically a rip and replace where there is available power that's going to be a lower cost mostly what it takes to remove and refit the site, but not bringing in a transformer. No more trenching. None of the high cost items in the installation will occur on that. Now, on L2, it's all in our forecasted budget in terms of the capital needed to do to install our forecasted amount for the L2 model. And it's all very reasonable based on the much lower cost of installation. But for details, if those are available, I'll turn it to Michael.

Yes, and I'll just give a little color. Obviously as you could see in the quarter we had a purchase of property and equipment of about $1 million, $1.5 million. But remember that's not just all installation. That also includes, we had some new vehicles for the ride share program, but also we had another increase in inventory of about another $5 million. So right there, if you want to take that on a linear between the two, you are looking at about, $25 million to $30 million to $40 million say of CapEx. I include inventory because that's really capital in nature. It comes through the cash flow statement as operating. But we could see that type of profile going in for the remainder of the year. And as Brendan mentioned, some of these dollars that are being spent this year already are for the grant money programs that we'll expect to see come back probably into latter power of 2023 and probably early part to mid part of 2024.

Okay. And the other thing to add to that is the significant percentage of our LT chargers that we are putting in the ground are under the hybrid model. And under the hybrid model, we provide the chargers, we provide maintenance, we provide upgrades if the charger, breaks down. The site host pays for the installation of that charger. So under the hybrid we don't pay and don't need the upfront capital for installation. They do that, we pay for everything else, and we split the revenue.

Got it. That makes sense. I will hop in the queue. Thank you.

Thank you very much. Your next question is coming from Sameer Joshi of H.C. Wainwright. Sameer your line is live.

Thanks Brendan, Michael for taking my questions. Once again, Brendan congratulations on your appointment.

Thanks.

Could you just give us a little bit of update on the integration of the network in Europe at other places? Have you faced any difficulties? Is it on track? Any color will be helpful.

Yes, it's an interesting question. If you ask a developer if there is any difficult, they'll tell me it's all on track, but you ask a business person, you are going to get a different answer. So, it's a herculean task to take four networks and actually five and combine them under one. Right? But we are fortunate Blink when we made the move two years ago, to bring Harjinder Bhade over from his endeavor at that time and to build a network that is equal or better to what ChargePoint has. They built the network with this in mind. So, we have – the final semi connect integration is going to take place in less than 30 days. And then Blue Corner will take place 30 days after that. The rest of Europe, the rest of chargers we have in Greece, South America and all others we'll switch over at that time as well. So, we've had some minor delays in the development process as we looked at certain functionality and needs that had to be in different countries. And that was predominantly the big delay. You had different specifications and different rules. In Europe, you need what's called a billing engine because they don't use credit cards like we do. So you have a little bit of separate development there. But overall, the emphasis and the slowdown has been to ensure that we do the right usability testing and the quality is there and we do it as bug free as possible. So, we are very much looking forward in the U.S. to have one network 30 days, and then throughout the summer we'll have one network globally and it'll be one blank. And all of that will be nothing but savings for us as we move forward. And we redeploy those engineering assets or take the save to the bottom line.

Understood. Thanks for that. Next question is on the IDIQ contract. What is the revenue potential and bottom line impact or a positive impact of this in 2023 and maybe 2024?

It's to be determined the margins of those products, I'll give you a little bit of feedback on that. The margins are good. So they are above our target. And our minimum target is 30%, our goal is 35%. So, they are above that on the individual product margins today. The volume of the contract is being released over time and it's a little bit of performance, so how well you perform, you could up your share of the overall bucket. And I will say this, we've received positive feedback from United States Post Office, we came in on time and earlier than any other provider, we made sure that our network passed the tests that our hardware passed, the firmware and hardware tests, and they all did it and flying colors and we shipped out the order and got it to them in record time. So we're in great position to be able to reap higher revenues and more of our unfair share of the total of the 41,000 chargers. And I believe we're really well positioned and we'll continue to put the emphasis on delivering quality and timeliness to this very important client.

Understood. Good luck on that. My last question is just if you can share any update on the ride share spinoff have you I mean, I know Blink Mobility is a wholly owned subsidiary, but how easy is it to cleave it out and integrate the Envoy acquisition into it?

Sure. So what we're doing right now is we're looking at both the Blue LA platform and the Envoy platform. We're going through another synergy exercise on that as we speak, we kicked that off last week. So we're looking everything from customer service, to IT support, to development, to how many agents you have there in the field, both sales and customer support agents. So we're going to keep separate business units in Envoy and Blue LA, but yet have shared services beneath the scene. So we reduce the overall expenses. And from there we will get an overall pro forma on the business. And then we'll start the roadshow on the spinoff. Once we put the business plan together, it really helps that we have additional grant money coming in from LA, we have the new grant money of $7 million coming in from the State of New Jersey. We have other grant applications that want that. So with the spinoff, with the grant money, with the synergies, we really believe that we're going to put together a very, very good product for the market. So look for more details on this as we get through the month of May and into June. Michael, do you have any additional comments beyond mine on those?

No, I think that's accurate. Good, sounds good.

Great. Thanks a lot Brendan, Michael. And good luck.

Thank you.

Thank you very much. Your next question is coming from Oliver Huang from TPH. Oliver, your line is live.

Good afternoon everyone. And thanks for taking our questions. Just a couple of quick ones at this point. First one being a follow-up. Is there any color that you all are able to provide with respect to how margins at the Bowie facility will ramp once it's kind of fully ramped to that 30,000 and 50,000 unit benchmarks on the level two chargers?

So, I can provide this, and I'll see if Michael, if he has some other additional color to add that. So Bowie, when we did the SemaConnect deal, we wanted the manufacturing footprint when we acquired them, right? And that's been excellent thus far. But also on pure product sales, they had one of the best margins in the industry. It hovered between 40% and 50%. So, that same product is the one that we're innovating upon now. And we're using that product in place of lower margin products that we've been selling for the last four or five years. So, as we continue to have this shipped from Blink contract manufacturing to those higher margin products coming out of our Bowie facility, you are going to see this improvement in margin. And Michael can elaborate further, but when we looked at the company as a whole, we like the chargers, we like the manufacturing both in the U.S. and India, we like the margins and we really love the customer base that they had. And those now are all proving very opportunistic as a combined company as we move forward. Michael, any other color around that?

Yes. I'll add a little more color. As we saw in the second half of 2022 and even prior to the acquisition that we saw in due diligence and even in the, what the financials that were filed, the margin profile overall, not just on the product side, but on the total gross margin on Sema including the network fees, they have a high network capacity and they drive a bit large revenue, large margin on the network side of it as well. And that was in excess of 50%. So the product might be at the 40% to 50%, but there is additional margin that came from that part of the bus of their business. So as we see more of the product, I don't want there to be expectations. We're going to start seeing 50% to 60% margins, because remember, we're still own and operate and until utilization gets to a higher level, we'll still have a little bit of cost run on there, plus, as we put more units in the ground, depreciation and amortization affects the gross margin. So I just want to give that expectation. But we're confident with the manufacturing product is going to like the profile that we saw in second half of 2022 will bring those margins up.

Awesome. Thanks for the color there. And just for my second question, just on the cost side, given some of the cost reduction initiatives such as the $5 million from the SemaConnect synergies and just some other noise, whether from recent acquisitions and stock-based comp, any sort of guideposts that you all are able to provide in terms of compensation and G&NA run rates relative to the $30 million or so that we're seeing per quarter over the last couple?

Yes, I'll add, obviously we haven't seen the full impact of the synergies that we've started in Q1. We'll start realizing those and seeing those come into play in second – more towards the end of second quarter into the third quarter of 2023. I think on an OpEx compensation levels, we are very conscious of compensation levels, share base comp. If you recall there was an award in the second half of 2022 that is just about fully expensed through right now. So we'll start seeing the share base comp come down. But again, we're very conscious on the cash part of compensation expense and we're really monitoring hires, and integrations and synergies and – to ensure that the integrations and the synergies are taking full effect.

Yes. So the only comments that I'd say it's a major focus, right. We'll continue to go through all the various entities of the companies both here and in Europe, and look for these opportunities of redundancies and synergies that have been achieved as a result of an efficiency gain. We will also continue to look for these opportunities of where the best cost of labor is going to be for a particular function. And we're doing a lot of that work right now. As many of you know, we have three – four different facilities in the United States that are in operations. We got Phoenix, we got Bowie, we've got the Miami office, we have the office in Los Angeles, we have three offices in Europe and we have a major manufacturing facility and a development center in India. So we will shift jobs to get the best bang for our dollars. We'll continue to eek efficiencies out of that. We still have some G&A reductions that are going to happen within the U.S. in Europe that we haven't yet taken action on. They will hit later this year. But then also we are going to have some upticks as we add more manufacturing initiatives to build and develop more chargers as well. So overall, we're going to continue to get more efficient, reduce redundancy go to more system bait process away from manual processes as we continue to move forward and improve the company on all access points.

Awesome. Thanks for the time.

Thank you very much. That appears to be our last question. So, that concludes our question-and-answer session. I will now turn the call back over to Vitalie Stelea, VP of Investor Relations.