Good afternoon, and welcome to Nuvve Holding Corp.'s Second Quarter 2022 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Eduardo Royes. Thank you. You may begin. .

Thank you. On today's call are Gregory Poilasne, Chief Executive Officer; and David Robson, Chief Financial Officer of Nuvve. .

Earlier today, Nuvve issued a press release announcing its second quarter 2022 results. Following prepared remarks, we will open the call up 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 Nuvve'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 Nuvve's filings with the SEC and in the earnings release issued today, which are available on our website. .

Nuvve undertakes no obligation to revise or update any forward-looking statements to reflect future facts or circumstances. .

With that, I would like to turn the call over to Gregory Poilasne, Chief Executive Officer of Nuvve.

Gregory?.

Thanks, Eduardo, and good day to all. Thank you for joining us as we review our results for the second quarter of 2022. .

I would like to start today's call as I often do by discussing some high-level secular tailwinds that underpin our enthusiasm about the outlook for vehicle-to-grid technology adoption. And now through our platform, we believe that Nuvve is well positioned to take a key enabling role in both vehicle electrification and improving grid resiliency. .

A few weeks ago, we were thrilled with the surprise news out of Washington, D.C. that the climate spend bill was back on as part of the Inflation Reduction Act of 2022.

Included in this package are not only a proposal that we expand and expand credits for EV purchasing, thus making EVs more affordable, but also created that spur to continue build-out of EV charging infrastructure, which is critical to EV adoption. .

EV charging is covered by what is commonly referred to as a Section 30C tax rate, also known as the Attentive Fuel Vehicle Refueling Property Credit. Under the new proposal, tax rate that a qualifying business would receive for the cost of purchasing and selling charging station and hardware will go up significantly.

Further, and critical for Nuvve, the bidirectional charging equipment that allows for V2G is specifically named as [ Trade Eligible], the new bill, which was not expected to be the case before. .

Another very important tool for the potential faster adoption of V2G and moderately EVs is increased availability of grant funding. We are pleased that the second quarter saw important progress in that front as well. .

On the back of the Bipartisan Infrastructure Law of 2021, the Biden-Harris administration announced in May that the EPA was making $500 million available for school districts and other eligible school bus operators to begin replacing the nation's fleet of school buses with clean, American-made, zero-emission buses over the next 5 years.

Our experienced grants and fundraising team has been hard at work with partners and customers to assist them in applying the grant to the program. .

As of today, we have submitted 174 grant applications on their behalves or the equivalent of more than 10 megawatts of capacity with more in the works ahead of the EPA's August 19 submission deadline.

While we do not expect full application to receive the grants, the [ sheer ] number of partners we are working with leads us to believe that a fair share of them should be successful. By managing this process for them, we position ourselves well to receive the associated V2G charging hardware orders when they do win.

We expect the EPA to announce the winner in the fourth quarter of 2022 and for the grant recipient to begin to place orders for the electric school buses and associated equipment, such as V2G hardware soon thereafter. .

To summarize, it is no secret that the federal support can play a critical role in the speed with which electrification is scaled up and political uncertainty and logjam can be the enemy of planning and decision-making for those looking to electrify.

With these developments of the past few months, the [ outfit ] for federal climate tax report over the near and long term in the U.S. truly does feel brighter today. .

Before turning to results, I would like to briefly address the rationale for our recent capital raise in light of where Nuvve stands today. Recurring capital needs are inherent to emerging growth companies, and we've made it before. Wins typically take time to convert to revenues. .

The supply chain challenges over the past 18-plus months have drastically slowed the rollouts of the necessary hardware, whether it be electric vehicles themselves or charging equipment relative to the planned and normalized production capabilities.

Further, even once we have sold, installed and commission charging stations that are integrated with a Nuvve V2G software, generating revenue from any onetime sales of chargers must wait on interconnection queues and other elements of the broader V2G ecosystem to be in place before we can actually fully operate and thus generate material revenues from V2G activities.

.

Despite this backdrop, we must continue to invest in and position our business for the future, whether outright through investments in key partnerships, sales and marketing efforts, or by occasionally electing to strategically sell hardware at a discount because we see compelling multiyear recurring revenue opportunity once the entire V2G ecosystem aligns for that particular customer project.

.

The equity market has not been kind for the companies looking to raise money in 2022 as a result of various microeconomic factors. However, we cannot risk jeopardizing our business plan and our path forward by waiting for a more favorable equity market backdrop, over which we have no control to make something critical investments.

The additional capital allows us to expand our backlog and this earning potentials. As such, in the second quarter, we entered into an at-the-market offering program, or ATM program, as previously discussed, and to date have raised $3.8 million via that program. .

Further, a few weeks ago, we announced that we closed a registered direct offering that resulted in an additional $13.1 million in cash to Nuvve balance sheet. Maybe we'll touch more on these in a few minutes. But the addition of this approximately $17 million is [ queued ] to funding future growth. .

one, our qualification to start commercial operation in the Japanese energy market. Two, our entering into an MOU with the U.S. DOE to accelerate V2G technology, which I discussed in my opening remarks last time. Three, an agreement with Power Electronics to add Nuvve V2G certified capabilities to their bidirectional chargers.

Four, an alliance with Cenntro to bundle Nuvve charging packages with the U.S. commercial fleet product lined up and five, executing a collaboration agreement with 2021.AI. We provided more color on each of these announcements during our May earnings call. .

Since then, in late June, we announced another exciting partnership. This one will Switch, a leader in charging infrastructure operation and maintenance software. This is yet another example of us investing in the future to ensure that we extend our lead and further build our competitive advantage in V2G.

Switch has developed an operating system that goes inside the charging station that we believe is far more advanced than anything else in the market. The cloud platform is built on the latest open charge point protocol or OCTP, which is version 2.0.1.

As a result, they are the world's first and only charging pattern that is native to plug and charge and vehicle to everything or V2X.

We have been working with Switch for the last 3 years with the goal of standardizing charging solutions and have elected not only to integrate our GIVe platform with their platform but have also made a strategic investment in the company. .

We believe that getting further upstream into the infrastructure as we are doing here, can only help our ability to scale up faster and [indiscernible] concerning them, we are not only moving upstream, but we are also building a competitive moat against other V2G aspirants..

Lastly, we believe Switch is a great channel partner for us to expand our reach with OEMs and other players in the V2G value chain. .

Moving along, the momentum has continued in the third quarter as last month, we disclosed an agreement with San Diego Gas and Electric SDG&E that pairs our V2G platform with the utility's Emergency Load Reduction Program or ELRP.

Recall that in July of last year, we disclosed that we have been chosen as the V2G platform provider for the Cajon Valley Union School District school bus program. Since then, high capacity chargers were installed at their bus yard in San Diego. .

This achievement shows what can happen when we partner with utilities.

Through the ELRP program, electric school bus fleets equipped with V2G charging through our GIVe platform are capable of and commissioned to provide energy backup to the grid during emergency load reduction events helping to avoid costly and inconvenient retailing outage and ensure service reliability for SDG&E's customer.

In return, qualifies if customers can receive $2 per kilowatt hour for verified export load/load reduction. .

The ELRP program represent a potential revenue opportunity per bus of $7,200 per year or $100 per kilowatt year.

First on background, the California Public Utilities Commission, or CPUC, created the ERP in 2021 to pilot the new demand response approach during peak summer electricity usage periods from May through October for both commercial and residential customers. .

Our partnership in the Cajon Valley Districts marks the first school bus fleet to be integrated into the ELRP in California. With all of the infrastructure and paperwork in place, we're able to start generating great service revenues immediately, although at marginal levels, given the relatively small size of the project.

Combined with the [indiscernible] underway are Cajon valley, Ramona and San Diego School districts, this is about 1.7 megawatt of capacity that is planned to be available over the future months.

We see a growing set of opportunities elsewhere in California and eventually across other space that are likely to implement similar programs in their efforts to combat the increased strain on the country's aging grid and the worsening impact of climate change on grid operability. .

Building on the momentum with San Diego Gas & Electric, we have just disclosed a partnership with Vistra Corporation, one of the largest energy generation and retailer headquartered in Dallas, Texas. .

This partnership aims both at trading channels [indiscernible] to provide its charging management system to EV owners and drivers as well as creating access to multiple value by providing grid services focused in Texas.

As you might be aware, the energy market in Texas has been extremely volatile with big consumption achieving levels never reached before. Nuvve and Vistra are initially targeting school districts in the Vistra territory, and we are jointly developing programs within both EPA and local subsidies as well as financing package.

The goal is to deploy 250 school buses over the next 18 months of 15 megawatts of power capacity, which provides us the opportunity to generate future fleet as a service and grid service revenues. .

Finally, earlier this week, we announced entry into an MOU with the Maine Maritime Academy to collaborate on the framework of V2G across maritime applications.

As part of the program, they will expand our current academic and certification programs to include delivery of workforce training in V2G related data science, operations, cybersecurity and artificial intelligence. Vehicle-to-grid solutions could enable ships and other vessels to sow and give energy back to the grid via ports, Island and waterways.

This builds on commentary we've made in recent quarters about continuing to build out academic partnerships and consistently exploring new market opportunities for V2G. .

Turning now to megawatts under management, which is we view as an indicator of the potential revenue growth embedded into our commercial wins. As of June 30, 2022, we had 16.1 megawatts under management installed.

This reflects roughly 10% increase from March 31, 2022 megawatts under management of 14.7% and a 132% increase over the 6.9 megawatts under management on June 30, 2021. .

commercial, operational, technology, et cetera. and we are incredibly excited about the long-term opportunities that each of these announcements provide as vehicle electrification and V2G adoption play out over the years ahead. Each of these agreements is [ essential ] for the growth that we believe lie ahead of Nuvve. .

We continue to execute on the recently and previously announced agreements and partnerships as all of the pieces of the V2G puzzle come together. At the same time, we continue to chase additional partnerships and customers that we believe will further strengthen the outlook for our business.

We look forward to working with current and prospective partners and continuing to have exciting news to disclose in the future. .

I will now turn the call over to David to discuss our financial results before I wrap up with some prepared remarks, and we open to Q&A. .

Thanks, Gregory. I will start with a recap of second quarter 2022 results. In the second quarter, we generated total revenues of $1.3 million compared to $981,000 in the second quarter of 2021. Within this increase, product and service revenues increased by nearly 40% on a year-over-year basis and represented 82% of total revenues. .

We also experienced a 9% increase in grant revenues. Product and service revenue should continue to be the lion's share of revenues going forward. On a sequential basis, total revenues fell by approximately 45%.

As noted on our first quarter call in May, first quarter 2022 results were unique as they benefited from the sale of 5 electric school buses, which did not repeat in the second quarter. .

Margins on products and service revenues were 3.1% for the second quarter 2022 compared to 52.7% for the second quarter last year.

The decline on a year-over-year basis primarily reflects a sales mix shift and our decision to engage in the sale of DC chargers at a discount in return for the contractual rights for a larger share of future grid service revenues with a particular customer.

As we have stated before, DC charger gross margins at standard pricing generally range from 20% to 25%, while AC chargers gross margins are approximately 50%. .

Total operating costs, excluding cost of sales, were $10.3 million from the second quarter of 2022 compared to $7 million in the second quarter of 2021.

The increase was primarily attributable to increased cost of sales associated with being a public company, an increase in payroll costs from increased staffing and costs associated with Levo, which we established last year. .

On a sequential basis versus the first quarter of 2022, the increase was $0.5 million, up from $9.8 million, largely due to higher payroll costs and legal costs.

Cash operating expense, excluding cost of sales, stock compensation, and depreciation and amortization was $8.4 million in the second quarter of 2022 compared to $8.7 million for the first quarter of 2022. Levo incurred $0.7 million in operating expenses during the second quarter. .

Other expense was $43.3 million in the second quarter of 2022 versus $154,000 in the year ago quarter.

The expense in the current quarter was driven by a write-off of deferred financing costs associated with the value of warrants and stock options granted to Stonepeak and Evolve last year in return for their capital commitment to fund up to $750 million in V2G-enabled EV fleet deployments of school buses through Levo mobility. .

We impaired the deferred financing costs this quarter, primarily due to the fact that we had not entered into fleet as a service customer contracts requiring preferred capital commitments from Stonepeak and Evolve in excess of $43.6 million within 1 year of the deferred financing costs being capitalized.

This impairment charge does not impact the existing capital commitment we have from Stonepeak and Evolve or our pursuit of customer deployments, funded by this capital commitment. Net loss attributable to newly common stockholders for the second quarter of 2022 was $51.5 million compared to $6.2 million for the second quarter of 2021. .

Now turning to the balance sheet. We had approximately $14.9 million in cash as of June 30, 2022, excluding $0.5 million in restricted cash. During the quarter, we raised $1.9 million from our ATM program. In addition, we raised $2 million through the sale of 134,499 shares to our CEO and COO at a share price of $14.87 per share. .

2.15 million shares of common stock pre-funded warrants to purchase 1.85 million shares and warrants to purchase 4 million additional shares that are exercisable beginning 6 months from closing for a period of 5 years. The net proceeds to the company from this offering was $13.1 million.

Further, we retained the ability through our ATM program to raise additional funds up to an aggregate offering price of $25 million. .

We used $8.8 million in cash during the second quarter, primarily attributed to $8 million in net cash losses, $3.7 million in higher working capital, $0.1 million in fixed asset purchases associated with our new corporate office space, a $1 million investment in Switch offset by $0.2 million in foreign currency exchange rate gains and $4 million raised through financing activities.

.

Inventory increased by $1.5 million to $10.8 million at the end of the second quarter from $9.3 million at the end of the first quarter of 2022. The increase was driven primarily by receipts of DC charger inventory that we ordered in 2021.

Accounts payable was marginally higher by $0.1 million, increasing to $3.3 million at the end of the second quarter from $3.2 million at the end of the first quarter of 2022. .

Now turning to our megawatts under management and estimated future grid service revenues. As a reminder, megawatts under management is a metric we use to quantify the aggregated amount of electrical capacity from the deployment of our V2G chargers, V1G chargers and stationary batteries that Nuvve manages and can supply under ideal conditions.

Currently, our megawatts under management includes chargers and batteries located throughout the United States, Europe and Japan.

As Gregory mentioned, during the second quarter, we added 1.4 megawatts under management in installed capacity increasing our total megawatts under management to 16.1 from 14.7 megawatts at the end of the first quarter 2022. .

I would like to point out that we have changed the definition of megawatts under management this quarter and going forward to only include those chargers that have been both installed and commissioned. Previously, our definition included some chargers that were not yet commissioned.

We believe including only those chargers that are both installed and commissioned is a better representation of megawatts under management. We made this change to how we track megawatts under management as we have recently experienced some delays for some of our customers in the time between when they are installed and they're commissioning. .

The 16.1 megawatts under management was comprised of 2.9 megawatts from DC chargers, 5 megawatts from AC chargers and 8.2 megawatts from stationary batteries. And as we create future V2G hubs, we will further expand our megawatts under management.

This brings me to estimated future grid service revenues associated with our megawatts under management and megawatts to be deployed, which is based upon a combination of contracted grid service revenues and merchant exposed revenues. .

Contracted grid service revenues results from negotiated revenues per kilowatt year be paid by the utilities.

Merchant exposed grid service revenues is projected based on a number of factors and inputs including the types of vehicles connected to our network, the expected use pattern for those vehicles, the length of term, the customer agreements and the geographies of the deployments. .

Depending on the geographic regions of our deployments, the grid service revenue opportunities will vary, and we are currently seeing grid service revenues generally ranging between $85 per kilowatt year up to $300 per kilowatt year.

These revenues include a combination of contracted services and merchant exposed services given the long-term nature of our customer deployments. These revenues are generally recurring over a period of 10 to 12 years. At June 30, our hardware to service backlog was $3.9 million, consistent with the backlog at March 31. .

And with that, let me turn it back to Gregory for some closing thoughts before we go to Q&A. .

Thanks, David. To summarize, we continue to plant seeds for additional growth and to retain our competitive edge as demonstrated by the various commercial and technical partnerships we disclosed during the second quarter and in recent weeks. All the while, we continue to experience healthy growth in our megawatts under management. .

We are positively pleased to receive federal support over the past several months, both with the DOE grant program progressing towards realization and with the climate spend package recently announced as part of the Inflation Reduction Act of 2022.

We continue to forge ahead and build towards the future despite the uncertain macro backdrop and a pace of revenue conversion and project startup that remains [ subjected to it ]. We look forward to speaking with you again on our third quarter 2022 earnings call. .

With that, we'll now turn the call over to the operator to begin our Q&A.

Operator?.

[Operator Instructions] And our first question is from Eric Stine. .

So maybe first thing, I know in the past, you've talked about an overall pipeline, I believe, if we go back a few quarters, you sized it, $225 million. Curious if you could provide an update on that.

And then I'd love to know how it breaks down high level between various applications, whether it's school bus, fleets, et cetera?.

Yes. I think that, Eric, that's a good range for where it is. It's probably a little bit higher now. Gregory, do you want to talk about the mix. .

So the mix includes some school buses. And I mean, some examples, for example, related to the Troy school district where we have [indiscernible] Levo as the [indiscernible] on buses that will be deployed there.

But it also includes for example, the other project that we've talked about, the deployment of the charging station in the parking lot outside of the Bluebird facility in Georgia.

So there is a mix of facilities that are deployed through that significant amount of school bus, either being produced or being actually used and some commercial fleets as well that we have not announced yet. .

Yes. And Eric, I might add. I probably think about it maybe 4 or 5 buckets, one, which is we have kind of our day-to-day school districts, small and large, that our salespeople are in the market every day that consists of our pipeline. And then we have some very large sizable proposals in our pipeline through Levo.

And then, as you know, and Gregory mentioned, we've talked about several hubs that we're engaged with that make up a balance of the pipeline than last is our fleet customers. So there's probably the 4 buckets to think about. Some are larger than others. And we have a broad channel that we're going to market with. .

All right, that helps. And maybe a good segue to Levo. I don't know if you would characterize the -- maybe not the activity, but just the fleets that have gone that route, whether that's a little bit behind schedule or on schedule. But just maybe talk about the outlook there.

And just curious, are some of the fleets there waiting on the EPA funding waiting to see if they get grant funding before pulling the trigger on something with Levo? Or are there other limiting factors?.

I think that the one that I'm working with the EPA usually, the school districts and there -- the EPA is a great sign point usually, but then that creates a broader discussion around how do we compare to old fleets.

Now there are also opportunities with what I would call fleet owner and operator or just operators for which Levo is a great fit as a partner in helping those fleet operators and on operators to convert their fleet into electric, and we see some of those opportunities through this channel.

And what's great about it is, yes, you can do it with the support from some of the subsidies that are coming, but it's very often also a commercial piece that is important and that doesn't have to go through the complexity that you have to deal with when you work with the school districts. .

Right. Got it. That makes sense. Got a lot of things to cover. But I guess maybe on the DOE tie up, you've got the MOU that you signed.

Anything that we need to look for in terms of next steps or kind of what the timing may be for that playing out?.

So nothing that we can share at this point. But as soon as we get more resolution, that's what we are able to share on. .

Okay, worth a trial. I'll stay tuned on that. I guess last one. I saw this -- I think it was earlier this week or late -- or the previous week, but I saw that Rhombus Energy. And I know they've been one of your charging partners acquired by BorgWarner.

Just thoughts on impact there? And is that a good thing? Is that a bad thing? How should we think about it?.

It's a great thing, right? I mean, when you have a vendor that is a smaller player that gets acquired by -- And honestly, that product is -- this is the product that we are commercializing right now, and we have some exposure on that, but the electronics products will come later.

And so for them to be acquired by such a large organization that has been around for some time, but also have started to work on the EV space as well. This is a great outcome for our relationship with Rhombus. .

And we have no further questions in queue at this time. I'll turn it back over to Royes. .

Thank you very much, everybody, and we are looking forward to have the next call in about 3 months. Have a great day. .

That concludes today's conference. Thank you for joining. Have a pleasant day..