Good afternoon and welcome to Nuvve Holding Corp.’s Third Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference today 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 third quarter 2023 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 events 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 evening to all. Thank you for joining our third quarter 2023 results call. We came into 2023 with optimism that we were going to experience a well overdue inflection in growth in our business. In the first half of the year, we began laying the foundation of this to play out with record orders and much higher sales than in 2022.

Momentum continued to build in the third quarter and so far in Q4. As discussed on our August call, we continue to evolve our AI capabilities by integrating Astrea AI into Nuvve’s FleetBox charge management app in July.

The enhanced functionality helps us maintain our differentiated edge and comes at a critical time as we accelerate deployments of our software kits hardware. With a 97% accuracy rate, Astrea AI is set to maximize revenue generation and bolster our V2G technology globally, revolutionizing EV usage and preparation.

In October, we deployed a record number of 38 AC and DC bidirectional charging stations connected to our GIVe platform.

While growing our megawatt on the management does not immediately correlate to revenue dollars, it is critical to our growth strategy as one, it increases our pipeline of potential future grid service revenue and two, with more and more people benefiting from the value of our V2G software, market awareness expands, which in turn accelerates demand for our products and services.

These deployments were carried out by Nuvve K-12 which was only launched in June of this year, in order to provide a full range of services in order to support fleet electrification from North American student transportation. We expect for record deployments in Q4 as the supply chain challenges that have plugged the last 2 years continue to abate.

Last month, we are proud to hit a big milestone by launching in Texas. With EPF funding, Nuvve K-12 was able to assist the Martinsville Independent School District or ISD in converting their 5 diesel bus fleets with 5 Blue Bird electric buses, 5 Nuvve Level 2 chargers and our innovative AI powered Nuvve FleetBox 2.0 charge management software.

With these deployments, we understand that Martinsville ISD as the first all-electric school bus fleet in the U.S. Finally, in California, we were honored to have received the highest score among applicants of a proposed award of $1.9 million from the California Energy Commission for our revolutionary RESCHOOL V2G project.

This recognition underscores our commitment to leveraging bidirectional EV school buses to enhance California’s power grid resiliency, marking not just a milestone for Nuvve, but at least for the state’s energy ecosystem.

In Q3, we continue to see steady growth in grid service revenues, which came in at 3.4x the level recorded during corresponding period last year.

We are also pleased to sell the 5 buses we have been carrying on our balance sheet for some time, which helped sustain the revenue growth trend for the first half of the year, while margin delivery were freed up working capital through these bus sales.

Altogether, this puts us on pace to grow total company revenue by more than 50% year-over-year in 2023 with one quarter left to go. As stated before however, growth can be lumpy, especially when there are substantial government dollars for electric school bus fleet customers to go chase, which can and does impact the timing of orders and sales.

Further, we have no doubt operating against the capital market backdrop that has seen a continued deterioration in sentiment towards clean tech. It’s something that seems to have only worsened in recent weeks due to the results and commentary from clean tech companies and above the EV landscape.

With our cash runway, we felt this backdrop gave us no choice but to continue raising capital, piecemeal fashion at depressed equity prices as we did last month. Moving forward, we will continue to evaluate all options to methodically and incrementally finance our business while we await for an improvement in market conditions.

This may include additional liquidity financing and/or debt financing. For example, we may continue to work towards putting in place an asset-backed lending facility, which David will expand upon. We have also been working on reducing our cost structure yet again to optimize our cash runway.

Specifically, we are working towards lowering our cash expense rate to at or below $5 million per quarter as we get into 2024. This is the result of reducing our cost across administrative and legal functions we are still investing into our platform in a manner that is commensurate with our focused priority.

In October, we issued a press release discussing our pattern. The messaging behind putting out this release should be clear. We have been at this for a long time investing significant resources into growing our V2G patent portfolio and developing a comprehensive V2G solution.

With IT and expertise around areas such as power flow control, charge management and power capacity and as we push our technology further ahead with Astrea AI, we have a market leading offering and we remain the pure-play public company today with a proven track record in deploying commercially available and scalable vehicle to grid technology worldwide.

Our belief in and commitment to our role in the AI transition is unwavering. And we expect both the macro and capital market backdrop to get back on track after the current rough patch. We expect Nuvve to be there throughout as V2G forms a critical piece of the energy transition.

And as we march towards a critical inflection point in EV adoption in the second half of this decade. The 2022 Edition of the EPA Clean School Bus program was a big tailwind for our increased orders and sales in the first half of 2023. And we are excited about the subsequent round.

To update on this, in August, in August the next installment of $400 million competitive grant funding round closed its application process, that is have already expected to start trickling out later this month and run into January, with the words to be issued later in Q1 2024.

Since our last call, EPA has also opened up a subsequent $500 million funding round. This installment will look more similar to around one in 2022 as it will be a rebate process. The application window for this round is expected to be open until the end of January.

Rebate recipients are expected to be notified in April 2024, after which winners can place purchase orders in relatively short order and submit for reimbursement. We look forward to hopefully adding even more success in these rounds as we did in 2022. With our Nuvve K-12 unit, we are confident we are even better positioned.

Before passing it over to David to discuss our financial results, we spoke a lot earlier in the year about our Circle K partnership in the Nordics. And it forms part of our strategic initiative to accelerate growth in megawatts under management to deployment of our GIVe platform on third party ChargePoint operator hardware.

As of today, we are actually completely integrated our software with the hardware, we expect to begin participating in the market and generating revenue prior to the end of the year.

More importantly, we are paving the way for more material revenue generation starting in 2024 and for exponential growth in megawatts under management in the region and beyond of the long-term. David, over to you..

Thanks, Gregory. I will start with a recap of third quarter 2023 results. In the third quarter we generated total revenues of $2.7 million compared $0.6 million in the third quarter of 2022. The increase was primarily driven by a large increase in charger hardware sales, higher grid service revenues and the sale of five buses.

Grid service revenues of $0.6 million represented 21% of total revenues this quarter and 3.4x increase from the prior year quarter. Year-to-date through September 30, 2023 grid service revenues were $0.8 million, which compares with $0.3 million for the prior year period, representing approximately a three fold increase.

Margins on products and service revenues were 9% for the third quarter 2023 compared to 43.3% in the year ago period, margins were heavily impacted by the affirmation sale of five busses. As a reminder, margins can be lumpy from quarter to quarter depending on the mix. DC charger gross margins at standard pricing generally range from 15% to 25%.

While AC charger gross margins are approximately 50%, but in dollar terms are a small fraction of the revenue of a DC charger. Grid service revenue margins are generally 30%.

Operating costs, excluding cost of sales was $8.8 million for the third quarter of 2023, compared to $8.9 million in the third quarter of 2022 declining mainly due to lower payroll and public company fees offset by higher consulting and legal expenses.

Cash operating expenses excluding cost of sales, stock compensation, and depreciation and amortization was $7.6 million in the third quarter of 2023 versus $7.7 million in the third quarter of 2022 and $7.3 million in the second quarter of 2023.

Other income was $0.3 million in the third quarter of 2023, down from $1.94 million in the year ago quarter. The year ago period benefited from $1.85 million non-cash gain from the change in the value of warrants.

Net loss attributable to Nuvve common stockholders increase in the third quarter of 2023 to $8.3 million from a net loss of $6.7 million in Q3 of 2022. The increase was also primarily a result of the just mentioned non-cash gain in the year ago quarter.

Now turning to our balance sheet, we had approximately $13.9 million in cash as of September 30, 2023, excluding $0.5 million in restricted cash. Included in our cash balance was approximately $9.8 million of EPA funds received. We expect to remit these funds to customers during the fourth quarter.

Net cash generated from operating activities was $2.8 million in the third quarter of 2023. Excluding the benefit from the incremental EPA funds received in Q3 $6.3 million net cash used in operating activities was $4 million for the third quarter.

During the third quarter, inventories declined by $2.1 million driven by improvement in inventory turnover of charging stations. Along with the benefit of selling five buses, we held an inventory.

As we had previously discussed, the improvement in inventory turnover is what we had expected as we continue to sell through the inventory investments we made in the back half of 2021 to mitigate industry wide supply chain constraints. During the third quarter, we raised net cash of $0.1 million through our aftermarket or ATM facility.

Subsequent to quarter end, we raised an additional $3.2 million in gross proceeds through two separate offerings in October, as previously disclosed. As we said last time, we remain focused on optimizing our ability to raise capital.

We continue to work on putting in place a long-term asset based lending facility or ABL, which can provide additional liquidity. The borrowing capacity of the ABL is based upon our underlying inventories and accounts receivables.

We believe this type of debt facility aligns well with our business model, given the ongoing inventory and accounts receivable amounts, we carry on our balance sheet. Now, turning over to 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 V1G and V2G chargers, which are primarily deployed in the electric school bus market in the U.S., and in light duty fleet deployments in Europe in addition to stationary batteries.

Currently, these chargers and batteries are located throughout the United States, Europe and Japan. Megawatts under management in the third quarter increased 6.1% over the second quarter of 2023 to 21.2 megawatts from 20 megawatts. In terms of its composition, 8.2 megawatts were from stationary batteries and 13 megawatts were from EV chargers.

On a year-over-year basis, megawatts under management increased by 30%. We continue to expect an acceleration in our megawatts under management as we go through the second half of the year.

This is evidenced in the press release we issued last week in which we noted that the following record installations in the third quarter, megawatts under management as of October end increased to 22.7 megawatts, or 7.1%, in only the first month of the fourth quarter.

Depending on the geographic regions of our deployments, our grid service revenue opportunities will vary. We are currently seeing grid service revenue opportunities for vehicle to grid services ranging between $85 per kilowatt-year up to $300 per kilowatt-year in certain key markets we are focusing on.

And with our planned expansion of V1G charging management services in Europe, we are seeing further grid service revenue opportunities. 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 up to periods as long as 10 years to 12 years. Now turning to backlog, on September 30th our hardware and service backlog was $5.6 million, down from $6.1 million on June 30th.

Order activity slowed in Q3 relative to elevated levels in the first half of the year, which benefited from EPA funding. Looking out for the fourth quarter, we expect full year revenues for 2023 to exceed $8 million, and we expect operating expenses excluding cost of sales for the full year to be under $34 million.

As Gregory mentioned, we have also implemented several cost reduction initiatives, which will reduce our cash operating expenses further, with which we expect to trend that approximately $5 million per quarter in 2024. This concludes my portion of the prepared remarks. Gregory, back to you to wrap up..

To finish up, I would like to discuss the big picture and provide a high level view of the main revenue drivers of our business as we look ahead. One, Nuvve K-12, which I briefly touched earlier on.

Our value proposition here relies on vehicle readiness, energy management and battery life extension is offering 45 strong positions as a service provider in the space. With more than 500 school buses connected to our platform today, we are confident we will keep on leading in this segment.

Two, stationary storage, where our growth is accelerating in 2023. Our core business is to provide grid services with highly unreliable batteries and EVs can be employed at any time. As a result, it’s not sudden surprise that we can also manage stationary storage.

And with our advanced platform, we believe that we can extract more value for these batteries than any other player in the space. Such batteries are included into our deployments today with Circle K, the University of California, San Diego, and the University of Delaware.

More and more developers and battery manufacturers are coming to us to manage battery deployments that are underway. We see this as the pathway to accelerate growth in megawatts under management and flexing our grid service muscles with over the multiple megawatts in the pipeline.

And likely, three, Astrea forecasting capabilities for transport operators or CTOs and utilities.

Our fundamental work on predictive analytics, which is based on our partnership with 2021 for AI as well as to developing very advanced features that allow us to predict with a very high level of confidence when an electric vehicle is going to be connected to a charging station and the amount of kilowatt-hour it will need to onboard during the session.

This allows us to offer energy services to CTO companies and provide grid usage forecast utilities. The ability to predict where EV charging bottlenecks seems likely to happen over the subsequent two days or three days is a very valuable service for utilities.

The ability to address this by adjusting charging time without impacting end users is critical to enabling an equitable cost of energy while we go through the EV adoption period. Beyond this, we also continue to explore opportunities in the Microgrid and consumer EVC.

And with that, we thank all of you not only for joining us today, but for sticking with us during what have been challenging times. Your trusting our vision and technology continues to propel us forward and we remain grateful. Operator, please open up the line for any questions..

Operator:.

Thank you very much for listening to us today. We are again very excited about the opportunities that are in front of us and remain available at any time if any of our shareholders has any questions for us. So, thank you very much and have a good evening..

This concludes today’s conference call. Thank you for attending..