Good afternoon, and welcome to Nuvve Holding Corporation's Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Joe Dorame. Please go ahead..

Thank you, Gary. Good afternoon, and thank you for joining us today. On the call are Gregory Poilasne, Chief Executive Officer; and David Robson, Chief Financial Officer of Nuvve. Before we begin, I’d 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 our periodic SEC filings 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'd like to turn the call over to Gregory Poilasne, Chief Executive Officer of Nuvve.

Gregory?.

On August 4, we completed formation of our sustainable joint venture, Levo Mobility that we announced last quarter with Stonepeak Partners and Stonepeak portfolio company Evolve Transition Infrastructure. We are very excited about the opportunity that Levo will create for Nuvve going forward.

As part of the joint venture, Stonepeak and Levo plan to deploy from $750 million upto an aggregate to 1 billion capital commitment to Levo. Levo’s mission is to rapidly advance the electrification of transportation by funding V2G-enabled electric vehicle fleets deployments.

Levo's turnkey solution simplifies and streamlines electrification, lower the total cost of EV operation for fleet owners, and support the grid when the electrical vehicals are not in use.

For a fixed monthly payment with no upfront cost, Levo will provide the EVs, such as electric school buses, charging infrastructure powered by Nuvve's V2G platform, EV and charging station maintenance, energy management, and technical advice.

We have previously communicated in the US, we've been very focused on electric school buses, which we believe provide an opportunity for solidify our lead in the V2G while reducing carbon emissions.

Electrifying school buses also remains a top priority for the Biden administration, within proposed $1.2 trillion Bipartisan Infrastructure Framework to $2.5 billion plan to replace 1,000s of internal combustion engine with zero emission electric vehicles represent only a fraction of funding needed to electrify all school buses and transit bus across the country.

Levo’s expertise, business model and ability to provide full financed EV fleet options for school districts and other fleet owners aims to bring the gap -- aims to bridge the gap between the need to electrify the nation's transportation fleet and the public funding available to do so.

While the initial focus of Levo is school bus fleet, we see a vast opportunity in other feed verticals such as commercial fleets, last-mile delivery, ride hailing and ride sharing, as well as municipal services.

Nuvve will continue to work with our global industry partners, including developers, fleet owners and operators to enable widespread adoption of V2G technology that complements Nuvve's offering. In short, finalizing the JV is a critical growth path forward, not going to do right by far, but also to expand the reach of our technology.

This is just the beginning of our differentiated approach that can be scaled and replicated to drive future revenue. One key differentiator about Nuvve is that we work with those across the value chain from dealerships to school districts to build relationships.

That also translates the customer experience, where we are focused on simplifying the whole process for these dealerships and school districts supporting end-to-end needs. In the near-term, we are focused on targeting a handful of states that offer the highest potential return, and where we see far the fastest path to commercialization.

Over the long term, we believe that, there is an opportunity to achieve significant annual revenue based on the $750 million commitment from Stonepeak over the life of the electric bus, which is on average 12 years. I'd like to turn now to the great partnership we have with the school bus industry leader Blue Bird.

As we discussed in our call last quarter, they delivered the first operational V2G typical school bus utilizing our charging technology. And yesterday, we announced an MOU that extend our partnership covering three key aspects. First, the financing of Blue Bird school buses, and related infrastructure to Levo Mobility.

Second, the deployment of charging station at key dealerships to demonstrate the solution to local school districts. Finally, the deployment of a large number of charging stations in the parking lot outside the Blue Bird production site to demonstrate the stability to get the solution.

These are example of our differentiated technology and important partnerships will lead OEMs to continue to drive the extended implementation of our products across the US..

During this quarter, we also announced a few other deployments in California as well as other states, including Ramona School Districts and Cajon Valley School districts, these deployments that, include our DCC kilowatt solution by expanding the initial deployment in taking – and in the previous quarter.

Some of these deployments are in partnership with key utilities such as [indiscernible] as well as a few others not yet announced. The purpose of such deployments goes from simple demonstration of the technology to full scale deployments, including financing supported by utilities and in combination with Levo Mobility.

We have also been qualified and approved by Sourcewell, which allows us to reach a large number – a large number of IQs for municipalities and other school districts.

During the second quarter, we also announced the collaboration with Romeo Power, a publicly traded energy technology leader delivering advanced electrification solutions for complex commercial vehicle applications.

Through this collaboration, we will integrate our communication protocols between Nuvve's B2C platform and Romeo Power's battery management system. This collaboration is a great example of how we are continuing to build an ecosystem of solution providers to electrify commercial vehicle fleets.

We need innovation across the transportation and energy industries to create a zero carbon world and this is another step forward in that direction. It demonstrates the reach of our technology from battery integration to full financing with Levo Mobility.

Turning next to an update on our business in Europe, in Denmark through a subsidiary called Nuvve Denmark ApS. We continue to see the value of an economic viability of V2G technology, which has been successfully demonstrated and deployed in areas with favorable market conditions.

We also announced during the quarter that we're working through a partnership with V2 markets, who are from new area like Spain, that the promises of V2G can be fully realized. As we continue our growth efforts in the region, we are pleased to have appointed a new leader of Europe, Christian Blom.

Christian has an impressive leadership experience across large Domestic and International Corporations as well as Products. Most recently, Christian serves as CEO and COO of Kyoto Group, where he helped develop an Innovative Renewable Energy technology offering and significantly grew the business.

We look forward to benefiting from his industry experience, along with his broad range of skill set, which is honed through his 20-plus year's career including driving operational efficiency, managing supply chain operations and successfully developing and bringing innovative products to market.

As you can see, we have a lot of exciting momentum underway which demonstrate the critical role that he plays with societies, governments and companies across the globe. As we continue to build our progress, we are seeing strong demand for technology from customers. We have a strong backlog.

And David will provide color around the how this will translate to revenue overtime, including through the Levo JV. In addition, our pipeline is growing at an even faster rate than our backlog. And we have a large number of customer contracts in progress through the second quarter.

We believe, our strong backlog and robust pipeline is a good indicator of the success we are achieving, the growing customer demand and partnership and strong future revenue. Looking ahead, we believe, we are well positioned to continue building in our 10 years of experience in this complex market.

And continuing to build relationships with key stakeholders including OEMs, other business partners and customers, the world that helps accelerate the implementation of our technology each of with our vital for our efforts. And now, I will turn the call over to David..

Thanks, Gregory. I'll start with an overview of our results for the quarter and our current financial position before getting into our outlook for the remainder of 2021.

As a reminder, we completed the Levo Joint Venture on August 4th, and therefore the results of the second quarter and backlog as of June 30th are not reflective of the potential it presents. In the second quarter of 2021, we generated total revenues of a million dollars compared to half a million for the second quarter of 2020, an increase of 112%.

We saw an acceleration of deployment and installation of our Level 2 in DC charging stations over the prior year in over the first quarter of 2021. As a note, we expect grant revenues to be a smaller portion of our future revenues as we deploy more hardware and grid services to commercial customers.

Margin on products and service revenues was 53% for the second quarter, compared to 59% for the sequential first quarter. The change in, Q2, compared with Q1 as a result of DC charger sales making up a larger share of the revenues and carry a lower overall gross margin rate.

SG&A expenses were $5.3 million for the second quarter 2021, as compared to $0.9 million in the year ago second quarter. The increase was primarily attributable to an increase in compensation expenses, professional fees, and other expenses associated with becoming a public company.

Second quarter R&D expenses were $1.7 million, from $0.7 million in the year ago period. The increase was primarily attributable to an increase in compensation expenses, and subcontractor expenses used to advance the company's platform functionality in integration with more vehicles.

Net loss for the second quarter of 2021 was $6.2 million, compared to $1.1 million in the second quarter of 2020. Now turning to our balance sheet, we had approximately $48.1 million in cash as of June 30, 2021, and remain in a strong position with the funding from the transaction and our PIPE investment.

Inventory increased to $4.2 million at the end of the second quarter from $2.9 million for the sequential first quarter in conjunction with higher quarter backlog in industry-wide supply chain constraints, which has increased inventory lead times.

During the quarter we capitalized $43.8 million in deferred financing costs associated with the valuation of $6 million warrants and $5 million options granted to Stonepeak partners in conjunction with the Levo transaction.

During the quarter, we use $10.5 million in operating cash flows of which $5.3 million resulted from our net loss during the quarter, excluding non-cash charges and $5.5 million was used to increase inventories and for the payment of payables and accrued expenses related to our IPO.

We use three million cash for financing activities during the quarter of which $2 million was for the purchase of stock from EDF associated with the IPO and $1 million was used for capitalized professional fees principally associated with the Levo transaction.

And as Gregory mentioned, this quarter we are introducing one new metric backlog, which will be disclosing going forward. Backlog represents closed contracts that have not yet been installed and represent future revenues that have not yet been recognized.

As of June 30, 2021, we had an order backlog of $6.4 million compared to $1.8 million at the end of the first quarter, which is comprised of orders for charging station hardware, ED buses and services. As we deliver upon the backlog, these products and services could be either sold out right to our customers or finance through Levo.

If the contracts are financed through Levo then the revenue recognition period would be determined based on the terms of the financing arrangement. We are pleased with the backlog levels we have achieved to-date this year. And we are also pleased to see our pipeline growing an even faster rate.

Before turning to our outlook, I'll briefly review some of the key financial terms of the Levo joint venture. First, as we announced last quarter Nuvve owned 51% of the common stock of Levo. Stonepeak owns 44.1% and Evolve owns 4.9%. Stonepeak and Evolve are committed to contribute initially up to $750 million in capital.

And in return for their capital contributions, they will receive preferred stock units, which were which will earn an 8% annual dividend to be paid quarterly.

In addition to their 8% preferred return, the preferred shareholders will also be entitled to receive total distributions sufficient to achieve the greater of a 12.5% IRR and a 1.55 times MOIC after which returns are allocated to the common shareholders.

After completing the definitive agreement this month, the Levo Board of Directors was also formed and consists of nine members; five appointed by Nuvve, three appointed by Stonepeak and one independent member was appointed.

Over the coming quarters we will be building out the Levo organization and management team to drive forward the Levo product offerings which we believe will accelerate the electrification of vehicles and accelerate the growth opportunities for Levo and Nuvve. We look forward to updating you along the way.

Turning to our outlook for the remainder of the year. With the completion of our Stonepeak venture, we are demonstrating strong momentum across our business which is reflected in our increased customer backlog. And we expect this momentum to continue based on the even faster growth rate we are experienced in our pipeline.

With respect to gross margins, for the current customers we have under contract and the terms of customer contracts, we are currently negotiating. Our DC charging station gross margins are still ranging between 20% to 25% on average.

With respect to operating expenses as a new public company, we have made critical investments in building up our sales, technology and business development, and engineering staff, as well as additional efforts. This is critical to why we went public and these expenses are a deliberate part of the business plan we are executing.

We continue to expect quarterly expenses, excluding expenses associated with Levo and excluding the cost of product and service revenues to range between $6 million to $7 million per quarter for the next several quarters, depending on the timing of new headcount we are planning to onboard.

In addition, we anticipate additional spending to establish the legal entity, which we are now forming after the closing of the definitive agreement in August. We expect to consolidate expenses of Levo into Nuvve given our 51% ownership of the common stock in controlling interests.

We ended the quarter with a cash position of $48.1 million on our balance sheet that we believe is sufficient to grow our business and generate additional revenues while pursuing our growth opportunities. And now I'll turn the call back to Gregory..

Thanks, David. In summary, we are pleased to learn from we are seeing in our business, the demand from customers and exciting partnership underway. We are continuing to leverage our leading and differentiated technology that meets a pressing need to lower the cost of EV ownership that is growing rapidly.

We believe the strong demand and robust pipeline will drive significant revenue and shareholder value in the near and long-term. We're excited about what's ahead and look forward to continuing to update -- to update you on our progress. Thank you for taking the time to join us today.

With that I will now turn it back to the operator to begin the question-and-answer session, operator..

We will now begin the question and answer session. [Operator Instructions] Our first question is from Eric Stine with Craig-Hallum. Please go ahead..

Hi, Gregory. Hi, David.

Hi, Eric.

Well, I appreciate you given the backlog number that's very helpful. Just any -- any color you give on the pipeline. I mean, clearly it's expanding. And really, it's expanded quite a bit with Levo. But any details around that. And what you've seen over the last two, three quarters would be very helpful..

Well I can start and Gregory can add. I think, as we said, we're seeing a pipeline and even a faster rate than our backlog. And now that we just recently announced Levo received more interest because of that. So we like the speed at which is growing, we're not in position today to give a quantitative number to what that is..

Okay, that's fair, but maybe then just on Stonepeak since that's going to be a big driver of it. I mean, obviously right now, you're, you're in early stages there.

But you also know kind of some of the business that is out there to be had I mean, do you feel, or how far do you feel you're down the path in educating the market, that this is even an option, right to finance a school bus for the same monthly payment as a diesel.

Do you feel that the market is sufficiently educated to take advantage of that, or is that something that you think will take some work here going forward?.

So, let me take that. I think that we -- the market is very different from place to place. And as I said earlier, we have -- we can't be everywhere. And so we have decided to focus our attention on a handful of states. And that handful of states were selected on multiple factor some of them being the value and potential value of V2G in those states.

But also the level of reception that we've seen from the different channels we've been able to expose in those territories, as well, as in the case of working with Blue Bird, the partnership we can establish with a local dealership that have the local relationships.

And so I think to answer your question, there's a broad range, but we see some areas and some of -- I always get some early adopters that are ready to dive into it. And we see quite a big group of that coming to us right now. And I hope we'll be positioned to announce some of them very, very soon.

And then it's a question of upkeeping dedication, which is why what we want to do is, going to the dealerships, setting up charging station buses, demonstrating to the local school districts how this all works together as well as doing this demonstration on -- in the parking lot of Blue Bird have a full-scale deployment with a large number of charging stations.

We think those are the steps to demonstrate and to accelerate the adoption to show that this is real, and to demonstrate to the people that school districts that they can do that, they can switch over to electric school buses without impacting their operation, right, their number one priority is transporting the kids safely and didn't want to pay more.

And that's where we believe we are putting all the bricks together to achieve that..

One thing I would add it right, which is we just closed on so peak in I mean, we're excited to get past that. And now we're -- now that the entities formed and it's official, we're building out marketing materials. As I said, in my remarks, we're building out a management team. And so more of that now can accelerate now that we closed it.

So the first step was to close on the transaction and form the entity which we've done. You're going to see more to come now that that's been completed..

Okay. Good. Maybe just last one, and then, I'll turn it over for someone else. But I noticed that announcement made by Boris that they're partnering with Nissan in Europe, clearly, I would expect that you'd be part of that. So maybe just kind of what you expect from that? What you're seeing from other OEMs..

Yeah. I mean, in general, two things. One is all probably just fleets. And right now, we're going to be successful with fleets. And that's going to be the entry point. Now, we think that the reach of the technology can really help across the board.

But when you talk to traditional large scale OEM, their focus is really about, how do I bring million EV's to the street, right. And we believe that our technology has a strong player in that. But we are -- as say, we are taking one step at a time. And right now our focus is on things. And even in those partnerships. Now we've worked with Nissan.

Now we have Nissan e-NV200 in Denmark that has been now that has been running on a platform for nearly five years now. And so we've always been working with Nissan. We have a good relationship with Nissan. And yes, when we look at, working with Nissan across Europe, and nearly 80 charging stations that are being deployed there as well.

That's all part of the same group. Today as a company, our number one focus is especially in the U.S. Europe is very important..

Got it, secondary, okay. Thanks a lot..

Mr. Simon. as a conference operator, please continue, if you have more questions..

I get to jump to another call..

Thank you..

Okay. This concludes our question-and-answer session. I would like to turn the conference back over to Gregory Poilasne for any closing remarks..

Yeah. Thank you very much. Thank you very much, everybody for being here today. What I need to emphasize and what I said is that, the fleets are very important for us in the short run, which is why we have the partnership with Bluebird. And that's because they have a much larger contribution to what we are doing. That's our number one focus.

And we are so excited about the opportunity associated with those three deployments. And expect to hear a lot more on that range over the next the next few weeks, as Levo is being rolled out. And we can share some more exciting news about the progress that we are making. So thank you very much for sharing with us these updates.

And we look forward to keeping on working with you over the next few months..

The government is now concluded. Thank you for attending today's presentation. You may now disconnect..