Charge Enterprises (CRGEQ) 10 May 232023 Q1 Earnings call transcript

Good day, everyone and welcome to the Charge Enterprises First Quarter 2023 Financial Results Webcast. I am Matthew. I will be your operator for today’s webcast. Today’s webcast is being broadcast over the Internet and is also recorded for playback purposes. After the speaker’s remarks, there will be a previously solicited question-and-answer session.

introductions, the like with Vice Christine and webcast turn Charge remarks Cannella. to over President, opening I to would today’s Enterprises, For Investor Relations ahead, go Please Ms. Cannella.

Vice morning, Welcome Enterprises. Charge Enterprises financial am Matthew. with XXXX to everyone. quarter webcast. you, Investor Relations Good Christine Thank Cannella, results President first of Charge I

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segments. We have two light capital

telecommunications segment, which Our and and infrastructure XG our service contracting includes depot, smart services, and wireless EV which commercial electrical operators Infrastructure, infrastructure A&S, for as our carriers. our business, our calls, our electrical EV connection CI infrastructure services voice known estate solution segment, and real Charge also SMS BW charging to monitoring and of fleet global provides business, business, data

and year-over-year in of our discuss XX% trends I charging, underlying quarter electrical million. were during first accomplishments businesses. strong for at from now the XXXX. would Revenues infrastructure benefited quarter our like the We higher EV to broadband $XXX

first drive strong in positive of adjusted the quarter these expect to tailwinds EBITDA We XXXX.

in a at to $XXX reputation first pleased product our clients a for of our have incredibly in offerings, booking for the demonstrating XXXX demand for the segment, while end delivering backlog are the million growing infrastructure surpassed to our We industry. quarter milestone approximately establishing

for pursuing opportunities several first with automotive electric or preferred vendor top quarter, partnerships vehicle large EVSEs become continued supply scale equipment and and the we OEMs retail jointly groups. During a add to to

me XX,XXX market, infrastructure has dealerships. the on retail automotive entire Let industry, about just which EV the franchise one of elaborate segment

to have XX% quarter, XXXX. have We goal. of project with the goal of these the dealerships stated the Through with by we initial engagements end our engaged of win first a targeted end of thousand

note Our expense $XX one transmission vary initial to solution revenue installed to years. in services that for project X on aggregated dealerships, type important If installation dealership and profits provide to gross is we It’s size achieve investment. full capture of the indicates needs. so size the auto far which the is and $XXX,XXX, $XX could of segment could on the chargers dealers approximately for just dealership, also $XXX customer initial next on million average in and their this we be over depending million XXXX million the alone and only

also evaluate the alliances adoption advances. actively to EV We partnership during the as of including vehicle announced movers recently Autel with strategic quarter, opportunity Energy develop our continue and electric Eaton and conformers with in industry and continue to first

fleet global storage together to Autel energy energy much more possibly as future as Eaton infrastructure the Charge For micro-grids. and charging able Energy, complete in with be solutions service of and and charging such will EV for electrification, manufacturers we and example, storage EVSE complex provide solutions a

XXXX, vehicles. on of charging CI on second unit business electric Moving the on give formed to capitalizing few to take half unprecedented EV nationwide to on CI minutes update is business. I wanted and a we facilitate transition to the the our focuses opportunity our infrastructure that an In

we our meaningful CI customer build team out During our of strategically and base. a pursued XXXX, accomplished

able make these generated We subsidiaries. with other investments are to by profits our

growth a offering veterans our EV touch customers multi-phase within recruited and process have built foundation of charging high infrastructure business. auto We to an experienced a industry for by creating team have

future develop as ahead. revenue platform create to dealerships various and diversified years streams and We a grow a view the services as products in

including and space growth maintenance other depots, expand partnerships We network, establishing office position and These fleets, dealer destinations. segments are for churches, monitoring seeds customer beyond the by multifamily investing into investments software us future and in planting and the services. malls, development, to other commercial

on to manufacturers auto currently first the onsite we to to critical have We franchised charging significant The articulated from the movers the what a charging the for focusing EV requirements. are combustion infrastructure vehicles. electric whom EV believe auto mandated infrastructure support are spend nation’s XX,XXX of transition dealers,

EV EV Our beginning The credit industry are as mandates favoring active the this recent drivers XX the Act, in infrastructure and are economic Investment portion climates key on in demand business tailwind more with macro supported the by OEMs. tax recent adoption guidelines emissions. goal to EV the infrastructure being of environment significant projects and federal Infrastructure stronger. proposal been the XX approximately has political, EPA for automotive is all XX Today, supporting the with market government, the CI current has our automotive projects engaging completed never Today, states capture to aggressive charging technological our with needs. currently in working many The Jobs and a for electric segment both for and vehicles. reduce and IRA such states,

service need. the there propelling EV In to EV scalable auto and addition, by well-positioned industry its solutions are that investment into aggressive the OEMs major white-glove is essential are plans forefront infrastructure this Charge the with

infrastructure strategically becoming we customers is partner laying While investing charging the operations, business, our that beginning. future is infrastructure long-term to growing of we committed only as EV this and EV adoption greatest enable lack a proliferates. growth The for This diversify to in are us our foundation the and adoption. adequate EV customer will are to base our the fast developing for charging one of allow roadblocks

succeed overcoming adoption electric deliver vehicle We is to clients throughout to hurdle, the this further to at Charge forefront enable services believe of Charge which that to sustainable and the mission. us positioning is our are EVs the electric country. We cornerstone excited at help future, Charger’s lead, to the a adoption, create the and more infrastructure, continually vehicle to paramount is building maintain

today’s would I to over our like over financial Now, go to turn Leah to webcast performance.

you a segment and results, good morning, on our financial EBITDA and will Today consolidated a which profit, measures, I basis. gross Andrew, Thank everyone. an walk financial adjusted key our are revenue, including you, through

X, and profit us begin Slide trends. Let on quarterly revenue Charge gross

fleet solutions result and of to a Telecommunication voice generated tower SMS are charging, segment in wireless Infrastructure are the businesses. with that and range routing charging services. quarter-to-quarter and via electrical our contracting, mix few XG reminder, and networks, XX-months, projects a vary global high-speed our electrical social installations data from broadband, can of partners our segment as building complete a from macro can volume Revenues vehicle Revenues as trends contains electric weeks EV within text and as include different parking As messages, derived and well events.

increases revenue quarter in The five-quarter of Looking quarter or last growth grew quarter quarter first first But of segment our of segments. results quarters, this of our comparison, the at while the segment XX% of our infrastructure revenue our forma revenues has business XX% that outpaced telecommunication to by million trend, in in for our our five grew $XXX compared first XXXX. XXXX, consistent year-over-year. with revenues telecommunication by million segment. pro segment the XX% In $XX year-over-year, infrastructure driven increase was to the XX% and both increased XXXX,

Gross Infrastructure lower versus $X.X offset profit same rose in last segment mix. million period, X% to Consolidated partially to profit $X.X partner year million gross gross by was of segments due from by to down our telecommunications profit period, the prior by growth versus margin driven due for X.X% for XXXX, of increasing in pressure our proportion first offset the infrastructure margin revenues coming partially higher segment. from both year an slightly was X.X% quarter which margin mild the

the voice experience X.X% to X% in this business within which prior quarter pressure segment, telecommunication on year period. from continue decreased We margin our

time margin. SMS message gross profit are carries the profile volume, which in expecting over gross increasing higher a enhance We telecommunications to by text

primarily Our in the in XX.X% decreased that prior in levels labor driven the most second costs, high of experienced are for from Infrastructure believe we part. of XX.X% and escalations due inflation, the to third costs the quarter segment, now to margin began quarters current higher XXXX. year by we profit stabilized in The period, in gross XXXX, labor

currently earlier We to phases with customers, within also we profit heavily emergence carry nascent the experienced as our business, weighted are margin. lower CI a which low slightly

margins scale, we drive is monitoring future. integrate business the dealer margin and expand expansion the of time create as that will opportunities to over on goal Our grow CI platform maintenance the in and to services, increase to

to plans through efficiencies have collaboration across and also We lines. business from opportunities benefit

and union base ANS customer the to non-union and businesses create workforce able For example, our leverage more to combined a opportunities. in are BW

businesses. grown fourth of growth the second from XXXX the CI year-over-year Slide both ANS will our X, trends. increased $XX quarter million. to for revenue driven and growth discuss or by to XX% revenues and million Infrastructure sequentially through in and experienced within the first also BW $X period the was each we presented, BW have ANS, segment, segments including the backlog In significant increase Infrastructure our quarter Turning double-digit The have quarter.

mentioned I our seasonality, to from As our have QX. ANS tend businesses, call resulting earnings specifically on to sequential last in declines infrastructure QX

business and not we XXXX, second revenue the in momentum quarter yet of to breaking sequentially quarter doubled While, are XXXX. nearly from as out the gathered of of first CI the fourth the half revenue XXXX, for

our to revenue in segment, report be project as infrastructure future remaining backlog. the completed Within we the

BW, announced can this XX% was can of this record or its XX-months. of on specifically we quarter-to-quarter large projects weeks completion of XX, to a of within booking the seasonality as ago, Backlog time. accounted year we duration March reported failure, up as $XXX backlog and last longer-term As at based levels over and fluctuate projects, last of XXXX. few CI minimal approximately million for

we we announced across do. ultimately combination have that auto demonstrates Build of X,XXX recently XX, CI revenues. customer growth brands approximately doing services, that U.S diversified of team, March in new expand The stated also would significant are our we acquisition we acquire backlog and dealerships. engaging CI the and as what customers, develop backlog, said white our our glove We drive with automotive achieved of of goal XX%

compensation, non-cash true Let to adjusted such focus the to EBITDA. stock adjusted amortization. X us performance. impact discuss closest Slide EBITDA measure and depreciation as move items, of is of the on operating We our removes It

of loss For adjusted million the EBITDA prior with $X.X quarter, the loss was million compared year in $X.X period. first EBITDA adjusted

our from seasonality to infrastructure from due As EV investment adjusted sequentially charging due XXXX declined year-over-year in expected people build QX processes QX, to and within business. to EBITDA infrastructure and CI

the $X.X SMS year-over-year, Telecommunications dropped associated of sequentially four adjusted quarter, the in segment in to Corporate XXXX. lower part advance were than capabilities EBITDA expenses recognizing which in made of investments and due is for revenues. text million quarters three in

We in to across business. continue allow investment further necessary to to segments, order our implement cost-cutting grow when measures our

adjusted for see While, we on deliver pivotal EBITDA experienced EBITDA of expect as XXXX. year positive a to adjusted basis, in the losses Charge; quarter an we we XXXX first

the and out of potential within needed CI this And EV for to vast laid has I ever emphasize support addressable earlier, our earnings infrastructure it. powerful charging the Andrew and As today. we growing believe want market business critical to everyone

We the company upfront team, a our at have and made necessary support the revenues investments to for build corporate both to customers. come to advance deliver and level, CI for the in of decades

Turning X, attribution about recognition change like a we resulted method principle stock-based take This before a full talk method. XXXX, X January our elected a in method to the of Effective to are attribution recognizing from We Slide stock-based a straight-line compensation P&L, into the of reflect to change industry expense. to XXXX. in million compensation $XX The to accounting vesting of graded moment cumulative principle in in would stock-based of to I straight-line compensation for to go and a accounting Change expense effects our accurately earn we of with our benefit periods peers. all align better used tax. predominant method the believe be awards more net attribution will retrospectively the in is our applied that approximately change

allocating first in quarter are segment we level. to starting the the addition, expense XXXX, the In of now

will in presented. periods an other the X-K X-K. the file to today, are change all There changes the with within no SEC change this principles reflect and We describing financials our to accounting

of investments acquisitions. G&A saw Looking quarter, people the all businesses where working intangibles the net increases profit. with processes benefits, and full just spoke first growth gross for that the corporate finished and to grow Depreciation We structure. balance quarter I positive of at support our reflected security. point amortization marketable with with our and I salaries the million year-over-year, and upfront and capital, revenues strong in a capabilities to in the in grew are about to and P&L in and would we due $XX and conjunction established cash strong sheet

I would XXXX Charge. like pivotal a for to as year reiterate. We see

to on deliver to continued investments business, operating expect business’s quarter solid the do and within our this We continued of positive our our infrastructure EBITDA first close management electrical expenses. and materializing plan growth charging We service our broadband heels EV in the capabilities, services in within adjusted through growth and team XXXX. and fundamentals strong of of

customer quarter infrastructure level have our proud our sustained in of performance as Andrew? the foundation in growth, engagement growth. an and revenue CI within of first business model endorsement are view built future We the record the backlog and you to support

Charge the you, exciting Thank for as future we for an Leah. This set foundation time is growth. Enterprises

continue our ability very our we and best continue will strategy We of operate every to to day. the adhere to build as

ready are for we Q&A. Operator,

today’s reminder, a previously As solicited. questions were

you how you questions from related of Are Eaton. James. is set different? recent charging equipment Alltel purely sourcing with partnerships announced Pavel supplier? first with months, you Molchanov and Can clarify The Raymond each partnerships In from are these

providing addition and industry development energy providing options customers BEVs. to charges service These ICE business with the case. relationships present amplifies customers. the will solutions and with on service our alliances for question need business segments to also to for from infrastructure Thank allow deliver are specific while the transition channels high-quality that Pavel. depending us the storage alliance have in trusted that various new strategic needs you for This that use Eaton to These offering hardware Alltel to clients

will down markets? Is [indiscernible] forecasted Group consultancy be wireless are on decline recently matching up XX% that you in seeing what America North CapEx to this XXXX. with The XX% the

leaded of filed Several in major recently lower XXXX in to the spend XX-Ks. are Hello, CapEx Pavel. their carriers

new industry year. less been With ‘XX, expected out. and of considered spend XG ‘XX XX-years, Our spending standard for the the maintenance in rolled in This last over believe for members, CapEx followed when XXXX. cycle have was in hype team mode by the who a is technologies industry

our However, long business. customers, based of expect large on conversations this growth with continued tenured area our in our see we to

by of submitted H.C. Infrastructure or will in segment backlog would How XXXX? Amit Next Wainwright. questions delivered recognized Dayal be be with the much

to Amit. impacted Thanks timing have the the to that backlog, projects When given that it’s time. we at it recognition your of our important any mix remember for question the of by is comes

business weeks has few as short projects a months. ANS to Our as over from that six range

take overall months, Our to business can months has But that our short-term tend up CI to had XX projects that to BW larger X X-years. business projects. projects and some have can last

backlog we that significant With during a is the also never mix that into portion backlog into as some same come recognized expect our we therefore quarter to at revenue backlog, to of partially may the first the in number, remainder end completely note quarter, of XXXX. of of stands backlog within important or and the externally. either the disclose recognize are it projects the It show and

contracts business, how to the In me through are recently charging your you understand are these to I you with focusing at Help understand, regard partners? infrastructure contracts EV obtaining dealerships. on to announced partnerships, look

benefit We goal early these to necessary the Have with in days, of our partnerships signing solution. example partnership needs. provide charging is customer. Eaton Alltel are both customized to One meet referring differences but of the and point mutually relationships capabilities EVSEs is major Charges parties. customers’ in including the

the providing for to you Telecommunications marginal in give sense Infrastructure XXXX? for of insight segment in the me a expect for what segment. gross Thank you Can year-over-year gross margin improvement for

experienced middle still the will in Amit, of we pressure guidance, do our the during that impact and volumes margin lapping XXXX we point we give voice have are not out quarter. but increased in I first

gross The profit year. anticipate should pressure XXXX, SMS SMS, move year-over-year over a this gross should begin lesson. in investment from forward dollars Earlier our announced will which we time. the from perspective As we margin in increase we

meaningful a gross base margin will telecommunications, it within take improvement a percentage. longer for due in However, revenue little the to high

expense on an operating Can outlook for you XXXX? expectations provide

Amit, I out. things there point are two would that

occurred so full First, on of basis majority of drive and pressure and a the the and in investment our for upward CI in year will people end during corporate, operating XXXX expense. on middle that

us EBITDA earlier, cost-cutting areas Second, to on XXXX. first tight deliver management focus positive the operating allow adjusted help to expenses grow as to keep to our quarter implement measures continue to of invest selectively Ultimately, I in mentioned our we business. to in is

pain Chris the points? client? The pain walk forward? moving process do you Charge us comes dealership can and Pierce the Where from with through points question for Needham. What the next keep are ease sales to cycle those Can a

the points knowledge, and certainty approach. along lack pain ownership, cycle Charge’s Appear what cost a Chris. on of Hello, been total with are is speed promised. understanding has of sales for based three-phased

power First and the on-site is assessment to the site. cost availability our analyze at

Second, construction, internal prepares approval, commissioning. is project plan a engagement that sales installation finally for cycle and entire team. them future. address and which client client customized for the every engineering, results and solution design set for points provides The and by a very submission their supported dedicated design, pain permitting, our technical engineering The management and and

now with of some maintenance Sullivan transitioning broadband sent fleet by electric, installations and monitoring go work? Are customers might questions of to to Maxim. these Tate any We your customers telecommunication and EV will need charging

Tate. Hello,

to poised fleet customers, to ready when the when ready ship their fleet they are are our electric and We to available. is inventory with and partner

have on mandate for will fleet we the their upgrade dealerships, be early infrastructure why shift stages, to in now. so to them. there the may are that’s focused We who is The

to? the least of at dealers Andrew, of automotive how have this dealerships U.S Does the auto represent in number the goal work of you end did portion X,XXX by CRGE to a talked develop XXXX? its with

those reasonable least a is this initial XX,XXX U.S. times on of And year. in are mind who keeping sell utility The the at major XX,XXX challenges lead approximately to extended the cars retail a dealers. market X,XXX believes be in the There target, auto current Charge XX% for on approximately upgrades. that’s dealers target service based

the we service. nicely addressable sliver not pacing can to We market that, total target. this a is Furthermore, are let’s forget, of achieve this

Partners. margin set How the next Alliance Global revenue questions remainder The the Will Fratt the profile? of the over change about Poe from year? with mix are of

Thanks question, Poe. for the

shift mix an our the momentum as to We their expect CI strong and over as business continue of the continue infrastructure revenue BW to well. continues time ANS in to growth

segment trend a segment seen in As prepared we I faster that we expect have my at continue. to Infrastructure remarks, pace and the grow than Telecommunications mentioned

Any in meaningful partnership first the Lumio impact the from quarter?

financial have impact we yet. Poe, any not experienced

help software to that developing as with used customers electric charging in at solar are interested Lumio or panels they vehicles dealerships. be will home We buy capture

like We a financial opportunities. as are platform and ecosystem this optimistic We dealership for meaningful the around that impact are in revenue that deals this we the future have beyond. XXXX building community see and deal can

different it telecom two sense Will example, split and the for into point make at companies, to some infrastructure? company

make the different At businesses. sense in it in might time, some company point to split two

as the one However is today, keeping we shareholders. believe interest best the of company our

will to benefits the carefully potential We continue drawbacks. and evaluate

are or investors things are that two What missing? one

limit Poe, a to why two, you few. let me give me

capital-light We in a company are high growth area.

We fundamentals. such business have and with as BW solid a foundational ANS

delivered have double-digit growth. revenue We

X,XXX our towards dealership We a have and goal backlog on our initial Today, dealerships. meaningful $XXX have made mandate significant spending. of with is grown to focus million, we our progress

Next, churches, section move unit estate broader EV and as destinations. real of multi fleet, a will other to such we customers, cross

installation, to I the service of contracts. in revenue could charging as about to we expect and new more ahead. first opportunities Additionally, excited not importantly, maintenance, Poe, such is the business our deliver monitoring, expected Most be EV XXXX. adjusted streams EBITDA infrastructure provide beyond quarter positive

I of will and time, the turn Fox Ladies remarks. gentlemen, webcast for webcast. back At this question-and-answer this Andrew portion closing the to today’s concludes

participating Thank continued you call. to your today’s support. forward look Operator? in for We

webcast. quarter that Charge results Enterprises We financial XXXX day. Ladies Goodbye. first wish a you and gentlemen, will great conclude