Blink Charging Co. (BLNK) Earnings Call Transcript & Summary

All right. Good afternoon. My name is Bill Peterson. I cover sector transportation fuel transformation here at the firm. I'm really pleased to have Blink Charging with us here this afternoon. Michael Farkas, the Founder and CEO of Blink Charging, is going to walk us through a presentation, and then we'll move on to Q&A. Please do feel free to ask some questions, and there'll be somebody with a microphone that can take your questions. This is being webcasted. So Michael, thanks for joining us here at the conference and over to you.

Thank you. Thank you for having me. Hello, everybody. I'm Michael Farkas, Founder, CEO and Chairman of Blink Charging. Here's our safe harbor statement. I'm not going to bother reading it. I'm sure you know it well. Give you some information about Blink Charging. We design, manufacture, own and operate EV charging stations. We are the only fully vertically integrated EV charging infrastructure company today. And what that basically means is not only do we design the hardware, we now, through our latest acquisition, are going to be internally manufacturing the hardware. We have -- the network that operates the charging station is ours, and we own a substantial amount of the charging infrastructure that we deploy. We have global manufacturing today. We have a global network that's in 6 countries -- 6 languages, 19 countries and different -- 19 different currencies. We have over 550 employees. And while most of our competitors are newbies in the space, we are now actually in September starting our 14th year of being in business in the same form that we have today. So we've been deploying charging infrastructure prior to any of the cars that we know of today even being on the road or even being conceived. I think the most important thing of any business is who the management is. Through my experience, it's not really about the horse. It's more really about the jockeys, the guys who operate the businesses. And if you look at our roster of players in our management, there is not one other company on the face of the planet that has the direct experience that we have in deploying, developing and owning an operating charging infrastructure. If you look at Ritsaart Montfrans and Miko, they were the founders, and Ritsaart was the Chairman of NewMotion. At the time of its sale to Shell, it was the largest charging infrastructure company on the face of the planet. Ritsaart is one of our Board members, and Miko runs our European operations. When you look at some of our other players, Brendan Jones, you're looking at experience that's really unheard of in our space. He launched for Nissan, the Nissan LEAF. He was there for a couple of decades. After that, he was the operator of EVgo and ran their business. And then after that, he was selected by Volkswagen to be the first employee and the Chief Operating Officer of Electrify America. Brendan, under his tutelage deployed more DC charging infrastructure than probably anybody else. Our CTO is Mahi -- is Harjinder. Harjinder was a founder of ChargePoint. And after seeing all the amazing opportunities at Blink, he joined our team, and he's increased our technology tremendously. In addition, we have Mahi Reddy, who was the founder of SemaConnect, which is one of our recent acquisitions, and he's on our team. Again, as I mentioned before, you have multiple parties that have more than a decade of experience in EV charging infrastructure. We could put our team against any team in the industry. I don't care if it's ChargePoint, EVgo or any global company, no one has as deep of a bench with experienced people in EV infrastructure as we do. We combined our company with SemaConnect recently, and that was one of the other larger players in the space. On a combined basis, we added about 12,800 chargers through the acquisition, about 151,000 registered users. And now when you combine the portfolio and with additional deployments that we've done since then, we're over 51,000 chargers and about 425,000 registered users. We have over 1,800 marquee property owner accounts throughout the country, and throughout our key markets. We have vertical integration of manufacturing. There are no companies today that are producing infrastructure -- charging infrastructure in the U.S. Most of it is produced in China, Asia, Europe, but not here. And the only player that really had a manufacturing presence in the States was SemaConnect. And now that's integrated into Blink's business. We have a large portfolio of comprehensive technology combined between us and SemaConnect and that's in Level 2 charging as well as DC fast charging. We have some amazing stuff in wireless as well. And on a combined basis, now we're going to be one of the lowest cost producers with the highest margins because of the integration with SemaConnect. We've also done some additional strategic acquisitions in Europe. We acquired Electric Blue, which is called EB Charging, add another 1,150 chargers to the portfolio. What was amazing is we had a back order -- backlog of orders that was more in value than the initial down price of the acquisition itself. So it was a very, very strategic acquisition in getting us a footprint and getting us access to an additional market. And now we also acquired Blue Corner in May of 2021. When you combine these businesses, we now have a major, major presence in Europe, both from a networking standpoint, portfolio of locations and property owner partners. This is some of our new products. Some of them have been launched and are in the market today. If you look at our Blink Fleet Portal, it is one of the most extensive portals for fleet operation of vehicles that are fueled by using EVs. It's very important when you have a fleet operator, they want to be able to manage those vehicles, how they fuel, when they fuel, cost of fueling. So we have a back-end system that integrates charging as well as fleet management. That's available today. The MQ 200 product, which you're able to see outside when you enter the facility, it is the most technologically advanced fleet product that's integrated with software. Most of our competitors are piecing these things together. They're taking a fleet software from one place, hardware from another combining them. We have more of an integrated turnkey solution for fleet operators with state-of-the-art technology. If you look at our new design of our Vision IQ, while we did release our first beta at CES. We did redesign it a bit, stepped it up a little bit and are making it more applicable to the marketplace. The Series 8 charger is what we -- one of the products that we acquired from Sema. It is one of the only products that complies with California's new rules of having antiquated billing technology in a charging station. I know that sounds a little bit incredible. But today, most credit cards now you tap and you could pay for your things. California enacted a law where it has to have a swipe in the charging station, going back in technology. While we think it's a horrible move for the marketplace, it's very, very beneficial to us. We are one of the only companies that have product available today that comply with these California mandates. ChargePoint does not, EVgo does not, pretty much everyone does not other than us. And not only that it's a dual unit, each port has 19.2 kilowatts of output. It's faster than any of our competitors chargers on a single port basis. Most of the ChargePoint's hardware is 7.2, 9.6 or 11.2. The Series 8 besides having the credit card capabilities also give us the ability to reduce our cost in half per port in deployment. So imagine what the -- what an IQ 200 and I'll show you a picture of that shortly, which has the same output. A dual unit cost does less now than what it cost us in the past when we did not provide and produce our own hardware. The middle -- the HQ 200 is our new home unit. It's now being released to the marketplace. It has connectivity as well as we have a unit that's less expensive and doesn't not have connectivity. Again, state-of-the-art, most robust features, integrated with mobile applications. You could have the platform where you can submit your billing to your employer and get reimbursements, amazing, amazing functionality and features and then our mobile app. While we preview the mobile app during CES, it's now going to be hitting the marketplace in a very short order. Most important thing is to make sure that we have a hardware solution for every type of location, no matter what type of location that is, whether it's a single-family home, whether it's dedicated partner spaces, whether it's commercial locations, multifamily, retail or even on-highway or off-highway supercharging. We have amazing historic commitment to EV infrastructure growth from not only the U.S. government but globally. I don't think, in the history of mankind, we've had as much funding and subsidies for a business as we're seeing for charging infrastructure. It sounds a little bit crazy, but in our business today with the programs that are out there, we're literally buying dollars for 2 dimes. Think about that. We invest a dollar and after the project is done, we're getting about $0.80 reimbursed to us, and we still own that infrastructure. So we're seeing just tremendous amounts of help from the government. We see the inflation in large -- I mean, Inflation Reduction Act that's going to bring us a serious amount of money in helping the consumers purchase EVs as well as the other programs, the $7.5 billion program, that's infrastructure across the board from the Biden Administration. We're going to see a lot of vehicles now that are being purchased going to be EVs. And the biggest shortfall is making sure that, that infrastructure is available. And if you look at what we've done, even without these major programs, we've been rewarded about $32 million since January of 2021. That's free money that we receive that impacts our portfolio of chargers that we own and operate as well as it stimulates purchases from our customers who buy their own hardware. So these programs are going to be beneficial across the board, not only for our own and operate business, but it will stimulate massive, massive amounts of sales that we have to third parties as well. This gives us a great understanding of really what separates us from our competitors. We, as I mentioned, are the only fully vertically integrated charging infrastructure company. We design the hardware, we manufacture the hardware, the network that these charging stations operate is ours. We own and operate a lot of the charging stations. We manage the infrastructure itself, and we provide charging services to individual EV owners. Again, there's no one who has a full breadth of services as we do. And you can again look at some of our competitors. And what does that do for us? It's great to say that we're fully integrated. But what does it really do for us? What's the benefit for us? It allows us to provide a property owner with a solution to deploy hardware where our competitors are unable to, and I'll simplify it. If you have salespeople that are ChargePoint salespeople and they go into the property owner, and that property owner is adamant about having a third-party operator of that hardware who manages that entire process, that's not what ChargePoint does. So their salespeople would walk out the door. On the other hand, EVgo, Electrify America, if their salespeople walk in the door, and that property owners, that's a great idea, but I really like to have more of that. I want to participate. I don't want to just get a rental or a small amount. I want to be able to own and operate that charging infrastructure. That's not what EVgo or Electrify America or many others do. We have a completely different way of dealing with our customers. Instead of us walking into the property owner and saying, "Hey, this is what we do." We ask a different question. We ask very simply, "How do you deploy capital in your locations?" And if they tell us, they own and operate everything, then we present the own and operate model, if they -- or a host-own model. If they mention us we're risk-averse. We're asset light. We want an operator who's going to operate the hardware for us. We want to receive a small amount every month for contributing our locations. We're able to do that when our competitors aren't. It really gives us an ability to provide services where our competitors can't. In addition, we have financial deployment methodologies that none of our competitors have because of this flexibility. Again, you want to own it, you want us to own it. Again, we have that breadth of services. Question and answer.

All right. Great. Thanks for that. And again, if anyone has a question out there, please raise your hand and let us know. I want to start off on that last point you made. I think it's important. So I think people that have come to understand the charging market, to some extent, they'll look at people like hardware suppliers on one end of the spectrum and owner operators on the other end of the spectrum. And as you point out, you try to -- it seems like you try to meet the customers where they are. And perhaps that also might entail sort of where they are now and where they may be in the future. So as you think about your engagements with customers today, where are most of the engagements? What do they prefer today? And then maybe more importantly, where do you see this evolving over the next few years?

Okay. So when you look at our customer base, it's kind of -- it's in a weird stage right now. We supply a lot of the auto dealerships with charging infrastructure. In most of those relationships, we sell the hardware. So when you go to GM or Audi, Subaru and others, and we're adding to that list, they buy the hardware from us. And because they need that hardware in a lot of their dealerships right now, it's kind of skewing our numbers towards hardware sales even though that's not our main business. And the reason why we're selling our hardware is, these are industry players, right? GM. They're one of the biggest investors in the space. Audi. They're benchmarking all the hardware against each other. They're literally taking it in the lab. They're ripping it down to its nuts and bolts, and they're benchmarking each unit against each other. And we've been selected by some of the greatest companies. Now GM is okay, that's one thing, but let's think about Audi for a second. Audi is a sister company to Electrify America. Audi went outside of the family and selected us after a tremendous vetting process and decided to work with us going outside of the family and not working with Electrify America. Now most people might not understand what that means. But this literally went up to the Board of Volkswagen in Germany, that's how much of an issue it was. And they asked the Head of Charging at Audi, why did you select these guys and go outside of the family? And he said, because these guys have a much better product and better services than I'm able to get internally. So again, this is outside validation from the OEMs. This is not saying, hey, this property owner or that property owner, this is the auto industry who literally benchmark these units against each other. So when you look at our hardware, I think we're ahead of the game. When you look at the models on how we're deploying, ultimately, our main goal is to own and operate as much of the charging infrastructure as possible. But because our hardware is so amazing. We have a lot of people who are buying our hardware, because their model internally used to be asset heavy. Whole Foods is a perfect example. Whole Foods buys hardware from us. We would love to own and operate the charging infrastructure in the Whole Foods, but that's not what they do. But yet they are still selecting our equipment and more and more so of our equipment than ever before. So we would like to predict the model and say, "Hey, this is what it's going to be." But that's not what it's all about. It's making sure that we provide the property owner with the solution that they want and that they're accustomed to. You don't want to try to sell someone who's asset-light asset-heavy model, you're going to get thrown out the door. So it's really about making sure that we provide the property owner with what they want more so than trying to gauge where the market is going to be. By having the offerings we do, we know no matter what we could take care of every single property owner when it comes to EV charging.

Great. And again, anybody else who have any questions right here?

Michael, thank you so much for being here with us today. My name is [ Stephen ], I'm an analyst at DWS Investment Americas. I was wondering have you thought of integrating any way of offsetting your carbon emissions from the energy grid that you take from or engaging with partners to pump more clean energy into the grid or perhaps working with customers, providing them with opportunities to offset their own carbon emissions when they use Blink Chargers?

Today, we're not as selective as our energy sources as we may want to be, and that's because of volume. As volume increases, we're going to aggregate our purchases. Today, the way it typically works is we use the meter of the property owner. So we're piggybacking off of their energy supply. In our contracts, when we own and operate, we have the option to setting up our own meters if we choose to do so. We haven't because volume isn't there right now, it doesn't pay. But ultimately, our goal is to aggregate all of our purchases, specify that we want green energy and make sure that, that green energy is being dispensed to our charging stations. But again, it's about volume, it's about timing. When you look at utilization rates today, they're not very high because the percentage of EV is being sold today is not very high. But as things increase and as it makes sense for us to run our own meters, we're going to go ahead and do so. And again, the plan is not only to provide the energy to our chargers, but when we're able to aggregate energy on that scale nationally, we'll be able to pass along those savings to our property owners who are not just getting the energy sales for the EV charging but for the entire building or a facility in property. And that's the ultimate goal.

I want to discuss the hardware. So you made the acquisition for your -- SemaConnect acquisition, you're getting some more hardware capabilities, including manufacturing. You spoke to this a little bit earlier, but where do you think the hardware stacks up today? You spoke a little bit on the AC side, both Level 2 and Level 3. And how do you how can you differentiate this product going forward?

We differentiated ourselves early by maximizing output on Level 2 charging stations. When our competitors were literally at 3.3 or 6.6 in power output, we jumped the entire market and released units a couple of years ago at 19.2 kilowatts, 80 amps of output. The entire industry thought we were a little too progressive. When we designed that hardware, it's amazing because we came out with an RFP, this is several years ago, for a 19.2 unit, and it was a substantial order at the time. It was actually the biggest order of charging stations, period. And we got no response on that RFP, zero. And we went to some of these manufacturers and some very big ones and some of our competitors today, this is before we got in the manufacturing side. And no one wanted to build a 19.2 kilowatt charger. And the reason why they told us was because we have a roadmap. And we want to go from 3.3 to 6.6 to 11 to 15. And then in several years from now, we'll get to 19.2. Now as an owner and an operator that doesn't work because when you own and operate charging infrastructure, if I have to pay for a 3.3-kilowatt charger and then have to replace it 4x in the next 5 or 6 or 7 years and then finally get to 19.2, where I will alleviate obsolescence that would cost me a lot to go down that route. That's the reason why we came out with 19.2 chargers because that is the maximum Level 2 charging rate period in the U.S. And if we release hardware with that output, we will never have to throw it out. We will overcome obsolescence. The way the units are designed, we have over-the-air upgradability, so we could always add features and functionality and services, but you can't upgrade power output. You have to switch out the box. You have to switch out the cables, connectors and everything. So we were a little progressive, and we decided we're going to spend a little bit more money on the hardware today to make sure that we don't have to swap it out over and over again. And believe it or not, we have locations like the first multifamily residential building that had charging stations deployed. It was a coulomb unit, which is now known as ChargePoint. Once upon a time, they were our sole provider of infrastructure. But that location is on its fourth charger and not one of them broke. It was all because the power outputs changed. So we went from the first generation of coulomb units, which were a Level 1 unit, the mixed Level 1, Level 2, to a dual coulomb unit to the original Blink Charging stations now that the Blink Charging station has 19.2 kw of output. We never have to swap out that hardware again into brakes. We built our hardware with a completely different philosophy than any of our competitors. When you build a piece of equipment and you want an upgrade cycle, you build it as such. You don't spend as much money on components because you want it to fail ultimately because you want your consumer to buy a new one. But when you build that equipment, for you to operate it and make money off of the sale of energy, you need it to not be perceived as our competitors look at a charging station like a cell phone, you need to look at a charging station like a hot water heater or refrigerator, and that's how we build our charging stations. We spend a little bit more money on the internal components. We spent a little bit more money on the connectors. You can not only touch and feel the difference between our units and our competitors. And obviously, you can't see the insides, but what you see on the outside is exactly what's going on in the inside as well. And that's the reason why GM selected us after looking at ChargePoint and Wallbox and Sema and everybody, they chose us. Same thing with Audi. It's again, after you benchmark the units and see how much we spend a little -- and it's not that much. $5 for this, $7 for that, $15 for this. But if I'm spending an extra $50 for that unit, it will save me every time I roll a truck to that unit, possibly $250. So imagine, I'm saving $50 -- I'm spending a little bit more on the unit today, but ultimately, that saves me a lot of money long term and alleviates me having to upgrade those units in the field.

Yes. And maybe speak to your DC roadmap and along the same comment. I mean if you put in a 50k, it's basically useless relative to where you're going in the future. So maybe about the obsolescence commentary there.

Okay. Most people don't know this. But Blink at one point was the largest DC fast charging network in the entire world. And we had a bunch of 50-kilowatt DC fast chargers paid for by all of us through our taxes and the EV program, the first financing of charging infrastructure in the government. And we realized at that point in time, and we knew this from the car charging days that the technology is going to change on DC. The power output is going to change. We knew the maximum in L2, and we built a unit that can maximize that output. Even DC, even though we have some understanding, 350, 400 kilowatts, now we're talking megawatts. So there's still things that are being figured out. Passenger cars, probably 350, 400 kilowatts of output. So we decided to take a step back on the DC side. We're not going to manufacture our own hardware. We're going to partner with all of those that manufacture hardware, like Tritium and others, and buy their hardware and deploy it in the locations that we need to, and that we were going to develop our next generation of DC when the market started really developing standards. And that's what we did. We took a back seat. We had a lot of other companies like EVgo, like Electrify America invest hundreds of millions of dollars, unfortunately, invested in a lot of antiquated technology, these 50-kilowatt chargers. Pretty much all of those need to be thrown in the garbage because they're worthless. And we decided, focus on our footprint, get as many locations as we can. In our contracts, when you own and operate, it does not talk about the hardware, L2 or DC. And then as the market develops, we're going to focus on investing in internally developing our own DC fast chargers. And that's what we were doing. The SemaConnect acquisition accelerated that quite -- much quicker. They were further along the road in developing that hardware. We're adding some additional features and functionality, but we will be releasing our own DC charging infrastructure in short order.

Great. Again, to see if everybody has any questions out there.

So just on the charges that you plan to own, what kind of returns on that capital are you expecting? And then what assumptions are you like modeling to get to those returns?

Okay. Obviously, profitability is when you're investing -- when you're making infrastructure investments, it's about return on capital. And I could speak to what we've spoken to in the past and what we've disclosed. But very simply, when you're looking at a Level 2 charging station, we have 2 own and operate models that we deploy infrastructure with. One is our turnkey solution where we pay for everything, A to Z, hardware, installation, management, everything. And our other solution is our hybrid model, where the property owner pays for the installation, and we contribute to hardware and manage the entire service. Those are both long-term exclusive in nature. On our hybrid model, it's typically a 5-year contract with two 5-year extensions, and those are exclusive contracts. And on our turnkey solution, it's a 7-year contract with two 7-year extensions. You're talking about between 15 and 21 years. Those are all exclusive. And for the most part, those contracts renew automatically. On our hybrid model, and again, I'm using a number that we achieve on some of our units, but is not where we are today. But on a 10% straight line utilization rate, on our hybrid model, payback is less than a year. We have 14 years left on that agreement. In our turnkey solution, payback is less than 2 years. We have another 19 years left on that agreement. So it's just a matter of having more cars on the road, and we see pockets of areas where we have utilization much higher than 10%, and we have areas where we have much less than 10%. But 10% is a very, very achievable number as more and more cars hit the road. And most likely, we're going to see between 25% and 30% utilization moving forward as we see more and more EVs on the road. Using those kind of numbers, you could see how profitable EV charging is. There's a reason why for the last 100 or so some odd years, the most valuable companies worldwide globally were those that supplied fuel to the local transportation systems. What we're going to see is a swap over of just who's providing that and what the fuel is. But there's going to be tremendous amounts of money made in transportation. And unfortunately -- I'm a car guy, more so than I'm an environmentalist. And I've loved autos since literally -- my second word was car. My first word was mom. So -- and that's why I got into this business. It's not the cars that make money. 99.9% of all auto manufacturers globally have gone bankrupt, period. When you want to look at the greatest blade and razor business there is, it's automotive and fuel. The autos lose money all the time. It's very cyclical. The guys who make the money and make it on a consistent basis are those who supply the fuel. That's what we're doing. We're filling that void. We're not playing favorites on any car company whether it's a Tesla or Volkswagen or VinFast, we don't care. We just want people to start driving EVs and ultimately us and everyone else in this industry who's in infrastructure will benefit from it. Okay. I want everyone to hear you. It's a great question.

Yes. Earlier on your slide, you mentioned the commercial fleet, can you help us understand better on that? By the way, that gentleman was very nice showcasing the 3 model, so it was very nice. But I don't think we have seen a commercial [indiscernible] 1 apartment, 1 for the house. The other is for like retail. I'm just curious...

Right. So the first unit, which was -- there was 2 that was similar, one was like a gunmetal gray with a little screen on it. That is a fleet unit. That's made for multifamily residential. That's made for fleet services. It's got 12 kilowatts of output. You don't need the 19.2 because a lot of times you're plugging that car, staying overnight. So you need lower charging, lower cost of equipment as well as a fleet management software program that you could integrate with that hardware.

Software integrated, just plug it. So...