Ideanomics, Inc. (IDEX) Earnings Call Transcript & Summary

Hello, and welcome to the Ideanomics Shareholder Conference Call and Webcast. [Operator Instructions] It's now my pleasure to introduce your host, Tony Sklar, Vice President, Communications and Head of Investor Relations. Please go ahead, sir.

Good morning, everybody, and thank you so much, operator. Thank you to all the participants on the call today. Today, this is the Ideanomics-VIA Acquisition Investors Conference Call. And joining me, I am pleased to have Mr. Alfred Poor, our Chief Executive Officer of Ideanomics; Mr. Shane McMahon, our Chairman of the Board here at Ideanomics; Mr. Bob Purcell, Chief Executive Officer at VIA. A webcast of today's call will be archived and then available on our Investor Presentations section of our corporate website for a minimum of 30 days. As a reminder, this conference call is being recorded. In addition to other than risks is more fully described in the Ideanomics' public filings with the U.S. Securities and Exchange Commission, which can be seen at www.sec.gov. Today, August 30, 2021, the company announces entering into an agreement to acquire VIA Motors International for an aggregate consideration of up to $630 million in an all-stock transaction for a 100% ownership stake, subject to customary closing conditions of the Ideanomics' shareholder approval. The format of today's call will be as follows: Mr. Alf Poor, our Ideanomics CEO; and Mr. Shane McMahon, Chairman of the Board at Ideanomics, will speak to the acquisition highlights and the business strategy. Mr. Bob Purcell, CEO of VIA Motors, will speak to the VIA Motors' business model. And if time permits, management will take some questions at the end. I am now excited to hand the conversation over to Mr. Alfred Poor, Ideanomics' CEO.

Good morning, everyone. Thank you, and welcome to our investors and analysts who are joining us this morning on such short notice. I'm extremely pleased to speak with you about Ideanomics' acquisition of VIA Motors. Before I get into the details of this transformative deal, I would like to expect the sincere thank you to the teams at VIA and their sell-side support from Blue Sea Advisors, Evercore, and White and Case. And on the Ideanomics side, I would also like to thank our buy-side team, including my management team and Board, as well as Morgan Stanley, Venable, Han Santos, UHY, [ Ricardo ] and others, including our entire corporate development team. And finally I'd like to say thank you to Shane McMahon, our Chairman, who joins us today. He was instrumental in this particular deal and has provided us with guidance and continued support as we build our global presence and a made-in-America brand. VIA is a perfect strategic fit for Ideanomics. This acquisition represents a transformational milestone for Ideanomics, notably our largest to date in our company's history, but will further enhance our competitive leadership position in the global commercial EV market by adding strong innovation capabilities from VIA, to our growing portfolio of leading companies in the commercial EV market. We are very pleased to incorporate VIA Motors' market-leading EV business, its proprietary skateboard platform, its prudent management team and its experienced employees to the Ideanomics family. This acquisition is aligned with our long-term strategy and provides us an immediate leadership position in a rapidly growing market and yet another path to accelerate Ideanomics' growth and profitability. It also provides Ideanomics with full OEM manufacturing capabilities that will reap dividends to our other division. VIA's products and services for global fleet operators are highly synergistic with Ideanomics and will significantly complement our end-to-end mobility ecosystem. Over to you, Shane.

Thank you, Alf. Well, again, you hit the nail right on the head as it pertains to our ecosystem. And this deal with VIA Motors is exactly that. We are transforming Ideanomics into everything in the EV space. We're now going through with VIA. We're going to make the vehicles through our force induction charging system. With WAVE, we're going to be able to charge. Through our relationships with Prettl, we're going to be able to have outside battery storage to charge any type of fleets outside of a normal grid and many other aspects complete ecosystem for, again, Ideanomics. I couldn't be more excited, and this all really came down. It started with a dinner with Alf, myself and Bob and a few others. And we came to a realization that there was a huge opportunity here for us really to get in together, and that's exactly what's happened. Again, it's a transformative deal for Ideanomics. We continue to grow as a leader in the commercial EV space. And with that, we're here to help establish VIA as a market disruptor, and we are excited to welcome Bob and his team to the Ideanomics family. So with that, I will turn it over to Bob Purcell.

Thank you, Shane. Good morning. I'm Bob Purcell, CEO of VIA Motors. I've been with VIA since 2015 and have been in the EV space since 1994, when I led the General Motors activity on the EV1. This transaction is an outstanding milestone and a great day for VIA Motors. All of us at VIA are delighted to join the Ideanomics family. As a leading electric commercial vehicle OEM, VIA designs and will manufacture a portfolio of Class 2 to 5 electric commercial vans and trucks launching in 2023. Combining VIA with Ideanomics facilitates significant synergies between the 2 companies, leveraging development and marketing across the subsidiaries, solutions for charging infrastructure, financing of both vehicles and charging and sourcing of propulsion components. We are very excited to become part of the Ideanomics family to usher in the new era of e-mobility. VIA Motors is changing last and mid-mile delivery with innovative and affordable electric commercial vehicles. Ideanomics' financial and personnel resources provide the back-end VIA needs to pursue an array of exciting growth prospects. All of us at VIA Motors are delighted to join the team to further the long-term growth strategy at Ideanomics.

Thank you, Bob. This is a highly synergistic deal, which was outlined in our press release this morning. And we are very excited to be part of accelerating EV adoption and Ideanomics' market share in the commercial EV space. By coming together with VIA, we believe we can further accelerate all of our strategic paths and bring tremendous opportunities and value to our customers and our shareholders. Thank you, all. I'll hand you back to Tony Sklar.

Thank you so much to Bob, Shane and Alf, very much appreciated. This concludes our management prepared remarks, and we will now have a chance to take a few questions. Operator, could you just let our folks on the line know how to raise their hand?

[Operator Instructions] Our first question is coming from Craig Irwin from ROTH Capital.

So I should say congratulations. This looks like an important acquisition, not just for Ideanomics, but also for the broader market. The obvious question that's out there on the side of institutional investors this morning is, how does this fit better into the Ideanomics portfolio than it would into a SPAC IPO, which was obviously what VIA Motors was pursuing over the last several quarters?

Yes. Thanks. I'd like to take that, if I can, Craig, and good morning. Good to hear from you again. I think if you take a look at what Ideanomics had to offer VIA, I think the key is there, as well as the capitalization we could bring to the table the same as a SPAC. We're a very liquid security that trades on the NASDAQ. We have a hefty balance sheet. So that gives VIA the confidence that we can help them invest and grow their business as they need to. But more importantly, when you go into the SPAC, you're going into an empty company. It's a blank check. It's a shelf, a one of a better term. As we began to get to know the team of VIA Motors and as Shane said, it started with the dinner in New York with Bob and some of his team at VIA. We began to help them understand what we can offer them synergistically. So if you look back into a SPAC, day 1, you have no HR, you have no supply chain. You have no IP development, all of those things that Ideanomics can bring to the table, centralized marketing. So it wasn't just a case of capitalizing the company for VIA, but looking for a really strategic partner. And then you look beyond what they can get from a fully developed publicly listed company like Ideanomics in terms of internal support. You then look at the other companies in our group, okay, inductive charging, the grid augmentation and deployment capabilities with Prettl and the PEA investment we did recently. We have US Hybrid with its fuel cells and components. We have Solectrac with its EV tractors. This is a really compelling group that we put together at Ideanomics. And allowing us to get into this particular segment, which is the high-growth local delivery market that a lot of folks have got their eyes on, I think, was really compelling when you put everything together. Bob and his team know how to make exceptional vehicles. Okay? They've been doing it for many, many years. He's got teams from GM, Ford, Chrysler, et cetera, within his group. What they needed was a partner that could help them, allow them to focus on execution, because execution is going to be the difference between who gets market share and who doesn't. I think you saw with [ Rivian's ] IPO number on Friday, Craig. There's market disruption taking place right now. And with the companies that we put together and the capitalization that we have, we're a perfect fit for VIA versus a SPAC.

So the second question I have is the earnout coverage, 40% on the base deal amount is fairly heavy and it's based on your 2026 forecast for VIA Motors, or I guess, theirs. I don't see the numbers anywhere in your presentation or the press release, but this is a pretty material piece of information for equity investors. Can you maybe share with us a little bit about your revenue and EBITDA expectations for VIA in 2026? And can you kind of help us shape how this company is supposed to develop over the next few years?

Yes, absolutely. It's a really good question. I'll take the first part of it, and then if Shane or Bob want to speak if I don't cover everything, feel free to. Obviously, we haven't shared any information today. VIA has got some very exciting propositions, some of them are available. It's information that's already in the market. We believe VIA's going to be one of the significant players in the space that they're in. But more broadly, I think if you take a step back, if you look at this deal, this is a high-growth area that's prime for market disruption. So there's a significant opportunity to capture revenue from 2023 onwards. You will see the numbers steady soon. They're going to be part of the proxy. The proxy that we will file for the shareholder approval will contain projections for both the Ideanomics business and the VIA business as well. But in terms of today, Craig, we're not prepped to be able to give you any further information.