Earnings call transcript: Nuvve Holding Q4 2024: Revenue Drop, Stock Dips

Nuvve Holding Corp (NVVE) reported its Q4 2024 earnings, highlighting a challenging year with a revenue decline and a drop in stock price. The company’s revenue for the quarter was $1.8 million, up slightly from $1.6 million in Q4 2023, but full-year revenue fell to $5.3 million from $8.3 million in 2023, contributing to a significant 34.33% revenue decline over the last twelve months. The stock reacted negatively, with a 6.79% drop in the aftermarket session, reflecting investor concerns over the company’s financial performance and future prospects. According to InvestingPro analysis, the company’s overall financial health score stands at a concerning 1.37, labeled as WEAK.

Key Takeaways

• Q4 2024 revenue increased slightly to $1.8 million from $1.6 million in Q4 2023.
• Full-year revenue declined to $5.3 million from $8.3 million in 2023.
• Gross margins for the quarter fell to 15.8% from 29% in the previous year.
• The stock price dropped 6.79% in aftermarket trading.

Company Performance

Nuvve Holding’s performance in Q4 2024 showed mixed results. While quarterly revenue increased slightly, the overall annual revenue saw a significant decline. This was partly due to challenging market conditions, especially in the electric vehicle and school bus sectors. Despite these challenges, the company managed to reduce its net loss to $5.1 million in Q4 2024 from $7.5 million in the same period the previous year.

Financial Highlights

• Revenue: $1.8 million in Q4 2024, up from $1.6 million in Q4 2023.
• Full-year Revenue: $5.3 million in 2024, down from $8.3 million in 2023.
• Gross Margin: 15.8% in Q4 2024, compared to 29% in Q4 2023.
• Net Loss: Decreased to $5.1 million in Q4 2024 from $7.5 million in Q4 2023.
• Cash Position: $400,000 as of December 31, 2024.

Market Reaction

Following the earnings announcement, Nuvve Holding’s stock experienced a notable decline, falling 6.79% in aftermarket trading. This reaction reflects investor concerns over the company’s declining revenue and the ongoing challenges in its core markets. With a beta of 1.84, the stock shows significantly higher volatility than the broader market. While the current price appears depressed, InvestingPro analysis suggests the stock may be undervalued, with 14 additional ProTips available to subscribers regarding the company’s valuation and financial health. The stock’s market capitalization has dropped to just $1.94 million, reflecting severe investor skepticism.

Outlook & Guidance

Looking ahead, Nuvve Holding is focusing on reducing expenses and improving cash burn, which InvestingPro identifies as a critical concern. The company’s current ratio of 1.15 and significant debt burden pose challenges to its operational flexibility. The company is expanding into the stationary battery market and developing infrastructure projects in New Mexico and Japan. Despite the current challenges, Nuvve expects continued growth in its megawatts under management and is building a backlog that has increased to $18.3 million. Subscribers to InvestingPro can access the comprehensive Pro Research Report for deeper insights into the company’s growth potential and financial stability.

Executive Commentary

• CEO Gregory Pallant remarked, "2024 has been an extremely challenging year."
• Pallant also emphasized cost reduction efforts: "We have been working hard on reducing our costs."
• CFO David Robson expressed optimism about future growth: "We continue to expect further growth in our megawatts under management."

Risks and Challenges

• Market Conditions: The electric vehicle and school bus sectors face challenging market conditions, impacting revenue.
• Regulatory Delays: Delays in EPA approval letters have affected the school bus business.
• Subsidy Reductions: Potential reductions in electric vehicle subsidies could further impact demand.
• Cash Flow: Limited cash reserves of $400,000 pose a risk to operational flexibility.
• Competitive Pressures: Increasing competition in the grid modernization and battery markets.

Nuvve Holding’s Q4 2024 results underscore the company’s ongoing challenges and the market’s cautious outlook on its future performance.

Full transcript - Nuvve Holding Corp (NVVE) Q4 2024:

Conference Moderator: Please note today’s event is being recorded. On today’s call are Gregory Pallant, Chief Executive Officer and David Robson, Chief Financial Officer of Navi.

Earlier today, Navi issued press release announcing its quarterly report and fiscal year report. Following prepared remarks, we will open up the call 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 Nuveen’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 these filings with the SEC and in the earnings release issued today, which are available on our website.

Nuvi undertakes no obligation to revise or update any forward looking statements that reflect future events or circumstances. With that, I would like to turn the call over to Gregory Powell, Chief Executive Officer of Nuvi. Gregory?

Gregory Pallant, Chief Executive Officer, Navi: Thank you, and good afternoon to everyone here today. Welcome to our Q4 twenty twenty four and fiscal year twenty twenty four results call. I’m not going to try to sugarcoat it. 2024 has been an extremely challenging year. I should say horrible as for the first time since 2021, our revenue went down compared to last year.

We know that we are not an isolated case as it has been for most of other companies in our industry with many of them going out of business. Dealers have been hitting us across the board. Concerning our K-twelve school bus business, during the first two quarters of the year, many of the school district partners were expecting to receive the final EPA approval letters, which arrived sometimes with up to six month delay, forcing them to hold on their purchase orders until they got the final approval letter for their grants. Q3, Q4 then picked up, but the damage was already done. In the same way, our projects have been impacted with delays due to their financing taking more time than initially thought.

And though we are confident their financing will go through, we are still financing some terms. But we did not stay passive. First of all, we have been working hard on reducing our costs, especially our cash expenses. For fiscal year twenty twenty four, both our cash and non cash operating expense, excluding costs of sales, went down by 33% compared to our fiscal year twenty twenty three expenses. We are working every day on reducing our cash expenses, trying to minimize the impact on to operations, product development and product qualification.

I will give you more insight in a few minutes. We have also been working hard on expanding our business in order to reduce our exposure to governmental funding, especially federal subsidies and accelerate the revenue. With this potential reduction on electric vehicle subsidies, we have decided to move more aggressively into the stationary battery business. Our GEIF platform is very good at managing how to predict batteries availability from electric vehicles such as school buses. It also does an exceptional job at managing stationary batteries and can help extract more value from these batteries.

From our perspective, stationary batteries are essential to provide grid modernization either behind a meter or in front of a meter, keeping the cost of energy equitable. We have now announced our first battery and service model in The United States. Our Battery as a Service business model for Electric Cooperative allows the co ops to deploy stationary batteries, reducing their exposure to constantal peaks, a situation where the system is experiencing a peak consumption while the transmission system they are connected to is also experiencing a peak. These peaks make the cost of the kilowatt hour very expensive. Our service allows co ops to keep the cost of energy low by reducing peaks, while also providing more resiliency to their members.

We are also expanding our stationary business battery our stationary battery business in Japan as we announced recently. The Japanese battery aggregation market has been expanding rapidly and value for a platform like ours is strong. Therefore, we have announced a couple of weeks ago, we’re establishing a new entity in Japan. This company is in the process of pursuing capital raising activities locally. Nuvi intends to keep a controlling interest in the new entity, while bringing aboard local investors to support the local business entity capital needs.

This is our second approach to reducing our cash expenses, sharing some equity of our local subsidiaries, while leveraging our existing expenses in Japan, in addition to generating potential future cash flow for Newby Holdings for services and access to the platform. Now the last but not the least, back in The U. S, we have also been selected by the State of New Mexico to deploy a variety of electric vehicle and the corresponding infrastructure. The addressable market opportunity is estimated at $400,000,000 of capital deployment, which is large, complex and requires significant focus from our organization, which is why we have decided that Ted Smith, our COO and President will be 100% focused on this opportunity and will become the CEO of our local organization. Ted has been driving this effort from the beginning and have created an amazing consortium of companies that we have that we will be announcing very soon.

The purpose for which the company is organized is to serve as a designated local presence for the execution of the State Purchase Agreement, SWPA, awarded to Nuvi Holding Corp. Pursuant the Electrify New Mexico initiative and to develop, construct, finance and operate a comprehensive suite of green energy and transportation electrification solution in New Mexico and surrounding states. These business activities include without limitation, a turnkey electric vehicle charging infrastructure and related site development services, B, vehicle to grid B2G technology deployment and aggregation C, stationary battery energy storage system D, microgrid and resilience hubs E, electric corridor charging network and depot level charging system F, vehicle procurement, leasing and financing and G, the valuation, acquisition, removal and replacement of internal combustion engine ICE vehicle fleets and related infrastructure to accelerate fleet electrification. This new LLC will also seek investment for local investors while leveraging Newby Holdings existing cash expenses and providing potential future cash flow to Newby Holdings through its services provided to the new LLC. In summary, though 2024 is extremely challenging, we have been able to survive it sometimes at an expensive price.

During this period, we have been working on transforming the company, but we feel that we are now very well positioned as a grid modernization and vehicle to grid company to close on our key opportunities and accelerate our business expansion working with both Capilo Global and Rod Capital. And now I will let David take you through the detail of our financials. David?

David Robson, Chief Financial Officer, Navi: Thanks, Gregory. I will start with a recap of fourth quarter twenty twenty four results. In the fourth quarter, we generated total revenues of $1,800,000 compared to $1,600,000 in the fourth quarter of twenty twenty three. The increase was primarily driven by higher charger hardware sales versus the same period last year. During the full year 2024, total revenues were 5,300,000 which compares to $8,300,000 for the prior year period.

The year over year decrease in revenues is also primarily driven by the reduction in charger hardware sales due to the timing of EPA funding awards this year versus last year as well as the sale of school buses in the prior year period. Margins on products, services and grant revenues were 15.8% for the fourth quarter of twenty twenty four compared with 29% for the year ago period. Our gross margin percentage in the fourth quarter of twenty twenty four was impacted by competitive pricing pressures on the sale of DC chargers to a single large customer. Year to date margins through 12/31/2024 were 33.1% compared with 16.2% for the year ago period. The increase in the gross margin percentage was primarily due to overall higher pricing of hardware sales, non recurring EV Bus sales and a higher mix of service and ramp revenues compared with last year.

Excluding grant revenues, margins on product and services were 11.4% for the fourth quarter of twenty twenty four compared to 24% in the year ago period. On a full year basis, not including grant revenues, the margins on product and service revenues was 27.5% in 2024 compared with 12.8% in the prior year. As a reminder, margins can be lumpy from quarter to quarter depending on the mix. DC charger gross margins as stated 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 the DC charger. Grid service revenue margins are generally 30%, while software and engineering service margins are as high as 100%.

Operating costs excluding cost of sales was $5,900,000 for the fourth quarter of twenty twenty four compared with 2,800,000 for the third quarter of twenty twenty four and $7,900,000 for the fourth quarter of twenty twenty three. We’ve continued to drive efficiencies throughout 2024 resulting in lower overhead costs. We expect the lower operating costs we have realized this quarter to continue into future quarters. On a full year basis, operating expenses decreased from $33,500,000 in 2023 to $22,200,000 in 2024, primarily driven by lower payroll, legal, public company expenses and consulting expenses. Cash operating expenses excluding cost of sales, stock compensation and depreciation and amortization expense increased to $5,100,000 in the fourth quarter of twenty twenty four versus $2,200,000 in the third quarter of twenty twenty four and decreased by $1,800,000 from $6,900,000 in the fourth quarter of twenty twenty three.

Other income was $515,000 in the fourth quarter of twenty twenty four, up from $130,000 in the year ago quarter. The current period benefited from non cash gains from the change in fair value of convertible debt and warrants offset by higher interest expense related to short term loans. Net loss attributable to new economic stockholders decreased in the fourth quarter of twenty twenty four to $5,100,000 from a net loss of $7,500,000 in Q4 of twenty twenty three. The improvement was primarily a result of lower operating expenses. Now turning to our balance sheet, we had approximately $400,000 in cash as of 12/31/2024, excluding $300,000 in restricted cash, which represents a decrease of $1,200,000 from December 2023.

The decrease was primarily the result of $15,700,000 used in operating activities, offset by net capital raise of $8,500,000 and cash receipts from short term loans and promissory notes of $8,500,000 Subsequent to the year ended 12/31/2024, during the first three months of 2025, we raised an additional $2,600,000 in gross proceeds through the combination of equity and debt offerings. During the quarter, inventories decreased by $1,100,000 to $4,600,000 at 12/31/2024 as we continue to reduce inventory levels. Accounts payable at the end of the fourth quarter of twenty twenty four was $1,900,000 a decrease of $300,000 compared to the third quarter of $2,200,000 Accrued expenses at the end of the fourth quarter of twenty twenty four was $3,400,000 an increase of $100,000 compared to the third quarter of ’3 point ’3 million dollars Now turning to our megawatts under management and estimated future grid service revenues. As a reminder, megawatts under management is a metric we used to quantify the aggregate 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 fourth quarter increased 5.2 over the third quarter of twenty twenty four to 30.7 megawatts from 29.2 megawatts, a 22.2% increase compared to the fourth quarter of twenty twenty three. In terms of its composition, 7.1 megawatts were from stationary batteries and 23.6 megawatts were from EV chargers. We continue to expect further growth in our megawatts under management as we continue to commission our existing backlog of customer orders we have earned in addition to new business we anticipate winning, which we have visibility to in our pipeline for both EV chargers and stationary batteries.

Now turning to backlog, on December 31, our hardware and service backlog increased $18,300,000 an increase of $800,000 from $17,500,000 reported at 09/30/2024. This increase is related to contracts with customers that are expected to convert into sales in 2025. Year to date backlog has increased by $14,400,000 from $3,900,000 at 12/31/2023, which is primarily related to a large hub project in Fresno, California, which we began recognizing revenue in Q3 and continue to recognize revenue through Q4. As we look out to the next several quarters, we expect to see more activity on the Fresno hub opportunity as this project gets built out. We also anticipate improvements in our cash burn resulting from the benefits of lower operating costs and improved gross margin dollars compared with last year.

That concludes my portion of the prepared remarks. Gregory, back to you to conclude.

Gregory Pallant, Chief Executive Officer, Navi: Thanks, David. Though very challenging from a revenue perspective, 2024 has allowed us to work on our expense reduction we are keeping on further reducing our cash expense without impacting our operations and opportunities. Finally, concerning our strategic path, expect to hear soon from us. I want to thank you and open the floor to questions.

Conference Moderator: Thank And this concludes our question and answer session. I’ll turn the conference back over to Gregory Polon for closing remarks.

Gregory Pallant, Chief Executive Officer, Navi: Thank you, everybody.

Conference Moderator: Thank you. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.

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