Good day, ladies and gentlemen, and welcome to the Blink Charging Co. Fourth Quarter and Year End 2023 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the floor will be open for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Vitalie Stelea, Vice President of Investor Relations. Sir, the floor is yours.

Thank you, Ollie. Welcome to Blink's fourth quarter 2023 earnings call. On this call today, we have Brendan Jones, President and Chief Executive Officer; and Michael Rama, Chief Financial Officer. Today's discussion will include non-GAAP references that are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You may find the deck along with the rest of our earnings materials and other important content on Blink's Investor Relations website. Today's discussions may also include forward-looking statements about our expectations. Actual results may be different from those stated. The most significant factors that could cause actual results to differ are included on Page 2 of the fourth quarter 2023 earnings deck. Unless otherwise noted, all comparisons are year-over-year. Now, regarding the Investor Relations calendar, Blink will be participating and taking one-on-one investor meetings at a few upcoming conferences. The first one will be the Roth MKM Investor Conference in Dana Point, California on the 17th of March. The second one will be the JPMorgan Energy Conference on the 17th of June in New York City. Please follow our announcements and the investor relations website for additional events that we will book in the future. I will turn the call now over to Brendan Jones, President and CEO of Blink Charging. Go ahead, Brendan.

Thanks, Vitalie, and good afternoon, everyone. Thank you for joining us on this call today. Well, to sum it up, 2023 was a historic year for Blink. It was marked by significant achievements and exponential growth. Now, as some of you know, Blink over the past four years has successfully integrated six strategic acquisitions, and in 2023, we began to demonstrate the powerful consolidated potential of the Blink enterprises. Now, not only did we leverage our advanced product portfolio and services, but we also began to see tangible benefits from our newly enhanced network launched in 2022. Organizationally, we are emphasizing a culture of continuous improvement and have begun to observe synergies and efficiencies that positively impacted 2023 results across all of our businesses. Operationally, we streamlined our sales, engineering, logistics, and distribution while expanding our manufacturing footprint near Washington, DC, to capitalize on additional synergies and opportunities for cost optimization. A little more on that later in this presentation. Now, if we move to the numbers as illustrated on Slides 4 and 5, our total revenues were $140.6 million, marking an impressive year-over-year growth of 130%, and a remarkable seven-fold increase compared to our 2020 revenues. Our fourth quarter 2023 revenues were a Q4 record of $42.7 million, representing a year-over-year increase of 89%. Our 2023 service revenues grew 111% year-over-year, amounting to $26.4 million. Now, within this figure, network fees grew 71% to $7.5 million, and Q4 2023 service revenue reached $7.9 million. Now, from a financing perspective, if you flip to Slide 6, we previously discussed raising additional funds to guide Blink towards profitability. I am pleased to announce that we substantially strengthened Blink's balance sheet by raising $113 million in gross proceeds via our existing ATM facility. We took advantage of favorable market conditions and did it opportunistically at scale and in a very cost-effective way. As a result, we deleveraged our balance sheet and significantly reduced our interest expense by paying off promissory notes and accrued interest of $45.5 million. With our current visibility, we anticipate that our existing cash balance will be sufficient to reach our positive EBITDA adjusted rate target in December of 2024 and beyond. If we now look at Slide 7 for full year 2024, we are targeting revenues between $165 million to $175 million and a gross margin of approximately 33%. We are also reconfirming our target of achieving a positive adjusted EBITDA run rate by December of 2024. Now let's jump over to Slide 8, where we show the different actions that will continue to materialize in 2024 to achieve our adjusted EBITDA target. First, solid revenue growth is expected to contribute significantly to adjusted EBITDA. We emphasize not only the sales quantity but also the quality of new customers, especially fleets, as they play a crucial role in financing our company's growth. During 2023, we saw important fleet wins in the United States, including the Post Office and Mac trucks, just to name a few. We also prioritized revenue generated from our existing customers as an optimal way to finance growth. Second, we anticipate gross margin improvement as we continue to insource a large portion of our product mix. Our decision to expand our Bowie, Maryland facility aligns perfectly with our growth strategy, and we are very pleased to have that facility open with production underway. Third, expense management and cost avoidance are currently underway throughout the entire company. We've also implemented a leading software tool to assist in the planning and monitoring of expenses at all levels of the company. We are pleased with this capability as it enables robust scenario planning and accountability for every department. Finally, we anticipate the EV market to maintain its recent momentum, benefiting not only Blink but, more importantly, the entire industry. If we move on to page 9, despite various media stories, we remain very optimistic about the EV market and the continued growth. This optimism is fueled by the decreasing cost of electric vehicles and the continuous expansion and improvement of charging infrastructure. The network effect is now taking hold. In 2023, EVs accounted for one of every five vehicles sold globally. In the U.S. in 2023, we saw an increase in EV adoption, accounting for 8% of all new cars sold. In California, EVs represented 25% of all new car sales. Bloomberg New Energy Finance anticipates EV penetration in the U.S. to reach approximately 13% in 2023, marking a significant 500 basis points expansion in just one year. In Europe, where we are active and have three different offices, the EV penetration rate throughout the entire continent stood at 18% of car sales. This figure is projected to rise across both western and eastern Europe to about 22% in 2024, with a target of 80% by 2030. As many of you may know, about 90% of all cars sold in Norway are EVs. Several larger European countries are closely monitoring this trend, and we at Blink are actively studying and adapting to this evolving landscape.

Thank you, Brendan, and good afternoon, everyone. Now turning to Slide 16, our Q4 2023 revenues grew 89% year-over-year to $42.7 million, marking another record fourth quarter for Blink. Total revenues for 2023 were an absolute record at $140.6 million, a 130% increase compared to $61.1 million for the full year of 2022. As Brendan mentioned earlier, only two years ago, our 2021 full year revenues were nearly $21 million, representing about 15% of current 2023 full year revenues of $140.6 million. Product revenues for the fourth quarter of 2023 were $33.4 million, an increase of 112% over the same period in 2022. Product revenues for the full year of 2023 were $109.4 million, an increase of 138% when compared to full year 2022. These increases were driven by strong demand for our commercial Level 2 chargers and DC fast chargers, as well as our ability to satisfy increasing levels of demand. Fourth quarter 2023 service revenues, which consist of charging service revenues, network fees, and car sharing revenues, were $7.9 million, an increase of 40% compared to the fourth quarter of 2022. Full year 2023 service revenues more than doubled to $26.4 million, representing a year-over-year growth of 111% driven by greater utilization of our chargers and the increased number of chargers on Blink networks. We break out these service revenue lines to differentiate between products and service businesses more accurately. Now turning to gross profit. Gross profit increased 63% to $10.6 million, or 25% of revenues in the fourth quarter of 2023, compared to gross profit of $6.5 million, or 29% of revenues in the fourth quarter of 2022. Gross margin decreased in the fourth quarter of 2023 when compared sequentially to the third quarter of 2023 due to increased year-end warranty and maintenance expenditures, as well as adjustments related to discontinued components. Now, excluding the impact of these items, the gross margin for Q4 2023 would have been approximately 30%. Gross profit for the full year of 2023 increased by 172% to $40.2 million, or 29% of revenues, compared to gross profit of $14.8 million, or 24% in the full year of 2022. Gross margin for the full year of 2023 increased when compared to the full year of 2022, primarily due to a higher mix of in-house manufactured units, which carry a higher margin, and increased utilization of charging. Now turning to operating expenses. Operating expenses in the fourth quarter of 2023 decreased 16% to $28.7 million compared to $34.2 million in the fourth quarter of 2022, while we grew quarterly revenues by 89% year-over-year. Most of the decrease in operating expenses was driven by a 27% reduction in year-over-year compensation expense for 2023. Operating expenses for the full year of 2023 were $239.9 million compared to $104.1 million for the full year of 2022. The increase in operating expenses for the full year is primarily driven by $105.9 million related to a non-cash goodwill and intangible assets impairment charge, as well as the impact of a one-time nonrecurring payment to our former CEO and a nonrecurring bonus related to the performance milestones achieved by our CTO related to the design and launch of Blink's recently implemented new network. It is important to mention here that these impairment charges are noncash and they do not impact our operations in any way. Excluding the impact of the $105.9 million noncash impairment charge and one-time compensation related items, the operating expense for full year 2023 would have been $134 million. As a percentage of revenues, this amount represents a reduction of approximately 7500 basis points while revenues increased by 130% year-over-year. Of note, 2023 operating expenses include $3 million of expenses for our 2023 acquisition of Envoy. Now adjusted EBITDA for the fourth quarter of 2023 was a loss of $14 million, compared to a $14.8 million loss in the prior year period. As a percentage of revenues, our adjusted EBITDA metric improved nearly 3200 basis points compared to Q4 2022, reflecting a 50% improvement year-over-year, reinforcing our trajectory to positive adjusted EBITDA run rate by December of this year. Adjusted EBITDA for the full year of 2023 was a loss of $57 million compared to an adjusted EBITDA loss of $60.3 million in the full year of 2022. The adjusted EBITDA for the three- and 12-month periods ended December 31, 2023, exclude the impact of stock-based compensation, acquisition-related costs, one-time nonrecurring expenses, noncash impairment charges, and noncash loss on extinction of notes payable. As Brendan mentioned earlier, several factors are expected to get us to positive adjusted EBITDA run rate by the end of this year, including revenue growth, expense management, and cost avoidance actions that are materializing based on our efforts to rationalize operations, consolidate facilities and support functions, and build scale into our manufacturing and sales processes. Earnings per share for the fourth quarter of 2023 was a loss of $0.28 per share compared to a loss of $0.55 in the prior year period. For the full year 2023, earnings per share was a loss of $3.21 per share compared to a loss of $1.95 for the full year of 2022. Please note that the impact of the noncash accounting adjustments to our goodwill and intangible assets, combined with the one-time compensation charges to our CTO and former CEO negatively impacted year-to-date earnings per share by $1.67. Adjusted earnings per share for the fourth quarter of 2023 was a loss of $0.28 compared to an adjusted earnings per share loss of $0.41 in the fourth quarter of 2022. Adjusted earnings per share for the full year 2023 was a loss of $1.42 compared to an adjusted EPS loss of $1.65 in the full year of 2022. Non-GAAP adjusted earnings per share is defined as adjusted net income, which excludes the impact of stock-based compensation, acquisition-related costs, one-time nonrecurring expenses, noncash impairment charges, and noncash loss on extinction of notes payable divided by the weighted average shares outstanding. Now turning to Slide 17, you can see that Blink has made tremendous progress in growing our revenue base over the last two years. Our revenues grew 671% in just two years. At the same time, we have more than doubled our gross margin from 14% in 2021 to 29% in 2023, and currently targeting our gross margin of approximately 33% for 2024. Now moving to our cash position. As of December 31, 2023, cash and cash equivalents totaled $121.7 million, an increase of $85 million compared to December 31, 2022, and $55 million compared to the $66.7 million on September 30, 2023. In the fourth quarter of 2023, we raised $88 million in gross proceeds via the existing ATM. Furthermore, during the first quarter of 2024, we raised gross proceeds of an additional $25 million via the ATM, totaling $113 million in gross proceeds via the existing ATM between November 20, 2023, and February 12, 2024. We accessed the market opportunistically, at scale and at very cost-effective terms for Blink. As a result, we were able to pay off promissory notes and accrued interest of $45.5 million, which deleveraged the balance sheet to avoid significant ongoing interest costs, as well as accelerate Blink's path towards profitability. We are very pleased to have closed fiscal 2023 with record fourth quarter and full year results. We believe the charging infrastructure industry is at an inflection point, and we're building a solid foundation for Blink's continued and, more importantly, profitable growth. I will turn the call back over to Brendan for his final commentary. Go ahead, Brendan.

Well, thank you, Michael. So I think you all can see that 2023 marked a truly transformative year for Blink. We couldn't be prouder of our team and the accomplishments for the year of 2023. But we've said a lot today, so let's recap really quickly here and get to the more salient points. Our revenues surged to over $140 million accompanied by an industry-leading gross margin of 29% in 2023. Additionally, as Michael just iterated, we took advantage of favorable market conditions and capitalized Blink by raising $113 million in cost-effective financing. We significantly reduced our debt obligation and the burden of interest expense on free cash flow. When you look at Slide 19, in 2023, we expanded our U.S. manufacturing with the recent grand opening of our facility near the nation's capital, allowing Blink to consolidate five of our U.S. facilities down to two while increasing production. From an operating, logistics, and network perspective, we further consolidated. We also consolidated sales, back office functions to reduce operating expenses and improve efficiencies. Additionally, we have integrated and rebranded our legacy companies of Electric Blue and Blue Corner, who are now Blink UK and Blink Belgium, and we're not done yet. As we move into 2024, the team is laser focused on the targets we have laid out in front; the number one target is achieving a positive adjusted EBITDA run rate by the end of 2024. As all listed out on Slide 20, we will continue to drive global efficiencies through optimized manufacturing, logistics, distribution, and facilities and back office consolidation. We will execute our cost reductions and avoidance strategies, leverage expanded manufacturing facilities to support growth, reduce COGS, and enhance the international product portfolio. We will launch a new multimarket maintenance and service and proactive monitoring network to improve uptime and charger quality and reliability, and we will continue to invest in innovative technologies to improve efficiency and promote continued growth. These tactical and strategic moves will provide Blink with the necessary flexibility to achieve our positive adjusted EBITDA run rate by December of 2024. This is fundamental to Blink's long-term success. Finally, our success in 2023 wouldn't be possible without the outstanding team we have in place, and we thank each and every one of them across the organization for their tremendous effort this year. As you might imagine, the team is excited about Blink's future, and we look forward to updating you throughout 2024 as we continue to make progress. With that, the call is now open for questions.

Thank you. Our first question is coming from Chris Pierce with Needham. Your line is live.

Hey, just two from me. We had an industry leader on the earnings call a couple of weeks back talk about seeing their customers thinking about moving towards a dual sourcing model and kind of having multiple chargers from multiple brands on site. Is that something that gives you confidence in the growth to triple your production capacity in Bowie? Had that already been contemplated in the model, or is that something new that's additive to how you're thinking about the future?

Yes, it's an enhancement, so it wasn't in the original math when we agreed to expand Bowie, but certainly now we're calculating it in. So we see that as added benefit over time.

Okay. And then you're guiding at the midpoint to roughly 20% revenue growth. How do we square that with the tripling of the capacity? One seems a little more aggressive, one seems a little more conservative. What's the right way to think about that?

Sure. We built our budgets from the ground up and we're factoring in. Obviously, we're a bit conservative. As you know, we're conservative in nature and as we head into 2024, as we navigate through some noise, we feel confident that that range is most appropriate for what we feel is to start out the year.

Thank you. Our next question is coming from Stephen Gengaro with Stifel. Your line is live.

Thanks. Good afternoon, everybody. Two from me and one to follow up on the question Chris just asked. When we think about the revenue guide for 2024 and we think about what the industry seems to be going through right now, just from an adoption rate, all the data points have been a little more negative. But notwithstanding that and your comments on the guide, how would you classify 2024, 2025, 2026? Should we think about that underlying CAGR that you illustrated in the presentation in the mid-20s as kind of a baseline? Is that a good place to start? And if so, how should we think about that impact overhead and margin progression?

It's a good place to start. You'll notice different accelerations in various regions where we operate, particularly outside the United States. We aim for larger numbers and want to ensure we have the capacity to manage upcoming developments in this area. It's essential not only to have the capacity but also to maintain the ability to produce with high margins. As Michael mentioned, we will take a conservative approach to our numbers, based on real data. We always review what analysts are saying, whether they are from McKinsey or other firms assessing industry growth. We then align that information with our active regions and analyze segmentation to identify where the most significant revenue expansion opportunities exist. We also evaluate our internal functions to uncover additional revenue possibilities as we continue to grow and scale in the industry. We believe that a target range of $165 million to $175 million is healthy and serves as a solid foundation for substantial work, which will enable us to enhance our margins as well.

Thanks. As a follow-up, we got to see the new facility this week. When you think about that facility ramping, and I think you've consolidated and centralized the warehouse and production, et cetera, how should that impact underlying product margins over the next two years?

Yes, it's going to have a positive impact. As you might imagine, we've done a couple of different things. We had five facilities, one in Miami, and actually four in the greater Washington, DC metro area. We've now consolidated all those to two. With that, we've also been able to reduce overhead across the board. As a result, we anticipate a positive margin impact from that. But we haven't crystallized those numbers yet, so we have it at a range. That's something that you're going to see manifest in the Q1 report, which is looking really good, and in the Q2 and Q4.

Operator, the next question please?

Hi. Good evening, and thanks for taking my questions. More on the housekeeping side, can you maybe update us on your DC Fast Charger portfolio? Where are we at as far as the new product introductions that you were planning? And can you maybe break out for us what the contribution was in 2023 and whether or not there was a margin drag in the fourth quarter?

Yes. Our DC Fast Charging strategy is threefold right now. First, we have our own products that are already in the market, which are predominantly fleet applications. That's our DC 9, which is actually our best-selling DC product, and comes in 30 kW and 40 kW, being primarily used at dealerships and fleets nationwide. Then we have what we call our third party outsourced strategy, where we have contracted manufacturing of a Blink-look and feel charger. This charger fills our orders, whether those orders are to dealerships, fleet companies, or municipalities. The last piece of our strategy is our own designed DC 240, which is in the certification stage. The design is finalized. The engineering aspect is all done, but we are waiting for confirmation from our manufacturing partner to produce that charger with us.

Excellent. And then, Michael, I appreciate the clarity on the gross margins. 30% is an impressive number for any producer in this industry. Can you help us with some of the items that were impacting this fourth quarter gap versus the adjusted number? Do you have those details to share with us?

Yes. As we noted in the prepared remarks, a majority, I'd say about $1 million to $1.5 million, represented warranty and maintenance expenses, along with certain discontinued components as we transition from outsourced manufacturing to in-house production. Those components were not used as much or had to be expensed at the end of the year. So it's a combination of a few things, but mostly on warranty and maintenance, as well as discontinued components.

Okay. And can you give us a little color on what the warranty was on? Is this legacy product from many years ago, or is this something that is just a minor correction for more recent product?

Yes, it's a combination. A lot of it has to do with legacy equipment in the field. We continue to honor warranties to ensure the uptime and quality of those chargers because that's one of the top concerns in the industry. This resulted in increased warranty expenses. When we replace those legacy chargers and customers still require that type of charger, we must pull out the older components, which adds to our component expense and cannot be reused. We are confident that this will be a one-time expense, but it particularly impacted Q4 as we upgraded older componentry and fulfilled warranty obligations to maintain quality in the field.

Excellent. And last question, if I may. Buy in America. This is something that the Department of Energy is big on, and the President is big on. You guys are now, I believe, the best positioned company regarding Level 2 supply into North America. With the Bowie, Maryland facility, can you give us some insight into the breadth of demand that you're seeing? I know we've discussed going from 12,000 to 50,000 units in capacity, and I think there's a plan to go to 100,000. You obviously see significant opportunities. Can you unpack that for us?

Absolutely. We met with federal, state, and local representatives this week. There is immense interest in the Buy America product. This was emphasized in meetings with Governor Moore and a session we had yesterday at the White House with Blink's Board of Directors and key management. They believe the volume of Buy America products needed will grow exponentially. The Bowie, Maryland facility enables us to service the U.S. market while also positioning us for global markets, including manufacturing chargers for our facility in India. This flexibility allows us to produce compliant chargers for both domestic and international markets. One of the key contracts we have is with the U.S. Post Office, who attended our grand opening. They are slated to take a significant number of those chargers made in North America at Blink's facility outside the nation's capital. We're very excited about this forecast.

Fantastic. Well, congratulations on the progress. I'll hop back in the queue.

Thank you. Our next question is coming from Sameer Joshi with H.C. Wainwright. Your line is live.

Thanks. Good afternoon. Congrats on the progress so far. Just a few questions and clarifications on the revenue outlook. What is the contribution from products versus network fees and charging revenue that is being reflected in this $165 million to $175 million outlook?

Michael?

Yes, we expect the trajectory of the split between services and products to remain consistent. In the U.S., we've seen a ratio of around 75% product and 25% service. In Europe, this is inverted, with 25% on the product side and 75% on the service side. We expect this trend to continue moving forward, enabling flexibility in maximizing either part of the business.

The only modification I would add is that we're moving quickly in 2024 to expand our sales operations in Europe. Although we have a strong presence of owner-operators in the region overall, there will also be considerable opportunities for hardware sales, as we restructure all of our European offices to leverage at a higher penetration rate.

Understood. So then the gross margin outlook seems more conservative than the top line outlook because already in the fourth quarter, you had nearly 30%, excluding extraordinary items. Your product sales are projected to grow, which should increase overhead absorption. It seems that the outlook might be conservative. Am I reading that right?

The only point I would emphasize is that for a full-service EV infrastructure company, we have many contemporaries in the U.S. and we've seen their earnings results. We are leading in margin today. We don't intend to rest on our laurels; our target is 33%. It's our history since last year to provide guidance conservatively and realistically. Therefore, we believe 33% is a solid target. If we see upside and can accurately measure that against the rest of the organization, we may adjust the guidance as we progress through the year. However, this target still positions us as industry-leading.

Yes, understood. Thanks for that. Just one last bookkeeping question. Was the $45.5 million paid before December 31 or subsequently?

Yes, the $45.5 million was related to the SemaConnect acquisition note. We paid $12.5 million during Q4 and the remainder in Q1 2024. With the capital proceeds, we deemed it prudent to pay down that obligation and decrease our expense burn moving forward.

Makes sense. Thanks for taking my questions, and good luck.

Thank you.

Thank you. Our final question is coming from Noel Parks with Tuohy Brothers. Your line is live.

Hi. Good afternoon. I wondered if you could talk a bit about multifamily? I think you also mentioned hospitality, and that sector as well. With multifamily, it seems to be that convergence between consumer adoption and centralized charging. I'm just interested to hear what you're seeing in that market.

Yes. We see that segment growing next to fleets. We have identified it as the highest-growing segment we are targeting right now, and industry data supports that. There are a couple of models merging in multifamily spaces. In some cases, there's a single charger model that does not require network access. Other models involve shared space where we need to network the chargers and credential access for customers. The third is third-party garage-based infrastructure not associated with multifamily dwellings, which is contracted out. Both networked commercial chargers can incorporate energy management solutions for better facility control. This is the path we are pursuing in the multifamily space.

Can you outline the number of manufacturing lines you have at Bowie and where you stand now and where the ultimate growth is in your footprint there?

We moved out of our previous facility, which serviced up to 15,000 units. Now we have three automated lines, with one line currently capable of matching our previous production at the old facility. The second two lines will increase that output significantly. We are operating with a standard day shift where technicians work from about 7 AM to 3 PM and then handle cleanup and restocking. By introducing additional shifts, we expect to ramp to 50,000 units, and we can add more shifts over weekends for special customer demands.

It was interesting to hear you discuss the reorganization you've done in sales and the orientation in Europe. Could you talk about Blink-branded parts of the business versus white-labeled products or fleet customer deployments? I'm curious about the role branding plays in your expanding business model going forward.

Currently, everything we produce is Blink branded. However, there are circumstances where additional branding may occur, particularly in OEM or specific customer contracts. We ensure that third-party chargers not manufactured by Blink are also Blink branded as part of our agreements with partners. Our vision for the future is that 80% of the total products we sell will be manufactured and branded by Blink, and we're on that path with the new Bowie facility facilitating this transition. We are also working toward the final stages of charger design to standardize Blink products in European operations.

Thank you, as we currently have no further questions in queue at this time, I would like to hand it back over to Mr. Stelea for any closing remarks.

Thank you, Ollie. And thank you to all of you who joined us on Blink's fourth quarter 2023 earnings call. As we announced, another absolute record quarter of revenue growth and an industry-leading gross margin. This marks the end of this call. We look forward to communicating with you in 2024, and at this time, you may disconnect.

Thank you, ladies and gentlemen. This does conclude today’s call. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation.