EVgo Inc. Q4 FY2024 Earnings Call

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the EVgo Fourth Quarter and Full Year 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I would now like to turn the conference over to Heather Davis, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to EVgo's fourth quarter and full year 2024 earnings call. My name is Heather Davis, and I'm the Vice President of Investor Relations at EVgo. Joining me on today's call are Badar Khan, EVgo's Chief Executive Officer; and Paul Dobson, EVgo's Chief Financial Officer. Today, we will be discussing EVgo's fourth quarter financial results and our outlook for 2025 followed by a Q&A session. Today's call is being webcast and can be accessed on the Investor section of our website at investors.evgo.com. The call will be archived and available there along with the company's earnings release and investor presentation after the conclusion of this call. During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance. Factors that could cause actual results to differ materially from our expectations are detailed in our SEC's filings, including in the Risk Factors section of our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. The company's SEC filings are available on the Investor section of our website. These forward-looking statements apply as of today and we undertake no obligation to update these statements after the call. Also please note that we will be referring to certain non-GAAP financial measures on this call. Information about these non-GAAP measures, including a reconciliation to the corresponding GAAP measures, can be found in the earnings materials available on the Investor section of our website. With the anticipated growth in dedicated stalls or stalls for commercial partners such as autonomous vehicles that are not open to the public, we have now broken out our stall counts into three categories: Public, Dedicated, and eXtend. Throughput shown and discussed today is for our Public Network only. The revenue for Dedicated sites has been reclassified from charging revenue commercial to ancillary revenue this quarter, and the associated costs have been reclassified from charging network cost of sales to other cost of sales. We provided a quarterly update for these changes for 2023 and 2024 in the appendix of our investor presentation, so you may update your models appropriately for the impacted periods. With that, I'll turn the call over to Badar Khan, EVgo's CEO.

EVgo had yet another strong and record quarter. Customer consumption on our network continues to rise with average daily throughput per public stall rising by 37% versus the same quarter last year and up more than five-fold in three years. Utilization on our network reached what we believe is an industry leading 24%, up 5% from a year ago and now already within the range of our recently updated and therefore still conservative long-term forecast. Full year revenues from our core charging business more than doubled year-over-year and Q4 represented the ninth sequential quarter of double-digit growth. Full year revenue grew 60% year-over-year, a near 12-fold growth in just three years. We added a record 480 new operational stalls in the fourth quarter, including Dedicated and eXtend stalls, which made it a record year with over 1,200 new stalls added in the year and now have over 4,000 operational stalls. And as you all know, after an 18-month process, we finally closed on a $1.25 billion loan guarantee with the Department of Energy Loan Programs Office that fully finances our ability to more than triple our installed base over the next five years throughout the United States. We received our first advance in January for approximately $75 million, leaving us with approximately $200 million in cash in January. EVgo has not yet scheduled our next quarterly advance. Taking a step back, we know that new sales of battery electric vehicles in the US have grown considerably over the past several years. However, we are falling behind other markets and, in particular, China, which is currently winning in an unmistakable race towards electrifying transportation globally. China already outsells the US in automotive sales globally as a result of extensive and prolonged state sponsorship of its EV industry. US automakers say their EV production is simply responding to demand. Two biggest drivers in survey after survey for why more US drivers have not already made the switch to electric vehicles are the upfront price of the vehicle despite the fact that the total cost of ownership is already lower and the availability of charging infrastructure. The good news is that there are more and more electric vehicle models available in the US that are becoming increasingly affordable. However, US electric vehicles remain more expensive than the electric vehicles subsidized in China. This is why US auto CEOs do not support the elimination of incentives and regulations to support the scaling up of EVs in the US. On charging, China has more than five times the DC fast-charging infrastructure per electric vehicle than the US. Increasing the supply of charging infrastructure stimulates demand for electric vehicles, which allows US automakers to increase scale, reduce unit costs, generate profit on their EV businesses, and as a result, improve their competitiveness against Chinese OEMs. As one automotive CEO put it, 'A global street fight is taking place in the automotive sector, and the US needs its EV businesses to scale up to be able to compete against China and preserve the 2.4 million automotive manufacturing jobs in the United States. Building out public charging infrastructure is a key enabler of that goal.' As you know, EVgo's charging revenues are not linked to new sales in any one year, but by the growth of all electric vehicles in operation, or VIO, and the availability of charging infrastructure. In fact, we estimate that less than 10% of 2025 revenue will likely be driven by new first-time drivers of EVs, and that ratio will continue to fall each year. Demand growth for our business, represented by the growth in EV VIO, has been outpacing supply growth of charging infrastructure for years. This is one of the reasons utilization of our network has grown four-fold in three years. In fact, according to DOE, we have had flat growth of new DC fast charging in the US for the past six quarters. Presumably, this lack of investment has been driven by the industry's expected slowdown in EV sales even though EV sales have, in fact, continued to grow. This demonstrates the resilience of our business model. As EV sales rise, utilization on our network rises because charging supply cannot grow fast enough. If EV sales fall, it's likely the pace of new charger development will fall faster, as we've already seen, and utilization on our network rises. In all cases, existing VIO will continue to underpin strong unit economics and demand for our chargers. And because we know that the availability of charging infrastructure is one of the most important factors in whether people switch to electric, this means increasing supply actually stimulates demand, and utilization on our network rises. In other words, in almost every scenario, we have a resilient business model where we see growth in our business. We further benefit from the fact that EVgo is more focused on growing usage in our network than some other charging companies may be. And therefore, it's likely capturing a greater share of kilowatt hours. Other fast-charging companies are either highway-focused, chasing NEVI awards where utilization is lower, who are building charging stations to sell cars versus maximizing utilization, or are non-owners whose revenue is based on equipment or software sales and not on utilization. Finally, as we've said many times, we also benefit from multiple other tailwinds that have driven up and will continue to drive up utilization. First is rideshare electrification. Companies such as Uber and Lyft have internal goals to get more drivers to switch to electric, and this is supported by policies requiring rideshare become fully electric in large cities such as New York City. When a rideshare driver needs to charge up during their shift, they'll usually do so on DCFC networks so they can get back on the roads quickly. Second, as EV adoption moves from early adopters to the mass market driven by more affordable vehicles, more EV drivers are expected to live in multifamily housing without access to home charging. As we've detailed in the past, multifamily EV drivers charge two times more in our network than single-family EV drivers. Third, as vehicles increase their charge rate or the speed at which they can take electrons from chargers, the use case for DC fast charging becomes more compelling to drivers. Fourth, autonomous vehicles are beginning to hit the roads of several market pilots from a few companies. The financial use case for AVs requires them to be both electric and highly utilized. Therefore, like with rideshare drivers, when AVs need to charge, they'll use fast charging. EVgo already has partnerships with leading AV firms and has 110 dedicated hub stalls in operation, representing what we estimate to be approximately 20% share of all dedicated fast charging stalls for the AV sector. We plan to continue to expand this segment in 2025 and expect this to be an area of growth that may occur faster than previously thought. And finally, the standardization of the charging cables to J3400, commonly referred to as NACS, is an opportunity for EVgo. Today, only a small percentage of drivers that use our network are Tesla drivers. As we add NACS stalls to our network, we are in a unique position to attract roughly 60% of EV VIO to our network that isn't currently using our network today. As I've mentioned before, EVgo stations tend to be in urban and suburban areas closer to amenities than many Tesla stations today. In fact, as of this earnings call, we've begun our pilot rollout of the NACS cable. And while it's very early days, we believe the results are promising. The combination of all these factors are what results in a resilient business model for EVgo, driving growth and adjusted EBITDA. Let's now turn to progress on our four key priorities: improving our customer experience, operating in CapEx efficiencies, capturing and retaining high-value customers, and securing additional complementary financing to accelerate growth. As always, improving our customer experience remains our number one priority, and our strong momentum caps off an excellent year. Customers want a charger to be available when they pull up to an EVgo station. We are deploying larger sites where our standard configuration is now six to eight stalls per site. At the end of 2024, 20% of our sites had six stalls or more. With a record number of deployments during the fourth quarter, we reached our goal of 50% of EVgo stalls served by our higher-power 350 kilowatt chargers compared to 34% a year ago. Autocharge+ continues to gain traction with a big step up in the fourth quarter to 24% of sessions initiated by the seamless plug-and-charge experience. We are gaining significant traction with auto enrollments for OEMs that have Autocharge+ enabled. And finally, our key customer success metric of One & Done increased 4 percentage points this quarter versus last year, with 95% of sessions resulting in a successful charge on the first try. In summary, another great quarter of achievement in improving our customer experience. We've also made excellent progress on our efficiency priorities. Most notably, we took the MOU with Delta Electronics we signed last October and converted it into a signed joint development agreement to co-develop the next generation of charging architecture. EVgo and Delta are making meaningful progress in this initiative and are expected to lower our gross CapEx per stall by 30%. We anticipate production of these stalls to begin in the second half of 2026, and we plan to have a prototype for the second quarter of this year. In 2024, we achieved a 9% reduction in our gross CapEx per stall for our current generation of chargers through multiple ongoing efficiency efforts. Additional reductions are underway in 2025, and we look forward to sharing our continued progress. The first sites built with our prefabricated skids are operational and yield savings in build costs and construction timelines. We expect around 40% of our 2025 deployments will utilize prefabricated skids. We continue to drive operational efficiencies in our business with total adjusted G&A as a percentage of revenue, delivering a 21-point improvement over 2023. In 2025, EVgo remains focused on operating efficiencies, and we anticipate further improvements in G&A as a percent of revenue while investing in the growth of our business. We also continue to make great progress on our growth priority of capturing and retaining high-value customers. 56% of EVgo's throughput came from rideshare, OEM charging credit, and subscription accounts in Q4. This provides EVgo with a relatively predictable baseload level of demand at our network. EVgo now has over 1.3 million customer accounts, growing over 50% from 2023. As a result of our investments earlier in the year in our customer marketing platform, we've been implementing multiple targeted customer lifecycle campaigns that are generating strong growth in retail throughput, which we will continue to prioritize throughout the year. Last year, we began rolling out dynamic pricing in our network, and by year-end, we expanded that to 100% of our existing fast-charging sites. We can already see the benefits of all of these efforts through expanding margins, but also significantly expanding throughput. We expect the next major uptick to our dynamic pricing algorithms in the second half of this year. And finally, as I mentioned earlier, we installed native NACS connectors at our first site in early 2025. We're excited to be able to share the results of this pilot project with you throughout the year. Looking ahead, we expect to expand or sign new partnerships with site hosts that are capable of scaling, similar to the expanded partnership we announced in November with Meijer, a Midwest grocery store chain, where we expect to add 480 new public fast-charging stalls at Meijer Properties over the next three years. In 2025, we also plan to launch the first of 400 new flagship stalls in partnership with GM with the goal of delivering an elevated customer experience. As a reminder, these sites will feature up to 20 stalls and come with ultra-fast 350 kilowatt chargers, canopies, ample lighting, pull-through stations, and security cameras, and like all EVgo sites, will be located near a diverse set of amenities that customers can take advantage of while charging. Finally, we expect to expand the number of dedicated stalls serving autonomous vehicle partners, which could represent a very attractive source of potential growth for EVgo given we estimate we have a 20% share of operational sites serving this segment today. As for financing the growth of the business, EVgo closed a $1.25 billion loan guarantee with the DOE LPO in December 2024 with the first draw for $75 million occurring in January 2025. This loan ensures we are fully funded to add at least 7,500 stalls, more than tripling our installed base over the next five years. In September, we completed the transfer of our first 30C income tax credit for our 2023 vintage stalls and expect to complete the transfer of our 2024 vintage portfolio this year. Over the course of this year, we expect around 30% of 2025 vintage CapEx to be offset from state, local, and federal grants, utility incentives, OEM payments, and 30C. Federal incentives in the form of technology-neutral 30C alternative fuels credit and NEVI represent approximately 10% of our 2025 vintage CapEx. As we said before, this is not a business particularly reliant on federal incentives, and our next-generation charging architecture program is targeting at least a 30% reduction in gross CapEx per stall, significantly more than the value of these federal incentives. And finally, given the very strong cash flows from our operating assets, we continue to receive inbound interest and evaluate additional complementary non-dilutive financing opportunities that would help fund the growth of any charging stations not included in the DOE loan funding to accelerate our growth. Paul Dobson, EVgo's CFO, will now cover our strong financial performance in the fourth quarter and full year 2024 together with our outlook for 2025.

Thank you, Badar. EVgo delivered another excellent year in 2024. Our operation team mobilized and operationalized many sites in the fourth quarter, and we ended the year with 4,080 operational stalls, a 37% increase over 2023. As Badar mentioned, we continue to add new customer accounts throughout the year and ended 2024 with over 1.3 million customer accounts. Total throughput on the public network for 2024 was 277 gigawatt hours, a 116% increase compared to last year. Revenue for 2024 was $257 million, which represents a 60% year-over-year increase. This growth was primarily driven by charging network revenues. Total charging network revenues of $155.7 million grew from $74.2 million in 2024, exhibiting a 110% year-over-year increase, with retail, commercial, and OEM charging revenue each individually at least doubling over the prior year. eXtend revenues of $86.6 million increased from $72.4 million in the prior year, delivering growth of 20%. Both charging network gross margin and adjusted EBITDA margin significantly improved in 2024, demonstrating the operating leverage in our business model. EVgo's public network throughput growth continues to outpace EV VIO growth, driven by multiple factors. Since 2021, our public throughput has grown almost 1,000% compared to EV VIO growth of over 200%. In the fourth quarter, network utilization increased to 24%, up from 19% a year ago. Diving into detail a bit more, 65% of our stalls had utilization greater than 15%, 53% of our stalls had utilization greater than 20%, and 32% of our stalls had utilization greater than 30%. Each of these utilization categories grew throughout the year with the distribution of the entire utilization curve of the whole portfolio shifting to the right. In the fourth quarter, the average daily throughput for the owned and operated public network was 269 kilowatt hours compared to 197 last year. Looking at the top 15% of our network, the average daily throughput per public stall was 599 kilowatt hours versus 450 kilowatt hours in the prior year. The top 15% of our network is already exceeding where we conservatively think the average stall will grow to when we reach 11,000 public stalls. We made significant progress in the profitability of the owned and operated public charging network this year. Charging network gross margin for 2024 was 37.6%, up from 26% in 2023. Higher throughput per public stall allows for leverage of the stall-dependent costs, such as rent and property taxes. Revenue for the fourth quarter grew 35% compared to last year with total revenue of $67.5 million. While strong charging revenue continued to meet our expectation, certain timing issues caused $4 million of eXtend revenue to move into the first quarter of 2025. Adjusted gross profit was $22.8 million in the fourth quarter of 2024, up from $13.3 million in the fourth quarter of 2023. Adjusted gross margin was 33.7% in the fourth quarter of 2024, an increase of 720 basis points compared to the fourth quarter last year. Adjusted G&A as a percentage of revenue also improved from 54.4% in the fourth quarter of 2023 to 46.2% in Q4 of this year, demonstrating the operating leverage effect. In the fourth quarter, adjusted G&A increased $4 million sequentially as we are hiring to support our next-generation architecture. Adjusted EBITDA was negative $8.4 million in the fourth quarter of 2024, a $5.6 million improvement versus negative $14 million in the fourth quarter of 2023. For the full year 2024, revenue was $256.8 million, an increase of 60% over 2023. Adjusted gross profit was $75.7 million in 2024, up from $41.8 million in 2023. Adjusted gross margin was 29.5% in 2024, an increase from 26% last year. Cost management continued to be a priority for EVgo. With a nearly $100 million increase in revenues, we managed our expenses well and adjusted G&A on an absolute basis increased by only $7.5 million for the full year to $108.2 million. With this leverage, adjusted EBITDA improved to a loss of $32.5 million for the year, a $26.4 million improvement over 2023. Cash, cash equivalents, and restricted cash was $121 million as of December 31, 2024. We also received our first draw of $75 million under our DOE loans in January 2025, which brought our cash, cash equivalents, and restricted cash to approximately $200 million. We're improving our cash flow profile as well. In 2024, we used $7.3 million in cash for operations compared to cash use of $37.1 million in 2023. Gross capital expenditures were $94.8 million in 2024. Capital expenditures net of capital offsets was $46.4 million. Let's now take a look at our unit economics model. First, we've made a couple of updates to remove the dedicated stalls, their associated throughput, revenue, and cost to focus solely on public stalls. Also with cost of sales, all energy demand charges are now in throughput-dependent cost of sales, whereas it previously was split between stall-dependent and throughput-dependent cost of sales. And finally, on sustaining G&A per stall, we are looking at a trailing 12 months of G&A to reduce the volatility that occurs when you annualize the quarterly number as G&A has accounting adjustments from time to time that can cause noise. The growth in average throughput per stall drove the increase in revenue per stall as average revenue per kilowatt hour increased by just $0.01. Throughput-dependent cost of sales decreased by $0.02 per kilowatt hour or roughly 8% as we continue our geographic expansion, including in Texas and Florida, where energy tariffs are generally lower, and we are spreading our demand charges over a greater network load. Stall-dependent cost of sales increased year-over-year, primarily driven by maintenance expense as utilization on the network has increased. Sustaining G&A per stall decreased roughly 5%. It's quite revealing to see the leverage in the EVgo model as annual cash flow per public stall increased 5 times for last year, and the top 15% of our network is now generating roughly $50,000 per stall per year, which is higher than even the top end of our long-term range. Utilization is now already within the range of our updated, but still conservative, long-term utilization range. The enormous tailwind we enjoy from faster charge rate batteries in newer models combined with faster average speed of our network from our 350 kilowatt charger drives much of the remaining increase in daily throughput per stall in our long-term assumptions. Looking at the longer-term, we should see leverage in stall-dependent costs driven by material improvements in the maintenance costs driven by the next-gen architecture's improved maintenance profile. For sustaining G&A per stall, we expect this number will increase in 2025. As we are making investments in stall growth, this is back-half weighted. We are targeting this to reduce to 7,000 in a long term as we build a larger network, and fixed G&A expenses are allocated over a three-times larger stall base. As we build critical supply of fast-charging infrastructure over the next several years and reach a scale of roughly 11,000 stalls, the leverage of the model is expected to generate annual returns of 50% per stall. Taking a simple math approach to our unit economics, the path to a much larger business in the long-term is clear. At 11,000 public stalls, we expect to generate around $1 billion in annual revenue, recharging network gross profit of $550 million. There are some investments in G&A to be made, but growth rates anticipated from gross profit scale much faster. At 11,000 public stalls, the core owned and operated business of EVgo could be generating $300 million to $425 million in annual adjusted EBITDA. As a reminder, this excludes contribution from any other business lines like dedicated hubs or growth outside of the DOE loan. The growth engine we've built at EVgo will continue to deploy stalls at a greater rate in 2025 than we achieved in 2024. We anticipate owned and operated public and dedicated stalls of 800 to 900 in 2025, with the vast majority being stalls for the public network. As a reminder, we prudently held back capital towards the end of 2024 awaiting the closure of the DOE loan. And as such, our 2025 build plan will be back-half weighted. We anticipate roughly 50% of the stalls planned for 2025 will be in the fourth quarter of 2025. And we expect to build another 450 to 550 stalls in 2025 for our EVgo eXtend partners. This increase in total deployments in 2025 shows we're on the path to deliver 7,500 stalls under the DOE loan. As a reminder, the public network stall build plan from 2025 to 2029 is supported by the DOE loan. If we're successful in lowering CapEx per stall in line with our stated plans, we would be able to build approximately 1,600 more stalls without an increase in the DOE loan financing starting from 2027 onwards upon the release of our next-generation architecture in 2026. We expect to add even more dedicated stalls for AV partners in 2026 and beyond. Our build plan for the pilot company through our eXtend contract is currently expected to be completed by 2027. EVgo continues our top-line growth and path to profitability in 2025. We expect total revenues in the range of $340 million to $380 million. We continue to target adjusted EBITDA breakeven in 2025 with a range of negative $5 million to positive $10 million. Additional color behind these ranges is as follows: charging network revenue is expected to comprise approximately two-thirds of our total revenue in 2025. In charging network revenue, we anticipate sequential quarterly growth throughout 2025. Q1 is typically flat to Q4 as it is the lowest quarter of the year historically for vehicle miles traveled. eXtend revenues are expected to be roughly flat in 2025 to 2024, with growth in the second half of the year. Ancillary revenues are expected to grow in 2025, with most of the growth coming in the fourth quarter of 2025, driven by the dedicated business. Total adjusted gross profit and adjusted G&A as a percentage of revenue are expected to improve in 2025, driving bottom-line adjusted EBITDA improvement. Adjusted G&A is expected to increase modestly on the Q4 run rate throughout 2025, reflecting continued investments in technology and efficiency plus inflation. We expect fiscal CapEx net of offsets to be in the range of $160 million to $180 million for 2025. 2025 will be a pivotal and exciting year for EVgo. Operator, we can now open the call for Q&A.

Our first question will come from the line of Bill Peterson with JPMorgan. Please go ahead.

Yeah. Hi, good morning, and thanks for taking the questions. And also nice result in 2024 when looking back at your guidance from last year coming in at the high end on both revenues and adjusted EBITDA, so nice execution. My first question is on the loan and the status of the loan. Perhaps you can shed some light on when you expect the second drawdown to occur. Is there any conditions that must be fulfilled? I mean, how are discussions happening with the administration? What avenues do you have to counter any attempts to claw back the loan or with this loan apparently being delayed? Just kind of wondering what you have there. And then, really, in the worst case scenario, you talked about some financing options, but I assume those are near term. But can you shed some more light on your non-dilutive financing options with or without the loan? For example, I'm assuming maybe project financing with some debt or equity partners, but what does the appetite look like for such options today?

Sure. Hey, Bill. So, look, we have a very productive relationship with the LPO team. As we've said here on this call and before, we see charging infrastructure as actually key to the long-term competitiveness of the US auto industry as it competes against China. And as you know, and I think as everyone knows, this is not a conditional commitment, but a legally binding contract that we're spending two months on, and adds a thousand jobs. All government funding is under review that I think everybody knows that. But we believe that they see what we see and what you're looking at today. These assets have very strong performance. The loan is a good deal for the US government. It's been carefully structured to provide protection to the government and also flexibility for us. And so, our confidence in the loan really hasn't changed. We received our first quarterly advance in January, and it's obviously too early for the next quarter, which would be in Q2. As we said in December and as we're saying today, we become EBITDA breakeven this year and levered free cash flow positive in 2026. Meaning, if we hadn't financed this growth with the DOE loan, there are likely many others that really would have. And so, Paul, do you want to just comment on the...

We are exploring additional financing options to complement the DOE loan. Some projects cannot qualify for the DOE loan because they are not public, and we believe it’s wise to seek alternative funding sources. Many businesses adopt this strategy, and we think it’s beneficial for EVgo. We have been engaging with various institutions and banks, and they appreciate our business model's reliable cash flows. They are aware of our unit economics and have reviewed our previous presentations. We are considering financing structures similar to the DOE loan, but not with the same duration, possibly involving project financing or hybrid solutions. We are committed to pursuing non-dilutive funding as well. The response from banks has been very positive; they recognize our track record as a developer, and they can see our execution and cash flow potential. We are confident that we will secure additional financing this year.

Yeah, thanks, Badar and Paul, for that. And then, my second question, I'd like to kind of unpack a little bit about the full year guide again in the context that last year proved to be conservative. So, I guess, what can drive the outcomes to the negative or positive end? And does any of this depend on DOE loan deployments? Or perhaps you can shed some more light or quantify how much G&A increase per stall is going up, maybe potentially offset by factors like utilization, charging rate, and network throughput? And how should we think about those factors as part of the guidance? Should we use for the fourth quarter as kind of a guidepost, or are you assuming any improvement relative to the exit rates in 2024?

Sure. Bill, I'll have Paul respond to that. I want to mention upfront that I indicated in my script that we anticipate less than 10% of our revenue will come from new sales of electric vehicles in 2025. This reflects our business model, which relies more on the total vehicles in operation rather than just annual EV sales. Paul, feel free to provide some additional insight on this.

Sure. To provide more context on our guidance, we expect revenue to fall between $340 million and $380 million, with two-thirds of that coming from charging revenue. This range accounts for some variability, specifically a slight plus or minus 5% on throughput, along with some risk related to LCFS pricing. The remaining third of the revenue comes from non-charging activities, and this range is influenced by timing issues related to contracts, including when we sign them, permitting, logistics, and some risks associated with NEVI. We also anticipate a modest increase in G&A from our Q4 run rate, which considers our technology investments and inflation. Our projected adjusted EBITDA is between minus $5 million and positive $10 million. Considering all this, you can estimate our adjusted gross margin by using the midpoint of these ranges, and you'll notice that both our charging and non-charging business gross margins are on the rise.

Yeah, thanks for sharing those insights, and nice job on the execution in 2024.

Thanks, Bill.

Thanks, Bill.

Our next question comes from the line of Chris Dendrinos with RBC Capital Markets. Please go ahead.

Thank you, and good morning. I want to echo Bill's comments about the successful year we had last year. To address the earlier question regarding Trump executive orders, if there were to be a funding halt this year or next, how would you respond? Would you reduce your activities, or are you considering other opportunities for potential debt funding to maintain your current growth trajectory?

Chris, are you talking about the executive orders and their impact on electric vehicle sales? Is that what you're...

Just if the DOE loan was paused and they took you to court to try to fight it and not fund it?

We feel very confident in the loan. The loan assets are performing very strongly, making it a favorable deal for the US government with ample protections in place. We're also starting the year with about $200 million in cash, which puts us in a strong financial position. Paul, do you have any other comments?

Yeah. So, that's right. So, as we mentioned, we've got around $200 million of cash, including the drawdown we took in January. And when you step back and look at our model, primary uses of our cash are the cash from operations and then for CapEx. So, since we're going to be EBITDA breakeven in 2025, that implies that our operating cash flow is close to breakeven as well. You saw in '24, our cash from operations, we used $9 million, which was a significant improvement over 2023. So, you can cast that forward and say that's more or less breakeven as well in '25. So that leaves CapEx as kind of the swing factor. So, our net CapEx is expected to be $160 million to $180 million, which includes buildouts not only for the 2025 stalls but also for 2026 vintage as well. And we have the option, of course, to either speed up or slow down the deployment of those stalls if we choose depending on funding or for any other reason. And just to reiterate, we are pursuing complementary non-dilutive financing and confident we'll be able to put something in place this year.

Got it. Okay. And then, maybe as a follow-up, you highlighted some opportunities on the AV charging station side, those private stalls. Can you maybe, I guess, talk about the strategy there and how does that compare with the public network stations? Thanks.

We have been developing and managing dedicated hubs for autonomous vehicle fleet partners for several years. Last year, we significantly increased the number of operational dedicated stalls to 110, which is why we categorized them separately from the public network. We earn a fixed dollar amount for these stalls, where the electricity costs are passed through, leading to a different revenue model. Although the margins for this segment are slightly lower than our publicly owned and operated hubs, they are significantly higher than those from our eXtend business, and they also lack utilization variability. We have a favorable view of this segment. Furthermore, we believe that the autonomous vehicle robotaxi market could experience faster growth in the coming years than we initially anticipated, especially following the recent election. We estimate that we currently hold about a 20% market share of dedicated hubs for autonomous vehicle partners.

Got it. Thank you.

Our next question comes from the line of Douglas Dutton with Evercore ISI. Please go ahead.

Thank you. Hey, team. Thanks for having me on. I was just curious about how the strategy has maybe shifted on the prioritization of geographic growth over the next few years. I understand the commentary about tripling the number of stalls, but has this current administration's more limited scope on electrification had you guys rethink which states or markets to focus on, maybe those where EV density is already at critical mass?

Let me comment on the impact of electric vehicle sales. Our business is influenced by the difference between the supply of DC fast charging and demand, based on overall vehicles in operation rather than annual sales. Supply has been exceeding demand for years, which has led to a four-fold increase in utilization over the past three years. This trend drives our business economics. As demand increases, we experience improved utilization. Conversely, when demand slows, the industry’s supply of fast charging has also tended to slow, allowing us to benefit from our excess supply. If other charging companies expand their infrastructure, it stimulates demand, which is advantageous for us as we have better-located stalls and a focused approach on usage compared to many other charging providers. This results in a resilient business model. Regarding geographic expansion, we are increasing the share of our growth and network development outside of California, a trend we have been pursuing for several years. In the last quarter, we saw a shift where usage in the rest of the United States exceeded that in California for the first time. We are observing strong utilization in many of these non-California markets and are concentrating on building our network according to demand.

Awesome. That makes a lot of sense. Thank you, team.

Our next question comes from the line of Gabe Daoud with TD Cowen. Please go ahead.

Thanks. Hey, good morning, everybody. I was hoping we can maybe focus on CapEx just for a minute. And, has there been any sensitivities or studies that you guys have done with respect to potential tariffs and how that impacts your personal CapEx figure over time?

We have minimal direct impact from these tariffs since we do not source our chargers from China. Our supply chain is not affected by tariffs from Canada or Mexico. Our hardware vendors operate in the United States for compliant shipments and we can increase production if necessary. We have several options within our supply chain and maintain ongoing discussions with our partners in various regions. Currently, what has been announced does not significantly affect our business regarding our charging infrastructure. As for the indirect impact on EV demand, our business model is resilient, with our economics and utilization influenced by the difference between EV supply and demand, alongside the supply of charging infrastructure. This imbalance has persisted for years and continues to drive our growth.

Thanks, Badar. That's helpful. And then, I guess, just as a follow-up, on the demand charge side, could you maybe give us an update on where you stand with some utilities and some jurisdictions on extending or instituting demand charge holidays? And do you think there's maybe a risk over time as there's obviously significant expected load growth in the US for the first time maybe ever on AI data centers, et cetera? But maybe how does that potentially impact, like, demand charges and demand charge holidays? Thanks, guys.

Yeah. We've got demand charge reductions or holidays across the vast majority of our kilowatt hours today. And as utilization and throughput per stall on a per site basis continues to grow, clearly the impact of demand charges just becomes smaller, frankly, over time. And so it's one of the reasons where we're seeing operating leverage in gross margin. And as throughput per stall continues to grow, as you've seen throughput per stall has grown five-fold over the last three years, the impact of demand charges just becomes smaller and smaller over time.

Got it. Makes sense. Thank you.

Our next question comes from the line of Patrick Ouellette with Stifel. Please go ahead.

Hey. It's Pat on for Stephen Gengaro. Thanks for taking the questions. Would you be able to give us details on how you think of utilization evolving in 2025 based on your guidance? And longer-term, is there sort of a sweet spot of utilization across the network that you're targeting, understanding that if utilization gets up to, I imagine, in the 70%-plus range, then drivers would be waiting to charge at your stations?

Sure. At a high level, we're currently at 24% utilization. We just revised our long-term target at the end of last year and now aim for a range of 23% to 26%, which we're already within. As indicated in one of the slides, about two-thirds of our charging stalls are exceeding 15% utilization, and nearly a third are above 30%. It's likely we will revisit that long-term target again this year. To give you a broader perspective, we now have the scale and sophistication needed to implement pricing strategies and customer marketing effectively. This enables us to go beyond merely building charging stations and hoping for visits; we can actively influence who charges and when, as well as potentially where. Currently, the density of charging stations is insufficient, leaving substantial opportunities for growth. We're working on this to ensure increased charging without congestion, and we feel we're quite advanced in this regard. Throughout this year, we might adjust utilization figures once more. It’s important to note that throughput per stall involves both utilization and charge rate. We're benefiting from quicker charge rates owing to faster batteries, and our network is continuously improving with the rollout of 350-kilowatt chargers each month. These factors significantly contribute to our volume, represented by the price times volume equation. Paul, would you like to share your thoughts on 2025?

Certainly. Our utilization increased from 19% at the end of 2023 to 24%, representing a 5-point rise within a year. As mentioned, our guidance is between 23% and 26%, and we're already within that range. For modeling 2025, I suggest using the highest end of that range. We may revisit this later in the year as we gather more information on our stalls' performance. Charge rates are also rising, moving from 43 kilowatts to 47 kilowatts in Q4 2024, and we anticipate continued growth as new vehicles with faster charging capabilities enter the market, along with the deployment of more 350 kilowatt chargers. Beyond just utilization, we are learning the importance of timing in managing how chargers are used. For instance, some chargers are being utilized at just 15% at 3 a.m., which is remarkable. How we influence the timing of charger usage through pricing signals and marketing will be crucial for managing utilization going forward.

All right. Great. That's very helpful. Just to follow-up, I know in the past you said non-Tesla vehicles make up the majority of the throughput on the network, but just curious if you've seen any uptick in Tesla vehicles charging on the network, especially since it opened its network to the other OEMs?

Tesla vehicles typically haven't charged on our network historically. With the introduction of the NACS cable, we're excited to start accommodating Tesla vehicles without an adapter, using a native connector. This change represents a potential increase in our network's throughput without affecting the existing number of electric vehicles. We have now deployed our first pilot site with NACS cables, but it’s too soon for me to provide specific data. I am pleased to report that we are witnessing Tesla vehicles charging on our network at higher rates than before, although it’s premature to extrapolate that data across our entire network. We plan to expand the deployment of these NACS cables throughout this year.

Great. Thanks a bunch. I'll turn it back.

Our next question comes from the line of William Grippin with UBS. Please go ahead.

Thank you. Good morning, everybody. My first question here was just based on the skid-based hardware that you've talked about deploying here in 2025. I don't think you gave the number, but to what extent could that drive some cost reductions for 2025 vintage CapEx? And could that potentially offset the loss of 30C tax credits should that actually happen?

I want to take a moment to discuss the 30C tax credits. This represents less than 0.5% of the total cost of the IRA. The 30C credits are technology neutral and have bipartisan support because they incentivize various types of charging infrastructure, not just electric vehicles. These federal incentives account for about 10% of our gross capital expenditures per stall. Therefore, I want to emphasize that our business does not heavily depend on federal incentives. Our charger capital expenditure reduction program, established through our agreement with Delta, aims for a 30% improvement in gross capital expenditures per stall. So far, we've seen a 9% improvement in 2024 compared to our previous expectations. We anticipate a modest improvement next year in average gross capital expenditures per stall, influenced by a greater proportion of prefab skids and other initiatives related to equipment, site design, and construction processes. The improvement appears modest because we’re introducing flagship stalls this year. To remind everyone, we plan to deploy about 400 flagship stalls over the coming years with our GM partnership. These come at a higher price point but also offer a significantly better economic deal for us. However, if we set aside that factor, we are still observing incremental gains in gross capital expenditures per stall before the introduction of our next generation of charging equipment, which will further enhance our improvements by 30%.

Got it. And then, just wanted to follow-up here on the pilot side with the NACS connector. I know you said it was early, but could you speak to what maybe some of the early observations have been here in terms of charging behavior and maybe mix of vehicles?

Well, it's really too early. We've got more Tesla vehicles charging, and we're excited about that. We've done very little or no marketing on those Tesla sites. Until we've done that, it's hard for us to say that this is a data point we can use to inform our deployment for the rest of the year. We're thrilled that we...

All right. Appreciate the time.

Our final question will come from the line of Chris Pierce with Needham. Please go ahead.

Hey. Not to belabor the Tesla NACS point, but is that something you plan to accelerate this year, given prior expectations, given sort of public sentiment towards leadership there or, again, too early to kind of make any statements?

In terms of the deployment of NACS connectors, we charge all electric vehicles. That has been our policy, philosophy, and strategy. In our charging lab in California, we are bringing in and testing all electric vehicles, including Tesla models. We are thrilled about the standardization of cables as it simplifies the customer experience. We are excited about deploying NACS cables. I have been discussing this since last year, and we now have the first site with the NACS cable as a pilot. We expect to deploy these NACS cables throughout our network, likely starting with retrofits before moving to new installations later this year or next year. This allows us to increase throughput without a rise in vehicles in operation. It is one of the reasons why our business model and our company are particularly resilient.

Okay. You've mentioned the direction of the business regardless of EV adoption or competition in the charging sector. With a company like Ionna moving from beta to a national release and planning to install a thousand fast-charging stations this year, what are your thoughts on this from a competitive standpoint?

This is not a zero-sum game business, unlike many other sectors of the economy. As charging companies install charging infrastructure, demand rises. We know that one reason customers hesitate to switch to electric vehicles is the upfront price, even though the total cost of ownership is lower. Another reason is concerns about charging infrastructure, particularly range anxiety. The deployment of charging infrastructure stimulates demand, which benefits us. Regarding Ionna, it's been nearly two years since their announcement, and it's good to see that they have a few sites now operational. We analyze these sites using our advanced network planning and site selection algorithms, and they don’t seem optimal for maximizing utilization. However, many charging companies have other goals beyond mere utilization, such as pursuing NEVI awards, which may not focus on utilization due to limited growth on highways. Ionna might also have additional objectives for their network. Regardless, the increase in charging supply leads to higher demand. With our well-positioned sites, we believe we are capturing a larger share of kilowatt hours.

Okay. Thanks for the detail, and good luck.

And that will conclude our question-and-answer session. And I'll now turn the call back over to Badar Khan for closing remarks.

Great. Well, thank you, everyone. We had yet another record quarter, finishing off a record year. The charging infrastructure we're building is a key ingredient to the long-term competitiveness and sustainability of the US automotive industry, and that's one of the reasons why what we do is so important. Unlike others in the charging space, we have a resilient business model that is set to deliver another year of strong growth and reaching EBITDA breakeven. And I look forward to providing updates on our progress on this and our priorities at our earnings calls throughout the year. Thanks very much, everybody.

That will conclude today's call. Thank you all for joining. You may now disconnect.