Blink Charging Co. (NASDAQ:BLNK) H.C. Wainwright 24th Annual Global Investment Conference September 12, 2022 10:00 AM ET
Company Participants
Michael Farkas – Chairman and Chief Executive Officer
Unidentified Analyst
Good morning and thank you for joining H.C. Wainwright’s 24th Annual Investment Conference. My name is [Mason] [Ph], part of the Investment Banking team at H.C. Wainwright. It’s my pleasure to introduce Michael and Vitalie from Blink Charging.
Michael Farkas
Good morning, everybody. Thank you for joining us. Here is our Safe Harbor statement; sure you guys are all familiar with it. So, I’ll give you some information about Blink, who we are. We have now entered our 14th year of doing business this month. And while most people think this is a very new business; it is for most, not for us. We were the pioneers in EV charging services, we created the space globally. We were the first player as an EV charging service company. We started in 2009. We now have deployed over 51,000 charging stations globally. We have over 423,000 members — EV drivers who are members of our network. We have over 550 employees globally. We are the only fully vertically integrated EV charging infrastructure company in the United States, most of Europe, I think there’s one in China, other than us, who is as vertically integrated as we are.
We design, manufacture the network that the charging stop stations operate and all the backend of hardware, software, fleet services, from A to Z is ours, and we own a substantial amount of the charging stations that are deployed throughout the United States, and now throughout the rest of the world. We’re in over — this is actually a little old; we’re in about 25 countries now. And we’re one of the leading global providers of interoperability and getting networks, on a global basis, to work with each other. We have different methodologies of deploying charging infrastructure that really separates us from our competitors. We have hardware that we sell to our property in host-owned.
We provide Blink as a service, where we provide a charging solution for property owners that they offer to their tenants and customers. We have our hybrid model where we could deploy charging infrastructure with our property-owned partners, typically we pay for the hardware, manage the service, the property owner pays for all capital improvements at their location to deploy the equipment. And then, we have our Blink-owned model, which is where we pay for everything; the property owner provides us with a location, we deploy the hardware, pay for it, pay for the installation, and manage the service from A to Z. We have a very experienced team in charging infrastructure.
And if you compare us to any other company globally, there is no one other company that has the experience that we do in EV charging infrastructure, not ChargePoint, not ABB, not EVgo, not Electrify America. I’ll go through others, and then I’ll go through myself last. But if you look at our President and Chief Operating Officer, Brendan Jones, Brendan launched the first EV, global EV, with Nissan LEAF. He was with Nissan for many, many, many years, and headed their EV program. And while he was at Nissan, that’s when I met him, more than a decade ago. He cobbled together a bunch of different charging station networks so that the Nissan had a network to be able to charge their vehicles, and that was what Brendan did.
He was selected by NRG, which is one of the largest utilities in the country, when they were setting up EVgo. And Brendan was one of the main employees at EVgo, deploying all of their DC fast chargers. From there, he was selected by the Volkswagen Board to be the first employee and chief operating officer of Electrify America. Brendan is responsible for deploying more DC fast chargers and charging infrastructure than probably anybody else in the face of the planet. Mahi Reddy, who is the founder of SemaConnect, again someone with another 13-14 years of experience in the charging station infrastructure business deploying charging infrastructures, developing them, manufacturing them.
Harjinder, who is our Chief Technology Officer, the biggest guy in the room, is ChargePoint. Harjinder was the founder of ChargePoint; he’s now our Chief Technology Officer. Ritsaart Montfrans was the founder and chairman of NewMotion. It was a company that was bought by Shell. It was the first major transaction done in the EV charging infrastructure space. And Ritsaart, literally from inception of that company all the way through the sellout to Shell, he was instrumental in every single facet of that business, again, over a decade experience of deploying, developing, and operating charging infrastructure. Miko, who is our Managing Director of Europe, was — Ritsaart is on our Board, Miko was his right-hand man opening up all territories in Europe for NewMotion.
Miko is day-to-day as our Managing Director. And then Michael Rama, who has built businesses through acquisitions, who has been very helpful in aggregating all of the acquisitions that we’ve been very, very successfully acquiring over the last several months and years. So, that’s our team. We all know, as investors, and prior to this I was an investor and I was a banker; it’s not the horse, it’s the jockey. You have a good team, they can make anything work. And when people ask me what is the best product or what is the best service or what’s the most incredible thing that you’ve done at Blink. And without a question, my answer is the team that we’ve built. We have a team, as I said; I will put them against anybody.
They have some great guys at ChargePoint, I’ll give you that. You have some great guys at a lot of our competitors. But really having the broad -based experience of developing and deploying charging infrastructure, there is nobody who can compete with us. We recently acquired SemaConnect. It brought on about another 12,800 chargers, about 151,000 members, and about 1,800 different property-owner partnership accounts. It allows us now to comply with the Building America Program. While Sema didn’t own and operate charging stations after they sold it, they’ve been involved, from the design and manufacturing side, more so than any other U.S. charging station company.
So, now, we actually have our own manufacturing. In the past, we outsourced all of our charging station manufacturing. Now, between our facilities in India and in Maryland, we now are able to — currently have capacity over 10,000, close to 20,000 units a year. With a very minimal investment in the current facilities, we’ll be able to get that up to about 50,000 units a year. So, this has been a very, very amazing acquisition for us with Sema. It accelerates our own internal development of DC infrastructure. We were both working on it simultaneously; they were a little bit ahead of us — a little bit ahead than we were. And so, now, we’re merging the best of all of our concepts, ideas into a really amazing product that’s going to be very, very reasonably priced, especially if compared to some of the other market entrants.
And there’s issues with getting supply on DC fast chargers. Sometimes you’re out six months, eight months, 10, and even 12 months on certain equipment. With having the internal manufacturing already set up, we’ll be able to overcome a lot of those issues. We’ve also made acquisitions in Europe, and that’s given us a footprint in the European market. And these are companies, typically, with contracts booked mostly with municipalities and getting access to government monies, and so on, and really gives us a great foundation in these markets to then introduce Blink. Instead of going into a marketplace blind, we now have boots on the ground, contracts in place, chargers installed, and just our ability to then bring in our network, our hardware, better pricing, and it really allows us to grow the business.
If you look at the acquisition we did, our order book, actual orders in hand were more than the acquisition price itself. So, we’re not only buying these companies for fundamental purposes, we’re actually making some amazing transactions in doing so. Obviously, this is a business about technology. And for a long time, the questions we got from the Street is, “Hey, you guys aren’t making any investment in technology.” In the past, we were able to get some of the contract manufacturers we worked with to cover a lot of those bills. [Lighton] [Ph], specifically, spent millions of dollars developing hardware for us, and we were able to not have to put up money. Times are changing, we need additional hardware. We’re now going to control that fate and have it within our own hands.
And you could see some of the amazing technology that we’re now releasing. Our Blink Fleet portal is really second to none, and most of the sales that you’re going to see in charging infrastructure over the next couple of years are going to be to commercial fleets. There is a consensus amongst almost all businesses that, number one, they want to go green, but more importantly it really actually saves them a lot of money, believe it or not. The cost to operate a fleet vehicle using electricity versus using gasoline, you could literally be spending $0.15-$0.20 on the dollar traveling that same distance, that same mileage. When you’re talking about maintenance of these vehicles, it’s night and day.
The last Tesla I handed back, before I got my recent one, I had for three years on a lease; I never went into the shop. I had three tires that I needed to change. I did need windshield wiper blades, and I found myself purchasing windshield washer fluid when I never did in the past because I used to get it filled up at the gas station. There is no maintenance cost or little maintenance costs. There’s no break fluids, there’s no transmission fluids, you have like 90-some-odd percent less moving parts. For fleet operators, there’s no question, all of them are going, whether [livery] [Ph], delivery, they’re all going electric. And it’s not just to be green; it’s about dollars and cents. And the vehicle pricing is coming down tremendously.
So, again, so our Fleet portal is something that we’ve invested in. Our MQ 200 is a fleet product, the second from the left, and that’s a product line that — we’re going to be selling that product. And the size orders that you’re seeing are very substantial. We’re very, very excited about that product line. In addition, we have our Vision IQ. It allows us to monetize our locations whether or not there’s charging sessions taking place. There is a lot of money to be made in that business. It’s not a lot of money to pay for one of those units. If you’ve looked at some of Volta’s information, you’re looking at being able to capture between $1,000 and $2,000 per spot with a screen of that size. You’re talking about return of capital in a very, very, very short period of time.
We have our Series 8 charging station, which is one of the reasons why we were very excited about buying Sema. California, we all know how smart they are these days, but believe it not, we usually look at them as being technologically advanced — maybe financially retarded, but technologically advanced. But they’ve actually decided to take a charging station, and instead of having a tap technology on a credit card, like every new technology has, and all new cell phones have, and all new credit card readers have, California is requiring a metallic swipe with — in all the charging stations; and that’s — it’s a mandate.
You will not be able to deploy charging stations in the State of California. I believe there’s 13 or 14 other states that follow exactly what California does. So, if you do not have a metallic swipe type of credit card reader on your charging station you will no longer be allowed to deploy them. The only charging station that exists today that’s certified ready-to-go, and you could purchase today that has that technology is that Series 8 unit right there. It was one of the reasons why also we were very excited about buying SemaConnect. It does not take a day to develop a charging station. In order to go through certifications, it’s not just going through UL, it’s testing these things with telecommunications companies; the processes are long.
It’s months, and sometimes over a year to even come up with a product once you’ve designed it. So, we have a major, major head start from the entire industry, including ChargePoint, including EVBox, ABB, Tritium, every one of these guys, on the Level 2 charging station right now, we’re the only one who complies with the product line. And it’s a night — it’s an 80-amp charger, so there’s nothing else like it around. Our HQ 200 is a new home charger. I actually just put one in my house, and it’s awesome. It’s really small footprint, has amazing functionality, amazing output, and it’s priced really well. And we have a new Blink mobile application.
Guys, it’s all about money. Right now, we’re getting $0.80 on the dollar for any products we’re deploying that complies with the programs for the government. Imagine being an infrastructure business and you’re getting reimbursement, you put up $100 and they send you back $80. It takes several months to get the money. You have to have the project commissioned; you have to pay for all of that. We have, as you could see we’ve already taken down $32 million and there hasn’t been any real serious programs. Wait till the $7.5 billion, and you are talking substantial amounts of money. And by the way, out of this $7.5 billion there are pockets of money in all these different groups of the government, in the department of the agriculture for charging infrastructure. It’s a lot more than $7.5 billion.
We are also one of the only companies — out of this $7.5 billion, there’s $5 billion that’s going through the states. There is $2.5 billion that’s going through the Feds. The Feds — a lot of the money is for disadvantaged communities. We are the only charging station company that’s been investing heavily in disadvantaged communities because we get amazing subsidies for it and because we believe in everyone should have access to EVs, and ultimately, everyone will be driving EVs because the governments globally are mandating it. You know, other guys from [indiscernible] earlier were talking about what’s going on with — what percentage of the industry. You have a couple of 100 million legacy vehicles in the United States that are still on the road that are internal combustion engine cars, those are going to stay. The question you need to ask is what percentage of the fleet sales in the future are going to be EV versus internal combustion engine.
It’s going to be almost impossible in most countries after 2040 to buy an internal combustion engine car. No manufacturer is investing R&D dollars for internal combustion engines anymore. There is a reason for it. Even the cars that were the biggest holdouts, the Ferraris, the Lamborghinis; we need vroom, the 12 cylinders; we need that run vroom. Just remember, Rimac just bought Bugatti. So Bugatti which was the W16, the engine of all engines is now owned by an electric car company and one of the pioneers in electric car space, Rimac himself. So, the industry knows where it’s going. And ultimately, it’s electric everywhere. And if you would have asked me — I am one of the founders in the space, if you would ask me 13 years ago, “Hey, are we going to have like long haul trucks EV?” I would have said, “No way.” “Are we going to have pickup trucks EV?” I would be like, “Nah, they are going to stay internal combustion.” I thought most of the just personal mobility market less commercial would go the way of EV.
We have boats now. We have like flying vertical takeoff vehicles that are all powered by electricity, all using the same standards of charging, same batteries. With battery cost coming where they are, we are now — my kids are big model fans. So, I tell them, this is Thanos greed and inevitability if anybody knows what that means. This is inevitable. EVs are here. It’s not going anywhere. We have support governmental — look at this. And this is not just in America worth $7.5 billion. We are seeing programs like this globally.
As I mentioned earlier, Blink is the only fully vertically integrated EV charging infrastructure company. There is not one other company that does every single thing that we do. And there is a reason why we do it. It’s not because we decided, “Hey, we want to be the be-all. No, it’s because this is what our customers need.” After 13 years of doing this and seeing all the different wants and desires of our customers, we know that we need to be in all these facets of the business in order to supply them.
When we were in McDonald’s and we own McDonalds, one of the things they said to us and I asked them, why did we win? They said we — our customers, we have more of a variety of customers who buy our restaurants, who own and operate our restaurants than we do of the Big Mac. And we were the only company who can satisfy if an owner wants to own equipment and he wants to dictate pricing or give it away for free, we can do that. Some of our competitors can, but they also can’t own and upgrade that hardware in that location. So, being able to give that consumer — that property owner that end user that flexibility is what allowed us to grow our business. And I think is really what makes us very attractive. And that’s above and beyond all the amazing hardware that we have.
Q&A, I know it’s not long, but any questions?
Question-and-Answer Session
Q -Unidentified Analyst
McDonald’s wants to get set-up with you, how long does it take to get through the channel and [indiscernible]?
Michael Farkas
Right now because we deal McDonald’s and have for many years and we are their go-to charging partner, it’s pretty quick. It’s a matter of the property owner saying, “Hey, I want to get infrastructure in there.” They will make a call, or they will already have information from — through the process. They will get in touch with the Blink representative. Will either — if they are going to own it and operate it and handle the installation on their own, we will just ship them a box. If we are going to own and operate it, we will coordinate with them…
Unidentified Analyst
[Indiscernible]
Michael Farkas
See, it’s not a difficult process. All the municipalities right now nationwide and even globally, they are all very positive about EV. And they have made it very simple to get their charging infrastructure installed.
Unidentified Analyst
Then you have stickiness [indiscernible] there?
Michael Farkas
Correct. We have to own and operate it to have that stickiness. When we own and operate charging infrastructure, are two models, it’s one with a 5-year with two 5-year contract that’s when we split the investment with the property owner where we pay for the hardware and manage it. And they pay for the installation. Turnkey, it’s a seven-year contract typically with two seven-year extensions. And by the way, those contract terms for the most parts these are automatic extensions. So, you are really looking at contracts that are 15 years and 21 years, and they are exclusive. So when we are that location, it’s about — there is nothing in our agreement that talks about the hardware except as an amendment. It’s in addendum. It’s says, “Hey, this is a hardware that we installed.” The contract that we have when we invest money in a location, it’s about us being an exclusive EV charging service provider. That encompasses bicycles. I mean we are not going to get so crazy and tell tenants, “Hey, you need to charge your bicycle and pay us for it. If you want to charge it on your apartment, we are not going to bust your shops.”
But if you have a motorcycle, if you have an EV — if you have one of these [EV T Walls] [Ph] that you are going to be finding in these buildings, those are really incorporated into our agreements. Any vehicle that needs electricity to fuel for mobility, we have exclusivity. And it’s not about just one charging station. If you look at ChargePoint, there is about a charging station. When it’s us, when we sign an agreement with a property owner, it’s about every single parking space in that location is ours exclusively. So, we don’t come out with these numbers and say, look at what we have versus some of our competitors. We are in like tens of millions of parking spaces that our relationships give us access to. And as more and more demand of EVs is out there and the requirement for charging infrastructure is at these locations, that’s our right. That’s already ours today. And no one has been able to quantify, “Hey, what is that worth. What is that value to Blink?” Meaning that they own and operate all these locations, how much is that worth, and I think you guys will start figuring it out.
Unidentified Analyst
As far as the connector goes [indiscernible] Apple or Samsung, they all have their own connectors. It’s not compatible one another. Is there a standard on the connectors?
Michael Farkas
Yes.
Unidentified Analyst
[Indiscernible]
Michael Farkas
Yes. And in the U.S., there is something called Type 1, okay? And that is for all AC chargers. And every car complies with it, except the Tesla. Everyone, Cadillac, Volkswagen, everyone complies with both AC and DC. Now Tesla has their own standard which is a same thing for AC and DC. It’s a certain connector. But, with every Tesla, you get a coupler, okay? And that coupler allows every charging station to fit into that Tesla.
The difference is the Tesla charging station today don’t fit on any car. You would have to change every connector. You would have to change every charger for that car — for that to work on every other car. So, it’s not like a backwards compatible thing yet. I know there is talk about him adding compatibility. But, if you heard the news that came out this weekend, the charging station that he is developing — Tesla is developing in California to comply with their rules, so they could get funding, they are actually setting up the chargers and write near it CCS chargers, which are the U.S. based chargers. So, he is not — it doesn’t look like in the U.S. he is looking to combine the charging, they are collocating them.
Unidentified Analyst
Can you tell me those operated and owned leverage [indiscernible] the margins and distribution that you have in sales in those two categories?
Michael Farkas
Okay. When I set up the company, our focus was really to own and operate charging infrastructure. We did not have our own network. We did not manufacture equipment. Our main supplier for the first half of our life and for the first half of their lives, we were their biggest customer, it was ChargePoint. Okay, we bought certain companies that gave us certain capabilities internally, manufacturing, our own network so on. So, we expanded and stopped buying from others and did it ourselves. Every time we start coming out ahead and own and operate or get pretty close, we start landing some pretty substantial contracts. We just recently — it was not too long ago, we had GM. Every GM dealership that you are going to go to in this country, you are going to see a Blink charging station. Audi, Subaru, there are whole bunch of others I can’t really get into.
And there is one thing about getting a real estate company like we just recently had Cushman to say, “Hey, we are going to go with Blink, and we are going to recommend them to all of our property owners and so on, and the business we manage,” that’s one thing. Cushman doesn’t take that unit, hold a point to 100 million pieces, benchmark it against every single other charging station out there in the whole world. But that’s what GM did. That’s what Subaru did. That’s what Volkswagen — that’s what Audi did. The validation we are getting from the OEMs on the equipment side, everyone of these competitions that we’ve won on the hardware side, they were against ChargePoint. They were against every competitor you could think of no matter who you could think of. I have been into the OEMs labs. I’ve seen every single charging stations on walls, mine and every single one of them everywhere in the world, they take things apart and they benchmark it. And there’s a reason why we’re winning. We build this hardware for us an own and operate it. There is not one other owner — there’s not one other manufacturer that manufactures hardware that they own and operate.
Their philosophy in the development of hardware is completely different than ours. They’re making a box, they want to sell it as high as they can for as cheap as they could make it, and they want to have upgradeability, right? They want it to be looked at like a cell phone, right? We develop a charging station to sell fuel, to be in the field as long as possible, we’re not making the money on the sale of the hardware. Although we are selling hardware, and that’s a substantial part of our business today, that’s because people see our hardware in the industry, they — it’s out there. And if we’re going to get an order, we’re not going to turn it down. But we prefer owning and operate; we have much more control over our reputation. But ultimately, if we’re looking at this business long-term, most of our revenues in five and 10 years from now will be from the sale of fuel, less from the sale of hardware. But today, majority of our sales are coming from hardware. The margins in the hardware are very, very beautiful. And there are even more beautiful, now that we’re capturing the manufacturing side and we don’t have to pay an outsourced manufacturing partner to build it for us. So, we’re — Sema was the highest margins in the EV charging space, period, and was again something that was very attractive for us.
Unidentified Analyst
You also collect like a percentage of the electricity you’ve sold [indiscernible]?
Michael Farkas
Okay, when we own and operate it, we make our money off the sale of the electricity. And when we sell the hardware, we make money on connectivity fees and processing fees. So, if there’s higher utilization, we make a very large spread on the processing fees. So, the processing fees cost us, let’s say, roughly 5%, and we charge 8% — actually we — and as it grows, we’ll be able to get it lower. So, that gives us 3% of all utilization profit on all the charging stations we don’t own. Plus, we charge $18.00 a month for connectivity, and it costs us roughly about $4.00 a month on charging stations we don’t own. On the ones we do own, when we reconcile with the property owner at the end of the month, because we do revenue shares, we don’t pay rents, we deduct full boat on connectivity, which is $18.00 a month, so we’re still making profit over there. And on the processing fees as well, it’s 8% we deduct, although it costs us much less than that.
Unidentified Analyst
On behalf of the H.C. Wainwright team, I’d like to thank everyone for their time. We are out of time for this meeting. Please feel free to continue any conversations out in the hallway. Thank you.
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