EVgo Inc. — Q1 2022 Form 10-Q
Business context and reporting period. EVgo owns and operates a U.S. public direct-current fast-charging network. This unaudited report covers the three months ended March 31, 2022; comparisons are with Q1 2021. The company’s business combines charging services, infrastructure programs and related services, and regulatory-credit sales.
Financial and operating performance
Amounts are in millions of dollars unless stated otherwise.
| Metric | Q1 2022 | Q1 2021 / prior date |
|---|---|---|
| Total revenue | $7.7 | $4.1; up 86% |
| Gross loss / gross margin | $(0.6) / (7.8)% | $(1.7) / (40.6)% |
| Adjusted gross profit / margin (non-GAAP) | $2.9 / 37.1% | $0.8 / 18.5% |
| Operating loss / operating margin | $(29.9) / (388.5)% | $(16.2) / (392.1)% |
| Net loss | $(55.3) | $(16.6) |
| Net loss attributable to Class A common stockholders; loss per share | $(14.4); $(0.21) | Not presented for Q1 2021 |
| Adjusted EBITDA (non-GAAP) | $(18.2) | $(9.8) |
| Cash from (used in) operations | $(19.8) | $7.8 |
| Investing cash flow, primarily capital expenditures | $(28.1) | $(7.8) |
| Financing cash flow | $4.1 | $15.7 |
| Cash and restricted cash at quarter-end | $441.4 | $485.2 at Dec. 31, 2021 |
| Working capital | $401.5 | $459.5 at Dec. 31, 2021 |
- Retail charging revenue rose 94% to $3.5 million; commercial charging revenue rose 44% to $0.7 million. Ancillary revenue increased to $1.5 million, partly reflecting PlugShare, acquired in 2021. Regulatory-credit sales increased 142% to $1.4 million. OEM charging revenue declined 55% to $0.2 million, primarily following expiration of the first Nissan agreement.
- Network throughput doubled to 8.0 GWh from 4.1 GWh, and operational DC stalls increased to 1,772 from 1,449.
- Gross margin improved with higher revenue and better cost leverage, but remained negative. Operating loss increased as general and administrative expense more than doubled to $25.4 million, including higher payroll, headcount, share-based compensation, insurance and software costs.
- Net loss included $25.1 million of losses from changes in the fair values of warrant and earnout liabilities. These were valuation adjustments, not operating cash expenditures. Adjusted EBITDA is a company-defined non-GAAP measure.
- Cash fell $43.8 million during the quarter. Capital spending included $28.3 million of purchases of property, equipment and software. The company reported no conventional borrowings outstanding; it recorded $22.6 million of operating lease liabilities at quarter-end.
Changes, outlook and material risks
- Management said cash on hand was sufficient for current working-capital and capital-expenditure needs for at least 12 months from the filing date. The filing does not provide formal financial guidance.
- EVgo identifies permitting, utility interconnection, construction and commissioning delays, supply-chain constraints, and COVID-19 effects as risks to deployment and contractual milestones. It said the duration and financial impact of COVID-related disruption could not be reasonably estimated.
- Under the GM agreement, EVgo must install 3,250 chargers by the end of 2025, with 72% due by the end of 2023. As of March 31, 2022, 13 stalls remained for a milestone, and 363 additional stalls were due to open by June 30, 2022. A continuing deficiency could allow termination and liquidated damages of up to $15 million.
- The Nissan 2.0 agreement requires 210 chargers by February 2024, including 58 by August 31, 2022. Potential delay penalties are up to $35,000 per site, subject to the contract’s terms and a maximum of 56 sites.
- The company adopted lease accounting standard ASC 842 on January 1, 2022, recognizing $22.6 million of lease liabilities at March 31. It also disclosed $34.7 million of estimated lease commitments for sites not yet taken into possession, which were not recognized on the balance sheet.
- Potential future tax-receivable-agreement payments could be substantial; no liability was recorded because no qualifying cash tax savings had occurred. The company also has a history of operating losses and negative operating cash flows.
- Disclosure controls were not effective at March 31, 2022 because material weaknesses in financial reporting controls remained. EVgo said it had remediated the journal-entry review weakness but was still addressing others; remediation could continue beyond 2022 and increase costs. Management nevertheless stated the included financial statements were fairly stated in all material respects.
- EVgo reported no material pending or threatened litigation. It noted the SEC’s proposed climate-disclosure rules could increase compliance costs and litigation exposure if finalized.
Most important facts for investors to verify
- Whether charging-volume growth and network expansion can improve GAAP gross margins and reduce operating cash burn.
- Progress against GM and Nissan installation, commissioning and network-availability requirements, and any resulting penalties or funding changes.
- Cash use and capital-expenditure needs relative to the stated 12-month liquidity expectation; the filing does not provide a longer-term funding plan.
- How much revenue and margin depend on regulatory credits, OEM arrangements, and PlugShare, including volatility in credit prices and contract timing.
- Completion of internal-control remediation and any subsequent changes in reported controls or financial estimates.
- The potential timing and amount of tax-receivable-agreement payments and unrecognized lease commitments.