EVgo Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022; filed November 4, 2022. EVgo owns and operates a U.S. public DC fast-charging network and also earns revenue from OEM and fleet services, ancillary services, and regulatory credits. Financial statements are unaudited.
Key financial metrics
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $10.5 million | $6.2 million | $27.3 million | $15.1 million |
| Gross loss | $3.2 million | $1.7 million | $4.6 million | $5.0 million |
| GAAP gross margin | (30.5%) | (26.7%) | (16.7%) | (33.2%) |
| Operating loss | $40.0 million | $25.9 million | $107.0 million | $59.7 million |
| Net income (loss) | $(50.9) million | $23.6 million | $(89.2) million | $(11.4) million |
| Adjusted EBITDA (non-GAAP) | $(22.2) million | $(14.3) million | $(60.2) million | $(35.1) million |
Q3 Class A common-stockholder loss was $13.2 million, or $0.19 per share; nine-month loss was $23.1 million, or $0.33 per share. Q3 results included a $12.2 million loss from changes in the fair values of warrant and earnout liabilities, versus a $49.6 million gain in Q3 2021. These fair-value changes materially affect comparisons of reported net income.
Revenue and operations: Q3 revenue rose 70%, led by retail charging revenue (+62%) and ancillary revenue (+152%); regulatory-credit sales rose 72%. Nine-month revenue increased 81%. Network throughput rose to 12.1 GWh in Q3 from 8.0 GWh, and to 30.2 GWh for nine months from 18.2 GWh. The network had 2,115 operational DC stalls at September 30, versus 1,595 a year earlier.
Adjusted gross margin, a non-GAAP measure, was 19.0% in Q3 versus 22.2%; for nine months it was 30.2% versus 20.9%. GAAP gross margin remained negative. General and administrative expense increased 55% in Q3 and 95% for nine months, driven principally by payroll and share-based compensation, professional services, software, and other growth-related costs.
Cash, liquidity, and obligations: Cash and restricted cash totaled approximately $301.0 million at September 30, 2022, down from $485.2 million at year-end 2021. Working capital was $248.5 million, compared with $459.5 million. For the first nine months, operating cash flow was $(57.3) million, investing cash flow $(133.3) million (primarily capital expenditures), and financing cash flow $6.5 million; cash and restricted cash declined $184.2 million. Management said available cash was sufficient for current working-capital and capital-expenditure requirements for at least 12 months from the filing date.
Interest expense was negligible in 2022; the related-party note had been converted to equity in 2021. The balance sheet includes $43.0 million of operating lease liabilities, $25.6 million of capital-build liabilities, and $33.5 million of warrant liabilities. The filing does not provide a clear conventional debt balance.
Material changes, outlook, and risks
- Growth in charging volume and the stall network supported revenue, but operating losses widened as G&A and depreciation increased. Nine-month GAAP gross margin improved, though it remained negative.
- EVgo entered agreements with Pilot and GM to build, operate, and maintain up to 2,000 stalls at approximately 500 Pilot sites. A Delta purchase order requires at least 1,000 chargers, with take-or-pay obligations and a stated liability cap. EVgo expects to fund related capital expenditure with Pilot proceeds and cash on hand.
- GM’s agreement requires 3,250 chargers by the end of 2025 and specified network availability; missed milestones or availability requirements could lead to termination and liquidated damages of up to $15 million. The filing identifies near-term installation milestones and possible permitting, utility, commissioning, and supply-chain delays.
- Under the Nissan agreement, EVgo was required to install 48 chargers by February 28, 2023 and 210 by February 29, 2024; delays can trigger penalties. An October 2022 amendment changes the timing of charging-credit revenue. The company also disclosed potential termination and continuing obligations if Nissan loses funding.
- Management cited uncertainty from supply-chain constraints, construction and utility delays, inflation, COVID-19 effects, geopolitical conditions, competition, EV adoption, and possible changes to government incentives and regulatory-credit prices. No quantitative financial guidance is provided in the supplied filing text.
- Disclosure controls were deemed ineffective at September 30, 2022 because of previously identified material weaknesses, including segregation/review, account reconciliations and supporting analysis, technical accounting, asset-retirement estimates, and retail charging revenue recognition. Remediation is ongoing and may extend beyond 2022, with costs not yet estimable.
- There were no material pending or threatened legal proceedings disclosed. The company reported $10.7 million in outstanding equipment purchase-order commitments and estimated $48.0 million of operating lease commitments for leases not yet commenced.
Important facts for investors to verify
- Whether throughput, stall growth, and revenue gains translate into improving GAAP gross margins and lower operating cash burn.
- Cash use, capital-expenditure needs, and the timing and funding of Pilot, GM, and other network build commitments.
- Progress against GM and Nissan construction, network-availability, and commissioning milestones, including possible penalties or termination rights.
- The scale and cash effect of share-based compensation and noncash warrant/earnout fair-value movements when assessing underlying performance.
- Remediation of internal-control material weaknesses and the potential impact on financial reporting reliability.
- Actual eligibility and monetization of government incentives, and volatility in regulatory-credit revenue.