Ideanomics, Inc.
Q4 2020 Earnings Call Transcript

Published: 31 Mar 2021

[Operator:]

Greetings and welcome to Ideanomics Fourth Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Tony Sklar, Vice President of Communications and Head of Investor Relations. Thank you, sir. You may begin.

[Tony Sklar:]

Thank you so much Victor and welcome everybody to the Ideanomics fourth quarter 2020 earnings conference call. Joining me today, I'm pleased to have Mr. Alfred Poor, Chief Executive Officer; and Mr. Conor McCarthy, our Chief Financial Officer. A webcast of today's call will be archived and available in our Events and Presentations section of our corporate website for a minimum of 30 days. As a reminder, this conference is being recorded.

[Alfred Poor:]

Thank you, Tony, and thank you to everyone joining our call today. I'm going to begin by talking about 2020 and follow that with some remarks about our first quarter of this year and our business outlook for 2021 and beyond. 2020 was a challenging year for many companies and with the global pandemic, the past 12 months or so required us to absorb the adversity and double down on developing the Ideanomics business. I asked a lot of my management team in 2020 and through our collective efforts, we finished the year with the company in a healthy financial condition and with an exciting future ahead. During 2020, we developed consistent quarterly revenues within our China based business; we paid down the company’s debt, removed the going concern with our auditors, and restored our minimum listing requirements with the NASDAQ.

[Conor McCarthy:]

Thank you, Alf. 2020 was the year when our pivot to commercial EV started in 2019, both in revenues generated on the building out of the foundations of our global EV business. The highlights for the year are

[Tony Sklar:]

Thank you very much Conor. And this concludes management's prepared remarks. So, now we're going to turn the discussion to everybody's favorite time, our Q&A. So, Victor, the moderator, if you could possibly just give the set of instructions?

[Operator:]

Absolutely. Our first question comes from Robert , a Private Investor. Please proceed with your question.

[Unidentified Analyst:]

Yes. When is the timeframe of when the Delaware Board of Trade might be operational?

[Alfred Poor:]

Thank you for the question there. The Delaware Board of Trade is a very valuable asset to us. We've recently applied for some more licenses CMA approvals, as I mentioned in the prepared remarks. There's a lot of very interesting conversations going on with DBoT that we hope to be able to speak to in the next quarter or so. We will obviously bring updates for the market on that as soon as we can. But suffice to say, there's a lot of interest back in that particular sector that we originally bought the asset for. And there's ongoing conversations that I can't speak to any further at this time, but watch this space.

[Operator:]

Thank you. Our next question comes from Craig Irwin with Roth Capital Partners. Please proceed with your question.

[Craig Irwin:]

Good evening, and thanks for taking my questions. So, I wanted to ask a little bit about the cross portfolio synergies, particularly in Ideanomics Mobility, can you maybe frame out for us how this business strategy is leveraging the assets and the different businesses that you've added into the portfolio? How does this accelerate time to market or maybe make it easier for business development of these different entities?

[Alfred Poor:]

Thank you, Craig. Thanks for the question. So, I'll give you a very good example. Right now we have significant orders in hand of our Treeletrik subsidiary in Malaysia. We received a purchase or very large purchase order from an Indonesian bike distributor, which will require us to begin servicing the first order of about 10,000 units from – with supply chain, maybe like Q2, but more likely from July onwards of this year. That's obviously an enormous order, and it will be the largest order Treeletrik received to date. Probably one of the largest EV bike orders, I believe there's probably been globally today. So, if you take a look at our Energica motorcycle investment, that's a company with battery and charging technology. The Treeletrik electric bikes are battery agnostic. So they come with batteries and charging equipment from different manufacturers based on different markets we sell them. So, we place that investment into Energica as part of the series of conversations we had with them regarding their ability to help us secure the supply chain for battery and charging equipment for Treeletrik. So, I think you can see quickly there, you know when you're going to do that that level of business for the company like Energica, why we would want to obviously begin a conversation with them around making the investment in their company as well. So, that's probably a really good example of something that, you know that shows the synergies across the platform and you know Treeletrik is one of our – is going to be one of our real revenue drivers in the second half of this year.

[Craig Irwin:]

Excellent. So just a follow up there. Are we talking about a vehicle similar to the – what is it the T-70 or is this more like the T-Express that Treeletrik makes?

[Alfred Poor:]

The purchase order was very large because they were distributed, but it really breaks down into individual orders, that's why we haven't announced it yet. So, the first order that's coming from Indonesia, it’s the 10,000 units of the T-70. So, T-70 – there's a distributor will take about 10% of the revenues out of that as part of the program, but our T-70 unit sell for little under $1,500 a unit, somewhere in the $1,300 range of that kind of scale. But what's really interesting about that order in particular is, what it will allow us to do, which will help us streamline the supply chain and improve our margins is, if we're going to be making that number of units for the Indonesian market, which is the world's largest motorcycle market, we'll be setting up an assembly operation in Indonesia. So, because the last thing we want to do is, get our component manufacturers to send everything into Malaysia, we then assemble the bikes, put them up, send them out, you know the combination of the different components and go out as a finished product through customers again and that obviously delays the supply chain. So, I think the, you know the interesting part of that particular deal is, it will rapidly see us expand in the ASEAN region as well.

[Craig Irwin:]

That's very exciting. The 10,000 bikes, you know 13 million, 14 million as a starter, did I get that right?

[Alfred Poor:]

Yeah absolutely and that's a small part of the of the distribution contract. We signed an original, kind of framework agreement with the distributor back in January 2020, but because of COVID and a lot of other things people have probably forgotten about it, but the distributors intention to distribute somewhere between one and one and a half million about bikes into the Indonesian market in the next few years, So, you know Indonesia is the world's largest two wheeler motorcycles, so there's about 105 million motorcycles or mopeds currently in the market there. So, putting a million, million-and-a-half of our Treeletrik bikes in sounds like a lot of unit orders, but it's actually only 1%, 1.5% of the market share.

[Craig Irwin:]

Excellent and can you just clarify for us does the buyer have financing ready to accommodate the sales and delivery into the market?

[Alfred Poor:]

Yeah. So the buyer itself is getting support from the state banks there. That’s why the size of the purchase order will be broken-up into large tranches. So they’ve secured the initial financing for the first 10,000 and we expect to get add on orders thereafter throughout the next couple of years.

[Craig Irwin:]

Wow. I like that. If you move on to more – I guess developments closer to home, so you're in the DC Center, I believe will – the center of excellence will be here in New Jersey, is that correct, and can you maybe talk about the buses where you're taking delivery? You know, will these be giving demonstrations on site? Do you expect to get permission to bring them to customer locations to demonstrate the capabilities of the bus? You know what can we expect as far as the press rollout or a potential customer education program over the next number of months?

[Alfred Poor:]

Yeah. So, for those of you that don't know we're on the call it's a really interesting question. New Jersey is one of the main kind of terminus hubs in the country because of the size of the New York market. Many freight operators bring their big rigs, the semi trucks into New Jersey and they terminate before they get to New York and they get broken down into warehousing and then shipped out through larger, you know larger size vans and trucks for delivery all through the Tri-state area So, it makes New Jersey one of the most important markets in the country. So, Ideanomics is taking occupancy of a building from about a May timeline. We’re just finalizing the lease now. That will be our Ideanomics Mobility, education and advocacy center and those buses are part of that effort. We’ll be showcasing all of our vehicle lineups within that center and commercial fleet operators will be able to come there and see, you know all the tech that's available. And we'll be doing classrooms out of that particular premises, workshops. So commercial fleet operators can come in a non-threatening, non-showroom type setting, learn about EV, learn about charging equipment, drive the bus on our private lot. We got a large parking space at the back that waste technology will be deployed into as well as other table-based charging so we can show people the difference between the different types of apparatus. So, the commercial fleet operators can come and learn, because one of the big things we learned last few years in China is, there's a lack of education for commercial fleet operators. Everybody's selling their vertical product, but nobody's really teaching the market about what you need to do to enable EV at scale. So, we'll be covering within that advocacy center everything from rebates and incentives to charging products to all different types of electric vehicles, they'll be able to come on site, enjoy the classroom setting, in a large kind of warehouse commercial type of setting, which is more appropriate for the commercial EV fleet operator. He's not a showroom kind of guy. And we're looking – got several local groups and local government interested in supporting us with that as well.

[Craig Irwin:]

That's good to hear. So, my last question is about WAVE. Recently, I had a dialogue with Macy, the CEO of Antelope Valley, which I guess has a few of the WAVE units installed, or, I believe the largest installation in the country. And he does have the largest number of EV buses of any operator in the country. I think he said 95. He's talking about, you know, customers stopping by non-stop to see demonstration of the WAVE Technology. Typically, you know a couple of weeks. I know that the contribution of WAVE was sort of mid-to-upper single-digit contribution in the millions last year. Can you talk about the pipeline of orders that WAVE is sketching out at this point? What do you think a typical order size could look like? And, you know, how should we look at the potential for WAVE? You know, now that they're tucked into the Ideanomics Mobility family?

[Alfred Poor:]

Yeah. So that's really interesting. I can see you've been doing your homework there, Craig. So that's great to see. The Antelope Valley Transit Authority, or AVTA they've been an incredible kind of used case around for Mike and the team at WAVE. And they've been very, very kind with their time and their expertise showing other transit authorities and fleet operators. Just exactly, you know the benefits of implementing a service likewise. And, you know, one of the things that we're working on with Mike – well, there's a couple of things. First, one of the things we're working on with Mike is, his revenues are lumpy, not because of the way that the sales cycles work, but because there's a few different elements of what has to go into getting it deployed. And the big part of it is, a local permit for the work to do the ground installation, with the local authority, and also a permit with the local utility, because these are high power installations as well. So, you know, he can get lumps of revenue one quarter, and then for another quarter. So what we're looking to do is introduce charging to the service for him, so that we can much faster service, the level of inquiries that he has, within his pipeline. And by doing the charging as a service we’ll integrate the, you know, the energy in the deregulated market, of course, and that will be a nice little extra piece of revenue. But the idea here is to smooth out that revenue for him and change his business model to a recurring revenue model that's much more predictable. And the benefit of selling the charging as a service is, there’s no CapEx cost upfront to the transit authority or the fleet operator. And so, they're much more prepared to take the order faster, and also prepared to commit to a much longer time as we amortize the cost of it for them. So, number of benefits there. But there's also been tremendous reception in China since our acquisition of WAVE. Larry, who's a new GM over there has been posting a number of meetings with ports, airports, and also talking to Petro China about our gas station conversion project, and bringing WAVE into that. So, we're now providing all of the safety specifications and things you need to do to get the Ministry of Transport in China to sign off on that and it looks like China will be a promising market for WAVE, as well as the domestic sales here, which I think, you know Biden’s speech today was very much in favor of technologies like WAVE. So, I think we're going to have a vibrant business on our hands for the next few years.

[Craig Irwin:]

Well congratulations. That's good to hear. I’ll hop in the queue.

[Alfred Poor:]

Okay. Thank you.

[Operator:]

Thank you.

[Tony Sklar:]

Actually, operator Victor, I just want to mention that we've been receiving some questions in from the inbox because I believe we've got some participants who are listening whether may not have an opportunity. So, I'd like to have the opportunity, Alfred, if it's okay, to read off a particular question that just came in from Brad, a longtime shareholder for sure. And he asks, compared to the plug-in EV chargers how does the WAVE Technology compare in terms of time required to achieve the same charge for vehicle like a car or a bus? Thank you, Brad.

[Alfred Poor:]

Yeah. Actually it’s a very good question for WAVE. So, the WAVE Technology inductive charging it's a lot less cumbersome than the plug-in charging. I drive an EV, many of the folks already know, because I've spoken about it quite a few times. For me to go in and start up my level two charger at home and open up the app and plug the car and, you know there's a good couple of minutes go by before the charging activity actually engages. With WAVE, as soon as they align over the charging pad, sort of fitted to the bottom of the vehicle aligned with the WAVE system on the road or in Depot or wherever it may be deployed. Charging starts in about three seconds. You know, there's none of this plugging in a cable and authentication in any of those things that are a bit cumbersome on the cable based charging side. So, if you're looking for smart charging solutions and if you're looking for fast charging solutions WAVE is certainly more capable than any of the current cable-based or catenary overhead systems that we've seen so far. And Tony as you know, I speak about this a lot. In the future where autonomous vehicles are going to be more and more prevalent and we're already starting to see that in China, particularly in the taxi sector and the local delivery sector, there's nobody to plug in a car when you don't know the driver. So, you know it’s a – I expect cable based charging as the cable – as the charging and battery technology developed further. I expect that to be used primarily in the residential market and we'll see more solutions like WAVE in the commercial market.

[Tony Sklar:]

Thank you. We can move to the next queue question.

[Operator:]

Thank you. Our next question comes from David, a Private Investor. Please proceed with your question.

[Unidentified Analyst:]

Yes, good day. Thank you for providing the report. I think you guys have done an excellent job. My question is, mergers and acquisitions, you guys acquired a lot of great companies both in EV, as well as Fintech sector. You never mentioned anything about Timios, but I know that was a really good acquisition for the company and I don't necessarily want to focus on that, but with regards to one that kind of went through just as a filing into that silk – was the silk a luxury car and that came through – are you guys going to be planning to do more investments in the EV sector, coming into 2021 and as well as any new acquisitions is that also on the plan, you’ve raised a lot of money and is this all going to be put towards growing the company or is it going to be more used for the internal operations?

[Alfred Poor:]

It's a really interesting question. There’ll be a balance of the use of cash on hand between growing organically the businesses that are already in the family and also us looking for some high quality accretive acquisitions. When you have a an industry where technology is moving so fast acquisitions will always be interesting as you see different technologies come to the forefront, but you specifically mentioned Silk EV and I'm going to tell you why both them and Energica rather than the alignment with the Treeletrik business I spoke about and one of the earlier questions are interesting to us. And I mentioned this in an investor panel I was on last week. The performance market typically innovates the technologies that become watered down and enter into the passenger car and commercial vehicle market later on. And the good example I gave was, you know a few decades ago early 1980s, all the engines started moving to fuel injection systems, which were much more economical use of the energy and much more efficient for the engine then, you know the previous carburetor based technologies. So, you know, you're going to see that that came out of the performance sector, fuel injection, and in the same way, in many ways, EV is interesting because the tech is getting better, but the innovation is really old tech in EV right now. Packing the battery fuel cells together and the charging hasn't really developed much in the last few years. And the performance sectors where you're going to see those improvements come because those vehicles need to push the limits of the battery cells, and also the charging capabilities as well, because the performance car will run a battery down much faster. So therefore, it will need to refuel, you know recharge much quicker. So, that's the basis for that. We've got a seat at the table with some of the world's best people in the performance sector with Silk EV and that gives us an opportunity to monitor the innovation, you know, directly.

[Unidentified Analyst:]

Yes, thank you. And the other question and briefly connects to the motorbikes. Energica was announced in this year, not last year, but this year, fantastic partnership there, any plans to bring the Italian high-end motorcycles into North America or is that not anymore built?

[Alfred Poor:]

Actually, it's going to be slightly us leveraging them. Energica is already there. Motorcycles are already available here. They have an owned and operated showroom on the East Coast and another on the West Coast in California. And they have a number of distributors throughout the country. So, you can actually buy the Energica motorbikes in North America today. What we'll be doing for the Treeletrik is leveraging their distributor network and they're owned and operated sites as well to help us get the Treeletrik bikes in. So, there's an additional things there, but they are available today and they’ll be showcased in the in Moto-E very shortly that's coming up, which is the Grand Prix for the bikes.

[Unidentified Analyst:]

I see. Excellent. Well, I'm going to congratulate you gentlemen for an excellent work. I think you've done a very good job moving the company forward, and we look forward to 2021.

[Alfred Poor:]

Thank you very much. Thank you.

[Operator:]

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Tony for any closing remarks.

[Tony Sklar:]

Great, thank you very much, everybody. And that is all the time that we do have for today. This will conclude the Ideanomics Q4 and full-year 2020 earnings investor conference call. We encourage our community to continue to reach out with us with their individual questions. We'll get those answered for you. You can send those into IR at ideanomics.com. We also want to make sure that you are aware that Ideanomics will be participating in the participating in the BNE Forum this upcoming April, as well as multiple events for our upcoming Earth Day. We'd like to thank all of our listeners, shareholders, and analysts and others who have taken the time to listen to our earnings call for today. We urge you all read through to our latest SEC filings for any information that you need. This call will be available on our website in the investors section, we'd like – if you'd like to find the link there. To be alerted to our news, events and other information in a timely manner for our newsletter and explore our [e-mail]. Thank you everyone for participating and listening on the call today.

[Operator:]

Ladies and gentlemen, this concludes today's webcast. You may now disconnect your lines at this time. Thank you for your participation and have a great day.