Good afternoon, and welcome to Nuvve Holding Corp.'s second quarter 2022 earnings call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Eduardo Royes. Thank you. You may begin.
Thank you. On today's call are Gregory Poilasne, Chief Executive Officer, and David Robson, Chief Financial Officer of Nuvve. Earlier today, Nuvve issued a press release announcing its second quarter 2022 results. Following prepared remarks, we will open the call up for questions. Before we begin, I would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Nuvve's best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking projections. These risk factors are discussed in Nuvve's filings with the SEC and in the earnings release issued today, which are available on our website. Nuvve undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances.
With that, I would like to turn the call over to Gregory Poilasne, Chief Executive Officer of Nuvve. Gregory?
Thanks, Eduardo, and good day to all. Thank you for joining us as we review our results for the second quarter of 2022. I would like to start today's call, as I often do, by discussing some high-level secular tailwinds that underpin our enthusiasm about the outlook for vehicle-to-grid technology adoption. Now through our platform, we believe that Nuvve is well-positioned to play a key enabling role in both vehicle electrification and improving grid resiliency.
A few weeks ago, we were thrilled with the surprise news out of Washington, D.C., that the climate spending bill was back on as part of the Inflation Reduction Act of 2022, including this package, not only proposal that will expand credits for EV purchasing, thus making EVs more affordable, but also credits that should spur the continued build-out of EV charging infrastructure, which is critical to EV adoption. EV charging is covered by what is commonly referred to as a Section 30C tax credit, also known as the Alternative Fuel Vehicle Refueling Property Credit. Under the new proposal, tax credit that a qualifying business would receive for the cost of purchasing and installing charging station hardware would go up significantly.
Further, and critical for Nuvve, the bidirectional charging equipment that allows for V2G is specifically named as credit eligible in the new bill, which was not expected to be the case before. Another very important tool for the potential faster adoption of V2G, and more broadly, EVs, is the increased availability of grant funding. We are pleased that the second quarter saw important progress in that front as well. On the back of the Bipartisan Infrastructure Law of 2021, the Biden-Harris administration announced in May that the EPA was making $500 million available for school districts and other eligible school bus operators to begin replacing the nation's fleet of school buses with clean American-made zero-emission buses over the next 5 years. Our experienced grants and fundraising team has been hard at work with partners and customers to assist them in applying for grants through the program.
As of today, we have submitted 174 grant applications on their behalf for the equivalent of more than 10 MW of capacity, with more in the works ahead of the EPA's August 19 submission deadline. While we do not expect all applications to receive the grants, the sheer number of partners we are working with leads us to believe that a fair share of them should be successful. By managing this process for them, we position ourselves well to receive the associated V2G charging hardware orders when they do win. We expect the EPA to announce the winner in the fourth quarter of 2022, and for the grant recipient to begin to place orders for the electric school buses and associated equipment, such as V2G hardware soon thereafter.
To summarize, it is no secret that the federal support can play a critical role in the speed with which electrification scales up. Political uncertainty and logjam can be the enemy of planning and decision-making for those looking to electrify. With these developments of the past few months, the outlook for federal climate tech support over the near and long term in the U.S. truly does feel brighter today. Before turning to results, I would like to briefly address the rationale for our recent capital raise in light of where Nuvve stands today. Recurring capital needs are inherent to emerging growth companies, and we've made it before, wins typically take time to convert to revenues.
The supply chain challenges over the past 18+ months have drastically slowed the roll-out of the necessary hardware, whether it be electric vehicles themselves or charging equipment, relative to the planned and normalized production capabilities. Further, even once we have sold, installed, and commissioned charging stations that are integrated with the Nuvve V2G software, generating revenue from any one-time sales of chargers must wait on interconnection queues and other elements of the broader V2G ecosystem to be in place before we can actually fully operate and thus generate material revenues from V2G activities.
Despite this backdrop, we must continue to invest in and position our business for the future, whether outright through investments in key partnerships, sales and marketing efforts, or by occasionally electing to strategically sell hardware at a discount because we see compelling, more key or recurring revenue opportunity once the entire V2G ecosystem aligns for that particular customer or project. The equity market has not been kind for the companies looking to raise money in 2022 as a result of various macroeconomic factors. However, we cannot risk jeopardizing our business plan and our path forward by waiting for a more favorable equity market backdrop, over which we have no control, to make certain critical investments. Raising additional capital allows us to expand our backlog and thus earning potentials.
As such, in the second quarter, we entered into an at-the-market offering program or ATM program, as previously discussed, and to date have raised $3.8 million via that program. Further, a few weeks ago, we announced that we closed a registered direct offering that resulted in an additional $13.1 million in cash to Nuvve's balance sheet. David will touch more on these in a few minutes. The addition of this approximately $17 million is key to funding future growth. Turning now to a summary of our major announcements in the second quarter of 2022. Accomplishments during the quarter include, one, our qualification to start commercial operation in the Japanese energy market. Two, our entry into an MOU with the U.S. DOE to accelerate V2G technology, which I discussed in my opening remarks last time.
Three, an agreement with Power Electronics to add Nuvve V2G-certified capabilities to their bidirectional chargers. Four, an alliance with Cenntro to bundle Nuvve charging packages with their U.S. commercial fleet product line up. Five, executing a collaboration agreement with 2021.AI. We provided more color on each of these announcements during our May earnings call. Since then, in late June, we announced another exciting partnership, this one with Switch, a leader in charging infrastructure operation and management software. This is yet another example of us investing in the future to ensure that we extend our lead and further build our competitive advantage in V2G. Switch has developed an operating system that goes inside the charging station that we believe is far more advanced than anything else in the market.
The cloud platform is built on the latest Open Charge Point Protocol or OCPP, which is version 2.0.1. As a result, they have the world's first and only charging platform that is native to Plug and Charge any vehicle to V2X. We have been working with Switch for the last 3 years with a goal of standardizing charging solutions and have elected not only to integrate our GIVe platform with their platform, but have also made a strategic investment in the company. We believe that getting further upstream and into the infrastructure, as we are doing here, can only help our ability to scale up faster, and, in effect, sponsoring them, we are not only moving upstream, but we are also building a competitive moat against other V2G aspirants.
Lastly, we believe Switch is a great channel partner for us to expand our reach with OEMs and other players in the V2G value chain. Moving along, the momentum has continued in the third quarter as last month. We disclosed an agreement with San Diego Gas & Electric, SDG&E, that pairs our V2G platform with the utilities emergency load reduction program or ELRP. Recall back in July of last year, we disclosed that we have been chosen as the V2G platform provider for the Cajon Valley Union School District school bus program. Since then, six high-capacity chargers were installed at their bus yard in San Diego. This achievement shows what can happen when we partner with utilities.
Through the ELRP program, electric school bus fleets equipped with V2G charging through our GIVe platform are capable of, and permissioned, to provide energy back to the grid during emergency load reduction events, helping to avoid costly and inconvenient rotating outage and ensure service reliability for SDG&E's customer. In return, qualified SDG&E customers can receive $2 per kW h for verified export load/load reduction. The ELRP program represent a potential revenue opportunity per bus of $720 per year or $100 per kW-year. For some background, the California Public Utilities Commission, or CPUC, created the ELRP in 2021 to pilot a new demand response approach during peak summer electricity usage periods from May through October for both commercial and residential customers. Our partnership in the Cajon Valley District marks the first school bus fleet to be integrated into the ELRP in California.
With all of the infrastructure and paperwork in place, we're able to start generating grid service revenues immediately, although at marginal levels, given the relatively small size of the project. Combined with deployments underway at Cajon Valley, Ramona, and San Diego school districts, this is about 1.7 MW of capacity that is planned to be available over the future months. We see a growing set of opportunities elsewhere in California and eventually across other states that are likely to implement similar programs in their effort to combat the increased strains on the country's aging grid and the worsening impact of climate change on grid operability. Building on the momentum with San Diego Gas & Electric, we have just disclosed a partnership with Vistra Corp., one of the largest energy generation and retailer headquartered in Dallas, Texas.
This partnership aims both at creating channels for Nuvve to provide its charging management system to EV owners and drivers, as well as creating access to multiple value by providing grid services focused in Texas. As you might be aware, the energy market in Texas has been extremely volatile, with peak consumption achieving levels never reached before. Nuvve and Vistra are initially targeting school districts in the Vistra territory, and we are jointly developing programs using both EPA and local subsidies, as well as financing package. The goal is to deploy 250 school buses over the next 18 months of 15 MW of power capacity, which provide us the ability to generate future fleet-as-a-service and grid service revenues.
Finally, earlier this week, we announced entry into an MOU with the Maine Maritime Academy to collaborate on a framework of V2G across maritime applications. As part of the program, they will expand their current academic and certification programs to include delivery of workforce training in V2G-related data science, operations, cybersecurity, and artificial intelligence. These total grid solutions could enable ships and other vessels to store and give energy back to the grid via ports, islands, and waterways. This builds on commentary we've made in recent quarters about continuing to build out academic partnerships and consistently exploring new market opportunities for V2G. Turning now to megawatts under management, which we view as an indicator of the potential revenue growth embedded into our commercial wins. As of June 30th, 2022, we had 16.1 MW under management installed.
This reflects roughly 10% increase from March 31st, 2022 megawatts under management of 14.7, and 132% increase over the 6.9 MW under management on June 30th, 2021. To wrap up, over the past several quarters, you have heard us discuss various partnership types, commercial, operational, technology, et cetera. We are incredibly excited about the long-term opportunities that each of these announcements provides as vehicle electrification and V2G adoption play out over the years ahead. Each of these agreements is foundational for the growth that we believe lie ahead of Nuvve. We continue to execute on the recently and previously announced agreements and partnerships as all of the pieces of the V2G puzzle come together.
At the same time, we continue to chase additional partnerships and customers that we believe will further strengthen the outlook for our business. We look forward to working with current and prospective partners and continuing to have exciting news to disclose in the future. I will now turn the call over to David to discuss our financial results before I wrap up with some prepared remarks, and we open to Q&A.
Thanks, Gregory. I will start with a recap of second quarter 2022 results. In the second quarter, we generated total revenues of $1.3 million compared to $981,000 in the second quarter of 2021. Within this increase, product and service revenues increased by nearly 40% on a year-over-year basis and represented 82% of total revenues. We also experienced a 9% increase in grant revenues. Product and service revenues should continue to be the lion's share of revenues going forward. On a sequential basis, total revenues fell by approximately 45%. As noted on our first quarter call in May, first quarter 2022 results were unique as they benefited from the sale of five electric school buses, which did not repeat in the second quarter.
Margins on products and service revenues were 3.1% for the second quarter 2022, compared to 52.7% for the second quarter last year. The decline on a year-over-year basis primarily reflects a sales mix shift and our decision to engage in the sale of DC chargers at a discount in return for the contractual rights for a larger share of future grid service revenues with a particular customer. As we have stated before, DC charger gross margins at standard pricing generally range from 20%-25%, while AC chargers gross margins are approximately 50%. Total operating costs, excluding cost of sales, were $10.3 million for the second quarter of 2022, compared to $7 million in the second quarter of 2021.
The increase was primarily attributable to increased cost of sales associated with being a public company, an increase in payroll costs from increased staffing, and the cost associated with Levo, which we established last year. On a sequential basis versus the first quarter of 2022, the increase was $0.5 million, up from $9.8 million, largely due to higher payroll costs and legal costs. Cash operating expense, excluding cost of sales, stock compensation, and depreciation and amortization, was $8.4 million in the second quarter of 2022, compared to $8.7 million for the first quarter of 2022. Levo incurred $0.7 million in operating expenses during the second quarter. Other expense was $43.3 million in the second quarter of 2022 versus $154,000 in the year ago quarter.
The expense in the current quarter was driven by a write-off of deferred financing costs associated with the value of warrants and stock options granted to Stonepeak and Evolve last year in return for their capital commitment to fund up to $750 million in V2G-enabled EV fleet deployments of school buses through Levo Mobility. We impaired the deferred financing cost this quarter primarily due to the fact that we had not entered into fleet-as-a-service customer contracts requiring preferred capital commitments from Stonepeak and Evolve in excess of $43.6 million within 1 year of the deferred financing cost being capitalized. This impairment charge does not impact the existing capital commitment we have from Stonepeak and Evolve, or our pursuit of customer deployments funded by this capital commitment.
Net loss attributable to Nuvve common stockholders for the second quarter of 2022 was $51.5 million, compared to $6.2 million for the second quarter of 2021. Now turning to the balance sheet. We had approximately $14.9 million in cash as of June 30th, 2022, excluding $0.5 million in restricted cash. During the quarter, we raised $1.9 million from our ATM program. In addition, we raised $2 million to the sale of 134,499 shares to our CEO and COO at a share price of $14.87 per share. We also made an investment of $1 million in Switch, which Gregory discussed earlier.
As Gregory also alluded to, subsequent to quarter end, we completed a registered direct offering of the following 2.15 million shares of common stock, pre-funded warrants to purchase 1.85 million shares, and warrants to purchase 4 million additional shares that are exercisable beginning 6 months from closing for a period of 5 years. The net proceeds to the company from this offering was $13.1 million. Further, we retained the ability through our ATM program to raise additional funds up to an aggregate offering price of $25 million.
We used $8.8 million in cash during the second quarter, primarily attributed to $8 million in net cash losses, $3.7 million in higher working capital, $0.1 million in fixed asset purchases associated with our new corporate office space, a $1 million investment in Switch, offset by $0.2 million in foreign currency exchange rate gains, and $4 million raised through financing activities. Inventory increased by $1.5 million to $10.8 million at the end of the second quarter, from $9.3 million at the end of the first quarter 2022. The increase was driven primarily by receipts of DC charger inventory that we ordered in 2021.
Accounts payable was marginally higher by $0.1 million, increasing to $3.3 million at the end of the second quarter from $3.2 million at the end of the first quarter of 2022. Now, turning to our megawatts under management and estimated future grid service revenues. As a reminder, megawatts under management is a metric we use to quantify the aggregated amount of electrical capacity from the deployment of our V2G chargers, V1G chargers, and stationary batteries that Nuvve manages and could supply under ideal conditions. Currently, our megawatts under management includes chargers and batteries located throughout the United States, Europe, and Japan.
As Gregory mentioned, during the second quarter, we added 1.4 MW under management in installed capacity, increasing our total megawatts under management to 16.1 from 14.7 MW at the end of the first quarter 2022. I would like to point out that we have changed the definition of megawatts under management this quarter and going forward to only include those chargers that have been both installed and commissioned. Previously, our definition included some chargers that were not yet commissioned. We believe including only those chargers that are both installed and commissioned is a better representation of megawatts under management. We made this change to how we track megawatts under management, as we have recently experienced some delays for some of our customers in the time between when they are installed and their commissioning.
The 16.1 MW under management was comprised of 2.9 MW from DC chargers, 5 MW from AC chargers, and 8.2 MW from stationary batteries. As we create future V2G hubs, we will further expand our megawatts under management. This brings me to estimated future grid service revenues associated with our megawatts under management and megawatts to be deployed, which is based upon a combination of contracted grid service revenues and merchant exposed revenues. Contracted grid service revenues results from negotiated revenues per kilowatt-year to be paid by the utilities. Merchant exposed grid service revenues is projected based on a number of factors and inputs, including the types of vehicles connected to our network, the expected use pattern for those vehicles, the length of term the customer agreements, and the geographies of the deployments.
Depending on the geographic regions of our deployments, the grid service revenue opportunities will vary. We are currently seeing grid service revenues generally ranging between $85-$300 per kW-year. These revenues include a combination of contracted services and merchant exposed services. Given the long-term nature of our customer deployments, these revenues are generally recurring over a period of 10-12 years. At June 30th, our hardware and service backlog was $3.9 million, consistent with the backlog at March 31st. With that, let me turn it back to Gregory for some closing thoughts before we go to Q&A.
Thanks, David. To summarize, we continue to plant seeds for additional growth and to retain our competitive edge, as demonstrated by the various commercial and technical partnerships we disclosed during the second quarter and in recent weeks. All the while, we continue to experience healthy growth in our megawatts under management. We are particularly pleased to see federal support over the past several months, both with the DOE grant program progressing towards realization and with the climate spend package recently announced as part of the Inflation Reduction Act of 2022. We continue to forge ahead and build towards the future despite the uncertain macro backdrop and a pace of revenue conversion and project startup that remains subject to slippage. We look forward to speaking with you again on our third quarter 2022 earnings call.
With that, we'll now turn the call over to the operator to begin our Q&A. Operator?
If you would like to ask a question, please press star one on your telephone keypad now. You'll be placed into the queue in the order received. Please be prepared to ask your question when prompted. Once again, if you have a question, please press star one on your phone now. Our first question is from Eric Stine. Your line is open.
Hi, Gregory. Hi, David.
Hi.
Hey.
Hey, maybe first thing, I know in the past you've talked about a, an overall pipeline. I believe if we go back a few quarters, you sized it at $225 million. You know, curious if you could provide an update on that, and then I'd love to know how it breaks down, you know, high level between various applications, whether it's school bus, fleets, et cetera.
Yeah. You know, I think that, Eric, that's a good range for where it is. It's probably a little bit higher now. Gregory, you wanna talk about the mix of.
The mix includes some school buses, you know, I mean, some example, for example, relate to the Troy School District, where Levo has a first right of refusal on buses that will be deployed there. It also includes, you know, for example, the other project that we've talked about, the deployment of the charging station in the parking lot outside of the Blue Bird facility in Georgia. There's a mix of facilities that are deployed through that. Significant amount of school buses either are being produced or being actually used, and some commercial fleets as well that we have not announced yet.
Yeah. Eric, I might add, I probably think about it maybe four or five buckets. One, which is we have kind of our day-to-day school districts, small and large, that our salespeople are in the market every day that consists of our pipeline. We have some very large sizable proposals in our pipeline through Levo. As you know, and Gregory mentioned, we've talked about several hubs that we're engaged with that make up a balance of the pipeline. Last is kind of our fleet customers. There's probably the four buckets to think about. Some are larger than others. In fact, we have a broad channel that we're going to market with.
All right. That helps. Maybe good segue to Levo. You know, I don't know if you would characterize maybe not the activity, but just the, you know, the fleets that have gone that route, you know, whether that's a little bit behind schedule or on schedule. You know, just maybe talk about the outlook there. Just curious, you know, are some of the fleets there waiting on the EPA funding, waiting to see if they get grant funding you know, before pulling the trigger on something with Levo? You know, are there other limiting factors?
I think that the one that are working with the EPA usually they have the school districts, and they're, you know, the EPA is a great starting point usually, but then that creates a broader discussion around A how do we convert your whole fleet. Now there are also opportunities with you know what I would call fleet owner and operator or just operators for which Levo is a great fit as a partner in helping those fleet operator and owner operator to convert their fleet into electric. And we see some of those opportunities through this channel.
What's great about it is, yes, you can do it with the support from some of the subsidies that are coming, but it's very often also a commercial piece that is important, and that doesn't have to go through the complexity that you have to deal with when you work with the school districts.
Right. Got it. No, that makes sense. Gosh, a lot of things to cover, but I guess maybe on the DOE tie-up, you've got the MOU that you signed. Anything that we need to look for in terms of next steps or kinda what the timing may be for that playing out?
Nothing that I can share that we can share at this point. As soon as we get more resolution to that, we'll start to be able to share more.
Okay. Worth a try. I'll stay tuned on that. I guess last one.
Yeah.
I saw this, I think it was earlier this week or the previous week, but I saw that Rhombus Energy, and I know they've been one of your charging partners acquired by BorgWarner. You know, just thoughts on impact there. You know, is that a good thing? Is that a bad thing? How should we think about it?
It's a great thing, right? I mean, when you have a vendor that is a smaller player that gets acquired by, you know. Where honestly, you know, their product is, you know, this is the product that we are commercializing right now, and we have some exposure on that. The, you know, the Power Electronics products will come later. For them to be acquired by such a large organization that has been around for some time, but has also started to work on the EV space as well, this is a great outcome for our relationship with Rhombus.
Okay. Thank you.
Thanks, Eric.
We have no further questions in queue at this time. I'll turn it back over to our host.
Thank you very much, everybody. We are looking forward to have our next call in about 3 months. Have a great day.
That concludes today's conference. Thank you for joining. Have a pleasant day.