Chargepoint execs exit as earnings take $42mn hit

CEO and COO are out after charge contributes to big earnings consensus miss

Chargepoint execs exit as earnings take $42mn hit
Chargepoint's future viability has been called into question

US charging firm Chargepoint has announced a reshuffle at the top its leadership as it reports a $42mn impairment charge that will materially dent its quarterly earnings.

CEO Pasquale Romano, as well as CFO Rex Jackson, have both departed, while COO Rick Wilmer has taken the reins as CEO.

Chargepoint is set to take a non-cash impairment charge of $42mn, which will drag its gross margin down to a range of -21pc to -22pc. The firm says that a non-GAAP calculation of margin guidance points to a range of -17pc to -19pc.

And the firm suggests that Romano and Jackson’s exits may be in relation to the impairment charge. In his previous role, Wilmer was leading a probe into the company’s supply chain, manufacturing processes and inventory management.

“The Chargepoint board and I are committed to significantly improving operational execution to ensure that the company is building a stronger, more resilient business for the benefit of all stakeholders,” Wilmer says.

To do this, “our first steps are to take an additional non-cash inventory impairment charge related to product transitions and to better align inventory with current demand”, the new main man elaborates. “We remain committed to our goal of generating positive adjusted Ebitda in the fourth quarter of calendar 2024.”

The non-cash nature of the impairment, plus the executives’ departures coming after an investigation into inventory management, suggests that the $42mn lost is in the form of depreciating inventory stock of charging products.

This explanation seems all the more likely considering that Chargepoint absorbed a similar charge in the previous quarter, which put a 19pc hole in the company’s margin.

This charge was put down to “a significant supply chain-related issue”. At the time, Chargepoint was sitting on of $144mn in inventory, which outgoing CEO Romano labelled “stranded costs”.

“Disastrous” quarter

But the impairment charge only contributes to what tech stock trader Henrik Alex calls a “disastrous Q3 performance”, with revenues also “projected to miss consensus expectations by approximately 30pc”, a number which “puts [Chargepoint’s] viability at risk”. Chargepoint says that revenues of $108-113mn are expected for the third quarter, down from previous projections of $150-165mn.

“Given the magnitude of the miss and the company's mounting challenges, I would advise investors to consider selling existing positions and moving on,” Alex says.

“A slew of new companies continues to enter the charging hardware space — but the market is only so big. With Tesla now selling its Supercharger hardware likely well below the competition, I believe we are headed for a shakeout in the next 18-24 months. And probably sooner for some companies,” says Loren McDonald, analyst at consultancy EV Adoption.

Chargepoint stock dipped by nearly 6pc before close on Thursday and has slumped another 30pc in pre-market trading.

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