Advent Technologies Holdings, Inc.

Everyone, I will be your conference operator today. At this time, I would like to welcome everyone to Advent Technologies' fourth quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. On the call today, we are joined by Dr. Vasilis Gregory, Advent's Chairman and CEO, and Kevin Brackman, Advent's CFO. Before we begin the prepared remarks, we would like to remind you that Advent Issues issued a press release announcing its fourth quarter 2021 financial results shortly before market opened today. You may access the materials on the investor relations section of IR Advent Energy. I'd also like to remind everyone that during the course of this conference call, Advent's management will discuss forecasts, targets, and other forward-looking statements regarding the company's future, customers' orders, and the company's business outlook that are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. While these statements represent management's current expectations and projections about the future results and performance as of today, ADVANCE actual results are subject to many risks and uncertainties that could cause actual results to differ materially from those expectations. In addition to any risks highlighted during this call, important factors that may affect ADVANCE future results are described in its foremost recent SEC report filed with the Securities and Exchange Commission, including today's earnings press release. Except as required by applicable law, the company undertakes no obligation to update any of these forward-looking statements for any reason after the date of this call. Lastly, information discussed on this call concerning the company's industry competitive position in the market which it operates is based on information from independent industry and research organisations. other third-party sources and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and other third-party resources as well as data from the company's internal research and are based on assumptions made upon reviewing such data in this experience and in knowledge of such industry and markets which it believes to be reasonable. These assumptions are subject to uncertainties and risk, which could cause results to differ materially from those expressed in the estimates. Please note this call is being recorded. Kicking off the call will be Dr. Valesis Gregory. So, Dr. Gregory, I'll now turn it over to you.

Thank you, operator. Good morning to everyone listening in, and thank you for joining us on Advent's fourth quarter 2021 earnings call. I'm joined today by Advent's CFO, Kevin Bracken. On today's call, I will provide comments regarding our fourth quarter results, followed by an update on the business. I will then hand over to Kevin, who will give a review of our financial performance and now look in more detail. 2021 was a very significant year of change and progress for Asda. From February 2021, after a successful listing on Nasdaq, Asda has grown from a headcount of around 50 to nearly 200 people in December 2021, and now has additional offices and manufacturing facilities in Denmark, Germany, Silicon Valley, and the Philippines. We now have a global structure of integrated manufacturing and sales. Prior to 2021, Aden has grown organically into an advanced fuel cell materials manufacturer with a target of moving across the value chain to both lightweight and stationary advanced fuel cell systems. During 2021, the acquisitions of Ultracell, Syrenergy, Syrenergy Philippines, and Fisher Eco Solutions enabled Advent to leapfrog ahead by years, which effectively accelerated our development and growth plan. The acquisitions have brought together some of the leading expertise in the high-temperature fuel cell space and have expanded Advent's platform to meet the increasing demand for clean energy worldwide. We now hold 190 independent patents worldwide for our fuel cell technology and have 38 R&D programs, allowing Advent to offer a spectrum of products to the fuel cell markets from advanced material to final systems. After the acquisitions, Ultracell, Syrenergy, Syrenergy Philippines, and Fisher Eco Solutions were consolidated and integrated under one structure and one brand name. This consolidation to maximize efficiency of scale began in earnest in 2021 and will continue throughout 2022. The activities throughout our global reach can now be summarized as follows. We are headquartered in Boston, Mass. We're building state-of-the-art membrane electro-manufacturing facilities in Charlestown, Mass. In Livermore, California, we design and manufacture lightweight systems with the former Ultracell staff. Denmark and Germany serve development and assembly responsibility for ADVEN's 5-kilowatt to 15-kilowatt Serenity systems. In the Philippines, we service the telecom market through our sales, service, and site preparation. And in Greece, we have expanded our MEA production and polymer synthesis capacity, including polymer for the next generation ADVEN MEA. We're now rolling out complete hydrogen fuel cell systems, and our global sales force has expanded our reach across North America, continental Europe, the Middle East, and Asia. The business focuses on the production of advanced fuel cell materials leading to direct sales, on the development of advanced fuel cell systems in collaboration with OEMs, will enable us to enter into long-term licensing agreements. In the fourth quarter, we delivered $2.9 million in revenue, up 714% from the prior year, driven by strong customer demand for advanced high-temperature MVAs, fuel cell systems, and flow battery materials. We also collected $3 million from Serenity customers during the fourth quarter related to pre-acquisition revenue. For the full year, we generated $7.1 million of revenue. On a pro forma basis, though, as if Serenity Fishery EcoSolutions had been acquired at the beginning of the year, our revenue would have been $16 million. We continue to have strong customer reserves totaling $79.8 million at year-end. Overall, our performance this quarter and for the year leaves us confident about the long-term growth and earnings potential of the company. Our last quarter validated our business model, and I will now give an overview of the selection of our key achievements. In October, we announced that a new order has been placed for Admin's Serenity U system for the rollout in the HM market. The new fuel cell stacks and reformers are intended to support internal testing setups to evaluate performance and to showcase results with Thai telecom operators. Our business in Denmark has been a partner with Thai-based All Right Combination Centric since 2017, which is a product distributor and service provider to Thailand's information and communications technology industry. The 5-kilowatt fuel cell will address the multi-million dollar telecom sector in Thailand. ADVAN's SerenEU fuel cells are fourth-generation fuel cells, and this generation introduces advantages, including longer lifetime, less service and maintenance fees, and improved total cost of ownership. The product places ADVAN fuel cells in a pivotal position to respond to an increasing global demand for sustainable energy. Also in October, ADVAN announced that with its partners, Smart Communications, which have successfully completed the first installation of the AT5000 fuel cell system across the Philippines. The delivery agreement was made early in 2021 with Smart Communications, and this partnership follows the commitment to the United Nations Race to Zero campaign. The movement of the global industry of mobile network operators highlights a broad-based commitment to zero emissions for all shareholders. Smart Shift to Green Energy follows the announcement of the Philippines Department of Energy that the government would no longer accept proposals to build new coal power plants. These significant policy shifts support the development of clean and energy resources to help ensure a more sustainable growth for the country. In December, Advent and BASF signed an MOU to develop and increase the manufacturing scale of advanced fuel cell membranes designed for long-term operations under extreme conditions. Under this agreement, we will explore the implementation of high-volume manufacturing for cell tech membranes, utilize advanced fuel cell stack and system testing facilities to assess and qualify the new cell tech membrane for R7 and U product for telecom power, M0 product for methane emission reduction, and honey badger product for portable . In addition, BSF supports a realization of the white dragon and green hippo projects, which are pending EU approval. through materials for power generation, hydrogen generation, and power storage. BESF will also evaluate the product's producibility of the ion-pair membrane, developing collaboration between ADVEN and the U.S. Department of Energy. ADVEN is working to increase the performance and scope of its products, to satisfy the requirements of its customers, and to address new applications by developing next-generation fuel cell materials. Also in December, ADVER announced that its fuel cell unit for the marine sector, developed within the framework of the River Cell Consortium, has passed safety testing, as well as safety assessment completed by D&V, one of the world's leading classification societies. The River Cell project is dedicated to the design and development of a fuel cell hybrid system for inland vessels. In addition to cutting greenhouse gas emissions, the hybrid concept demonstrated an increase in both safety and efficiency in shipping. As part of the demonstration, the prototype of Advent Serenity Marine Fuel Cell Unit was successfully integrated into a modern hybrid DC electric energy grid, which was equipped with all relevant ship systems, including battery storage. During the fourth quarter, we have continued to progress the White Dragon and Green Hippo project in Southeastern Europe. The goal of the two projects is as submitted by Aden and the White Dragon Consortium of Companies, is to replace Greece's largest coal-fired power plants with renewable solar energy parks, which will be supported by CO2-free hydrogen production of 4.65 gigawatts capacity and fuel cell heat and power production of 400 megawatts capacity. Through Green HIPPO, Aden will use renewable electricity to produce green hydrogen by electrolysis. This green hydrogen is converted to clean electricity, green energy, and heat through advanced high-temperature PEM fuel cells. The projects are part of the Hydrogen Technologies IPCI with the European Union. While the approval timeline is not within our control, we expected formal notification from the EU during Q2 or Q3 this year, with final notification by the European Union shortly thereafter. Aden has started to put in place an operational structure that will deliver on these significant power projects, with Aden being ideally poised to commence immediately upon final ratification. We're pleased to be the technology partner for such a large and important environmental project in Europe and to have received approval from the Greek government. We look forward to being able to provide more information around EU approval and the final scope of the project over the coming months. Aden remains well-positioned to take advantage of the growing focus on clean energy and where the current government, businesses, and societies will work together to address the climate crisis. We believe that clean energy technology in the hydrogen economy will play a key role in power decarbonization. With that, I would like to hand over to our CFO, Kevin Brackman. Thank you, Vasile.

And good morning, everyone. Turning to our financials, as Vasile noted earlier, We delivered revenue of $2.9 million in the fourth quarter, a 714% increase from the prior year. The increase was driven by growing customer demand for ADVENT MEAs, fuel cell systems, and other advanced material products. We also collected $3 million from Sorenergy customers during the fourth quarter related to pre-acquisition revenue. For the full year, we generated $7.1 million of revenue. On a pro forma basis, as if Sir Energy and Fishery EcoSolutions had been acquired at the beginning of the year, our revenue would have been $16 million. Cost of revenues increased $2.6 million year over year in the fourth quarter. The increase was directly related to revenue growth over the last year and the requirement for increased production of MEAs and fuel cell systems to satisfy customer demand. R&D expenses were $2 million in the fourth quarter, primarily related to our cooperative research and development agreement with the Department of Energy, as well as the R&D costs at Sur Energy and Fisher EcoSolutions. Administrative and selling expenses were $14.3 million in the fourth quarter, a year-over-year increase of $12.4 million. primarily due to increased staffing and costs resulting from the acquisitions of SurEnergy and Fisher EcoSolutions and the cost to operate as a public company and to incentive and stock-based compensation expenses. Net loss totaled $9 million in the quarter and adjusted net loss was $15.9 million. I should note that our adjusted net loss excludes a $6.9 million gain from the change in the fair value of outstanding warrants. Our net loss per share was 18 cents in the fourth quarter. ADVENT remains well capitalized with 79.8 million in cash reserves on the balance sheet at year end, which provides us with the flexibility to be agile in executing on our strategic and operational priorities. This is a decrease of 12.7 million from September 30th of 2021 driven by the increased level of R&D and administrative and selling expenses. Our existing cash reserves and projected cash flows are anticipated to be sufficient to support our planned operations for the next 12 months. I will now turn to our outlook. Advent has developed significantly during 2021, and we have entered 2022 with a more advanced product range a dedicated technical sales team focused on key sectors and geographies and potentially large infrastructure projects. We therefore have a strong pipeline. As we all know, however, not every opportunity in the pipeline will transpire due to factors that may be beyond ADVENT's control. Opportunities may not materialize or could be delayed. ADVENT will use its expertise and resources to bring opportunities to fruition, which will translate into revenue. Due to the long-term contract nature of our business model, the timing of our revenue can also be difficult to predict. Having said that, we anticipate revenue and income from our grants for 2022 to total approximately $23 million, which will be heavily weighted towards the second half of the year. This estimate does not include a significant contribution from the White Dragon and Green Hippo projects in southeastern Europe due to the uncertainty around timing and approval of the project. In closing, we believe that Advent is well positioned to be the provider of clean energy solutions across a variety of end markets. The company has built a solid foundation for the business and continues to grow and execute on its strategic initiatives. With that, I will hand back to Vasili for closing remarks.