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spk04: Good morning, 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. If you would like to ask a question at that time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. On the call today, we are joined by Dr. Vasily Gregorio, 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 issued a press release announcing its fourth quarter 2022 financial results shortly before market opened today. You may access the materials on the investor relations section of the company's website, www.advent.energy. I would also like to remind everyone that during the course of this conference call, Advance Management will discuss forecasts, targets, and other forward-looking statements regarding the company's future, customer 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 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 reports filed with the United States 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 in which it operates is based on information from independent industry and research organizations, other third-party sources, and management estimates. Management estimates are derived from publicly available information released by independent industry analysis 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 and with 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 that this call is being recorded. Kicking off the call will be Dr. Vasili Gregorio. Dr. Gregorio, I'll now turn it over to you.
spk02: Thank you, operator. Good morning to everyone listening in, and thank you for joining us on Advent's fourth quarter 2022 earnings call. On today's call, I will provide an update on the business. I will then hand over to Kevin, who will give a review of our financial performance and outlook. It is clear that the energy transition is underway, and while sustainability has always been foremost, the issue of energy security is also now prominent. The combination of sustainability and energy security has provided the tipping point for the clean energy economy. In particular, the increasing support from governments, and most notably the U.S., and the EU have introduced incentives such as the Inflation Reduction Act of 2022, RepowerEU, and the European Hydrogen IPCI projects, where ADVENT is one of the participants. ADVENT had a productive fourth quarter. After formal certificates from the EU, with funding of 782.1 million euros for ADVENT's Green Hippo project, we have been working with the Greek state on the mechanism and time and schedule for the funding facilities. These meetings have included visits by Greek state officials to the Commerce Research and Production Facilities in Patras, Greece. It is our goal to finalize these discussions as soon as possible and proceed with the rollout of the program. The scope of GreenHIPPO over the initial period of six years is to innovatively develop and manufacture fuel cell systems and electrolyzer systems for the production of power and green hydrogen, respectively. for cumulative capacity of 118 megawatts of fuel cells and 1.5 gigawatts of electrolyzers over this time. The production of these systems will take place in Greece, in the region of Western Macedonia, which will become our focal point for technology development and mass production. The company intends to create approximately 600 direct jobs for qualified scientific and technical personnel, and up to 4,600 indirect jobs over the six-year period. GreenHippo will provide Advent with the momentum to enter into and accelerate towards commercialization of electrolyzer systems. As a result, we will establish a global green hydrogen value chain from hydrogen production with electrolyzers to clean energy production with fuel cells. In addition to the GreenHippo project, I will now give an overview of key recent developments. In the U.S., Advent recently announced that it opened its new R&D and manufacturing facility at Hood Park in Charleston, Massachusetts. The state-of-the-art Hood Park facility will enable Advent to scale up and deliver on the increasing global demand for electrochemical components in the clean energy sector. This includes state-of-the-art coating machines to support the seamless transition from prototypes to production runs for advanced membranes and electrodes, a fully analytical facility dedicated to quality control, performance analysis, and improving product lifetime, fuel cell test stations for statistical process control and development of next-generation MEA materials, and a mechanical engineering lab for development of automated process for MEAs. One of the products to be developed to manufacture, I'm sorry, in the HOOT facility will be the ion pair advent MEA, which is currently being developed within the framework of the the company's joint development program with the U.S. Department of Energy. Aspen intends that its proprietary fuel cell products, such as Serine and Honey Badger 50, will incorporate the ion-fair Aspen MEA beginning in 2024. The company expects the introduction of the ion-fair MEA will significantly reduce the cost of our Serine flagship products and thus expand the immediately addressable market. Furthermore, the expected system increase in power density in a lifetime will highly differentiate Advent's fuel cells in the heavy-duty mobility industry. In March this year, Advent and Hyundai announced a successful technology assessment. The assessment evaluated Advent's proprietary EMA technology for supplying Hyundai's high-temperature fuel cell needs, and following its success, the two companies have entered into a joint development agreement. The agreement solidifies the interest of one of the world's leaders in fuel cell technology to further develop the high-temperature PEM technology in collaboration with ADVEN. The first step of the JDA focuses on the MEA. ADVEN's goal is to provide its MEA and its high-temperature PEM fuel cell development expertise to co-develop with automotive manufacturers the next generation of fuel cells for heavy-duty mobility. The high-temperature PEM fuel cell technology is highly differentiated compared to the current LTFEM technology because it allows a vehicle to operate with e-fuel, such as e-methanol, biofuels, and low-purity hydrogen. It allows higher purity in the hydrogen or air intake, a case which is very common in practice and has repeatedly hampered low-temperature PEM deployments in real-world conditions. It has built-in resilience, as the high-temperature fuel cell does not rely on water for conductivity, therefore eliminating the problems of operating in extreme heat, cold, or humid conditions. And it has a higher efficiency resulting from the high-temperature operation, which allows for optimized cooling, a critical performance parameter for heavy-duty trucks and aircraft. Based on this, ADEN will continue to pursue strategic joint development agreements to achieve its goal of supplying QMEA components and technology to the mobility market. In December, ADMIN launched a proof-of-concept project with Vantage Towers to replace diesel generators with fuel cells. Vantage Towers Greece is the largest and non-independent tower infrastructure company in Greece, operating more than 5,250 towers for Vodafone Greece and Windalas. By replacing diesel generators with fuel cells at non-permanent sites, that are not connected to the power grid, they can be supplied with clean electricity. Under the project, Vandas Towers Greece, a subsidiary of Vandas Towers Group, one of Europe's leading tower companies, will explore the applicability of ADVEN's syringe-biomethanol-powered fuel cell systems as backup and primary power sources for its telecom towers. Following the successful completion of the project in Greece, ADVEN and Vandas Towers will consider wider deployment. ADVENT has already installed approximately 1,000 methanol-powered syringe fuel cell systems worldwide, primarily used as backup power source for the telecommunication sector. In January this year, ADVENT announced a collaboration with Alfa Laval, a global provider of heat transfer, separation, and fuel-handling products, on a project to explore application of ADVENT's methanol-powered high-temperature PEM fuel cells in the marine industry. Funded by the Danish Energy Technology Development and Demonstration Program, The project is a joint effort between ADVENT, Alfa Laval, and a group of Danish ship owners. The project will focus on testing ADVENT's methanol-powered high temperature fuel cell as a source of marine auxiliary power. During the course of the project, the fuel cell system will undergo a risk assessment by a leading international classification site. At the same time, the project aims to integrate the next generation of ADVENT fuel cells. These fuel cells will be based on ADVENT's next generation MEA. Aiming to meet the even growing power requirements of the marine industry, Advent's next-generation fuel cells are expected to demonstrate a significant increase in lifetime, efficiency, and electrical output. In February, Advent announced a new marine collaboration with a globally renowned energy technology company offering a sustainable solution across the entire energy value chain. Albin and its partner will work together to develop a 50-kilowatt to 500-kilowatt marine fuel cell solution for a range of super yachts. We will provide a sustainable and reliable source of auxiliary power and offer improved power density. This marine fuel cell solution is initially expected to be used as a hybrid power source, enabling clean electricity generation instead of using conventional diesel engines and generators for procedures such as anchoring and maneuvering. As part of the agreement, ADVAN's partner has placed an initial order for 20 of ADVAN's methanol-powered syringe fuel cell systems. Following the completion of this project, the two parties will explore the potential of developing similar solutions for a wider range of business applications beyond marine, such as industrial power solutions. ADVAN continues with the development effort of the Honey Budget 50, the portable power generation for the defense market funded by the U.S. Department of Defense. The company expects the production version to be finalized in 2023, and our goal is to receive production orders in 2024, increasing to high volumes in 2025. We consider the Department of Defense programs a very important part of our innovation portfolio, as they demand performance under extreme conditions, improve the resilience of the high-temperature PEM technology. The portable fuel cell application market is also a potential target for growth, where we intend to seek synergies with established market leaders that require a fuel cell product line. And finally, let me turn to the stationary and off-grid markets. Aden has made focused efforts to increase the commercial footprint of the Seren high-temperature fuel cell system produced in Germany and in Denmark. Our stationary powered product suite has been targeting telecommunication and other critical backup power opportunities. We're experiencing and changing landscape in the Philippines, which has resulted in order delays. Prior to our acquisition, Serenity was actively selling to both Smart and Globe Telecom in the Philippines. In 2022, these companies proceeded with selling of most of their tower assets to Tarkos. This has resulted in delayed orders and the mandate to reboot our efforts in the sector. We're focusing our resources now on major Tarkos, pursuing long-term large-scale deals that can sustain this product, and marketing at the tariff exchange events. In addition to lower revenue that we had planned in 2022, another financial impact of the market change and other delays was the recognition of the impairment charts against our sharing view investment. We remain confident, though, that the anti-sharing products have great promise for both the off-grid and marine markets. With that, I would like to hand over to our CFO, Kevin Brackner.
spk03: Thank you, Vasili, and good morning, everyone. Turning to our financial results, we delivered revenue of $2 million in the fourth quarter compared to $2.9 million in the prior year quarter. The year-over-year result is due to a decline in orders for the company's stationary fuel cell systems, driven by a change in telecom tower ownership, as Vasili mentioned. R&D expenses were $2.5 million in the fourth quarter, primarily related to internal R&D costs, incurred in each of our businesses, as well as our cooperative research and development agreement with the Department of Energy. Administrative and selling expenses were $9.3 million in the fourth quarter. Combined with R&D expenses, total operating expenses were $11.7 million, a year-over-year decrease of $4.6 million, primarily due to a reduction in incentive and stock-based compensation expenses. Net loss in Q4 was $47.6 million or $0.92 per share. Adjusted net loss was $13.2 million or $0.26 per share. The adjusted net loss excludes a $2.1 million gain from the change in the fair value of outstanding warrants, a $2.4 million gain from an acquisition purchase price adjustment, and a $38.9 million asset impairment charge. The asset impairment charge primarily relates to goodwill from the company's stationary fuel cell systems business in Denmark, Germany, and the Philippines, which was acquired in August 2021. Unrestricted cash reserves were $32.9 million as of December 31, 2022, which is a decrease of $9.5 million from September 30th. In the fourth quarter of 2022, we received $0.4 million in tenant improvement allowances for the Hood Park R&D and manufacturing facility, which is net of additional spending for the build-out of the facility. Our existing cash balances and projected cash flows are not expected to be sufficient to support planned operations for the next 12 months. However, as Vasili discussed earlier, we have been working with the Greek state to implement a funding mechanism for the Green Hippo project as soon as possible. Additionally, we are exploring opportunities to raise additional capital and expect to provide an update on this very soon. In the meantime, we will continue to manage our costs closely and capitalize on opportunities to reduce costs where possible. I will now turn to our outlook. Advent entered 2023 with a strong pipeline of opportunities. As we all know, however, not every opportunity in the pipeline will transpire due to factors that are beyond Advent's control. Opportunities may not materialize or could be delayed. Due to the long-term contract nature of our business model, the timing of our revenue can also be difficult to predict. As we mentioned, we have experienced delays in the Philippines, for stationary fuel cell systems and their installation. Due to the level of uncertainty caused by these factors, we are not providing a revenue outlook for 2023 at this time. With that, I will hand back to Bisoe for closing remarks. Thank you, Kevin.
spk02: ADMIN has a significant portfolio of technology and commercial strengths, allowing it to compete and be successful at the global level. Green HIPPO will be transformational for ADMIN and Green HIPPO is for the long run. We're moving along the process with the Greek state to unlock state aid and will keep you informed on developments. ADMIN is pursuing a visible and defined path towards key and significant sectors. ADMIN is a clean energy technology company and we will leverage from this strength to generate commercial products in addition to providing attractive technology solutions through partnerships with OEMs. In closing, we believe Advent is well positioned to be the provider of clean energy solution across a variety of end markets. I would like to thank you all for joining us today, and we're now ready to answer questions. Thank you very much.
spk04: At this time, I would like to remind everyone, in order to ask a question, press star followed by the number one on your telephone keypad. We'll pause for just a moment to compile a Q&A roster.
spk05: Again, if you would like to ask a question, press star followed by the number 1 on your telephone keypad.
spk04: Your first question comes from the line of Lacey Midgley with Panmure Gordon. Your line is open.
spk01: Hi, Vasilis, Kevin. Can you hear me?
spk05: Yes, very well.
spk01: Hi, both. Thank you very much for the presentation. vasili as well congratulations on the recent appointment um as chair of the ipsy uh uh high two tech facilitation group and my first question actually is around the green hippo project um obviously this is a key project for absent over the next few years certainly and you mentioned that next steps towards um implementation of the project have been discussed. Can you give us some more color on what the steps and next milestones are and timing of those, please?
spk02: Yes, absolutely. I know this is a very good question, and this is something that's very important to us, so we call it every day. Here is the situation. The IPCI has been ratified at 5.4 billion across the continent. Not all countries are at the same level. Again, as a very newly elected chairman, my first thing is for all of us to find out where we are and to go in the next couple of months when we have our first reporting to see where everybody is. So the idea is that the Greek state is very positive about it. We received a letter in March that, first of all, congratulated us on this amazing success, if you will. And second is that they go as fast as possible to go to the next level, meaning get us a call. And in the call, we're all going to see the exact details of what's going to happen there. In general, what I came back from the first meeting two days ago in Berlin is that Hydrogen is here, and it's going to be big in Europe. And I think the collective effort there represents a true world opportunity. So I think that's how much I can say. I think in the next few months, we will know things. But right now, I don't think we can say something more about it. I mean, we are definitely there, and definitely happening, but we cannot say unfortunately. We definitely would like to have it by now, don't get me wrong, because we got the ratification in July 2022, and we know it's going to be some months, but unfortunately we don't have it today.
spk01: I understand that, thank you, that's helpful. And I guess I'm switching topics. sort of tack here a little bit but on the Hyundai the JDA deal which for me is you know quite a significant step forward this year and most recently but is there any more colour you can give us again on sort of expected timing on the development milestones and I know early days of course but any initial sort of expected timings on a commercial product or you know being ready with Hyundai?
spk02: Yeah, thank you. Listen, we had a joint press release, as you know, and I don't think I can say much more for that. I thought it was inclusive. The good thing here is, A, the long-term nature of this, because we passed the first test. The technology assessment, in my opinion, was the most difficult thing there. We agreed to work together. There is tremendous expertise from Shudai and Catalyst that we'll use in the final MEA. And also, we have demonstrated, if you die, that our hardware capabilities, especially, you know, the superior cooling and the multi-fuel capacity that we said before, are very important to a global player like them. So, I would say we focus on the longer term, and it's a really important milestone for us.
spk01: Absolutely. I think it's, yeah, I agree. And as a follow-up, just I think I know the answer to this, but this isn't an exclusive agreement. You're free to work with other partners and players in the auto market?
spk02: No, no. We have with them a particular agreement, as I said. You know, we provide our expertise, they provide their expertise, but because, you know, these are rather complex systems right i mean not everybody knows everything so we will go to two different collaborations with different models but we're very happy so far with hyundai and we congratulate them also to be in the pioneer of this sector okay one last one from me just finishing up sort of thoughts on on the auto market more generally is there
spk01: is this wider interest that you're getting sort of i know you probably won't be able to say too much on this again but from sort of auto players i'm assuming so given this this deal and within that i mean obviously you mentioned in the statement we find those sort of heavy duty applications is there more interest around that given your technology and your strengths and they're on the light duty side any color you can give there would be helpful
spk02: Yeah, you said it. We are very competitive, and we have tremendous advantage for heavy duty, maybe a little bit light duty. And we are not that competitive somewhere else. So we're trying to concentrate where our strength is. So I think let's go where we have our strength, rather than to try to engage in everything that At the end of the day, technology is what makes the thing either work or doesn't work. So heavy duty and some light tracks as well, I would say.
spk01: Okay. Thanks so much. That's all from me. Thanks, guys.
spk05: Thank you.
spk04: There are no further questions at this time. Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.
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