Advent Technologies Holdings, Inc.

Good morning, everyone. I will be your conference operator today. At this time, I would like to welcome everyone to Advent Technologies' first 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 for Advent's analysts. On the call today, we are joined by Dr. Facilis 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 first quarter 2023 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, Advent's 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, ADVAN's 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's future results are described in its most 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 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 risks, 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. Vassilis Grigoriou. Dr. Grigoriou, I'll turn it over to you.

Thank you, Operator. Good morning to everyone listening in, and thank you for joining us on ADVENT's first quarter 2023 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 in more detail. During my last update on March 31st, I highlighted that ADVENT has further consolidated its business operations and was focusing on the core sectors of mobility and stationary power. This has continued in the first quarter. We remain focused on expanding and executing our commercial pipeline with a view to embed our technology and product portfolio in these key power sectors. The opening of our new facility at Hood Park in Boston represents a significant milestone achievement for Aspen because This will provide a firm anchor to our business growth in North America. Food Park encapsulates R&D and production facilities, as well as our headquarters. Its commission has expanded our global footprint for manufacturing. We also continued our capital investment program in state-of-the-art equipment that's required to complete our scale of production capacity. We intend for this progress to continue towards large-scale manufacturing as soon as our Green HIPAA project commences. The broad support for the energy transition through legislation and economic incentives is snowballing globally. We believe that the future demand for Advent's high-temperature PEM technology and related products will create a significant opportunity, and we believe Advent would be ideally positioned to capitalize on this. In the first quarter, we continue to execute on our strategy of innovation commercial focus, and market permeation. We look forward to growing our commercial activities and achieving long-term profitable growth. Our business focus is on the production of advanced fuel cell materials leading to direct sales, the development of advanced fuel cell systems, and joint development agreements in collaboration with OEMs, which enables to enter long-term licensing agreements. is expected to deliver revenue consisting of milestone payments and royalties, which will provide the upside to our business. I will now give you an overview of key business updates. In March, Aden and Hyundai announced the conclusion of a successful technology assessment. The assessment evaluated Aden's proprietary MEA technology for supplying Hyundai's high-temperature fuel cell needs, and following its success, the two companies entered into a joint development agreement. This agreement solidified the interest of one of the world's leaders in fuel cell technology to further develop the high-temperature PEM technology in collaboration with Aden. The first step of the JDA focuses on the MEA. Aden's goal is to provide its MEAs and its high-temperature PEM fuel cell development expertise to co-develop with automotive manufacturers the next generation of fuel cell systems for heavy-duty mobility. ADVEN will pursue strategic joint development agreements to achieve its goal of supplying QMEA components and technology to the mobility market. In the maritime sector, in February, ADVEN announced a new collaboration with Siemens Energy, offering sustainable solutions across the entire energy value chain. ADVEN and Siemens Energy will work together to develop a 50 kilowatt to 500 kilowatt maritime fuel cell solution for a range of super yachts, which will provide a sustainable and reliable source of auxiliary power and offer improved power density. This maritime 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, the similar energy has placed an initial order of 20 of Advent's methanol-powered serine fuel cell systems. Following the completion of the project, the two parties will explore the potential of developing similar solutions for a wide range of business applications beyond maritime, such as industrial power solutions. In March, AVEN announced at the opening of the new R&D and manufacturing facility at Hood Park in Boston, Massachusetts. Located at the heart of one of Boston's newest innovation and R&D communities, the Hood Park facility will enable AVEN to scale up and deliver on the increasing global demand for electrochemical components in the clean energy sector by including state-of-the-art coating machines to support the seamless transition from prototypes to production runs for advanced membranes and electrodes, a complete analytical facility dedicated to quality control, performance analysis, and improving product lifetime. Fuel cell and water electrolysis test station for statistical process control and development of next-generation MEA materials, and a mechanical engineering lab for developing automated assembly processes for MEAs. One of the products we manufacture at Hood Park is the ion pair admin MEA, which is currently being developed within the framework of the Linovator, the company's joint development program with the U.S. Department of Energy. ATEN intends that these proprietary fuel cell products, such as serine and honey budget 50, will incorporate the ion-pair NDA beginning in 2024. The company expects the introduction of the ion-pair NDA will significantly reduce the cost of our serine flagship products, and thus expand the immediate addressable market. Furthermore, the expected system increase in power density and lifetime will highly differentiate Advent's fuel cells in the heavy-duty mobility industry. In May, Advent and BASF Environmental Catalyst and Metal Solutions, a global leader in precious metals and catalysts, jointly announced a new agreement to join efforts in building a closed-loop component supply chain of fuel cells and enter discussions to extend the partnerships into the field of water electrolysis. For 20 years, BHF Environmental Catalyst and Metal Solutions has been a leader in membrane and MDA technology for high-temperature PEM fuel cells, with a strong foundation in precious metal service and catalysts. High-temperature PEM fuel cells operate at 120 to 180 degrees Celsius. offer a broad operating window and tolerate impurities in the hydrogen fuel source. The fuel cells also enable simplified cooling and need no humidification. Adren offers competitive fuel cell systems for stationary and portable applications based on and on-site . In the future, high-temperature fuel cells will also be available for heavy-duty mobility and maritime power. The scope of the agreement includes role in scaling up MDA production and Advent's plan, state-of-the-art manufacturing facility in Western Macedonia, Greece, while offering Advent its full portfolio of products and services to enable circularly equipped materials. Both companies will cooperate on BASF's latest member development, Celltech-Z, and the new ion pair MDA by Advent, aiming for improved performance, lifetime, and cost competitiveness. Finally, turning to GreenHippo, I was elected as the chair of the EU Important Projects of Common European Interest High-to-Tech Facilitation Group. The election took place at the first General Assembly for High-to-Tech and High-to-Use, two of the European Union's IPCIs. The General Assembly was held in March in Berlin and was attended by executives from companies with projects ratified by the European Union under the IPCI framework as well as government and EU officials. Athens Green HIPO project received a notification in June 2022 for up to 782.1 million euros in funding from the Greek state, the highest amount of funding received for a project under IPCI I210. The European Union officially ratified the project in July 2022. Green HIPO will be based in the Western Macedonia region of Greece where a state-of-the-art facility will be established for the R&D production of innovative fuel cells and electrolyzer systems for the production of power and green hydrogen, respectively. We have already progressed to identify a suitable site and have now purchased the site and commenced planning. Alvin is actively working with the Greek state for the timely sign of the contract. We look forward to reporting on future progress. Advent is well positioned to take advantage of the growing focus on clean energy. We're continuously developing our technologies and consolidating our operations to address new and key opportunities. We have a product portfolio that's focused to enable a greener economy, one that will evade the reliance on fossil fuels and will disenfranchise the energy supply market, therefore providing energy security to communities and economies. With that, I would like to hand over to our CFO, Kevin Brackman.

Thank you, Vasili, and good morning, everyone. Turning to our financials, we delivered revenue of $1 million in the first quarter and income from grants of $0.5 million for a total of $1.5 million. R&D expenses were $3.1 million in the first 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 $8.5 million in the first quarter. Combined with R&D expenses, total operating expenses were $11.6 million, a year-over-year decrease of $1 million, primarily due to administrative cost reductions implemented throughout 2022 which were partially offset by an increase in research and development expenses. Net loss in Q1 was $12 million, or 23 cents per share. Unrestricted cash reserves were $19.5 million as of March 31, 2023, a decrease of $13.4 million from December 31 of 2022, driven by R&D and administrative and selling expenses, as well as annual insurance renewals, a $2.2 million increase in inventory, and $1.9 million of CapEx spending in the first quarter. Our existing cash balances and projected operating cash flows are not expected to be sufficient to support planned operations for the next 12 months. However, as Vasile discussed earlier, we have been working actively with the Greek state for a timely implementation of the funding mechanism for the GreenHippo project. Additionally, we have been evaluating various opportunities to raise additional capital, and in April this year, we finalized an agreement for an equity line of credit with Lincoln Park Capital, which gives us the option to access up to $50 million of capital over the three-year term. The use of this equity line of credit is entirely at Advent's discretion and provides us with an effective buffer, if required, that can be used alongside other sources of capital. In the meantime, we will manage our cost structure 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 advance 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. Due to the level of uncertainty caused by these factors, we are not providing a revenue outlook for 2023 on this call. However, we expect to provide an outlook for revenue and income from grants on the next earnings call. With that, I will hand back to Vasili for closing remarks.