Allego N.V.

Greetings and welcome to Alago's fourth quarter and fiscal year 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Fleury Schwartz with ICR. Thank you. You may begin.

Good afternoon. I want to welcome everyone to Alago's fourth quarter and full year 2022 earnings call. Today's speakers are Matthew Bonnet, Chief Executive Officer, along with Ton Mowers, Chief Financial Officer. During today's call, we may make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward-looking statements made on this call. For more information about these risks and uncertainties, please refer to the risk factors in today's press release and the company's filings with the Securities and Exchange Commission. Readers are cautioned not to put any undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call. During our call today, we will also reference certain non-IFRS financial information. We use non-IFRS measures in some of our financial discussions as we believe they represent our operational performance and underlying results of our business. The presentation of this non-IFRS financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with IFRS guidelines. as issued by the IASB. And our non-IFRS measures may be different from non-IFRS measures used by other companies. Reconciliations of IFRS to non-IFRS measures, as well as the description, limitations, and rationale for using each measure can be found in our filings with the SEC. I'll now turn the call over to Matthew Bonnet, CEO.

Thank you, Felice. Good afternoon to everyone, and welcome to our fourth quarter and full year 2022 earnings call. I will begin today with a brief overview of our results, followed by an update on the progress we have made since speaking with you last time. I will then turn the call over to Tom Lowers, our CFO, for a closer look at the numbers. But first, an overview of the company for those who may be new on the call, and I hope they are many. Aligo is a pioneer in driving and enabling the electric vehicle revolution by building the largest public EV fast and ultra-fast infrastructure across Europe. Aligo boasts a vast network of over 34,000 charging points, both public and private, at almost 23,000 diverse locations across 16 countries. This positioning has solidified Aligo's market leader status in Europe and we are expanding quickly. With a focus on growth, Aligo is shifting rapidly from slow and fast public charging to fast and ultra-fast public charging that we fully own and operate with already a portfolio of more than 1500 fast and ultra-fast charging points that are poised to benefit from the growing demand for full battery EVs and that consequently accelerate the adoption of EVs. Through its relentless efforts to expand its network, Allego is uniquely positioned to meet the evolving needs of the electric vehicle market and drive the sustainable future. Importantly, BNEF estimates that the number of full-battery electric vehicles in Europe is projected to reach approximately 14 million by 2025, underpinning our confidence in our growth trajectory. For context, as of 2022, Europe has approximately 4.7 million full battery EVs on the road. Turning now to our results and progress, I am very pleased with our developments through the end of 2022, which marked our first year as a public company, nine months exactly. While the year was filled with milestones, we worked through a very challenging microenvironment, and I am excited with the way our entire team has performed to deliver our results. We finished 2022 with revenue of €133.9 million. Our strong revenue performance was primarily the result of significant growth in charging revenue, which was our objective, while services revenue also improved meaningfully. Our charging revenue increased more than 150% while our service revenue was nearly 14%. We saw growth across all key metrics, including full year 2022 total charging session, increasing to $9.2 million, an increase of nearly 51%, a fourth quarter 2022 utilization rate of 13.4% compared to 7.4%, and full year 2022 total energy sold almost doubling to $106. 54.6 LWh. This is all in comparison to the prior year period. Our full year 2022 operational EBITDA was 2.3 million euros compared to 9.2 million euros in the prior year period. The decrease was expected as we had to cope with massive increase of 135% of energy price due to energy crisis in Europe before the kickoff of our hedge through the signing and preparation of power purchase agreements in 2022. We mitigated the situation with price increases, which took place in January, September, and October 2022, that has not triggered, as explained, a decrease in utilization rate or energy sold. We chose the strong power pricing of Aligo. With these measures, we have seen a strong recovery of our gross margin in charging revenue especially for our ultra-fast charging in Q4 2022. We reached in Q4 2022 an operational EBITDA of 7.8 million euros. We are continuing to see margin improvements through Q1 2023 with our energy hedge being implemented and a strong activity in charging. Importantly, in the fourth quarter of 2022, we executed on two strategic initiatives to buttress our development. First, in December, we increased our credit facility by 230 million euros to 400 million euros. The new facility will be used to expand our investments in our ultra-fast charging stations to be deployed to equip our significant backlog of signed contracts. All our 2023 investment needs will be largely covered. Second, last November, we contracted with the leading independent renewable producer that will provide 25 gigawatt hours of solar energy, which took effect in January 1st, 2023. It will cover a majority of our operation in Germany for 2023. This contract will provide us with a natural hedge in quality and input pricing for the next 10 years with a very attractive fixed price. Meanwhile, we signed three more PPAs agreements with renewable assets in Germany and the Netherlands beginning of this year, providing in total already more than 160 gigawatt hour in 2023 and 2024 for 10 years duration, each at very attractive price. We are on track to reach our target to cover 80% of our energy needs onward at the end of 2023. The sale of certificates of carbon credits directly generated from the sale of our green energy has been a complementary source of income that mitigated our energy cost increase in 2022. This provides a robust natural hedge against rising energy prices. The value of these certificates, available in our main markets, will provide long-term complementary revenue directly linked to the volume of our sales. During the year, the income generated from the sale of these certificates was 9.5 million euros compared to 5.4 million euros during the same period in 2021. With this strategy in place, we believe that we are now well equipped to face the volatility of energy price for our charging business line. This charging business on our own network is to be more and more important in our revenue mix compared with services and provide a stable visibility for our margin. Now, turning to some commercial developments during Q4 2022, I would like to highlight some examples. We commissioned four big ultra-fast charging hubs on highway network in France, designed, owned, and managed by Aligo. In total, we installed 16 ultra-fast chargers, each charger dispensing up to 300 kilowatts. In addition, we signed an agreement with Pate, again in France, a theater network to equip 11 prime locations with ultrafast stations. In Germany, we added two new key accounts, Patricia Retail Estate and the network of Tom, do-it-yourself retailer, representing 69 sites with hundreds of ultrafast charging ports. Germany is a key country in Europe for EVs, and Aligo is accelerating very quickly there with an increasing backlog of contract sites. Very importantly, 2022 has confirmed the execution of our plan in the acceleration of the rollout of our own ultra-fast network. We have increased by more than eight the number of ultra-fast charging points we own in 2022 to reach around 750 end of Q4 last year, and we are accelerating. It shows that we are able to execute, and despite this massive increase of chargers, we see a continuous increase of utilization rate, which shows that we are catching more traffic. We're regarding our growth ahead. Our backlog continues to grow with a higher demand for electric vehicle charging and our size and scale create additional momentum for our partners. We had a secured backlog of 1300 sites at the end of December 2022. All these sites are signed up for lease terms of an average of 15 years and include approximately 8,600 fast and ultra-fast charging ports, which translates into growth of more than 90% from December 2021. Our ability to offer 20 solutions with strong core technological competencies bringing high uptime continues to be a unique value proposition and advantage in the market. As Don will discuss in greater detail, we are pleased to provide Outlook for this year, 2023. We expect revenue in the range of 180 to 220 million euros and operational EBITDA in the range of 30 to 40 million euros. From a top-line perspective, we will continue to benefit from the growth of the market, an increased utilization rate, and additional site deployments all over Europe focused on ultra-fast charging. We are observing strong utilization rates through the early part of 2023 and expect that trend to continue. From a margin standpoint, the actions we took throughout 2022, including the price increase, the control of our energy price, and the rigorous management of our resources, will go on in 2023 in order to increase our margin and operational EBITDA. Before I conclude, I would like to reiterate our confidence in our business strategy. It is supported by a demand environment that is conducive to our model. The European Union's confirmation on banning the sale of internal combustion engines by 2035 marks a significant milestone towards the goal of replacing over 200 million passenger vehicles with electric ones in a short period, given the current base of 4.7 million vehicles. We are indeed in a comprehensive mobility revolution that will require us to expand our capacity to meet the demand for ultra-fast charging, a key component to provide the required energy to EVs. With that, I will turn it over to Ton Lauers, our CFO, for an overview of our financials.