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spk04: Greetings. Welcome to the Alago first quarter 2023 earnings conference call. This time all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to Clarice Schwartz, Investor Relations Associate. Clarice, you may now begin.
spk01: Good morning. I want to welcome everyone to Aligo's first quarter 2023 earnings call. Today's speakers are Matthew Bonet, Chief Executive Officer, and Tom Lowers, 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 factors referenced in today's press release and the risk factors and other disclosures in the company's filings with the Security 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. except as may be required by law. 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 provide useful information to management and investors regarding certain financial and business trends related to our financial condition and results of operations. We believe that the use of these non-IFRS financial measures provides an additional tool for investors to use in evaluating projected operating results, and trends in comparing our financial measures with other similar companies, many of which present similar non-IFRS financial measures to investors. The presentation on 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 as issued by the IASB. 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 Mathieu Bonnet, CEO.
spk05: Thank you, Faris. Good morning, everyone, and welcome to our first quarter 2023 earnings call. I will begin today with a brief overview of our results. followed by an update on some recent milestones before turning the call over to Tom Lowers, our CFO, for a closer look at the numbers. I am very pleased with our first quarter 2023 results, which reflected strong demand for our charging network that has nearly tripled our charging revenue year over year. We reported 38.8 million euros in revenue, a 27.4% increase compared to the prior year period of 30.5 million euros. Our charging revenue increased 166.7% to 27.8 million euros, while our services revenue decreased 45.4% to 10.9 million euros. The decline in service revenue was anticipated as we focus on our core charging business. The decrease was driven by the lower revenue from the CAFO project in line with expectations. The ongoing recurring phasing of this project weights the revenue towards the second half of 2023. Meanwhile, new services contracts are starting that will kick in revenue later on this year. Very importantly, our charging revenue was strong, which comes from a much higher utilization rate a growth of the energy sold with a strong stream of new ultra-fast chargers being installed during the last 12 months and a robust charging price that demonstrates our pricing power. We saw growth across all our key metrics. First quarter 2023 total charging sessions rose to 2.6 million, an increase of nearly 23%, The first quarter 2023 utilization rate of 13.1% compared to 7.7% and first quarter 2023 total energy sold climbing by almost 54% to 49.4 gigawatt hours. This is all in comparison to the prior year period. The energy sold represents 247 million of kilometers driven And because we are supplying green electricity to our charters, the use of our charters avoided the release of 39,000 tons of CO2. Our first quarter 2023 operational EBITDA was 8.9 million euros compared to 1.5 million euros in the prior year period. The increase was due in part to three price hikes through 2022 in January, September and October. None of the price increases, however, triggered a decrease in utilization rate or energy sold, demonstrating our strong pricing power. These measures, linked with a lower cost of energy during the quarter, led to a strong recovery of our gross margin in charging revenue, especially for our ultra-fast charging. In the early months of 2023, we successfully finalized three additional PPS contracts with renewable assets in Germany and the Netherlands. Each of these agreements span a duration of 10 years. At this point, we have already secured a total energy supply of over 160 gigawatt hours for 2023 and 2024. Notably, these contracts were secured at highly favorable fixed price, enhancing the overall attractiveness and margin of our energy procurement strategy. Our significant progress towards covering 80% of our energy requirements with renewable sources by the end of 2023 underlines our commitment to sustainable practices and reinforces our position as a leader in the adoption of clean and environmentally friendly energy solutions. With this strategy in place, we believe that we are now well equipped to face the potential volatility of energy prices for our charging business line going forward. Our strategy is to focus our charging business on our own network. It is anticipated to become more and more important in our revenue mix compared with services and provide margin stability and growth going forward. Now, turning to some commercial developments during the first quarter of 2023, I would like to highlight the following one. The portal deal in Germany that has been executed, which represents 1500 fast and ultra-fast charging points, which is an increase of the global capacity in Germany for fast and ultra-fast charging by more than 10%. It is the largest development contract signed by Aligot to date. Looking at our growth ahead, our backlog continues to expand meaningfully as a result of higher demand for electric vehicle charging, and our size and scale create additional momentum for our partners. We had a secured backlog of more than 1,300 sites at the end of March 2023. All of 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. Our growth will reach out to the majority of the European people in the near future. As Don will highlight, we are reiterating our outlook for 2023. We expect annual revenue in the range of 180 to 220 million euros and annual 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, robust utilization rates and additional site deployments all over Europe focused on fast and ultra-fast charging. Utilization rates with the early parts of 2023 have been solid and we expect that trend to continue. From a margin standpoint, the action we took throughout last year and so far in 2023, including the price management of our station, the managed energy input price through our PPAs and rigorous management and optimization of our resources should continue to benefit Adego in 2023 and drive margin and operational EBITDA growth. Before turning the call over to Don, I want to emphasize our unwavering confidence in our business strategy, which is bolstered by a favorable demand environment aligned with our model. Public ultra-fast charging will be again critical to provide the necessary energy to power the 20 times growth from now that is expected in the number of electric vehicles in 2035. With that, I will turn it over to Don for an overview of our financials. Don?
spk03: Thanks, Mathieu, and welcome, everyone. I will begin by summarizing our financial results for first quarter ended March 31st, 2023, followed by a review of our balance sheet, cash flow metrics, and capital structure, before closing with our guidance for full year 2023. starting with a brief summary of our first quarter 2023 results. Total revenue for the first quarter of 2023 was up 27.4% to 38.8 million euro compared to 30.5 million euro in the first quarter of 2022. The improvement was driven by strong growth in charging revenue. Charging revenue grew 166.7% to 27.8 million euro with charging sessions climbing 34.5% to 2.6 million from 2.1 million. In addition, we benefited from the price hikes that we implemented in 2022 to offset higher input costs. Services revenue decreased 45.4% to 10.9 million euro, compared to 20 million euro for the first three months ended March 31st, 2022. Lower services revenue was largely on account of an anticipated decrease in revenue on the CAFU project. First quarter operational EBITDA was 8.9 million euro compared to 1.5 million euro for the three months ended March 31st, 2022. The improvement was due to a combination of expanding operating leverage and the three price hikes in 2022. Gross profit for first quarter 23 was 13.4 million, up 190.9% from 4.6 million euro in the first quarter 2022. Gross profit was positively impacted by our pricing actions, the first PPA being put into force, and the sale of carbon credits. General and administrative expenses were 19 million euro in 2022 versus 244.4 million in the first quarter of 2022. The improvement in these expenses was mainly on the account of lower share-based payment expenses of 227.5 million euro. Moving to finance income. The first quarter 2022 finance costs were €8 million compared to finance costs of €117.9 million in the year-ago period. The change was mainly as a result of the recognition of €115.5 million of mark-to-market adjustment income from the warrant liability in the first quarter of 2022. Net loss for the first three months and in March to the first 23 was 13.2 million compared to 351 million during the first quarter of 2022. The reduction in net loss was due to lower stock-based payment expenses of 227.5 and the drop in finance cost as described. First quarter 2023 operational EBITDA was 8.9 million euro, up from 1.5 million euro in the prior year period. The significant climb in operational EBITDA was largely driven by the three price hikes we implemented in 2022, which led to stronger gross margins in charging revenue, especially for our ultra-fast charging in the first quarter of 2023. Moving to our key balance sheet figures and the main movements. PP&E for the first quarter of 2023 was 140.4 million compared to 134.7 million euro a year ago, following the first investments made in the European HBC network. Our cash and cash equivalents as of March 31st, 2023 were 27.9 million, reflecting investments made in our HBC network as well as normalized working capital requirements. Furthermore, we experienced some delayed invoicing at the end of 2022 and beginning of 2023 due to a change in VAT regulations in Europe. This called an incremental increase in receivable and has begun to abate. We continue to maintain ample liquidity through our cash on the balance sheet, approximately 100 million remaining on our credit facility and improving funds from operations over the next 15 to 18 months. We had a secure backlog of 1,117 sites at the end of March 23. All of 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 translate into growth of more than 90% from December 2021. Moving to our guidance. We are reaffirming our 2023 expectations of generating revenue between 180 and 220 million euro and operational EBITDA between 30 and 40 million euro. Total energy sold is anticipated to be between 215 and 225 gigawatt hours for the full year. We expect services revenue growth to be driven by the Carrefour project, which should be running at scale in the second half of 2023. Charging revenue is also anticipated to grow further as we expand our network and the transformation of Europe's EV charging infrastructure continues apace. I want to briefly remind everyone of the role that PPAs play in our overall strategy before turning to margins. We have signed three long-term PPAs with leading independent power producers to supply renewable and reliable energy for 10 years at lower and fixed costs. These PPAs are effective beginning January 1, 2023. Such agreements are key to our cost optimization strategy because they help mitigate volatility across our most significant input cost, the cost of electricity, by locking in a low price for 10 years, thereby stabilizing our overall long-term input cost base. We expect to sign additional PPAs to cover more than 80% of our operations by the end of this year. In terms of margins, we believe there is a significant upside potential. Our gross margin improved meaningfully during the first quarter of 2023 as we realized the full impact of the price hikes throughout last year. In 2023, we anticipate gross margin to improve beyond current levels as we benefit from the combined impact of both 2023 price increases, the lower input cost base from the PBAs, the shift in the revenue mix towards services, and the operation of the CAFU project at scale. Among other things, our guidance assumes that energy prices are expected to remain high and or around current levels for the foreseeable future and excludes the impact of any potential future sites, assets, and acquisitions. With that, I'd like to hand back to Mathieu.
spk05: Thank you, Tony. In conclusion, I am delighted with the progress we have made in the first quarter of 2023. Our positive momentum is strong, and we are laser-focused on our strategy to roll out our long-term plan with public ultra-fast charging. Our pipeline contains an impressive array of fast and ultra-fast chargers, ensuring revenue visibility not only for this year, but also for the years ahead. Our technological superiority and extensive network, coupled with our reliable service, have played a critical role in establishing a loyal customer base. In line with our growth plan, we have made significant strides in realigning our cost base to mitigate the impact of commodity price fluctuation. The recurring high gross margin profile of our charging business affirms our pricing power, which will continue to drive our success and profitability in the future. Moreover, we are confident that the current high demand for electric vehicles in Europe will persist, propelling the acceleration of the e-mobility revolution. Lastly, I would like to express my gratitude to all the members of our Allegro team for their unwavering commitment and dedication to the company. Their efforts have been instrumental in our success so far. With that, operator, we are ready for questions.
spk04: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Thank you, and our first question is coming from the line of Matt Somerville with DA Davidson. Please proceed with your question.
spk02: Thanks. A couple of questions. First, just one point of clarification. Tan, you referenced 1,117 sites in secured backlog, I believe. Mathieu referenced 1,300. What's the difference there? Because they're both mentioned differently in the press release, and I just want to make sure I understand how you're characterizing that.
spk05: Yes, sure, Matt. So the 1300 was the backlog at the end of March 2023. And the one in the deck and the tone expresses is the one at April. We have begun a big rollout of these sites. And so that's why there is the difference. So all these sites are not finished yet, by the way, but the construction has begun.
spk02: and uh in may where we have a new new figures of course but we had the decade at least and that the figures of tom gave us uh it is end of february if we think about your guidance for the year you did nine million in ebitda in q1 obviously you're already annualizing you know towards the midpoint of that guidance range How should we be thinking about the seasonal cadence? And do you see EBITDA headwinds from here relative to how you perform in Q1 in the context of your guidance?
spk03: Okay, you're breaking up a bit, Matt, but I think I got the question. So the seasonality here, if you look at the charging revenue, it's pretty straight line. It will increase over time, of course, because of the... extension of the network um it's the sales and service part that is um let's say a bit more skewed toward h2 than it is to uh to h1 so um you know but the i think the the nine million that we see today um in the uh in the first quarter is i think a good good representation what we think it will look like every quarter quite frankly because we see that actually predominantly charging revenue is already, let's say, making up for all of the SCNA, et cetera. So that's, I think, what we always discuss, that we want to reach that point quickly. And depending on the development of the Carrefour project in particular, and maybe one or two that we will add this year, you'll see an upside potential, let me put it like that. But for now, we think it's pretty evenly skewed over the year with a bit more weight in H2.
spk00: Understood. Thank you, guys. Thank you.
spk04: As a reminder to ask a question today, you may press star one. Our next question is from the line of Doug Becker with Capital One. Please proceed with your questions.
spk06: Thank you. I was hoping to go into some more detail about the expectations for utilization. Dipped a little bit in the first quarter, but I assume that's largely seasonal. And particularly thinking about the second quarter in light of the lower public charging port count that we saw this quarter.
spk05: Yeah, so we expect to have for this quarter, second quarter of the year, utilization rate around the same level as the Q1 because it's an average and we are increasing the number of chargers. So, of course, the last charging station opened. they need to be known and as well, their utilization rate is lower. So on average, that's the reason why we may end up at the same level as Q1. But it means as well that some oldest and the older stations are growing. And that's, I think, very important for us and interesting, meaning that we are offering more charging stations per station along the way. And it comes from, of course, the number of cars that is higher on a quarterly basis, but as well because we are based on premium sites, which attracts EV drivers.
spk06: That makes sense. I wanted to understand the public charging ports declined 1Q versus 4Q. I guess your point is it's going to be increasing in the second quarter.
spk05: Yeah, actually, what happened is that we have, you know, when you look at the figures and we are really focusing on ultra-fast chargers, we are increasing the number of public ultra-fasts, the own one, and that's important to specify. And so we see that we are increasing our stocks uh in q1 and we are going to increase more again in q2 and the years and in the next quarter of this year and when you look at our figures in the release in the ultra fast own public chargers we were at the end of april at 938 whereas at the end of march we were at 896 meaning that, yes, we are increasing. And if I compare with end of year 2022, we were, to be precise, at 749. So we're getting momentum. And that's the reason why we said that during the presentation, we are installing more and more ultra-fast chargers. That is really our core focus. And again, that's the reason why with this new charging station and these new chargers, they need to have a kind of... in order to catch up with the average utilization rate.
spk06: Got it. And then a housekeeping question, just a little more color on what's included in the business optimization costs that are added back to the operational EBITDA. That was around 18 million euros last quarter, down to around 2 million euros this quarter. Really just trying to think about what's included and what to expect going forward.
spk03: Yeah, so I think what you can expect going forward is that it will get less and less. I mean, the two main elements here is the final bit of some support that we got internally to be able to cope with the compliance side, especially on the financial reporting side, so IFRS specificities, et cetera. the decrease in our D&O liability insurance that we also announced actually for our 22s. So that's 1.4 out of the two. There are some smaller bits and pieces in there. I'm happy that if we even were to take or to include that, we would still have a positive EBITDA, right? So it's going absolutely into the proper direction. And going forward, you will see this getting less and less and ultimately probably disappearing. Perfect.
spk05: Thank you very much. Maybe just to add on this, if you take the operation in EBITDA and you detect the interest on our debt and the cash from tax, we are positive. And that's kind of my son as well for this quarter.
spk00: Thank you.
spk04: Thank you. At this time, we've reached the end of our question and answer session. I'll turn the floor back to management for closing remarks.
spk05: Thank you. For this presentation, I would like to, first of all, to stress and highlight the fact that we are increasing now, and we are fully on our plan to roll out our ultra-fast chargers, and you have seen that with these figures. And I do think that we have reached a very important milestone as well in terms of operational EBITDA within nearly 9 million euros. And the way forward, we consider that it will be a good level for the year. And it means that we have a strong, and you see that in utilization rate, we have a strong usage of our chargers because of the quality of our site and because, as well, we are able to give the drivers the right services in order for them to charge. So I think that's the way forward, and here we are reaching some big milestones for the company. With that, I thank you very much for your questions.
spk04: Thank you. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation.
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