Allego N.V.

Greetings. Welcome to a Lego first half 2023 earnings 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 the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Rachel Richardson, Director of Investor Relations and Corporate Communications. Thank you. You may begin.

Good morning. I want to welcome everyone to ALEGO's earnings call for the six months end of June 30th, 2023. Today's speakers are Mathieu Bonnet, Chief Executive Officer, and Tom Lowers, Chief Financial Officer. During today's call, we may make certain forward-looking statements with 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 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, except as may be required by law. During our call today, we may 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 relating to our financial conditions 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 and in comparing our financial measures with other similar companies, many of which present similar non-IFRS financial measures to investors. 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, 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. And now I'll turn the call over to Mathieu Bonnet, CEO.

Thank you, Rachel. Good morning, everyone, and welcome to our earnings call for the first half of 2023. I will begin with a brief overview of our results, followed by an update on some recent milestones before turning the call over to Don for a closer look at the numbers. In the first half of 2023, our total revenue increased by 34.5% to 68.2 million euros compared to 50.7 million euros in the same period of 2022, driven by strong charging revenue growth in Q2. Charging revenue more than doubled to 51.1 million euros compared to 24 million euros during the same period, 2022, due to robust prices from the hikes we implemented in 2022, which remain in place through Q2. Utilization rates that grew 51% from H1 2022 to H1 2023, and a 17.2% jump in the global number of charging stations to 5.2 million euros from 4.4 million in the prior year period. Consequently, our charging revenue grew substantially with an increase of more than 112% as a result of the uptick in energy sold. Our strategy to shift from sales and services revenue to charging revenue is in full swing, even though due to seasonality, we see usually lower sales and services revenue in first half year compared with second half year. Sales and services revenue declined to 17.1 million euros from 26.7 million euros during the first half of 2023. The decrease in services revenue was primarily the result of the expected slower deployment of stations for the Carrefour project in Q2 and the later pickup of new contracts in the second half of the year and mainly in Q4 2023. As such, I want to spend a minute discussing our utilization rates. The period is characterized by a steep increase in the number of our ultra-fast charging ports as it is our main strategy focus. We grew this number by more than 42% in the first half of 2023 and by 20% in the last quarter. The new charging stations have a ramp up in terms of utilization compared with more mature stations. As more drivers familiarize themselves with the new locations, we see that the rates steadily climb. But even with this delayed stabilization effect, our global utilization rate has increased sharply compared with the same period in 2022, which highlights the premium sites location selection process of our Alamode technology. In order to better explain dynamics in place, we will be providing utilization rates for both new and mature chargers going forward. Through the first half of 2023, our mature charging network utilization rate was 13.4% for ultra-fast charging ports installed before January 2023, while our new ultra-fast charging ports installed in H1 2023 had a utilization rate of 8.9%. Overall, we saw growth across all our key metrics. First half 2023, total energy sold climbed to more than 96.4 gigawatt hours, and total charging stations amounted again to 5.2 million at the end of the period, an increase of 17.2%. Our operational EBITDA was a gain of 11.7 million euros for H1 2023 compared to the prior year period loss of minus 1.5 million euros, showing the strong increase in our charging revenue margin that stems from strong management of our inputs costs and the kick-in effect of our Power Purchase Agreement PPA contracts during the period. During the first half of 2023, The net loss was minus 38.9 million euros compared to the prior year period of 247.1 million euros. Looking at these results, I am pleased with our performance through the first half of 2023. We are rapidly expanding our ultra-fast charging network with growing energy sold while minimizing input cost volatility through our execution of PPAs. The results of these measures are reflected in our solid gross profit and operational EBITDA performance. We have made remarkable strides in moving towards our goal of fulfilling 80% of our energy needs through renewable sources PPAs by the end of 2023. This achievement underscores our unwavering dedication to sustainable practices and solidifies our position as a pioneer in adopting clean and eco-friendly energy solutions. With this robust strategy in place, we believe we have the flexibility to deal with potential energy price fluctuations within our charging business line. We have sharply increased our number of chargers, which contributes to a growing share of our charging revenue, and this trend will continue in the next quarters. We are fully committed to equip our backlog sites with a higher installation rate. Now, turning to some of the commercial developments during the second quarter of 2023, I would like to highlight, most recently, Aligo and Oil Tank & Go have joined forces in Denmark, establishing the first collaboration of this kind between a gas station brand and an external charging provider to introduce a network of ultra-fast charging infrastructure in the country. ALEGO is developing the first 14 sites that are expected to be operational in Q1 2024, with the potential to install in all 80 stations in Denmark. In June, we announced a long-term agreement to sell compliance credits due to tickets generated via our public charging stations in Germany to ESO-Dutchland. The agreement has been signed through the end of 2028 and has a potential total value of up to 185 million euros. With this contract, we secure complementary revenue from our charging activity in Germany as each kilowatt hour is remunerated through this contract at a fixed price. It will significantly increase our margin of charging activity going forward. We have signed, for instance, a partnership in France as well with real estate owner Partidis to equip more than 40 locations with ultra-fast chargers, which will significantly grow our footprint in the country. In all our 16 countries of operations, we see substantial commercial activity with signed contracts and backlog of 1,350 sites at the end of H1 2023. As Tom will discuss in more detail, we are refining our outlook for 2023. We expect annual revenue in the range of €180 million to €200 million. We are maintaining our operationally bidder range as our charging revenue margin has increased, and we are maintaining our green energy sold. From a top-line perspective, we will continue to benefit from the booming market in Europe for EVs, robust utilization rates, and additional site deployments all over Europe with a focus on fast and ultra-fast charging. Utilization rates through the first half of 2023 have been solid, and we expect that trend to continue. Before handing over to Tom, I would like to highlight that we are in a position of strength as we benefit from our business strategy of recurring usage and the buildup of our own public ultra-fast charging network. Public contrafast charging will continue to play a pivotal role, and even more so, in supplying the required energy to sustain the projected 20-fold growth in the number of EVs by 2035. With that, I will turn it over to Tom for an overview of our financials.