Wallbox N.V.

Hello everyone and welcome to the WowBox's second quarter 2022 earnings conference call and webcast. My name is Victoria and I will be your operator for today's call. At this time, all participants' lines have been placed in listen-only mode to prevent any background noise. After a speaker's remarks, there will be a question and answer session. Analysts who wish to ask a question can place themselves into the queue by pressing star 1. I would now like to turn the call over to Matt Trachtenberg, Wallbox's Vice President of Investor Relations. Matt, please go ahead.

Thank you, Victoria, and good morning and good afternoon to everyone listening in. Thank you for joining today's webcast to discuss Wallbox's second quarter 2022 results. This event is being broadcasted over the web and can be accessed from the investor section of our website at investors.wallbox.com. I'm joined today by Enrique Asuncion, Wallbox's CEO, Geordie Lyons, our CFO, as well as Douglas Alfaro, General Manager of Wallbox North America. Earlier today, we issued our press release announcing results from the second quarter 2022, period ending June 30th, 2022, which can also be found on our website. Before we begin, I'd like to remind everyone that certain statements made on today's call are forward-looking. that may be subject to risks and uncertainties relating to future events and or the future financial performance of the company. Actual results could differ materially from those anticipated. The risk factors that may affect results are detailed in the company's most recent public filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20F for the year ended December 31, 2021. which can be found on our website at investors.wallbox.com and on the SEC website at www.sdc.gov. We will be presenting unaudited financial statements in IFRS format that reflect management's best assessment of actual results. Also, please note that we will use certain non-IFRS financial measures on this call, and reconciliations of these measures are included in the presentation posted on the investor section of our website. Also, a copy of these prepared remarks can be obtained from the Industrial Relations website under the Quarterly Results section, so you can more easily follow along with us today. So, with that out of the way, I'll turn it over to Enrique.

Thank you, Matt, and thanks, everyone, for joining us today. In addition to reviewing highlights from the second quarter of 2022, I will also share some updates on a new partnership two acquisitions we just recently completed, and provide you with a view of the market. Douglas is joining us today to offer some insight into our North American business, the new manufacturing facility, the NEVI program, and the recently announced Inflation Reduction Act, or IRA, and what it all means for us. We will then turn the call over to Jordi, who will provide a more detailed review of our financial results. Before I return to communicate our guidance for the third quarter of 2022, we will end by taking questions from our covering research analysts. The second quarter played out as we expected, with strength across regions and technologies. Despite that complicated geopolitical backdrop and continued global supply chain disruptions, Wallbox continues to perform exceptionally well and again exceeded expectations in the second quarter of 2022. I'm proud to share our record results, which highlight our continued commitment to executing our business plan. I want to thank our team for their hard work in helping to deliver on our commitments to investors, partners, and customers. It was a very busy quarter for us, producing solid results. Revenue growth was 124% on a year-over-year basis, and we are pleased with our growth margin of 41.1%. We forged new exciting partnerships, including one in the U.S. with Nissan. For this, Wolf will offer a complete solution to buyers of the new Nissan EV area. A beautiful new SUV hitting the market soon. We see this as a proof of the trust and confidence we deal with global leading brands like Nissan, and we look forward to a successful launch. We also acquired two very effective but very different companies, Coil and Ares Electronics. They are great examples of opportunities we see that can expand our offering, addressable market, and capabilities, and which can ultimately deliver value for shareholders and customers. Turning to the financial results, first quarter revenue of €39.5 million was up 124% year over year. That standing performance was fueled by growth strength across much of Europe, with notable growth in Spain, the Netherlands, and Belgium, all at approximately 400%, and Sweden and France both exceeding 200% on a year-over-year basis. North America, which now includes sales in Canada and Mexico, grew by almost 500% over the prior year period. We are making great progress in Asia-Pacific, with Australia and New Zealand growing year-over-year by 300% and 600%, respectively. LATAM, while early in its transition, continues to show promise, and we expect it to be an effective source of growth for World Ops in the coming years. Consolidated growth margin in the quarter was 41.1%, driven by continued cost control on key components, even in the face of global shortages. We continue to navigate the supply shortage of critical items better than most, and we continue to re-engineer products and establish strategic purchasing agreements for critical components. And finally, we sold almost 64,000 chargers in the quarter, with 77% in Europe, 16% in the U.S., 5% in APAC, and 2% in Latin. Notable share gains continue to occur in Southern Europe, Sweden, and the U.S., with new markets like Australia and New Zealand ramping up nicely. Today, we are experiencing a unique market dynamic. The demand for EVs is stronger than most imagined. At the same time, EV manufacturers are struggling to keep up. Capacity constraints and company shortages are resulting in longer lead times and lower EV delivery volumes than industry services expected. Often, buyers are quoted six to 12-month delivery dates. And while I'm encouraged by the amount of investment made in expanding that capacity in 2023 and beyond, there is little that can be done in the short term. However, even in the face of this imbalance, we've been able to achieve our sales and growth margin targets. We see these market share gains as a result of our agile manufacturing model, brand reputation, and strong focus on meeting customer needs. For example, in the first quarter of 2022, European EV deliveries grew by 24% year over year. In the same period, we sold 155% more units compared to Q1 of 2021. Similarly, in the most recent quarter, even though European e-deliveries declined by 2%, we sold 70% more units than Q2 of 2021. Our business model and brand reputation are helping drive our ability to make shares, and these share gains enable us to meet our commitments to investors. Build, buy, partner. Three methods of growing your business. Wallbox builds exceptional products. That is something that you likely know. We also consider ourselves adept at identifying and acquiring attractive companies. I'll talk more about this in a minute, but partnering, that's probably where most companies fall short. It's hard to do well, but we work very hard at establishing the right ones and being a good partner. When we first enter a market, the fastest path to the customer is direct, retail. But it's done through sites like Amazon.com, Walmart.com, Best Buy, Lowe's, Walmart, and Napa Auto Parts. You can see the success we had here. While delivering products to the first channel, we are investing in developing the second channel, which consists of distributors, contractors, and installers. This channel is something we spoke to you last quarter about our strategy here and how valuable this is for Walvox. The agreement with City Electric is one great example, and ZVEA Solar, the solar solution provider for IKEA, is another. ZVEA now includes Walvox chargers in their solution seen on the IKEA showroom floor. That is part of their holistic approach to energy management, and it's a passion we strongly share. Those types of relationships take time to cultivate and formalize. So it's our second path to the customer. And while you are servicing those channels and investing in their success, you are speaking with large, often global OEMs and utilities. Partnerships are often the decent method here. And a great example is what we announced with Nissan in June. Nissan has been a leader in the AV space from the beginning. The Nissan Leaf is one of the best-selling EVs on the market, and they've assembled an impressive list of new and exciting vehicles to come. Their new SUV, named Aria, is expected to be in high demand, and we are proud to be included in the launch. Buyers are directed to a program that website that allows them to select a charger and schedule an installation, all at a reduced price. We chose WarWalks because of our commitment to high-quality hardware and innovative software features, as well as outstanding customer support. And what's more is that the installation services are facilitated by COI. Our recent partnership with EVF is another great example. They are one of the world's largest utilities with more than 5.5 million customers and have recently launched a new platform servicing homes and small businesses that include sales and installation of EV charging infrastructure called EV. Through the platform, EVF customers can choose a Volvo charger and schedule installation all from EVF's new website. These are only a few of many partnerships we put in place, and there's more to come. We have ongoing conversations with most household names around the world. I look forward to sharing more with you as we make our way through the year. As we look out over the need to long-term, we expect Wallbox to continue its evolution into a holistic provider of energy management, hardware, and software. Some of that will be done organically. Quasar, for example, is designed to enable consumers to more efficiently manage their energy consumption and put energy stored in their EVs back into the grid when needed. However, some of this journey can be accelerated through the application of innovative technology or talented people. We expect there will be consolidation in the charging market, and we intend to closely watch for opportunities that align with our strategic plan while allowing us to create shareholder value. The two transactions, basically closed, align very closely with our strategy and bring clear commercial and operating synergies to Wallbox. The consideration for both transactions was made largely in Wallbox stock, which highlights their trust in the long-term vision of the company. Financial impact in the short term is relatively benign. Coil is a fast-growing provider of installation services within the energy management space. and they expand our addressable market into a large and growing segment. They've been a key part to market for Wallbox, and now they are part of the family. Installation and solution sales are an important element to the comprehensive solution, especially within semi-public and public settings. Installers are often the face of the brand, and the expertise and relationships Coil brings to Wallbox will help strengthen our competitive offering. In return, The investment and scale we can offer COIL is expected to open new opportunities and business models that will benefit everyone. The commercial synergies here are compelling, and we believe the purchase price allows for significant value creation over the mid and long term. Remember that the total purchase price of a charger and installation is often multiples of the hardware price alone. And when you account for an addressable market that is of equal size to that of hardware, the value of this business combination is extremely compelling. We will share more details on how we expect to benefit as we look into 2023. RF Electronics designs and assembles innovative printed circuit boards, or PCBs, for technology companies, including Wallbox. We've been their largest customer, and we are excited to bring these capabilities in-house. We are excited about this for two reasons. First, it will put us in a good position to help ensure a consistent supply of high-quality components that are critical to winning orders in today's market. And second, it allows us to be closer to the point of innovation, further differentiating our product by designing unique components and innovative features. We will not anticipate a material revenue impact from this transaction. but we do expect cost synergies that will be realized given the expected scale of our business in the coming years. This transaction is a great example of ways to improve or accelerate our path to profitability. Ares has both attracted broad margins and generated positive EBITDA. We have a payback period of less than two years. I'm looking forward to seeing the impact they will have. The last topic is one that Douglas is going to speak on. and that's the current state of the North American market, our position there, and the subsidy programs currently being discussed. Barlas, I'll hand it to you.

Thanks, Henrique. Happy to join everyone today to talk about exciting things happening for Wallbox in North America. We've been really busy building the local leadership team and putting in place the systems, infrastructure, and relationships needed to be a leader in this market. We've been moving fast and delivering results from key activities like activating the warehouses to get our products out faster to our growing list of customers, building an exceptional team of now over 100 employees across the U.S., and making strong progress toward the opening of our new factory in Arlington, Texas, next month. Finally, we're further deepening and expanding on key and highly visible partnerships with leading names like Uber, Napa Auto Parts, City Electric Supply, and especially Nissan, which we're really excited about. It's incredible to think that Wallbox entered the U.S. market in just February of last year, and today we're already a major player. Our strategy of providing high quality and innovative products for the home has really resonated with customers. The ease of installation and setup of our chargers has proven valuable to our network of distributors and installers, and we keep on delivering new features, capabilities, and products that continue to serve our customers' growing demand for EV charging. While we've seen a lot of momentum for EVs in the US in the first half of this year, the US market has historically had slower rates of EV adoption compared to Europe and parts of Asia. This picture, however, is quickly changing. For example, the NEVI program, which came out of the bipartisan infrastructure law last year, has allocated $7.5 billion over five years to improve the charging infrastructure in the U.S. It requires that states install and operate DC fast charging stations every 50 miles along highways across the country. The $5 billion formula program will be allocated and administered directly by individual states. An additional $2.5 billion discretionary program with more ample reach in terms of charging technologies will also be introduced with more details to come later this year. For the formula program, the federal government has released technical guidance that calls for what are called minimum technology standards, and Wallbox is already engaged and providing comments as they finalize these requirements. The requirements as drafted include four chargers per site, with each charger needing to charge to at least 150 kilowatts of power. This aligns perfectly with Wallbox's introduction of Hypernova to the U.S. market. Additional guidelines include requirements around uptime and reliability, open payment systems, and, of course, the location of manufacturing and materials to be used in the equipment. With respect to the NEVI program timeline, states have already submitted their plans by the August 1st deadline, and the federal government will review and approve these goals from now through September 30th. We anticipate most state programs to begin launching in 2023, with additional opportunities for public engagement ahead of those RFP announcements. Wallbox is already engaging with key priority states based on their funding allocation, EV market penetration, and other funding opportunities to position Wallbox as a leading provider of NEVI-compliant EV chargers ahead of program implementation. We believe that the largest opportunity over the long term will be in the 150-kilowatt to 400-kilowatt range, which aligns with the NEVI program and also Wallbox's HyperDOVA DC charger. While most electric cars on the road today don't benefit from the maximum power available in this range, we're already seeing vehicles with higher power charging capabilities hit the road who'd be looking to benefit from faster charging than what's being installed today. For this reason, we prioritize the development, certification, and production of Hypernova. This ensures we're set up for success over the long term. In addition, our new capabilities through COIL allow for the installation of different configurations and types of qualifying infrastructure, which puts us in a great position to win business. Investing in the right technologies for the long-term viability of business is key, and our goal is to be a leader in the ultra-fast public charging space in the coming years. The other piece of legislation getting attention is the Inflation Reduction Act of 2022. This was just passed through the Senate over the weekend and is expected to pass under the reconciliation process next week. The Inflation Reduction Act is a massive package that includes $379 billion in climate investments and represents the United States' largest single investment in this area in history. The package includes both consumer and corporate incentives and loans with the aim of reducing emissions by 40% by 2030. The main mechanisms for the incentives are tax credits and loans. There are a few key elements of this bill that will benefit Wolbach both directly and indirectly. First, consumer tax credits known as 30D for the purchase of EVs are expected to be extended and renewed. $7,500 will be offered to buyers of new EVs, and most importantly, $4,000 will be offered to buyers of used EVs. The language also removes the manufacturing cap, leading to more vehicles, including Tesla, being eligible for the tax credit. Ultimately, this accelerates adoption of our products by creating additional demand for home and public charging. It's worth pointing out that the used EV rebate is the first of its kind from the federal government, creating additional accessibility in the growing secondhand EV market and also helping to fill in the near-term production capacity constraints that many automakers have today. Second, the 30-fee EV infrastructure tax credit has been extended and dramatically expanded from 30% or $30,000 per site to now 30% or $100,000 per charger installed. The package also now qualifies bidirectional charging equipment as eligible, a unique area of leadership for Wallbox. I'd like to highlight that the individual tax credit of 30% of the cost up to $1,000 toward a home charger plus installation is also expected to be extended as it's been expired since the end of last year. again with the addition of coil we're very well positioned to benefit here as well since installation costs are an important component to maximize the value of the incentives toward businesses and customers the expansion of these credits could bring a new sustained demand for charging hardware that wallbox is well positioned to deliver another area of incentives to mention is the extension of the 45w tax credit for commercial vehicle purposes ranging from $7,500 all the way up to $40,000, this incentive will help expedite the electrification of commercial fleets and will ultimately benefit Wallbox through additional commercial opportunities to provide EV charging, insulation, and energy management services to fleet partners. It's important to note that these changes have been extended until 2032, providing a steady stream of federal incentives over the next 10 years. The size and scale of this proposal is viewed as many as the most ambitious and impactful infrastructure program in the last 70 years. We're in a great position to participate, and we're focusing now on bringing new products and services to the market as quickly as possible. The final subject I want to provide an update on is our new factory in Arlington, Texas. You've heard us mention it a few times so far, and I'm excited to share that it's on track and looking great. The production lines are being installed, raw materials are in stock and in place, and employees are easily moving in to work directly from within the facility. We continue to hire and train production team members and supply chain agreements are being finalized to prepare for an aggressive ramp up to meet upcoming demand. We'll have a formal celebration when the time is right, so stay tuned for that news. Bringing this capacity online is important given all the opportunities we've discussed today. I'm encouraged by the progress we've made and look forward to even more of what's to come. Jordi, I'll turn it over to you for comments on our financial details.

Thank you, Douglas. Good morning and good afternoon to everyone. Before I reveal the financials, I'd like to point out that the full set of annual audited financial results can be found in our 20th. As a reminder, our intention is to provide you with key and updated financial and operational measures as we make our way through the year, so you can remain informed of our progress. Also, note that neither Ares nor COIL are included in our second quarter results. Like Enric, I'm very pleased with our record quarterly results and the acquisitions we've been able to close. Our revenues, gross margins, number of units sold, geographic footprint, and headcount highlight the scalability of the business model and the strength of the EV market. For the second quarter of 2022, revenue was €39.5 million, a 124% increase from the year-ago period, driven by strength across all regions and products. Now, let me share with you some key highlights that allowed us to perform so well in the quarter. First, our regional mix, now with more than 100 countries, continues to improve upon the benefit of geographic diversification. Europe now represents 81% of our revenue mix, down from 89% last year. North America accounts for 13%, up from 7% in the prior year period. And Asia-Pacific is 2 percentage points higher than last year, now at 5%. We expect these new strengths to continue as stronger growth in newer geographies shapes our global footprint. Second, loss margins continue to be resilient in the face of continuous component shortage, and 41.1% is something we're very proud of. For most of our products, we've been able to navigate these supply challenges quite well. This consistency is something investors have come to expect from Woolbox, and we work very hard to deliver results that meet and, when we can, exceed expectations. We are building a company that is delivering results in a time of hyper-growth and expansion. Balancing the capital needs of the numerous opportunities we see in an uncertain economic climate requires us to remain disciplined and focused on executing our strategic plan. I am proud of the team and their commitment to delivering consistent and strong growth margins. Adjusted the loss for the quarter was 15.6 million euros, relatively flat on a sequential basis. Our balance sheet remains strong, with 127 million euros of cash and equivalents available, which really is enough for us to fund operations until positive cash flow. We ended the quarter with 23.3 million euros of long-term debt. As of June 30th, there were more than 1,100 Goldbox employees around the world. We intend to strategically add talent in areas that fuel our growth and remain disciplined in cost control actions. With that, I will now turn it back to Enric to provide you with some commentary around Q3 and the full year.

Thanks, Jordi. As I stated earlier, EV deliveries continue to fall well short of EV orders. In the long term, I'm not overly concerned by this. In the near term, it may have slight impact on the timing of our sales. There are numerous positive trends that we are benefiting from, and often in an industry that experiences growth of this magnitude, manufacturing expansion comes in feet and stars. We understand the capacity constraints are within the scope of normal growing pains, and we'll continue to take share where we can, manage our supply chain, and acquire attractive businesses that expand our opportunities and capabilities. Given what we see and have discussed here today, we expect consolidated revenues in the third quarter of between 44 and 49 million euros, or growth of approximately 140 to 170% year over year. we also expect growth margin of approximately 40% in the third quarter, in line with our full year expectations. For the full year 2022, we expect revenue of between 175 and 195 billion euros, representing an annual growth rate of between 145 and 170%. I want to leave you with a few key thoughts. First, We are confident in our ability to execute our business plan and meet our commitments to investors, customers, and partners. Achieving consistent results, including revenue growth and growth margin, is key to our philosophy and long-term success. Second, our portfolio continues to evolve and expand, designed to meet the future needs of customers around the world. Third, The scale at which we operate provides a platform for us to reach more customers and continue to take market share. And finally, the perception of EV as a less desirable option is history. EVs are now the first choice for many drivers, and the amount of consumer demand, industry support, and government subsidies have brought us to a critical inflection point. We are also confident that auto manufacturers will ultimately be able to meet this demand as they invest in new factories and fortified supply chains. In summary, we have an exceptional business with a great team in a large and growing market. We couldn't be more excited about the future of Wallbox and the industry. That concludes our prepared remarks today, and now we will take questions from our covering analysts.

Welcome back, everyone. To our analysts, we ask that you pose one question with a follow-up if needed. Then re-enter the queue if there's more. This will allow each of you to ask your questions up front, and we'll get to as many questions as time allows. Victoria, I think you have some instructions for our audience today.

Yes. If you would like to ask a question, please press star 1 on your telephone keypad. When preparing to ask your question, please ensure that your line is unmuted locally. And our first question comes from Chris Snyder at PBS. Please go ahead.

Thank you. I was hoping for an update on Supernova production. The release noted that the company is working to aggressively ramp production. We were just hoping for any color around units produced in the second quarter and how we should expect that to trend over the rest of the year. Thank you.

Hi, Chris. Thank you for the question, and thank you for attending. This is Enric. So right now, we are producing this month of August around 15 units of Supernova per week, and we expect by the beginning of September to ramp up to 40 units a week, as the new assembly line is already going to be fully operative. That means that for Q2 to achieve our target of deliveries of roughly around 100 units, And for Q2 and Q3, we will be able to more than double these in Q2 and double in Q3 and double in Q4 again. So production is growing as expected. The new assembly line is working fine. And as I said, by the beginning of September, we will multiply by three our current production rate.

I appreciate that. I'm very happy to hear the ramp is ongoing. For my follow-up, I really appreciate all the color and insight on the U.S. infrastructure and just broader investment in the EV space. I'm not sure if Douglas is still on the line, but I guess my question would be, You know, within all of that data you shared, did anything stand out as, I guess, the most positive for Walbox? And was there anything in the bills or the legislature that surprised you guys? Thank you.

Thomas, do you want to take this question?

Yes, absolutely. No problem. Yeah, you know, it's actually great to see the levels of support that have come through related to investments in climate from the administration and the final makeup of the bill, as has been proposed and passed by the Senate over the weekend. You know, one of the, let's call it, most exciting aspects of it is that it's well-rounded and very aligned with where Wallbox is in terms of producing products, services and also product roadmap from a technical standpoint. So that really begins with the renewal of the consumer tax credits related to the purchase of new EVs. So removing the caps on previously expired credits from certain brands that are leading in this market is very exciting because the single passenger vehicle market really drives the purchase of home and workplace chargers, which is where most charging happens, and that's an area that we're very active in leading today in the U.S. market. Another exciting aspect of this was the addition of tax credits toward used EVs. So with supply chain constraints and deliveries being pushed out for many new EVs in the market, being able to access and increase the total addressable market on the used EV side was a great surprise and I think an area that will perform quite well. And lastly, really, it's the element that all of these tax credits, whether they're targeted toward residential, commercial, or even highway corridors, are in place over the next 10 years. So that gives us a sustained outlook in terms of, you know, possible opportunities to participate and benefit from participation in the incentive programs and delivering our products out to customers and partners across the U.S.

Thank you for all that. I really appreciate it. Thanks, Douglas. Thanks, Chris. Yep, thanks, Chris. Victoria, next question.

Thank you. Our next question comes from Stephen Janagri at Stifel. Please go ahead. Okay.

Thanks, and good morning, everybody. I think two things for me. The first, just a follow-up on the prior question, is there one of the things that's come out from, like, I think the United Auto Workers, just some of the things we've read in the press, is the income cap on the federal tax credits for new EVs. I just wondered if you had dug into that at all, if you had any thoughts around that, the impact on sales.

Sure. I'm happy to comment on this. You know, in terms of – go ahead, Matt.

No, I was just going to say, any thoughts on that, Douglas?

Oh, sure, sure, absolutely. So as it relates to the income caps, you know, in terms of where the industry has – has landed on these and where the bill is going with them. I believe the limits are for single earners $150,000, for household $300,000 in terms of income limits, which in terms of what's been communicated from administration officials and the industry actually applies to a large swath of folks across the U.S. So from our point of view, we're quite happy with the outcome of the bills. We think there's broad application for incentives across many different parts of the bill in addition to the purchase of new EVs, like also increasing access for folks purchasing used EVs. And all of this is also to say that there are incentives which are being brought back. from exploration like the residential tax credit for EV charging, which allows for 30% of the cost of charger plus installation, up to $1,000 for the purchase of EV chargers, and that has no income limits. So as far as infrastructure is supported, there's no limits, and really supports the consumer and businesses.

Great. Thanks. That's helpful on the charging side. And then the other, just to follow up, and I know this is probably a lot of moving pieces and it's a complicated answer, but if we think about the mix shift and as you get the supernovas and hypernovas rolling and address some of the maybe fast charging needs, What does that do to the gross margin profile if we would assume kind of the inflation environment just kind of stays where it is? I know there's a lot of cost pieces, but what does that mix ultimately do to gross margins over the next couple of years?

I think, you know, Stephen, in the short term, it does have a slight impact only as we ramp up production, right? And so as you achieve scale, those margins improve, and I think that we expect them to be within the range of sort of corporate average. I think over the longer term, we don't expect the shift in mix to have a drastic impact to gross margin. I wouldn't change anything in your model. As we bring on new products, though, in the first quarter or three, there tends to be some movement around margins, but we've been able to navigate that actually quite well, as you've seen over the last two quarters, even in the face of ramping up.

Great. Matt, thank you.

Thanks, Stephen.

Thank you.

Victoria, next question.

Our next question comes from Gabe Dowd at Cowan & Co. Please go ahead.

Thanks, Victoria, and hey, everybody. Thanks for all the prepared remarks so far. Guys, I was hoping we could maybe just get a little bit of color on the two acquisitions. So, Coyle, could you just maybe talk about the strategy here? Will you continue to install – third-party hardware, maybe just anything on geographic footprint. And then, Aries, similar question, will you continue to supply PCBs to third parties, or is this more about just bringing that functionality in-house to help Wallbox solely?

So thank you for joining today. Regarding Aries, the second one, We expect that they sell to us if we have additional capacity. So if he has additional capacity, if the company has additional capacity, we will sell to us. But I don't expect this to happen in high numbers in the midterm because only our expected growth will keep them very busy. As you know, we have been the main customer for them historically since we started our commercial relationship. And basically what we are bringing with ARES is faster product development cycles, making sure we can deliver our products, and obviously there's going to be cost synergies that we expect to give you more information as we come into 2023, but we expect improvements in cost of all the products as we include the positive EBITDA of RS in the production. Regarding COIL, It's a totally different acquisition. It's in the other side of the vertical integration. Coil increases our decibel market. They are installing for others. They install for some of our customers and some of our competitors even. We are happy that they keep doing that, and these actually help us. to start having revenue for some products that we don't have today or maybe we will not be interested in having in the future. They do installations for any type of charger and maybe some segments we're going to come later or we never will come. As you know, our focus is in phone charging and fast charging, but they install any kind of charger. So we are happy that they sell to us and provide service to us. It makes us learn. It helps us enter faster markets. It increases our total addressable market. And, again, it increases the revenue per customer. And I think both acquisitions at the end, what they are doing, not only make us grow faster, also bring our positive EBITDA and positive cash flow sooner. And I look forward, as we come to 2023, to give you more color in this.

Hey, Gabe, remember that bringing COIL into Wallbox allows us to enter that conversation. It allows us to enter that project earlier than we normally would. Right? So COIL is often one of the first folks in the ecosystem to engage with that end customer. They help design the project, and they can make recommendations. And so entering that project at an earlier phase certainly puts us at an advantage. Thank you. Some of the partnerships.

Sorry, go ahead. No, thanks, Zach. Sorry. My thought was just going to be around guidance for this year. I think if we just kind of do the math, it implies a pretty big ramp in 4Q. And I think historically you've said that that usually is the strongest quarter of the year, just given spending around the holiday season. So I was just curious if you could maybe confirm that and just talk a little bit about that ramp. Thanks, guys.

Yeah, absolutely. So we are keeping the guidance we told you during the IPO last year. And, you know, we want to make sure that we give a guidance range that we believe is reasonable and achievable. Historically it's like that. Q2 and Q4 are very strong quarters because we are following EV deliveries. Car manufacturers always try to deliver all the cars they can before the end of the year, so in Q4. So always Q4 has been a very strong quarter for us. Internally, we are following the Q3 guidance that we expected, growing 140% to 170%, which is what we should be doing to achieve the full year guidance. So, as expected, Q4 will be the stronger quarter. It always has been like that.

Thank you. Thanks, Gabe.

Thank you. Victoria? Our next question comes from Ben Carlo at Bed & Co. Please go ahead.

Hi. Good day to you guys. My question was about bi-directional charging and just how energy prices have maybe impacted demand, whether it's in Europe, UK, or here in the United States because of your ability there. Thank you.

Hi, Ben. Thank you for joining. So We are actually seeing this last quarter increase on Quasar 1 sales, mostly B2G projects, as we used to have been selling. Yes, there's more and more customer interest on Quasar 2, which is the ideal product for what you're mentioning, especially also in case of a blackout, Quasar 2 will be able to provide you with electricity. We are hearing these things in Europe. I know in some states in the U.S., it already happened the blackout but in europe is a new thing the blackout but we have we're hearing this from from from our governments in in most european countries that there could be energy challenges as we move into the winter so we are accelerating the development of quasar 2 to have it in production as soon as possible hopefully beginning of next year and and we believe it's going to be a very successful product everywhere in europe and the us But, yeah, there's more and more comments about this. People are looking forward for this product, not only for saving money and energy prices, now about the blackouts and having a more resilient grid at home. That's what people are looking for.

Thanks for that. And just to follow on, I know you guys touched on this, but can we just talk about cash and cash usage going through the year? you know, as you wrap up, you know, factories and things like that. So how we should expect cash, you know, at the end of the year. Thank you guys very much.

Hi, it's Jerry Lyons, Ben. Well, as we mentioned in our presentation, existing cash and availables at the end of June was 127. It's in line with what we forecasted in our finance model, and we are still confident that we will have enough cash to cover all our finance model until we are expecting the chief profitability on 2024. So we have increased significantly our working capital finance lines in order to finance our growth, and this is what we are expecting also from the rest of the year, that we will have enough capacity to finance our growth in inventories and receivables for financing our growth.

I want to add then that we are being super conscious on spending, for example, capex and opex, especially in the capex side. the U.S. factory, we split the process in two steps in terms of CapEx to make sure we have enough capacity for the next year, and then there's going to be a second phase in Arlington for mid-2023. So we are investing, you know, very thoughtfully to make sure we just use what we need for the next 12 months. The same we are doing with hiring, making sure we hire exactly what we need. And even with acquisitions, you know, these acquisitions are not only helping bring cash flow positive forward, also we are making sure we pay them mostly, almost everything with stocks, which I think is great that these companies and the leadership in these companies accept this method of payment and they are looking forward to have this payment because that means that they trust in Volvo's and the performance of our stock. So we all have extra eyes, obviously not impacting at all our growth, but making sure that we bring forward the profitability as a company.

Thanks, Ben. Victoria?

Thank you. Our next question comes from Alexander Vargo at Bank of America. Please go ahead.

Thanks very much, Victoria. Good morning, good afternoon to you all. Thanks for taking my questions. I wonder if I could just touch a little bit on your comment there about the vagaries and the volatility of EV production. And I wondered if you could just give us your view or commentary on how that looks like it may or may not sort of improve, I guess, over the balance of the year. and into next. I mean, it's obviously not really showing up in your own growth, which looks fantastic, but just trying to understand whether you feel that there's been constraints in your growth because of that, whether it could even have been stronger. And I think, I guess where I'm coming at really is if we see a slower ramp in easy sales or easy production in Europe or in the US? Is that something we just need to be a little bit mindful of as we think about the balance of the year for you guys? And I guess if I could ask as a follow up to Jordi, can you give us any feel for the buckets of of that cash movement um in in the quarter uh with respect to how much of it was working capital how much of it was uh inventory build uh because i know you guys have done a great job of making sure that you can always get product to the customer uh either in in in contrast to some of your peers thank you thank you alex uh yes so

Q2 EV deliveries in Europe were not great. Also in the U.S., we didn't grow as expected. As I say, EV deliveries in Europe in Q2 dropped 2% versus 2021. That same, as you point out, we were able to grow as expected, even overperformed, even our market share increased bigger than we expected. So, obviously, as EV deliveries ease and we even can see that car manufacturers can catch up. We are seeing, you know, a lot of factories being announced. Hyundai investing $5.5 billion in a new factory. The new factory of Rivian $5 billion, Ford $50 billion, GM $7 billion. So there's a lot of new factories coming, and obviously that will take some time. But if in the next quarters the supply chain gets easier and easier, deliveries increase, there's potential for upside for us. You know, the numbers we are giving you for guidance, we are taking in mind that the market slightly improves because I think Q2 was This is bad because, especially the conflict in Ukraine, given there was some harness provided, cable harness provided that could deliver, and that affected a lot of EV and manufacturing factories. So I think that was part of the impact. But as you point out, given the increasing market share that we have, and we have more market share than we anticipated now, if EV deliveries ease and increase, we have potential for upside.

Hi, Alex. In terms of where we are planning to invest, as we mentioned, our existing cash is basically focused to finance and fund our CAPEX and OPEX for the next 18 months. And basically what we are expecting in terms of working capital, as we are increasing our inventories, as we are launching new products, as Supernova and Hypernova, and we are launching a new factory in the U.S., is to achieve the working capital finance capacity. Today, in August, we have covered more than 75% of our needs for year-end. then it means that we are quite comfortable that we will achieve it and we will not have to dedicate any additional euro for financing working capital. Basically, we are focused in our new factory at the beginning of this year in Barcelona, B26, and also in our new factory in Arlington that I mentioned before, we will inaugurate in September.

That's great. Thank you both. Thank you. Thanks, Alex. Victoria, I think we have time for one more question.

Yeah. Final question comes from Stephen Janaga at Spitzel. Please go ahead.

Thanks. And I'll make it quick. But earlier, there's a question on the bi-directional charging front. And I was curious, it seems like, and you guys are a little closer to this than I am, but it seems like more and more manufacturers are or including that or that capability is embedded in a lot of the new EVs, which the LEMs are rolling out. Are you seeing that, and do you expect to see a ramp in demand for the bidirectional chargers driven by that over the next couple of years?

Yeah, thank you, Stephen. Absolutely. We are seeing in both directions, AC bidirectional and VC bidirectional chargers, We're making sure our products are compatible with both systems, AC and DC. The main problem there is now with all these new cars announcing bi-directional compatibility is that today there's no standard for bi-directional charging. And that will be hard for a company that just starts to make, tries to start making a bi-directional charger. But however, because we have already one and we are being contacted by many of the car manufacturers that are launching these functionalities, we are making sure that Quasar 2 is compatible with lots of these new car manufacturers. The lack of standard is not helping in the short term, but it's giving us an advantage as we are making sure working with the car manufacturers together that our product is going to be compatible with many of the car models. So, yes, it's good. It's increasing our market. And in the short term, I believe we have an advantage compared to others due to the lack of standard.

Great. Thanks, Stephen, in detail. You got it. Well, to our audience, that's going to be our last question. Thanks, everybody, for joining us today. We hope you found today's call a good use of your time. Our next quarterly earnings call will be held in November. And also, please note that we have numerous investor events held throughout August and September. And so, if you'd like to spend some time with us, just check the calendar of upcoming events for conferences, or you can reach out to us at investors at wallbox.com. Let us know if we can help you in any way. Have a great day, everyone.