Wallbox N.V.

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

Thank you, operator. And good morning and good afternoon to everyone listening in. Thank you for joining today's webcast to discuss Wallbox's third quarter 2022 results. This event is being broadcast over the web and can be accessed from the investor section of our website at investors.wallbox.com. I am joined today by Enrique Asuncion, Wallbox's CEO, Jordi Lines, our CFO, as well as Masoud Rabbani, our Chief Business Officer. Earlier today, we issued our press release announcing results from the third quarter period ending September 30, 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 the 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 us are detailed in the company's most recent public filings with the U.S. Securities and Exchange Commission, including in the post-effective amendment number three to our registration statements on form F-1 filed on September 28, 2022, which can be found on our website at investors.wallbox.com and on the SEC website at www.sec.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 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 investor 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 third quarter of 2022, I will also share some thoughts on the current market we're experiencing and provide you with some insights into our fast-charging portfolio, both Supernova and Hypernova, including detail on customers, production, and backlog. I'll discuss a few new partnerships. Then Massoud will join us to offer some higher-level insight into how we approach partnerships with leading CPOs and energy providers like vCharge and EDM, and why they select Wallbox. 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 fourth quarter and full year 2022. We will end by taking questions from our covering research analysts. The third quarter finished within our expected range. with strength in North America and key European markets offsetting softness elsewhere. Market share gains, as defined by units sold relative to EV and PHEV deliveries, have been substantial all year and continue to grow through the recent quarter. Our European market share goal for 2022 was approximately 15%, and we achieved 19%. That is a testament to our products and footprint. Today, Walworth has one of the most comprehensive charging portfolios, including home charging, public DC fast charging, bi-directional, and semi-public AC. This award-winning offering, including proprietary software and services, is both designed and manufactured in-house. The operational capabilities are enabled by our regional manufacturing footprint, now with facilities in North America, Europe, and Asia. and give us an expected capacity of more than a million units as we exit 2022. Our ability to consistently deliver high-quality and innovative products while remaining flexible to changes in the demand environment has allowed us to build strong relationships with leading brands. Our strategy is resonating with customers, and we can see this in the results. It's always a busy time at Bollox, and Q3 was no different. Revenue of 44.1 million euros grew by 140% on a year-over-year basis, and we are pleased with our growth margin of 41.4%. We forged new exciting partnerships and have accelerated key initiatives within our product development roadmap. Our Q3 results were fueled by exceptional strength in North America, growing revenue by 535% and key European markets, including 270% growth in France, 160% in Belgium, 130% in Italy and the Netherlands, and 125% in Spain, all on a year-over-year basis. We continue to make great progress in APAC and LATAM, both of which are early in the GB transition. What's most exciting for us here is that we have built the infrastructure, brand, and relationships in these young markets. While of a small base, our market share in these new countries is massive. This position has extremely well to continue our leadership position as EV adoption takes hold, and I'm excited to see what can be done here. North America now contributes 22% of total revenue, an increase of 14 percentage points over the prior year period. This exceptional growth draws in part the geographic mix here from Europe, which now represents 71% of revenues. Asia Pacific provided 5% of consolidated revenues in Q3, and Latin America was 2%. This meaningful shift is both deliberate and helpful as we continue to diversify both our geographic and product mix. Our home charging portfolio represents 83% of our total revenue, with fast charging at 5% and 12% provided by software and services, a growing portion of which is recurring. Over the long term, As Supernova ramps up and Hypernova is introduced to the market, we expect our product revenue to be more balanced between home and public charging. We also anticipate software and services to represent approximately 20% of revenue. Consolidated gross margin in the quarter was 41.4%, driven by stable pricing, continued cost control of key components, and the impact of recent acquisitions. We believe we are navigating the supply chain shortage of critical items better than most, and we'll continue to re-engineer products and establish strategic purchasing agreements for critical components. Jordi will share more details with you. And finally, we sold approximately 67,000 chargers in the quarter, with the geographic mix nearly identical to that of our revenue mix by geography. The macro environment has become increasingly complex as we made our way through the year. There are always going to be gives and takes as you progress through a forecast period, but the difference in 2022 have been notable for many companies. The challenge for a successful business like Wallbox, which has been more than doubling in size every year, is remaining focused on the long-term opportunity while navigating near-term obstacles. Clearly, EV demand is stronger than anyone ever imagined. It's been driven by consumers and enabled by new innovative technologies and increased choices. The record number of new 2023 EV models is exciting to see and will only serve to accelerate adoption. But manufacturing capacity and economies of scale and its impact on pricing has yet to be realized within the automotive industry. While we are preparing for a strong 2023 and 2024, we are not ignoring the challenges that many in the automotive industry face today and which I will speak about in a moment. Still, near-term bumps won't distract us from executing our long-term strategy, especially given the size and duration of the transition taking place within our market. And our goal is to be the most successful company in it. For most of 2022, Europe has delivered fewer EVs than expected. And as a result, our investments in the coming quarters will be focused on pockets of growth within the region. As Massoud will share, there are always opportunities that we identify and win. That's what Wallbox does best. The U.S., which is now the world's second largest country for EVs, continues to grow at a staggering pace and is expected to continue giving subsidies from both the NEVI program and Inflation Reduction Act. Our current portfolio, capabilities, and product roadmap sets us well to be one of the few hardware vendors that meet all manufacturing and performance requirements, qualifying us for government subsidies. We began investing in our infrastructure there last year and believe we are well ahead of the curve. While it's too early to put a number on the opportunity here, it has the potential to be massive. Our focus over the next five quarters will be to ensure we have everything we need to be the market leader going forward. Our business model is also a key element in our ability to navigate the current environment. You heard us talk about our unique manufacturing model, about our highly verticalized supply chain strategy, about our global operating and distribution footprint. It's something that is not openly visible, but under the hood, Wallbox is a very different vehicle. The decision to operate in this way was not made yesterday. It's not a reaction to recent supply chain disruptions, or the subsidies announced in the U.S. The decision was made when the company began, and we've built a business like this to allow for improved agility and time to market, improved control of the manufacturing process, faster delivery times, reduced freight costs, and more rapid certification times. One example is the recent acquisition of Aries, which is a leading supplier of PCBs, a critical component in most technologies today. We believe this transaction announced last quarter allow us to secure a critical component, enabling us to better navigate shortages than others are experiencing, allowing faster innovation times, offering cost savings, and supporting our goal to ship product within 72 hours. Another example is our installer capabilities. Coiled, a leading North American installer network, is now part of Wallbox, as you heard on our last call. With our in-house capabilities in Europe, the value customers can realize from a comprehensive solution is compelling and not easily replicated. Massoud will share why it's so important in a moment. The final example is our EMC chamber at our headquarters. It's one of the only two in the south of Europe as it's currently equipped to test up to 150 kilowatts and upgradable to 400 kilowatts. Why do we need something like this? consider the testing, validation, and certification process. Having in-house the capability to test electromagnetic compatibility at very early stages of a new development puts Wallbox in a position to optimize not only component selection, but to design the most effective energy management architecture with highest performance at most competitive cost. But advantages are also at the time of product certification. Perhaps you are one of the 30 different hardware vendors who want to introduce a new charger in the UK in January. Your product cannot be sold without being proven compatible and safe to connect to the grid. That requires you to get in line to have your charger tested, and now you're waiting in line behind dozens of your competitors. Such equipment is normally fully booked, and you will wait months for your turn. And if you do not pass at the first attempt, product iterations and recertification will take several additional months. That time lost is pure waste. It's costly and can erode a competitive advantage very quickly. At WallWalks, we roll the new charger from the lap to the fourth floor and perform the test. It's how we build a business from the ground up to control our own destiny, and you see that in everything we do. Turning to our next business highlight today, I want to share some thoughts on the U.S. and our fast charging portfolios. We recently held our factory opening ceremony at the facility in Arlington, Texas. We posted a video on our investor relations website for you to watch when we are done here. In Texas, we hosted customers, partners, government officials, and even some of you on the phone today. It was a great day for us, and it ushers in a new era of participation in the North American market. While we were proud to showcase our technology and capabilities, the product demonstration stole the show, especially Supernova and Hypernova. Today, Supernova is sold in a 60-kilowatt configuration with multiple versions on the way that will scale up to 150 kilowatts. These modular stations can operate with very high reliability rates and are sold at competitive prices. While incumbent vendors are often working to undo years of poor quality and uptime, we are not burdened by it. This is a differentiation today, and one we intend on driving home with our customers. Poor reliability impacts the investment return profile for CPOs, many of which are our customers. It's expensive to consistently run a truck to swap out a cellular modem or an RFID reader, or change out a power boiler. Labor is expensive, and losing consumer trust in a charging infrastructure ultimately impacts adoption for EVs. For this reason, it's critical that industry reliability rates improve drastically. That is key and is something that we have focused on from the start. It is one of the main criteria when purchasing a DC fast charging station and one that sets us apart. Supernova also continues to ramp up nicely. To date, we have delivered units to almost 50 customers across more than 30 countries. We currently have a healthy pipeline of several thousand chargers, And we will continue to build upon it as production ramps up. If you are unfamiliar with Hypernova, it's our next generation DC fast charger, which reaches 400 kilowatts. That's fast enough to provide 100 miles of range in less than five minutes. It's designed to be highly reliable, provide low total cost of ownership to operators, and will grow to the market in 2023. in time for the programs I mentioned. That product was not only on display in Arlington, but was charging a vehicle at that EV's maximum limit, more than 220 kilowatts. We are very pleased with the overwhelming reception from customers, which resulted in our first order and multiple LOIs and have very high expectations for market acceptance. Before Massoud discusses our partnership strategy and outlines some exciting new programs, I wanted to offer some exciting updates on what the North American team has accomplished recently. First, you might have seen our announcement in August regarding Fisker. Wallbox has been selected as the exclusive partner to provide hardware and installation services to buyers of Fisker ZV globally. Customers will be able to purchase a co-branded charger and schedule coils installation service through Fisker's website. We are very proud to have been selected and look forward to the vehicles hitting the road soon. There was a joint announcement last week by the U.S. Department of Energy, KB Homes, SunPower, Kia, and Schneider Electric detailing what they call the first all-electric solar and battery-powered microgrid community in California. The houses involved in these communities are equipped with backup battery storage, bi-directional EV charging capabilities, and perhaps most importantly, are interconnected, creating a resilient energy network. When combined, these technologies establish a self-supporting energy network capable of powering a neighborhood during a power outage. We are excited for Quasar to be a part of that infrastructure and believe this is the first of many to come as utilities look for solutions to the growing gap between energy production and consumption. If you're a regular shopper at bestbuy.com in the U.S., you will soon see Pulsar Plus on the website. We've been working with them in Canada, and this new phase opens up an enormous opportunity. This is a meaningful win for Wallbox, and we look forward to reaching more consumers through their online presence. So congrats to the North American team. Nice work, and keep it up. Masoud, I'll hand it to you.