Wallbox N.V.

Perfect, thank you. Transferring us through in three, two, one. Hello everyone and welcome to Warbox's first quarter 2024 earnings conference call and webcast. My name is Charlie and I'll be the operator for today's call. At this time, all participants' lines have been placed in listen-only mode to prevent any background noise. After the speech remarks, there'll be a question and answer session. Analysts who wish to ask a question can place themselves into the queue by pressing star followed by one on their telephone keypads. I'd now like to turn the call over to Michael Wilhelm to begin. Michael, please go ahead.

Thank you, Charlie. And good morning and good afternoon to everyone listening in. Thank you for joining today's webcast to discuss Wallbox first quarter 2024 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 CEO, Jordi Lyons, our current CFO, and Luis Boala, who will join Wallbox as its new Chief Financial Officer, effective May 15. Earlier today, we issued our press release announcing results from the first quarter ended March 31st, 2024, which can also be found on our website. Before we begin, I would like to remind everyone that certain statements made on today's call are forward-looking, that may be subjected to risk 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 SEC, including the annual report on Form 20F for the fiscal year ended December 31st, 2023, filed on March 21st, 2024. We will be presenting unothered financial statements in IFRS format that reflect management's best assessments 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 a presentation posted on the investor section of our website. Also, A copy of these prepared remarks can be obtained from the investor relations website on the quarterly results section. So you can more easily follow along with us today. So with that out of the way, I will turn it over to Enric.

Thank you, Michael. And thanks everyone for joining us today. In addition to reviewing highlights from the first quarter of 2024, we'll spend some time discussing recent product introductions and commercial wins. including the washington state project and the pulsar pro launch in north america we will also discuss the integration progress of our recent acquisition abl as well as the general commercial agreement and we will touch on how the market is expected to evolve in 2024. jordi will offer a closer look at our financial results and our key financial metrics and finally I'll return to close the conversation and highlight what we are focused on for the remainder of the year, as well as welcome Luis Boada, who will formally join us next week as our incoming CFO. We will end by taking questions from our covering research analysts. So let's get started. Q1 revenue was 43.1 million euros, up 23% year over year, driven by EV market seasonality slightly impacted by softer AC sales in the US and the timing of DC shipments within specific customers and large projects. We do not believe that the latter is a result of overall market weakness, but rather of new European regulations that are being digested by customers and which have impacted the timing of orders and deployments of new installations. ABL results were in line with expectations and we're excited to accelerate the cross-selling opportunity. especially after the launch of the EM4 across Europe in March. DC revenue increased by more than 100% from the previous year period, as customers continue to expand their networks and select Supernova for its high quality and low cost of ownership. We installed the first Supernova 180 in North America in the quarter, a meaningful milestone, and we look forward to ramping up activity quickly in the second quarter. In total, we delivered 37,500 AC units globally, including ABL, and approximately 320 units of DC during the period. Gross margins were 39.6% in the first quarter, positively impacted by the aggressive actions we discussed last period, including cost engineering, strategic sourcing, and lower transportation costs. Those efforts show strong early results, and we believe we can continue to hold them in the range of 38% to 40%. This is yet another proof point in our ongoing shift towards operational excellence, and we want to thank all World Boxers for their hard work and focus. Q1 2024 included a full quarter of all revenue and costs from AVL. And on a consolidated group level, saw a 21% reduction in labor costs or headcount-related costs, and a 30% reduction in OPEX, both on a year-over-year basis. Sequentially, both expense categories are up slightly, as anticipated with the inclusion of a full quarter of ABL. However, we continue to identify opportunities to reduce our cost base, and we're flexible even in the market volatilities. First quarter adjusted a bit, the loss tightened by more than €1 million to €13.5 million from the fourth quarter and represents a year-over-year improvement of 38%. Gross margins and our operating costs have come close to the range that now only leaves scale and top-line revenue as a barrier to profitability. With the introduction of new products, current strong traction of Supernova Rollout in North America, and the progress discussed here, we believe we will be close to rake-even adjusted EBITDA in Q2. For the first quarter of 2024, Europe contributed €36.5 million of consolidated sales, or 85% of total revenue, and grew by almost 30% from the year-ago period. We saw strength in Benelux and the UK, which offset softness elsewhere. North America contributed €4.7 million, or 11%, and was impacted by an inventory adjustment at a specific retailer. APAC was strong this quarter, contributing €1.3 million, or 3%, and LATAM was approximately €600,000, or 1%. These mixed shifts were also somewhat driven by the full impact of AVL, whose sales are entirely AC within the EMEA region. AC sales of 29.9 million euros, including ABL, represented approximately 69% of our global consolidated revenue, down one percentage point from last year. The global rollout of Pulsar Pro continues to go very well. Pro is designed for commercial and multifamily residential use in the North American market and other relevant markets. The charger is equipped with RFID integration and ISO 15118 readiness, ensuring secure and future-ready charging capabilities. The Pulsar Pro stands out for its dynamic power sharing feature, which monitors the building's power and automatically allocates power to connected TVs, reducing the need for costly upfront electrical infrastructure upgrades. A great example of the overwhelming market reception is the $26 million project we announced on March 7 with the state of Washington. Those funds will be used to deploy hardware, software, and services throughout almost 150 GrayStars multifamily housing properties across the state of Washington, with a strong focus on environmental justice communities. COIL will participate in those installations too. We expect much of this project to occur and be recognized in 2024. DC contributed 19% of the revenue in the first quarter, a nine percentage point increase from the prior year period. The Supernova product line continues to see strong reception from customers and is driving growth in our pipeline, which now totals more than 2,000 units. Today, we have more than 10 customers which receive more than 50 units for their charging network. We see large customers with broad and expanding footprints are becoming the norm. So the full list of more than 100 unique customers have the opportunity to grow into key accounts as we impress them with our offering. One example of a highly valued customer is Osprey, which is building one of the leading EV charging networks in the UK. The company is growing fast and is using Wallbox as a supplier for both the Supernova 60 and the Supernova 150. Currently, we have sold 180 DC fast charging units to Osprey, including the Wallbox Care Programme. offering preventive and corrective maintenance and warranty extensions. At Wallbox, we understand the dynamics of our CPO customers and the importance of open, flexible collaboration. This includes incorporating product development ideas, short lead times, capacity to deliver reliable solutions at scale, and aligning with the rollout speed of our customers. We would also like to provide you with some color on the status of the DC fast charger rollout with Iberdrola. we announced in the past iberdrola is an important long-term partner of wallbox both as a customer and a shareholder and has a strong commitment to sustainable mobility together iberdrola and wallbox have large ambitions in developing reliable charging infrastructure for electric vehicles and we are currently taking the initial steps in delivering supernova units As of now, we have sold close to 150 units to Verdola, and we are expecting to see this number increase steadily as the rollout of charging infrastructure continues. Supernova 180 is currently shipping to North America, and we have begun conversations with a variety of CPOs, beyond free-to-move and Stellantis. We believe we're able to ramp up production and meet the growing demand that's not currently being met by legacy players. And finally, we are seeing strong interest from European customers in more powerful systems, including the Supernova 220 announced last call and beyond. Customers are focused today on ease of deployment, reliability, and protecting their investment. They want the right system in the right location, and they want it to be relevant for 10 years, which is critical given the rapid pace of both EV technology and consumer behavior. We believe we check all the boxes and have established Wallbox as a leading provider of public fast-charging equipment and software. We're excited to see such positive traction. Growth margin improvement is something we've been very focused on for the last several quarters, and we believe we've turned the corner. As mentioned before, after the introduction of a new product, the growth margins have a ramp-up time, and now, as the Supernova product line is maturing, we see significant improvements. going from negative gross margins to contributing significantly to the group result. We are pleased with a gross margin in the quarter of almost 40%, but we still see opportunities for improvement going forward. Jordi will talk more about this in a minute, but I'm confident in our strategy and ability to focus on what we can control and turn our attention to increasing sales growth and the successful rollout of all the new products we introduced this year. I want to take a moment and share some thoughts on ABL because we are very pleased with the progress we've seen after closing the first full quarter as part of Wallbox. Conversations with current and prospective customers are encouraging and highlight the need for a comprehensive solution for both AC and DC that together we now offer. We launched the EM4 across key markets in Europe last month and look forward to capitalizing on strong initial interest. The EM4 is AVL's newest AC Level 2 product for commercial applications. Given its OCP capabilities, wire or wireless up to 100 charging points, a single or dual GAN configuration, IP55 and IK10 for a robust solution, and advanced load management functions. We believe this product meets the unique needs of apartments, office parking lots, hotels, and retail applications. We are excited to watch the progress of the rollout, and we look forward to sharing more with you next quarter. Aside from the integration of the EM4, we have also introduced the ABL Pulsar to the DAG market as part of our product and innovation integration. Educating the market on the benefits of Supernova 150 and 220 is also well underway. In the first six months, we have made great progress on our integration efforts, and I am proud to have ABL as part of the Volvo Group. I would like to take the opportunity to thank everyone involved and a special note to the whole AVL team for their continuous efforts. Both companies recognize the collaborative potential and I appreciate the strong commitment to join future roles. Today, we will also like to talk about the commercial agreement with Generac in more detail. As discussed during our previous earnings call, the Generac partnership is one of our most exciting and impactful events in our history. We believe that our aligned ambition will bring both companies significant long-term commercial opportunities. This is reflected in our commercial agreement, which has a 10-year term and a worldwide scope. In the long term, we foresee offering Wallbox full product portfolio through generic extensive $8,700 network. But initially, we will launch with the Pulsar Plus UL for North America. The charger will be co-branded and provided with a wide-level app, allowing for its integration with Generac's existing home energy management systems and solutions. In the following months, we expect new products will become part of the scope of the commercial agreement, which includes both AC and DC charging solutions. We will also put our efforts together to develop new products relevant for a wide range of customers. We are very excited about these first steps in our journey together, and we appreciate the commitment of Generac to Wallbox from both a commercial and shareholders perspective. We spoke to you in February about our view of the market and how we envision it evolving. There were almost 1.1 million EVs sold in Europe and North America in the first quarter of 2024, representing 8% year-over-year growth as reported by RoadMotion. They expect more than 5.6 million to be sold this year across these two regions, which excludes China, representing year growth of almost 20%. This also doesn't include the sale of used EVs to new owners, which often require the installation of a new AC charger. What we share with you is our belief that early adopters are fully bought into the value proposition of EVs and the market volatility you read about from several OEMs is natural in the adoption of a disruptive technology. It's no different from what we saw from consumers with the PC or cellular phones. At the same time, we recognize the current economic dynamics with slower economic growth and recent high inflation figures pressuring consumer budgets. But even though the adoption curve and economic slowdown coincide, the long-term potential of the industry remains solid with more affordable EV models being introduced continuous rollout of charging infrastructure and innovative technical improvements in the industry. In the meantime, what we focus on is exiting this period in the strongest competitive position and well ahead of our peers. We have developed a product portfolio for every charging segment, which allow us to capture growth where it takes place. For example, the current demand for DC fast charging infrastructure remains high as the rollout of DC infrastructure is essential to the mass adoption of EVs, This provides us with a great opportunity to leverage our diversified position, both geographically and commercially. Now is the time in which winners and losers are determined. And therefore, we will continue to invest in operational excellence, forge strong partnerships, and rationalize our cost base. Jordi, I'll turn it over to you to comment further on our financial details.

Thank you, Enric. Good morning and good afternoon to everyone. Our first quarter results came in lighter than anticipated, driven largely by timing of orders and some continued market softness in key geographies. Gross margin was stronger than expected, as improvement programs took hold faster than originally planned. Cost controls continue to yield solid results, and additional opportunities may present themselves as we continue through the year. For the first quarter 2024, revenue was 43.1 million euros, approximately flat sequentially and up 23% year over year. Consolidated gross margin for the quarter was 39.6%. The drastic improvement is a result of more favorable pricing, lower component cost, product quality improvements, process engineering, product mix, and inclusion of ABL. Labor costs and OPEX amounted to 32.6 million in the period, which was modestly higher sequentially as we have now included a full quarter of ABL. Building on cost reduction results of the past year, we continue to work towards a cost structure which is better suited for the current stage of the company. As anticipated, we are close to our 30 million per quarter cost base for labor costs and OPEX. Even though we are not fully optimized yet, we believe that with this cost base, the gross margin back in the correct range and with the rollout of new products, we expect to be close to adjusted EBITDA break-even in the second quarter. Consolidated adjusted EBITDA loss for the quarter, including ABL, was 13.5 million, representing a 38% year-over-year improvement. we remain extremely focused on cost and conserving cash and have seen tangible benefits of those efforts. This slide shows us again the three main metrics we have been focused on over the last year. Revenue, cash cost, and the adjusted EBITDA. We like to present cash cost in this slide as it reflects the cash out, which is the 32.6 million labor costs and OPEX I just mentioned plus R&D costs. As you can see, for Wallbox standalone, cash personal costs have continued to decrease from 19 to 18 million with other operating expenses remaining stable quarter over quarter. In Q1 2024, we have included a full quarter of ABL, which explains the expected increase in cash costs on the consolidated group level compared to the previous quarter. but it still reflects a 9% decrease from the same period a year ago. The adjusted EBITDA continues to improve and, as stated before, with the continuous cost reduction efforts and expected revenue growth, we believe this trend will remain throughout 2024. The financing events in 2023, paired with the aggressive core reductions we went after, allow us to end March with approximately 83 millions of cash, cash equivalents, and financial instruments. Long-term debt was approximately 96 million at the end of the quarter, with the variation compared to the previous quarter resulting from the reclassification of existing short-term debt to long-term debt with approximately 10 million euros. We did not use the ATM during the first period. No shares were sold. CAPEX, excluding capitalized R&D, was very light, with less than $2 million spent in the first quarter, with more than half on property, plant, and equipment. Our CAPEX will exclusively focus on the development and production of higher power charging products. Therefore, we expect to spend less than 10 million for the full year 2024, as almost all our factory capacity to scale is already in place. Inventory reduction is another initiative we made significant progress on, with wall box levels falling by another 5% or almost 5 million from the fourth quarter 2023, and ended the period at 79.4 million. AVL's current inventory levels are 10.1 million, which is an appropriate amount given the ramping up of EM4 sales and cross-selling. The consolidated inventory levels for the group are totaling 89.5 million euros, which is a 3% reduction sequentially. Our goal is to continue to bring total inventory down by the end of this year. This, together with our sales growth and cost structure reduction, is expected to help us achieve positive operating cash flow. Full-time headcount, including ABL, decreased on a quarter-over-quarter basis by 8% as we continue to balance the retention of key personnel and our efficiency efforts. Enric, I'll turn it back to you to provide some closing commentary.

Thanks, Jordi. You joined Wallbox six years ago when our revenue was 5 million euros and we had 60 employees. You helped shape the company into what it is today, a leading provider of EV charging hardware and energy management solutions around the world. And we are so grateful for your contributions. This is not goodbye because you will be joining our board soon enough. And so we'll continue to benefit from your long career in the automotive industry. Thank you for your continued time and guidance. As you depart, we would like to welcome Luis Boada. With nearly two decades of experience in corporate development, finance, and investor relations, Luis brings extensive expertise in both North American and European markets. He joins us from Fluidra, a global leader in pool equipment and connected solutions, listed on the Spanish Stock Exchange. During his tenure at Fluidra, Luis held various roles, including M&A, investor relations, and as a CFO of North America. Throughout his eight years at Fluidra, Luis played a pivotal role in establishing key processes, orchestrating integrations, and spearheading expansion efforts, all contributing to the company's financial success. Notably, the success of Fluidra and Project Merger and Fluidra's ascent from being a low volume and relatively unknown stock to inclusion in the main index of the Spanish stock exchange. He also brings substantial experience in M&A, something we intend on putting to good use as the industry continues to consolidate.

Luis, thank you for joining us today. Many thanks, Enric, Jordi, and the entire team. I am very appreciative of your support and look forward to officially joining the team next week. Joining Wallbox, which is a leading company in a very exciting space poised for significant growth and expansion, is truly thrilling. I'm excited to dive in, get to know the broader team, shareholders, and other stakeholders, and immerse myself in the world of Wallbox.

We're looking forward to you hitting the ground running. So as we look out over the remainder of 2024, I'm confident about our execution and competitive positioning. We've worked very hard to set up ourselves well for the upcoming year. Our 2024 strategic initiative remains very clear to the entire company. First, we are focused on growing sales in key geographies, including North America, Germany, and Western Europe, and in attractive market verticals like commercial application, bidirectional charging, and public DC fast charging. Second, depending on the product category, we will endeavor to expand gross margins through the continued use of cost engineering process continuous quality improvements, and strategic sourcing. Third, we will remain focused on aligning the cost base in reality to the market through thoughtful R&D spend, measured key talent acquisition, and disciplined OPEX allocation. Now, as our product portfolio nears its full breadth, only incremental adjustments are expected to occur to improve and evolve rather than drastic steps or significant investments. And finally, capital allocation is expected to occur in a thoughtful and disciplined manner to grow the business both organically and inorganically. So, as a result of these areas of focus, I expect there to be significant room for us to grow and evolve for the years to come. The market will recognize the transformation we've undertaken and shareholders will be rewarded. Thank you for your continued trust and patience. With that, we are ready to take questions from our 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 as many additional questions as time allows. Charlie, I think you have some instructions for our analysts.

Thank you. Of course, if you'd like to ask a question, please press star followed by one on your telephone keypads. If you'd like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure you're unmuted locally. As a reminder, that's star followed by one on your telephone keypads now.

Thank you, Charlie.

Let's take another question. Of course, our first question comes from Ben Callow of Baird. Ben, your line is open.

Please go ahead. Hi. Thank you for taking my question, Jory. Thank you, Luis. Welcome. My first question, just with the Tesla charging news, does that create an opportunity for you within the U.S. or in Europe? I've seen reports there are some sites that were permitted that no longer will be built out. And I've seen other companies trying to benefit off of that. So any thoughts there? And then I have a follow-up.

Hi, Ben. Thank you. This is Enric. So the way we see the Tesla announcement, we see it very positive for our customers, which at the end are the CPOs that are looking for sites and locations. So, one, that brings them better sites and better opportunities and also brings to the market the possibility for these players to have more volume, you know, at the end to install more charges at the end, you know. So them selling more chargers, it means that we will sell them more chargers. And I think we are in a unique position because we are one of the few players that today can sell fast chargers from 60 to more than 200 kilowatts in Europe and in the US. We have factories in both places and we're also selling them in the Asia region. So in this regard, we think it's going to be adding revenue in the midterm for us and for our customers, which are the transport operators and utilities and car manufacturers. I also think there's some opportunity in terms of talent acquisition, although it's probably more interesting for transport operators. There's some technical roles that might create some opportunities also for companies like us.

Thank you. In the U.S., Have you seen any kind of change in utilities as it pertains to them being a channel partner for you and their willingness to use your bi-directional charging technology? I know that you've had many deals in Europe, but I'm just wondering about in the U.S. how you see utilities on this subject. Thank you.

Yes. So we have some initial programs we are doing in California. But right now, the biggest volume for Quasar is with OEMs. Actually, we saw some news today that Kia was increasing volumes for the AV9. It's a very successful product. And we announced that we are going to launch the Quasar 2 together with Kia in the US. These are most of the opportunities we are discussing with lots of car manufacturers to do similar launches that the one we are doing with Kia. And we're also seeing a new opportunity for this product, which is with the factories of car manufacturers and car dealerships. Factories and car manufacturers need to discharge the car before they ship it. It has to be below 30%. So this is creating an initial big volume of this kind of product because at the end, car manufacturers need to discharge the product before servicing it and before launching it. So, you know, obviously the typical use case for Quasar, which is to use it for powering the home in case of a blackout and doing energy efficiency. But we're also seeing this additional opportunity for car manufacturers and car dealerships, which we believe in the short term is going to bring a lot of volume, especially the last quarters of the year, Q3 and Q4.

Thank you very much. And thanks again, Jordi, for your help.

Thank you. Our next question comes from Stephen Gengaro of Stifel. Stephen, your line is open. Please go ahead.

Thanks. Good morning, good afternoon, everybody. I guess two for me, but the first is pretty straightforward. On the AC units, if I'm doing the math correctly, the average price per unit jumped significantly, sequentially. And I was curious what drove that, if it was mix, if it was geographies. or if I'm doing the math wrong, just based on kind of you said units sold divided by revenue. So I'm curious what's behind that.

Hi, Stephen. So yes, this is a change of price. You know, we used to have lots of the previous volume for AC before the acquisition of AVL was more in the home charging segment. You know, home charging average price For a unit, it's around 600, 700, 500 euros. When we go into commercial charging, there's two dynamics here. One, a commercial charger is normally more expensive because you have a payment terminal, you have certain meters and certifications you need to achieve that make the product more expensive. But there's a second one, which is that the... Most of the commercial chargers we sell from ABL have a double connector. So normally it's double the price. So we are talking a normal AC commercial charger with a double outlet. It's around... $2,000, 2,000 euros. So we have this impact coming also from higher, more connectors in commercial charging. And the last thing, we have another product that we added to our portfolio, also coming from ABL, which we have not commented, but it's the EMC. This is a public charger, AC public charger. So it's a big pedestal with metal, It's a product very successful, especially in the city of Munich. We are selling it. And the average price of this kind of product can be above 5,000 euros. So these are quite expensive products because they have to be ready to withstand crash of a car. And it's in a public space. So these things are driving the increase of price of AC units. And well, let me add one more thing. We also reduce discounts, which has been a way we have increased our gross margin during the quarter. You know, average discount has dropped and that also helped to improve gross margin.

Thank you. That's helpful. And then the follow-up to that is then when we think about the AC business going forward, I know Mix will play a role But is the first quarter sort of average price per unit a reasonable gauge versus where it was historically?

Yeah, so I expect for the year to be in that range.

Great. Thank you.

Thank you. As a reminder, if you'd like to ask a question, please dial star followed by one on your telephone keypads now. Our next question comes from Leanne Hayden of Canaccord Genuity. Leanne, your line is open. Please proceed.

Morning, everyone. Thanks so much for taking my question and congrats on the progress this quarter. Just to start for me, could you please provide ABL specific revenue contribution during the quarter? And, you know, if you're not willing or able to provide the specific number, any additional color on this would be great.

We are not reporting the revenue, but we reported last quarter because it was the first quarter with ABL we introduced the company, but we expect ABL to be in the range of, as we reported before, 50 to 65 million euros for the year. We are a little bit behind in Q1 because the market has been softer in Europe, dropping 50% versus the previous quarter, but we still expect ABL to achieve this range for the for the full year.

Okay, thank you so much. And then just one more from me. How do you expect DC sales to ramp in 2024 and into 2025?

You mentioned DC sales, right?

Yes.

How do we see the ramping up in 2024 and 2025? Yeah, so...

The way we see it is 2024 for AC, we see it following the market growth. But for DC, we're still expecting growth ranging from 80% to 120% compared from the previous year. And keeping the same growth into 2025. The reason why there's two. One, we are now rolling out supernovae in North America. So that's really fueling the growth in Q2. You know, we have to think in Q1, our cells of supernovae in North America were growing. initial, you know, we sold the first units as we were ramping up production. But already in Q2, we expect to start delivering orders from some of these car manufacturers we discussed about. And that launch, together with the contracts we already have and backlog we already have in Europe, that should be able to give us this 80% to 120% growth year-on-year. And when we look at 2025, the contracts we are now starting to work and the RFQs we are starting to work with charge point operators in North America will translate into these big volumes. You have to think that most of the revenue we will have this year in North America comes from agreements we did last year. So that ramp up is going to continue in North America and we expect to be still in the range of 100% year-on-year growth for DC worldwide.

Got it. Thank you so much. I'll hop back in here.

Charlie, do we have any more questions?

Thank you. As a final reminder, no further questions on the line. But as a final reminder, if you would like to ask a question, please dial star followed by one on your telephone keypads now. We do have a follow-up from Stephen Jengara of Steeple. Stephen, your line is open. Please go ahead.

Thanks, and thanks for taking the follow-up. Just curious, in North America, how the operations are going in Texas and how we should sort of think about the margin profile on the D.C. side. I guess what I'm getting at, can you help us understand maybe a little more, is the D.C. A.C. mix and margin impact and just maybe tie that into how Arlington has progressed.

Hi, Stephen. So right now, most of the chargers, actually all the home chargers and commercial chargers that are sold in North America are being produced in Arlington. And I think we are very, very efficient right now in Arlington. We have improved a lot of our operations. But what's impacting gross margin right now in North America, it's more the kind of customer we have. Our customers in North America are big utilities, big partnerships like the Generac Partnership or Florida Power & Light. So these are big customers, volumes are bigger, and obviously this impacts the average selling price. And, you know, as we continue expanding with new customers, new partnerships, we will continue making the operations more efficient. But what's driving margin right now is pricing for these kind of partnerships. But if you ask me how the operations have gone, I think we are very, very efficient already. And what's impacting gross margin is pricing. In DC... and we have to say that gross margins are are performing very well in north america and we could say that the product we are delivering in north america it's almost generation three of supernova you know generation one is the first one we sold generation two was the cost improvement that we made for europe but now generation three it's super optimized for cost and reliability And we are seeing potentials of gross margins above 40, 45% for the North American market for DC. Right now, the products, we are shipping them from Barcelona. But at the end of the year, we will be producing them in Arlington, Texas.

Very good. Thank you for the detail.

Thank you. I think that was our last question. So thank you all for joining us today. We hope you found today's call a good use of your time. Let us know if we can help you in any way.

Ladies and gentlemen, this concludes today's call. Thanks for joining. You may now disconnect your lines.