Wallbox N.V.

Hello everyone and welcome to Warbox's third quarter 2024 earnings conference call and webcast. My name is Charlie and I'll be coordinating today's call. At this time, all participants' lines have been placed in listen-only mode to prevent any background noise. After the speaker's 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. I'd now like to turn the call over to Michael Wilhelm from Warbox. 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 third 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, and Luis Boada, Wallbox CFO. Earlier today, we issued our press release announcing results from the third quarter ended September 30th, 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 an audit financial statement in IFRS format that reflects 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 validation website under 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 Enrique.

Thank you, Michael, and thanks everyone for joining us today. Before we discuss the highlights of the third quarter 2024, I would like to take the time to put in perspective where Wallbox is today in light of the current EV market sentiment, especially in Europe. Year-to-date, up until the end of the third quarter, we had revenue of 126 million euros, which reflects a 26% growth compared to the same timeframe last year. If we look at the EV market in the main regions we operate in, Europe, North America, and rest of the world, which are all countries excluding China, we have outgrown the market significantly as the EV market year-to-date only grew 3% year-over-year. In the same period, we have reduced labor costs and OPEX by 14% and capex spending by 48%, even after incorporating AVL. clearly reflecting how we are improving our efficiency while continuing to grow and develop our products. We are a global leader in electric vehicle charging and energy management solutions. We have sold over 1 million chargers in more than 100 countries, and we believe that we continue to play a key role in the transition towards electric mobility. It is clear that this transition is happening. but that it is going through a much slower cycle towards mass adoption, and this is impacting the entire industry, including our competitors. We continue to work hard in adapting to the continuous changing factors ranging from regulations, subsidies, new technologies, daily market, customer preference, product requirements, the macro environment, and more. This volatility on our way to become leaders of a more mature industry is a fact, and it impacts our results. We already have been doing a lot in the last two years, but I would like to share with you key initiatives we are working on to remain agile against this market backdrop and how we plan to thrive. First, we have adjusted our organizational structure to be business unit driven. The core business units are home and business and fast charging, including software solutions and manufacturing. Each business unit has different types of customers, requires different kinds of support, and has different sales cycles. With this new structure, we create a more effective approach to each segment we operate in, allowing us to unlock the full potential of our solutions, shape a more focused customer experience, align resources more efficiently, and solidify our path to profitability. Second, we continue to optimize the organization according to the current market environment and as we look to 2025. This means creating visibility on the top line is key. And we have been improving this by doing detailed analysis of our sell-in versus sell-out data, speaking with our key customers, and strengthening our pipeline. Based on this demand, we are matching the cost base of the organization to support our path to profitability and cash generation. The aforementioned business unit structure will play an important role here, where dedicated focus will help identify the best and most efficient way to serve a particular segment. Third, we have clear action plans to improve our gross margin across all our product groups. Due to our efforts to increase visibility I just mentioned, we believe we are in a better position to optimize our procurement process and manage our inventory levels. There is a detailed bill of materials analysis ongoing to further identify cost reduction opportunities, and we are in the late stage of entering into strategic partnership agreements with industrial partners to improve our sourcing. Lastly, on top of the revenue we have visibility on, we have plans to further expand our sales with an improved commercial strategy and introduction of new products. As the EV market is developing differently region by region, country by country, and segment by segment, we are realigning our commercial strategy to ensure we optimize our sales channels and best capitalize on the opportunities in the market. We aim to drive revenue by continuously innovating our existing product portfolio and with the commercialization of new products. Examples of new products that are expected to come into commercialization soon include the Quasar 2 and the iRide certified Supernova 220. Both segments, bi-directional charging and public DC fast charging in Germany, open up new markets in which we didn't operate previously or only limited release. In Germany alone, Promotion projects more than 150,000 public DC chargers to be installed between 2025 and 2035. Now, we will go into the highlights of this quarter and share our perspective on the market. Afterwards, Luis will offer a closer look at our financial results and our key financial metrics. And finally, I will return to close the conversation and provide Q4 guidance. Q3 revenue was 34.7 million euros, up 7% year-over-year, driven by strong AC sales in North America, but impacted by a softer market in Europe for all product categories, and due to a one-off revenue charge of 1.6 billion euros from a return related to historical bill-and-full agreement with a specific customer. We are excited with our growth in North America. The European market growth was subdued to everyone's expectation, and this impacted our results. For European DC, we now see a similar trend as we previously saw in AC, where our CPO customers have been building up inventory as their focus has shifted from highly accelerated rollout towards profitability. In North America, the demand for the SuperNOA 180 in North America remains steady as we continue to ramp up sales efforts and add new partners. As we are starting from a smaller base in DC, than many of our competitors, we see ample opportunity to grow as we mature our position in the market. In total, during the third quarter, we delivered more than 38,000 AC units globally and 169 units of DC during the period. Gross margin was 23% in the third quarter, heavily impacted by one-off inventory provision. As we continue to develop and improve our different product families, certain components become obsolete or much slower to sell. So we choose to provision them, setting the business on the right footing for future success. It is important to highlight that this is not a cash out. Excluding this impact, the gross margin was higher and closer to historical results. We keep pushing for unmatched product quality and operational excellence to create gross margins in the range of 38 to 40%. Luis will provide more detail on gross margins shortly. On a consolidated group level in Q3 2024, we saw a light year-over-year reduction in labor costs and OPEX, 2% now, continuing the trend in cost reduction. Again, it is important to remember that we were able to achieve these cost reductions despite ABL's contribution to our cost base. We see additional opportunities to reduce our cost base as we continue to optimize the operations across the group and leverage synergy. Third quarter adjusted a bit, the loss landed at 21.8 million euros. This quarter broke the improvement trend since the last quarters due to the inventory provision. We see this as a one-off quarter with a unique sales adjustment and inventory provision on our path in making the business profitable. For future quarters, we expect to resume top line and most importantly, significant margin accretion. There continues to be progress with new products, new commercial efforts, cost reduction, and gross margin improvements, which are not yet reflected in the numbers we report today, but which we expect to benefit from in the near term. For the third quarter of 2024, Europe contributed €22.9 million of consolidated revenue, or 66% of total revenue, and grew modestly with 1% from the year-ago period. Compared to the 13% decline of the EV market in Europe, this was significantly better. North America continues to show strong progress with 45% year-over-year growth, while the EV market in the region grew with 4% and contributed €9.7 million, or 28% of total revenue. We are excited to see our progress in this region and how we are leveraging our complete portfolio in home, business, and fast charging, which we now have in place. APAC contributed 1.2 million euros, or 4%, and LATAM was approximately 800,000 euros, or 2%. We see clearly an increase in relative exposure to the US versus Europe, as we further diversify our unique and global geographical footprint. AC sales of 23.7 million euros, including ABL, represented approximately 68% of our global consolidated revenue. The AC portfolio remains the most important revenue weight category for Wallbox, containing both the home and business segment. We start at home and we continue to leverage our strong position in this segment as announced partnerships are starting to pay off. One exciting new partnership is with Engie as Wallbox has been chosen as the all EV charger provider for their new EV charging offer, My Smart Charge. In France, there is a specific regulation where chargers require an integrated connector without a cable, and this makes Wallbox Pulsar Plus socket the perfect solution for our partners. This is another example of how our broad product portfolio is allowing us to capture opportunities in different markets. In parallel, Wallbox is making quick ground in the business segment with the EM4 and Pulsar Pro. We are signing up new distributors and leveraging existing partners with the aim to optimize the cross-selling opportunities in our sales network. DC sales were 4.4 million euros, representing 13% of the revenue in the third quarter, and was impacted by an unexpected order delay by a customer due to excessive inventories. In the DC segment, the sales cycles are longer and therefore can create volatility between strong quarters and slower quarters. As a trend, we do see The ChargePoint operators are currently focused on profitability and network utilization much more than expanding their network by reach or by ports deployed. This means that ChargePoint operators are working through existing charging inventories and ordering less frequently. However, we continue to set up new customers and further expand our customer base in all regions. Software, services, and others contributed 6.6 million euros for the third quarter, representing 19% of our total revenue. These activities continue to be solid compared to last quarter with ElectroMaps, our public software activities showing 55% quarter-over-quarter growth. If we exclude the inventory provision impact mentioned before, the gross margin on a product level was solid. We also see opportunities to improve as we introduce new cost-out versions of our products. With the focus on quality, reducing our BOMs and leveraging our strategic partners to improve our procurement process, we see upside to the 38-40% gross marginal target in the future. We believe this improvement will be accentuated further when the market demands larger volumes. Last earnings call, we mentioned that we remain positive our long-term growth and the future potential of daily market, which we continue to do so. However, it is clear that the transition to EVs will take longer than everyone expected and that current growth is slowing. As reported by Road Motion in the third quarter, there were 1.47 million EVs sold in our core markets, which are North America, Europe, and the rest of the world. If we will compare with the same figure last year, this represents a 2% decrease in those markets combined. Our long-term view on EV transition and the opportunities that come with it remains solid, and we are more optimistic as we enter into 2025. Hundreds of billions have been invested by car manufacturers. New, more affordable EV models are being introduced. Charging infrastructure continues to be installed, and in the EU, new regulations come into effect. We have a diversified position, both geographically and commercially, making us less vulnerable to local or region volatility. At the same time, we see that competition without a similar diversified position and scale is struggling, increasing our market share and creating more opportunities for us. We believe that we are only at the beginning of the adoption curve, and in the meantime, we will continue to focus on what we can control. There are clear headwinds in the industry, but we are focused on maximizing our growth and achieving long-term profitability. Luis, I'll turn it over to you to comment further on our financial details.