Alfen Nv

Hello and welcome to Alphen 2023 full year results. Please note this conference is being recorded and for the durations of the call, your lines will be in a listened-only mode. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I'll now turn the call over to Marco Rolleveldt Chief Executive Officer. Please go ahead, sir.

Thank you, Adib. Good morning and welcome to this Alphen full year 2023 webcast. Let me firstly introduce the participants on our site. This webcast and the questions that may come forward will be handled by the management board of Alphen, being Jeroen van Rossum, CFO, Michelle Les, CCO, and myself, Marco Roelleveld, CEO. 2023 was the breakthrough year for the battery storage systems, almost quadrupling the revenue compared to the last year, and compensating the drop in revenue of charging stations caused by the destocking into the market. Assuming you have noted the use of the disclaimer, we can now start with the presentation, where firstly, I will start with the highlights of 2023. Then Michelle Lesch will continue with setting the stage for food growth, and in the last session, Jeroen van Rossum We'll go into more details on the financials, and I will close the presentation with the outlook for 2024. We can now go to slide four with the highlights. Our revenue in 2023 has risen to €504.5 million. This represents a growth of 15% compared to 2022, where the revenue was €439.9 million. The adjusted EBITDA in 2023 came out on 11.3% of revenue. This is a drop of 18% compared to the 18% in 2022. Our projected revenue outlook for 2024 is 590 to 660 million euros. This revenue growth is driven by the continued energy transition throughout Europe. And we reconfirmed our strategy and medium-term objectives as communicated in the capital markets day in May 23. We can go now to sheet five with the 2022 revenue splits. As already mentioned in the highlights, the overall revenue has grown in 2023 with about 15%. For energy storage, the revenue in 2023 ended up at 163 million euros, And that represents a revenue growth of 258% growth compared to the 2022 number where the revenue was 45.5 million euros. For the battery elements, more projects are in the execution phase and the average project size is increasing. And the market momentum remains strong. For the battery mobile, we strengthened our position portfolio by introducing our fourth generation mobile energy storage solution. And all in all, we are convinced that the future growth potential of energy storage revenue due to the positive market developments, our strong market position and good order book. The smart grid solution revenue grew in 23 with 32% to 142.6 million euros for a large part driven by the disk grid operator significantly ramping up their investments. These disk grid operators continue to expand and reinforce the distribution grid and it reflected this in their formal investment plans. And these investments are publicly available. Towards 2050, in the Netherlands alone, around 100 billion euro of investments are needed to make a grid future-proof. The private network business also grew strongly, as it was no longer constrained by supply chain restrictions. For EV charging equipment, the revenue in 2023 was 153.1 million euros, which is a 39% decline compared to the 251.8 million euros in 22. This drop was mainly due to destocking at our channel partners. In 2023, our channel partners used their inventory they bought in 22 to supply the end markets. Therefore, they had less need for buying charges, and as a consequence, our revenue declined. From Q4 onwards, we saw the destocking come to an end. As you can see, our Q4 results in 2023 showed an increase of 10% compared to the third quarter. We now continue on sheet 6 with the overview of our EBITDA developments. The adjusted EBITDA in 2023 mounted up to 57.1 million euros, which is a decrease of 28.1%. compared to the 79.4 million euros in 2022. The overall EBITDA margin decreased in 2023 as low volumes created deleverage of fixed costs based in our EV charging business line. On a quarterly basis, 2023 shows an improvement trend driven by higher volumes with smart grid solutions and energy storage systems. On sheet 7, we summarized the 2023 highlights regarding our sustainability agenda. Corporate social responsibility is a key focus point of Alphen. We are at the heart of the energy transition by enabling generation, distribution, and consumption of emission-free electricity with our smart grids, EV charging equipment, and energy storage solutions. Our business line directly contributes to a sustainable economy and society as proven by the fact that 99% of our revenue is aligned with the EU taxonomy regulations. In 2023, about 374,000 households can be supplied with renewable energy due to solar farms that were connected to the public grid. The other elements where our products contribute to sustainable economy, I would like to refer you to our annual report where we've included an extensive section on this subject. Furthermore, we have put a strategic action plan into place under the direct supervision of the management board to implement the corporate sustainability reporting directive. In addition, we've also met our full scope three CO2 emissions filed our SBDI targets, where we're now waiting for approval. When approved, we will share more information. Michelle will now continue with setting the stage for future growth.

Thanks, Marco. Now I'd like to talk through various market developments that will sustain our growth. First, on slides 9 and 10, we'd like to show what we're seeing in the market across our three business units, and again share our view on the EV charging relative to the markets. First, let's look at SGS. We have two segments, our grid operators and private networks. What we are seeing with the grid operators is an estimated CAGR of 21% from 2024 to 2026, as Marco mentioned, based on the draft investment plans that are published and available by the grid operators in Q4 of 2023. And in private networks, we serve many end segments, including greenhouses, solar, EV fast charging. And here we're showing one of those end markets for EV fast charging. where you can see an 11% CAGR from 2022 to 2028. When we look at EV charging, we see a CAGR of 18% from 2023 to 2027, and in energy storage, a CAGR of 58% from 23 to 27. Keep in mind that is on a megawatt-hour basis. The timelines are varied due to data availability, but fundamentally all represent continued market growth for our business. Next on slide 10, we want to again share a view we've shared in a previous call. And there's a couple of things we'd like to point out. I think first, what we see is that Alpen continues to be a leader in the EV charging space amongst listed peers. And with the stocking over, what you can see is a recovery in revenue starting in Q3 and continuing into Q4. We see our customers ordering again, and they are seeing demand from their end markets. We've also been asked many times about our market share position and what we see here gives us confidence that we've not lost share and reaffirms what we shared in Q3 about future growth. Next on slide 11, we want to share an internationalization update. As you can see in 2023, we had 42% of international revenue down from 51%, but this reduction was driven by two things. First, a reduction in EV charging volume where we had the largest percentage of internationalization and growth in SDS, where we have the most activity in the Netherlands. But even with this reduction of international revenue from EV and strong domestic growth, we still achieved 42%, which really shows us that our energy storage business will contribute to our internationalization goals. And fundamentally, we still have a focus on internationalization. We continue to grow across Europe with EV charging and energy storage, but with our current mix, we do expect to see more domestic revenue. As we move to slide 12, we'd like to share a sample of our commercial successes that reinforce our growth story across all three business lines. What you see here is we continue to add new customers, but equally important is we are getting wins from existing customers. First, in EV charging, we continued to build depth with winds in the parking and electrified fleet segments. And we saw continued winds in the public segment with electricity. In smart grids, we continue to supply to the grid operators and have private network winds in key segments such as wind, solar, and microgrids. In energy storage, we continue to have winds in both segments, both utility scale and mobiles. And we're seeing repeat wins with customers like Hatanasi and continued growth in key markets with VasaWind. In addition to these selected wins, as we move to the next slide, we'd like to share some of the investments we continue to make in our solution portfolio to serve the market. In EV charging, we are readying our solutions for the upcoming implementation of AFIER. AFIER is the Alternative Fuels Infrastructure Regulation and is a law that will be in effect in April of this year. This law requires that all new publicly accessible chargers in the EU have payment capabilities. For us, this includes hardware changes on our twins and software enhancements for our portfolio. We also continue to enable our customer experience with the upcoming release of our Alphanese Connect app. In smart grids, we have ongoing work to support our tender win with Staten and ensuring our stations can support new switchgear that complies with the phasing out of FSX gas. In energy storage, we launched our Mobile X, which provides more energy density and a 10-foot container and includes a transformer and switchgear to be a complete temporary power solution. We've also built out capabilities to support our customers and their grid compliance requirements. As we continue to slide 14, we'd like to share that in addition to the market growth and investment in technology, we also continue to invest in other areas. We've expanded our average FTEs to 942 in 2023, an increase from 787 in 2022. We continue to invest in productivity and operational improvements, including maturing our sales and operations planning process, which includes forecasting, demand planning, inventory control. And we are looking forward to opening our new facility, which is previously shared, will be three times larger than our current largest facility. As previously communicated, this is to support further expansion of our manufacturing, production, and office requirements. And now I'd like to hand it to Jeroen to walk through our financials.