Alfen Nv

Hello, welcome to the ALPHA 2025 Half Year Results Conference Call, hosted by Marco Ruhlefeld, CEO, and Ono Kraut, CFO. For the first part of this call, all participants will be in listen-only mode. And afterwards, there will be a question and answer session. If you wish to ask a question, please press pound key five on your telephone keypad. I would now like to hand the call over to Marco Ruhleveld. Mr. Ruhleveld, please go ahead.

Thank you. And good morning and welcome to this webinar regarding the 2025 first off-year trading update of Alphen. We appreciate the fact that you have taken the effort to participate. As indicated by the moderator, this webcast and the questions that may come forward are handled by the management board of Alphen, being Onno Krupp, CFO, and myself, Marco Rulleveld, CEO. In this webcast, we will start with the highlights of the first half year of 2025, followed by a short review of the business line. Next, we will go in more detail regarding our financials and outlook. We continue with slide four with the highlights of the first half of 2025. In the first half year, we realized €211.5 million in revenue. This represents a 13.9% reduction compared to the first half year of 2024. It was mainly driven by low revenues in energy storage systems and EV charging. The overall gross margins was 29.1% of revenue compared to 22.3% of revenue the first half year of 2024. Please note that 2024 gross margin was impacted by moisture issue provisions. As a percentage of revenue, the adjusted EBITDA improved from 5.5% to 6.2% as a result of cost saving measures. Personnel costs decreased by 9.8% and other OPEX decreased with 18.3%, showing that the cost reduction measures have been effective. We reiterate our 2025 guidance as communicated at the Q1 trading update. For our mid-term ambition, we are considered as the continued challenge in market conditions that we experienced in 2025 are expected to persist in 2026. Onno will go into more detail on the financials and outlook later on in this presentation. As last point in this highlight and further detailed in the next slide, I would like to draw your attention to the appointment of Michael Colline as per the 1st of October. We are convinced that he has the right background and personality to guide the company forward in the coming years. With the appointment of Michael Colline, we are assuring a careful and timely succession following my decision to retire early. Michael brings a strong background in leadership within the energy and technology sector with extensive relevant experience as former CEO of Heliox, a market leader in smart energy management solutions and fast charging systems for public transport, e-trucks, and port equipment. Next, we will go in more detail regarding our three business lines, starting with the next slide with smart grid solutions. Smart Grid solutions revenue in the first half of 2025 was 97.1 million euro, which is 3.9% more than last year. Grid operators drove 65% of the revenue, and the private domain clients accounted for 35% of our revenue. We produced 1,628 substations in the first half year compared to 1,548 in the same period last year. In the Netherlands, that were 1,273 stations, and in Finland, 355. The gross margin increased from 31.1% to 22.4%. Adjusted for one-off costs, the gross margin decreased from 26.5% last year to 22.4% in the first half of this year. This decline is primarily related to the increased component cost in response to the moisture issue and a relatively higher share of revenue coming from grid operators. A nice commercial win to mention is the electric acre polder, where we carry out medium voltage installation activities for the 200 megawatt peak solar path. Regarding the technical innovations, we have certified our Pacto, Diabolo, and Altro stations with SS6-free components. The usage of SF6 elevation gas is prohibited by the European environmental regulation in greenhouse gases, and the new equipment is not allowed anymore as per January 2026. On the next slide, we elaborate on the weakness we see in the markets of smart grid solutions. Our clients in the Netherlands are hampered in scaling by several aspects. Those aspects are firstly obtaining permits, Next to that is available transmission grid capacity. Thirdly, available land to place the required extra substations. Fourth, the availability of main components, partly related to the SF6 translation. And lastly, the fifth point, available human labor capacity for site installations. For our business with the grid operators and also in the private domain, we do not see short-term improvements due to the mentioned aspects and we expect the situation to continue into 2026. A positive note is the rollout, is the acceleration of the rollout of the connection between stations, the connection station between the TSO grid and the DSO grid. It is good to note that the margin profile of this revenue is in line with other business with the grid operators. Ono will now continue with the next slide regarding EV charging business line review. Thank you, Marco.

EV charging revenue decreased by 22.8% from 80.1 million in H1 2024 to 61.8 million in H1 2025. As communicated during the Q1 earnings release, we currently do see increased competition in our core markets. which we are countering with selective pricing programs and new product introductions and innovations. A total of 61,245 charge points were produced in H1 2025, which is a 23.7% decrease compared to H1 2024. Although these lower volumes do not affect our gross margin percentage, for the product line in total, we do see an absolute gross margin effect of around 7 million due to lower volumes. Gross margin increased by 41.3%, and this is a slight change versus our press release, which stated 42.9, compared to 33.9% in H1 2024. Adjusted gross margin stands at 44.1% compared to 38.4% in H1 2024. These high adjusted gross margins are mainly due to lower component cost prices, and to a certain extent, to the higher margins on twins in comparison to H1 2024. Together with the Belgium wholesaler CBO, we will roll out 520 charge points in parking garage and semi-public space in Belgium. These stack of wins are important for us since it is our expectation that parking garage and company parking lots will be important growth segments in the years to come. We also announced our plus models, which are fully compliant with new APHER requirements that will come into effect in the beginning of 2026. Since the plus models are built upon a new hardware platform, we had to take an inventory provision of 1.8 million for certain components that will not be used anymore on the new platform. This provision has been booked in Q2 as the European Commission provided clarity on the timelines for the implementation of the alternative fuel infrastructure regulation, also known as APHER, The new requirements will come into effect on the 8th of January in 2026. With the launch of new plus models, we will also be launching a new tool for installers. Time to install is an important KPI for our installers. Alphen has been working on the development of the EVE install app, which will help installers to significantly reduce time required for installation and configuration. This app will be available at the beginning of 2026. Next slide, please. Battery electric vehicles and plug-in hybrid electrical vehicle registration growth across Europe has been strong in a number of countries. However, we do not see additional growth since the relaxation of CO2 regulations in March 2025. Often for the Netherlands, we are faced with increased competition in markets where we have been traditionally very strong. As mentioned before, we see increasing competition in the home segments. often continues to maintain strong position in the public market with its thin products, although the overall number of installation in the public market has slowed down. Despite relatively high battery electric vehicle growth rate in Germany, we currently do not see a similar order intake increase in our order books. For Belgium, the market growth rates for battery electric vehicles have been high, but it was offset by a sharp decline in plug-in hybrid cars. Even though overall battery-equipped vehicles and plug-and-habit electrical vehicles registration in France are weak, often have seen quite robust growth performance in this market, as we have gained a strong position with a number of larger clients. In Denmark, we have developed a strong partnership with Northleaf, which has been very successful during 2025. As mentioned earlier, after the introduction of our personals in Q4, This year, our full product portfolio is compliant with a theory crimes affected next January, beginning of next year. Revenue for our energy storage product line declined by 27.1%. 2025 revenue performance is in line with our expectation. As during Q2 last year, we had an unusual high revenue due to simultaneous deliver of materials on site for several projects. leading to higher revenue recognition in Q2 last year. Gross margins at 27.4% were higher than usual on the back of relatively high margins in Q1. In the second half of 2025, we expect the margins to normalize. Together with eConnection, we will deliver 20 million watts, 40 megawatt-hour battery energy storage systems. This system will be co-located with a wind hub at Milche Jams in the southwest of the Netherlands. This project will help to maximize the use of wind energy and maintain electricity grid stability. It is expected to be operational in Q1 2026. Furthermore, we have introduced a new 20-foot containerized solution for our elements battery storage system. This innovation is important as it increases the energy density and reducing the length required for battery energy storage projects. The backlog for battery systems is sufficient to cover the 2025 revenue guidance. In addition to the stationary systems that we are realizing and taking revenue for during 2025, we also sold a number of mobile units that we are delivering in 2025. Backlog for 2026 is developing in a positive way. Over during the year, we have 72 million of backlog for 2026 revenue, and our pipeline has sufficient prospect to further fill the backlog for 2026. As battery prices continue to decline by about 10 to 20% in 2025, our kilowatt-hour volume growth is quite significant. Prices decline are driven by several factors. Firstly, there is a consistent oversupply of battery energy systems in the market. Secondly, prices of raw materials used for batteries are dropping. And lastly, battery technology continues to improve. In January, often announce the signature of the agreement with Flavorbest to build one of the Netherlands' first large-scale four-hour bests based on a containerized solution. Construction has started and completion date of this project expected to be Q4 2025.