Alfen Nv

Hello, welcome to the elephant 2025 full year results conference call hosted by Michael Culline, CEO in Onocrop CFO. For the first part of this call, all participants will be in listen only mode and afterwards there will be a Q&A session. If you wish to ask a question, please press pound key five on your telephone keypad. I would like to now hand the call over to Michael Culline. Mr. Culline, please go ahead.

Thank you, Maria. Good morning and welcome to Alphen's full year 2025 earnings call. Thank you all for taking the time to join us today. I'm Michael Collein, Chief Executive of Alphen, and I'm delighted to be leading this trading update with you today. Joining me is Onno Grapp, our CFO, who will talk you through our financial performance later in this presentation. Today's agenda is structured to give you a comprehensive view of our 2025 performance, and our path forward. I'll begin with the highlights of 2025. We'll then dive into each of our three business lines. Honor will follow with our full year 2025 financials. I'll then outline our strategy update. We'll conclude with our 2026 outlook before opening the floor for your questions during our Q&A session. 2025 was a challenging year for Alphen. At the same time, Our focus on cost control and operational discipline allowed us to maintain a stable, adjusted EBITDA margin at 5.8% of revenue. This highlights the resilience of our business in a difficult market environment. Since joining Alphen four months ago, I've spent significant time getting to know our organization's employees and partners, engaging with key customers, major supply chain partners, and our investors. The past period has reinforced my view that Alphen is a company with potential. Alphen's products and services are crucial for the European energy independence and energy transition. Looking ahead to 2026 and 2027, we are focused on translating Alphen's strong strategic position into performance. To capture our strategic position, Alphen has embarked on company-wide transformation to align organizational capabilities with the revised strategic focus of customer centricity, product excellence and digitalization. This transformation is essential as we work to navigate current market conditions and position Alphen to better capture future growth opportunities. Looking ahead to 2026, this will be a transformational year in which Alphen repositions for profitable growth. We expect revenue to be between 435 and 475 million euros, with an adjusted EBITDA margin between 4 and 7%, while maintaining capex below 4% of revenue. I will dive deeper into our transformation and 2026 outlook later in this webcast. Let me turn to our smart grid solutions business. In 2025, SGS generated revenue of 189 million compared to 2024 revenue of 210 million. Market conditions remained mixed throughout 2025 with headwinds in smart grid solutions caused by labor shortages, regulatory constraints, and grid congestion, while underlying demand drivers linked to electrification remained intact. activity increasingly centered on battery energy storage integration transport distribution stations and the rollout of sf6 free substations in preparation for european regulation we maintained a balanced revenue mix with 70 percent of revenue generated by high volume transformer substation sales to grid operators and 30 percent by project sales our adjusted gross margin remained stable at 22.4% compared to 22.8% in 2024. Looking ahead, we are starting to see regulatory tailwinds that will benefit both the product and project smart grid business over time. For example, the European grid package published in December And the Dutch Environmental and Planning Act will contribute to increasing the speed of permitting and the availability of capacity on the transmission grid. Installation capacity will also be increased by the Scaling Plan 2030, published in November 2025, where Dutch DSOs, contractors and government launched a plan to accelerate grid infrastructure deployment. And Alphen is prepared to capture significant part of that growth. Our EV charging business faced significant headwinds in 2025, with revenue ending at 120 million compared to 153 million in 2024. This decline was driven by increased competition in the EV charging home segment and reduced installation rates in the public segment. our adjusted gross margin for EV charging improved significantly to 43.4% compared to an adjusted margin of 36.1% in 2024, primarily due to lower component prices. A significant achievement at the end of 2025 was the introduction of two innovative chargers, the EVE Single Plus and the EVE Double Plus. These new products feature vehicle-to-grid ready capabilities compatibility with a wide range of vehicle brands and energy systems, smart charging capabilities with OCPP 2.x compatibility, auxiliary services for charge point operators, reduced installation costs for charging plaza applications, and the secure ad hoc payment options via dynamic QR codes. Over 2025, the battery electric vehicle market in the EU regained momentum with high double digit growth rates in car registrations year on year across the EU. Importantly, European Union legislation continues to confirm the electric future with both short and midterm accelerators. Even though the European Commission has lowered several 2035 CO2 tailpipe emission reduction targets for cars, This still shows the future of mobility is electric. New initiatives such as greening corporate fleets and the automotive omnibus further support market development. We also see that market uptake will be increasingly driven by economic and customer preferences, such as the superior total cost of ownership and performance compared to internal combustion engine vehicles. These economic and customer preference factors are overtaking the importance of regulation in driving EV adoption. Our energy storage systems business demonstrated resilience in 2025 with increasing revenue by 1.6% to 125.6 million compared to 123.7 million in 2024. This growth occurred despite market headwinds as energy storage system prices kept falling sharply in 2025. The gross margin for energy storage system was 22% in 2025 compared to 29% in 24. This was due to revenue recognition timing effects and an increased share of large scale battery projects with a lower margin. Despite these challenging market conditions, we achieved several significant commercial wins during the year. And I give you two examples. For NOP AgroWind, Alphen will be doing the full engineering, procurement and construction scope for a 49 MW, 196 MWh battery electric system, including the grid integration. Additionally, Alphen will be manufacturing 56 Mobile X units for Green & Power, Europe's largest temporary battery fleet. On the innovation front, we launched a new inverter design, significantly reducing noise levels and making the system more suitable for urban and other noise sensitive environments. This development strengthens our competitive position as energy storage systems increasingly move into densely populated areas where noise considerations are critical. The backlog for energy storage systems for 2026 revenue was 122 million at the end of 2025. This positions us well for 2026, and we still expect to book some orders in the first half of the year that will contribute to revenue in 2026. I now hand over to Onno to walk us through the 2025 financial performance. Onno.

Thank you, Michael. Our revenue in 2025 was backloaded towards Q4 due to a number of end-of-the-year projects that were commissioned. We did effort revenue of 120.1 million, representing a 12% decline compared to 135.7 million in Q4 2024. This year-on-year Q4 decline was driven by lower EV charging revenues and by lower revenues in smart grid solutions. Smart Grid solution revenues in the Q4 2024 comparison days were higher than normal due to the production catch-up to recover from lower output earlier in 2024. Our adjusted gross margin for Q4 2025 remains stable, 34% of revenue in Q4 2025 compared to 25% of revenue in Q4 2024. The lower adjusted gross margin was driven by lower margin in energy storage solutions due to revenue recognition timing effects and a lower margin in smart grid solutions due to a relatively high share of transport distribution stations delivered with a lower margin compared to private domain stations. This gross margin effect was partly offset by higher gross margin EV charging due to lower component prices. Adjusted gross margin Q4 2025 was lower than earlier in the year due to a business line and mix effect. Relatively more revenue in ESS. We also delivered a number of mid-voltage distribution stations at slightly lower gross margins. Adjusted EBITDA for Q4 2025 was 4.6% versus 5.7% in Q4 2024. This reduction was driven by a margin as well as a deleveraging effect. Looking at our full year 2025 income statement, I walked you through the key financial metrics and how they compare to our 2024 performance. Starting with revenue, we generated 435.6 million in 2025, which leaves us at the lower end of our updated revenue guidance of 430 to 480 million, as you already indicated during our Q3 earnings release. The decline represents a 10% decrease from 487.6 million in 2024. Our gross margin for 2025 was 124.9 million, representing 28.7% of revenue, compared to 115.4 million, or 23.7% of revenue in 2024. This significant improvement in gross margin percentage was mainly driven by a large amount of one-off costs in 2024, totaling to 24 million, among others a provision for the moisture issue, as well as a provision for obsolete EV charging inventory. When we look at our adjusted gross margin, which provides a clearer view of our underlying operational performance, we see it remained relatively stable at 28.1% in 2025 compared to 28.6% in 2024. To calculate our adjusted gross margin, we exclude a provision of 1.8 million in absolute inventory for ecocharging components offset by a 4.1 million reduction of the moisture issue provision. Moving to our operational costs, personnel costs decreased significantly by 15.2% to 73.8 million in 2025 from 87.1 million in 2024. Our adjusted personnel costs exclude 1 million in restructuring costs and some minor other adjustments. Other operating expenses also declined meaningfully by 21.1% to 25.7 million in 2025 compared to 32.5 million in 2024. Our adjusted operating expenses exclude 1.2 million in one-off transformation costs for R&D and 0.8 million in share-based payment expenses. In the next slide, I will explain in more detail how our adjusted operational expenses have changed as a result of our cost control effort and rightsizing. EBITDA improved from a negative 4.2 million to a positive 24.8 million, mainly driven by the absence of previously mentioned significant one-off items in 2024. Adjusted EBITDA remained stable at 5.8% of revenue, while dropping in absolute terms from 28.5 to 25.5 million. Adjusted net profit remained stable at 3.2 million. Throughout 2025, we implemented significant cost reduction measures. These actions were necessary to align our cost structure with revenue developments. Total personnel expenses and operational costs were reduced by 16.8%. Our most substantial cost reduction in absolute terms came through organizational rightsizing, where we reduced our workforce from 1,053 FTEs at the end of 2024 to 923 FTEs by the end of 2025. We achieved meaningful reductions in other operational expenses, which decreased by 21.1% to 26 million in 2025. These savings came from multiple initiatives across the organization. Moving forward, we will continue to maintain this disciplined cost and efficiency approach. Our net debt position continued to improve throughout 2025, demonstrating our commitment to maintaining a healthy balance sheet. Looking at the most important balance sheet movements, current asset decreased by 46.2 million driven by further inventory reductions and a reduction of trade receivables as our end of year 2024 position was higher than normal on higher volumes of substations towards year end and a number of battery outstanding receivables. On the liability side, non-current liabilities decreased by 6.8 million, caused by a reduction on provisions and scheduled repayments of borrowings. while current liabilities decreased by 44 million due to a reduction of trade payables as we paid our year-end bills. Our net debt position improved further from 32.7 million at the end of 2024 to 20.7 million at the end of 2025. Operating cash flow was 32.5 million positive in 2025 compared to 55.8 million in 2024. Operating cash flow was highly influenced by the inventory reductions in 2024 as well as in 2025. Further, we remain well within our bank covenant requirements. Our net debt to adjusted EBITDA ratio stayed below the maximum threshold of 3 to 1 as stipulated in our banking agreements. This improvement in debt position gives us a solid financial foundation as we navigate through the 2026 transformational phase. Our working capital position showed significant improvements throughout 2025, declining from 92 million in 2024 to 77 million at the end of 2025, reflecting our disciplined approach to inventory management and improvements in AR position. The most notable improvement came from our inventory reduction efforts. Between 2023 and 2025, we reduced overall stock levels and strategic down payment by 45%, equivalent to 79 million. In 2025 alone, we achieved a substantial 20% decrease in inventories, representing 20 million in reductions. This was driven by several key factors. selling a number of long-term energy storage inventory items and continuing to sell EV and battery charging inventory. Moving forward, we will continue to focus on further bringing down EV charging inventories to optimize our working capital position. Trade receivables decreased significantly in 2025 by 32.9 million, mainly reflecting the normalization of elevated receivable levels at the end of 2024. These higher levels were driven by the ramp-up in volumes with grid operators in the second half of 2024, following the resolution of the Morse issue that had affected the smart grid solution business. On the payable side, our trade payables was reduced by 40.9 million, as certain larger accounts payable positions were due towards the end of the year. The effect of our industry energy storage business on our working capital percentage continues to be positive. This continued positive impact is dependent on a continuous flow of energy storage contracts incoming for which repayments are due. Overall, the working capital improvements contributed meaningfully to our positive operating cash flow of 32.5 million in 2025. And now I hand over to Michael Kolijn, who will walk you through the strategy update and outlook. Thank you, Arno.