Alfen Nv

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Hello, welcome to the Alphen 2026 Q1 results conference call hosted by Michael Kolijn, CEO and Onno Krab, 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 5 on your telephone keypad. I would now like to hand the call over to Michael Kolijn. Mr. Kolijn, please go ahead.

Thank you, Bart Jan. Good morning, everybody, and welcome to Alphen's 2026 Q1 earnings call. Thank you all for taking the time to join us. I'm Michael Cullen, CEO of Alphen, and I'm delighted to be leading this trading update with you today. Joining me is Arnold Krupp, our Chief Financial Officer, who will walk you through our financial performance later on in this presentation. Today's agenda is structured to give you a comprehensive view of developments during the first quarter of 2026. I'll begin with the highlights. We'll then dive into each of our three business lines. Honor will follow with our financials. I'll then outline advancements on the transformation. And we will conclude with our outlook before opening the floor for your questions during our Q&A. I'm pleased to report that Alphen delivered a good start to 2026 with total revenue reaching 129.7 million in the first quarter, representing a 25% increase compared to Q1 2025. This is primarily driven by energy storage and smart grids project business. Looking at group gross margins, our adjusted gross margin was 34 million, representing a 3 million absolute increase compared to 31 million in Q1-25. The lower group margin percentage represents the business line mix shift towards energy storage systems. We deliver a solid adjusted EBITDA with absolute and margin improvements. This demonstrates the operational leverage inherent in our business model and our continued focus on cost discipline while investing for growth. Beyond our financial performance, we've made significant strides in our transformation and renewed strategy. Most notably, we successfully implemented a business unit organization, marking a milestone in our journey towards greater customer centricity and accelerating strategy execution. Looking ahead, Alphen reiterates its 2026 guidance across the board. Let me turn to our Smart Grid Solutions business. Our Smart Grid Solutions business delivered solid performance in the first quarter, with revenue reaching 55.8 million, representing a 2.7% increase compared with last year, which was also a strong quarter then. This growth reflects the strength of our project execution capabilities in both regular projects as well as transport distribution stations for a Dutch grid operator. We invested significant efforts to accelerate these larger stations. By combining project capabilities, a standardized solution, and a long-standing partnership, we delivered a turnkey approach that increases deployment speed by approximately tenfold. Revenue from transport distribution stations starts to show in our figures, and this effect is structural in a year-on-year comparison throughout 2026. From an operational perspective, we delivered 833 substations during the quarter. We delivered 590 substations in the Netherlands and 243 from Finland. The significant increase in Finnish substations is attributed to a substantial mix shift towards grid operator products for Alfa and Elkamo, our Finnish subsidiary. To reflect this in our revenue mix, we now split revenue from Elkamo in grid operator products and projects, whereas last year we allocated it fully to projects. This results in 71% of revenue coming from grid operators and 29% from projects. Gross margin improved to 25.2% from 23.9% last year, in part driven by a higher share of project sales. Further, we saw the first signs of our international expansion strategy on SGS. securing project orders from germany and france while these initial orders so modest in scale do represent the first proof points of our strategy while we're pleased with our smart grids performance this quarter i want to provide you with a slightly more balanced perspective on our market dynamics that we are observing On the positive side, we're seeing meaningful regulatory improvements that support our medium to long-term outlook. The regulatory environment has clearly reached elevated levels of ambition to support grid infrastructure development. At the same time, we saw a notable acceleration of substation infrastructure rollouts in the 2026 investment plans of Dutch grid operators. This represents significant progress in addressing grid capacity challenges. we're witnessing similar positive momentum in Finland, where FinGrid has expressed optimism about mid to long term outlook for grid infrastructure investments. However, the key constraining factors still impact our smart grid solutions clients today. permit acquisition difficulties, transmission grid capacity limitations, land availability for substation placement, component availability issues, and human labor capacity constraints for installations. The recent example is the news from the province of Utrecht in the Netherlands, where small consumers, including new housing and people who want a heavier connection at home, will face a connection freeze. These types of grid capacity limitations illustrate both the urgent need for our infrastructure solutions and the complex challenges our customers face. Let me conclude this slide on a positive note by saying we are more optimistic about the market environment compared to 2025. Moving over to EV charging. We faced a decline in the first quarter with revenue down 19% to 23.3 million, which was in line with expectations as we renew our portfolio. This quarter's performance reflects three dynamics. First, the gradual ramp up of features on our new products impacting order volume. Second, an uneven order pattern in the public segment. And third, the continued competitive pressure in home charging. Our gross margin percentage improved year on year to 39.9%, which is at the midpoint of our guided range. From a production perspective, we delivered approximately 25,000 charge points during the quarter, representing a 12% decrease from the 28,400 units produced in Q125. We are taking every effort to return the EV charging to revenue growth by renewing our portfolio and enhancing our existing offerings. I want to share initiatives we are working on. From a product perspective, we are accelerating new product development to answer the competitive pressure in the home segment. And with a similar disciplined focus, we are accelerating the rollout of new features for our recently introduced plus models to enable smarter charging capabilities. On the digital front, we have a new digital platform that will enhance the customer experience installation. We're significantly reducing installation time through our updated installer app. And lastly, we made improvements on our service experience through localization and digitalization initiatives that customers are already feeling today. Together, these initiatives structurally strengthen Alphen's competitive position in the EV charging market. The work and dedication I've seen in recent months make me confident that we will turn this around. I would now like to dive deeper into the market context. Across Europe, battery electric vehicle registrations continue their upward trajectory, although the country-specific picture is mixed. Our core markets of the Netherlands and Belgium experienced a year-on-year quarterly decline, reflecting their status as early adopters. Conversely, southern European countries are demonstrating strong momentum, with Italy and Spain showing robust year-on-year improvements in the battery electric vehicle registration. Current geopolitical tensions have created a re-acceleration of demand, with fuel price hikes driving renewed consumer interest in electric mobility. At the same time, we are seeing renewed policy support across European markets this year. As a result, this positively influences the total cost of ownership, which was already compelling for battery electric vehicles versus the combustion engine counterparts. This is starting to become a reality for all vehicle segments as new models hit the market that are cheaper and deliver superior performance. It reinforces our view that electric vehicle adoption will increasingly be driven by consumer adoption rather than regulatory support alone. In all, we are on an undeniable path towards electric transport, and this will translate into sustained demand for charging infrastructure across all our European markets in the coming years. Our energy storage systems business delivered a significant increase with revenue surging 145% to 50.7 million, driven by successful milestone achievements in two large-scale projects. From a profitability perspective, our gross margin in energy storage systems was 21.1 during the quarter. Last year's margin of 32.5% was exceptionally high due to a one-off release of project contingencies. The current quarters margins were above the midpoint of the expected range of 15 to 25%, which we consider strong given the share of large projects in the product mix. Looking at our backlog, which grew quarter over quarter to 130 million. with 82 million scheduled for delivery in 26 and 48 million extending into 2027. this is presses given the 0.7 million converted to revenue during quarter one backlog is accompanied by pipeline going forward we are seeing market traction in all of our target segments utility scale commercial and industrial and mobile storage applications However, we want to be transparent about timing dynamics in this business. The natural window is closing to convert pipeline opportunities into revenue in 2026, given the project timelines and component lead times inherent in large scale energy storage deployments. That said, mobile storage opportunities present shorter execution cycles, offering some flexibility for near-term revenue conversion. From a market perspective, we're observing a notable reversal in the pricing environment that has characterized recent years. According to Bloomberg New Energy Finance, battery system prices have increased by 10% to 20% compared to Q1 2025, driven by higher raw material prices, particularly lithium, and China's reduction of export tax rebates. However, we observe a smaller system price increase in our supply chain channels compared to Bloomberg figures. I want to mention that this has no impact on orders that are already in our backlog. As part of our strategy implementation, Halfen continues to work on lowering the total cost of ownership of energy storage projects for our customers, which accounts for more than battery pricing alone. I will now hand over to Onno for our financials.