Alfen Nv

Hello and welcome to the ALPHA 2026 third quarter results conference call hosted by Michael Colijn, CEO and Bart Meussen, Interim 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 to enter the queue. I would now like to hand the call over to Michael Colijn. Mr. Colijn, please go ahead.

Thank you, Elba. Good morning, everybody, and welcome to Alphen's 2026 Q3 earnings call. Thank you all for taking the time to join us. I'm Michael Colijn, CEO of Alphen, and I will be leading this trading update with you today. Joining me is Bart Meussen, our interim chief financial officer. Today's agenda is structured to give you a comprehensive view of developments during the third quarter of 2026. I'll begin with the highlights. We'll then dive into each of our three business lines. Bart will follow with our financials and we will conclude with our outlook before opening the floor for your questions during Q&A. Let's start with this quarter's highlights. Revenue came in at 99.1 million. compared with 104 million in Q3 2025. The year on year movement is largely a function of phasing within energy storage systems and it was fully anticipated. The number that better reflects the underlying momentum of the business is our year to date revenue, which grew 14.3% to 360.6 million up from 315.6 million in the first nine months of 25. That is a solid result and gives us confidence in our full year position. Our group gross margin came in at 30.5 million or 30.8% of revenue compared with 29.9 million and 28.7% of revenue in Q3 2025. Improvement in margin percentage was primarily driven by the release of project contingencies on the completion of large energy storage projects. Adjusted EBITDA was 4.0 million or 4% of revenue compared with 6.9 million and 6.7% of revenue in Q3 2025. Reflecting revenue phasing throughout the year and transformation efforts with a planned temporary increase in personnel expenses. I'm also happy to announce that we renewed our credit facility during the quarter with three years until October 2029 at the same terms with two one-year extension options. Bart will take you through the details of that later on. Finally, and importantly, we are reiterating our full year 2026 guidance. With three quarters behind us, we expect revenue to come in within the upper half of our 435 to 475 million guidance range. Adjusted EBIT margin is expected to be in the lower half of the 4% to 7% range, and CAPEX will remain below 4% of revenue. At the end of October, Alphen hosted a conference with the title Generation Electric, an event bringing together more than 300 partners, industry experts and stakeholders. The event was held for the second consecutive year The program combined keynotes from industry experts on the developments shaping Europe's energy transition with showcasing Alphen current and future solutions across our business units. It is a clear step in strengthening Alphen's presence in the market and reflects the sharper customer focus. Turning now to smart grid solutions which have delivered another strong quarter. Revenue came in at 54 million, up 10% compared to 49 million in Q3 2025. That growth was driven by two clear forces. Sustained high volume demand from Dutch grid operators compared to last year, and the continued momentum of our Finnish subsidiary, Alphen Elkamo, which recorded its highest quarterly revenue to date. In terms of revenue mix, 70% was generated by grid operators, and 30% by project sales. Operationally, we delivered 870 substations in the quarter, 621 in the Netherlands and 249 in Finland. Adjusted gross margin came in at 23.7% compared with 25.9% in Q3 2025. The modest decrease reflects the higher share of grid operator products in the mix, which carry margins at the lower end of our range. This is within our expected gross margin range of 20 to 30%. Let me now turn to the market context for smart grid solutions. The picture remains balanced and unchanged from what we have shared throughout 2026. Regulation is moving in the right direction, while the requirements to scale continue to set the pace in the short term. On the one hand, the regulatory agenda moved forward again this quarter. At EU level, member states agreed their position on the grids package aimed at faster permitting and more grid investment. In the Netherlands, the cabinet set out its crisis legislation for grid congestion with the first measures taking effect from 2027. and in Finland, grid operators continue their large-scale renewal programs towards the 2036 security of supply targets. On the other hand, the known constraints are still there. Permits, transmission grid capacity, land to place substations, component deliveries and installation capacity still determine how fast our customers can build today. The NGO Netbeheer Nederland latest progress report captures this well. Grid operators are building more than ever but demand for grid capacity is still growing faster than the grid can expand. I'll share one concrete example to illustrate that we see a similar pattern. Our transport distribution stations continue to grow year on year and build times across the sector are coming down. Yet finding locations and permits for these stations remains the bottleneck, as reflected by one of the Dutch grid operators in the media recently. For Alphen, this underlines our view. The long-term need for grid infrastructure is clear and growing. In the near term, however, the pace is set by execution in the field, and that is how we are planning for it. Moving to EV charging, where the story this quarter is one of transition, with real signs of progress emerging alongside near-term challenges that we are managing with clear intent. Revenue came in at 26.8 million, a decrease of 6.7%, compared with 28.7 million in Q3 2025. That decline reflects two dynamics running in parallel. The phase-out of our previous generation products, and continued competitive pressure in the residential segment. Neither is unexpected and both are accounted for in the strategic choices we have made to reposition the portfolio for the long term. What is encouraging is that we have a new platform and it is beginning to deliver. The phased introduction of new features throughout 26 is starting to pay off in a tangible way. most visibly in the year-on-year growth in the business segment where our EVE double plus product is gaining clear traction. Seeing growth there in the face of broader revenue pressure is a meaningful signal. On volume, we delivered 25,850 charge points in the quarter, a decrease of 10.6% compared with the 28,900 delivered in Q3 2025. Geographically, 60% of our EV charging revenue was generated outside the Netherlands, which speaks to the breadth of our pan-European footprint and underscores that we are not dependent upon a single country. Gross margin was 40.9% compared with 43.1% in Q3 2025, with the modest compression reflecting ongoing sales campaigns. Importantly, the margin remained above the midpoint of our 35.45 guidance range, which we view as a solid outcome given the current environment. We are clear eyed about the work still ahead in this segment, but the strategic direction is set. The new platform is gaining traction and we remain confident in the path back to growth. Moving on to the market context of EV charging. Electric vehicle adoption in Europe accelerated in the third quarter. Battery electric registrations grew by 55% year on year on average and every market on this chart grew. France more than doubled and Germany was up 77%. EV registrations in our core markets are back on track. After a slower first half year, the Netherlands grew by 51% and Belgium by 34%. This acceleration is happening while European policy is uncertain. The European Commission has proposed to soften the 2035 targets for new cars, and that discussion is still ongoing. Yet the market keeps moving forward. First, buyers now have a much wider choice of more affordable electric models. Second, batteries keep getting better and cheaper, which means more range, faster charging and lower prices. and third, higher fuel prices make driving on electricity even more attractive. Finally, the fourth point, EV charging infrastructure is more accessible and reliable. In some, EVs have a better total cost of ownership and are more convenient. And that is why uptake is becoming structural rather than driven by regulation alone. For Alphen, this makes the trend irreversible and supports underlying demand for charging infrastructure across our markets, independent of the direction of the European debate. Turning now to energy storage systems, where the headline revenue number requires some context to be read correctly and where the underlying story is considerably more positive than it might first appear. Revenue in Q3 was 18.3 million, a decrease of 30.4% compared to 26.3 million in Q3 2025. That decline is a direct consequence of phasing, not demand. The large projects that reached completion this quarter had their revenue recognized progressively throughout the first half of the year as components were placed onsite and construction advanced. By the time we reached Q3, the bulk of that revenue had already been booked. This front-loading was anticipated and it is fully consistent with how we have guided the market to think about the shape of our energy storage revenue across 26. Running alongside that, mobile storage systems continue to deliver significant year-on-year growth, a part of the business that is scaling with real momentum in the last 12 months. driven by power rental companies that take our batteries all over Europe, replacing diesel generators at construction sites, events, charging hubs and temporary projects, providing reliable and clean power. Going forward, this segment should supply the energy storage business with a more stable base load revenue. On gross margin, the picture is genuinely strong. Margin came in at 37.1% compared with 18.2% in Q3 2025, well above our expected range of 15% to 25%. This was driven by the release of one-off project continuancies upon the completion of several large projects combined with meaningful cost efficiency improvements in executed projects. We are transparent that this level of margin is not the run rate expectation for that segment, but it does reflect the quality of execution our teams have delivered on these projects. Turning to backlog, which grew to 109 million at 30 September 26, up from 93 million at the end of the first half. That growth was driven in large part by orders secured early in the quarter and the backlog is now split 23 million for the remainder of 26 and 86 million carrying into 27. Orders signed in Q4 will add further to the 2027 revenue base. The underlying pipeline gives us confidence in our ambition to close the year with a backlog above the 127 million level, which we held at the end of 2025. For the remainder of the year, we are actively focused on converting those opportunities before year end. The fundamentals of this market remain compelling. Let me now turn to project delivery, where we have reached significant milestones that strengthened our execution track record. with Return Antares and NOP Agerwind now in operation, Alphen has delivered the three largest operational battery energy storage systems in the Netherlands to date, measured by capacity. Together, these represent 180 megawatts and 522 megawatt hours of capacity. Return Antares in Waddingen, Spain is the largest of the three at 100 megawatts and 200 megawatt hours. It has been operational since the end of September and is connected to the transmission grid. NOP Agerwind in Espel followed one week later, 49 megawatts and 196 megawatt hours, co-located with wind power and delivered turnkey. Flevobest in Dronten has been running since November last year. At 126 MWh it was the largest system in the country when it went live. Three sites with three different connections and setups, all brought into operation within a year. That is the execution capability customers look for as projects grow in scale and time to operation becomes an increasingly important criterion. In total, Alphen has now delivered 2.8 gigawatt hours of battery storage to date and our role does not end at energization. All three systems are covered by long-term service agreements in line with our ambition to be a reliable lifecycle partner for utility scale storage in Europe and support the build-up of a recurring revenue stream further. With that, I'd like to hand over the call to Bart who will talk you through the financials. Bart.

Yeah, thank you Mike and also good morning from my side. I will now walk you through our financial performance indeed for the third quarter. Starting with our top line in the third quarter, we delivered a revenue level of 99.1 million compared with the 104.1 million in the prior year. A strong performance in smart grid solutions was offset by a decrease in EV charging and energy storage systems. As we have previously communicated, the energy storage revenue has been front-loaded in 2026 and this quarter's performance reflects that pattern. Our adjusted gross margin increased slightly and reached 30.5 million equal to 30.8% of revenue compared with 29.9 million or 28.7% in Q3 2025. The group gross margin was strong this quarter, in part due to an outperformance of the energy storage systems compared to its expected range. EV charging and SGS reported within their expected ranges. Operating expenses increased by 12.7% to 26.7 million compared with 23.7 million in Q3 2025, predominantly driven by a 10% increase in personnel expenses resulting from our ongoing transformation. These amounted to 19.6 million compared with 17.8 million in Q3 2025. This effect was planned for. The other operating expenses were 6.8 million and remained broadly stable throughout 2026. Our EBITDA came in at 3.9 million, down from 6.2 million last year. As only a minor adjustment of 0.1 million was recorded, the adjusted EBITDA resulted in 4 million, equal to 4% of revenue, compared with 6.9 million or 6.7% of revenue in the comparable prior year period. We saw a deleverage effect during the quarter, but again, all within expectations. From a cash flow perspective, we generated 1.2 million in cash flow from operating activities. Overall, we remained in a net cash position at the end of the quarter. And lastly, I'm pleased to share that we signed a renewed credit facility agreement with the bank for three years until October 2029 with two one year extension options. The revolving credit facility of 50 million, the guarantee facility of 80 million and its financial covenants remain unchanged. The size fits the company's expected working capital needs. Securing this agreement well ahead of majority strengthens Alphen's financial foundation and gives the flexibility to execute our strategy. It also reflects the continued confidence our banking partner in the business. With that, I'll now hand over the call back to Michael who will walk you through our outlook.