Nel Asa

Good morning, and welcome to Nell's fourth quarter and fall year 2025 results presentation. My name is Håkon Voldahl. I am the CEO. With me today, I have our CFO, Kjell Christian Bjørnson, and our Head of Investor Relations, Marketing and Communications, Lillen Flinders. Today we have the following agenda. We will skip the Nelling brief section and go straight to the fourth quarter and fiscal financial year 2025 highlights. We will have a commercial update. We will talk about our new technology that we are about to launch, and we will, as usual, end with a Q&A session. Quarterly highlights. Revenue from contracts with customers came in at 330 million NOC in the quarter. We had an EBITDA of minus 36 million NOC. Solid order intake. I think it's the second best order intake in Nell's history of 686 million NOC. Order backlog increased to 1.3 billion NOC. And we ended the year with a cash balance of 1.6 billion NOC. In the quarter, we had several highlights. Among them, the PEM purchase orders from High Fuel and Kaupanes from Hydrogen Solutions in Norway together combined value of more than $50 million. We were chosen as a technology provider for Green8 projects in Kristiansund and Slagentangen in Norway, and we received a third order for containerized PEM solutions from H2 Energy in Switzerland. We also took a final investment decision on industrializing the next generation pressurized alkaline platform, coming back to that a bit later in the presentation. Looking at the fourth quarter results. Revenue, as I said, came in at 330 million NOC. That's a 9% increase quarter on quarter and a 20% decline year on year from the fourth quarter last year. EBITDA, flat versus last year and also flat quarter on quarter. The big difference versus last year is actually on the EBIT line with the negative EBIT in the fourth quarter of 920 million NOC compared to 106 minus in the fourth quarter last year. That is due to roughly 800 million NOC in impairment losses. due to our next generation technology influencing the value of the current platforms or the legacy platforms. I'll come back to the specifics a bit later. No cash effect, of course, on the impairment. And that means we end the year and also the quarter with a solid cash balance of 1.6 billion NOK, slightly down from 1.9 billion at the end of 2024. In a historical context, 2025 came in below 23 and 24, but still higher than 22, 21 and 20. EBITDA losses came in at minus 275, again as a consequence of the reduced revenue. Not a year that we wanted, but still, in a historical context, around 1 billion NOK is decent. Alkaline was the main reason for the decline on the revenue side and also on the EBITDA side. We went from 1 billion NOK in 2024 and positive EBITDA, 127 million NOK, down to 562 million NOK in 2025 and a negative EBITDA of 16 million NOK. Again, this was partly due to cancelled contracts or also the bankruptcy of one of our customers that was supposed to drive top line and EBITDA performance in 2025. On the PEM side, we increased the revenue slightly from 2024, and we also improved EBITDA slightly. More revenue is needed in order to bring the PEM business into black numbers on the bottom line. Order intake and backlog. That was a very positive development in the fourth quarter. As I mentioned, the fourth quarter was the second or is represented the second best order intake for Nell ever. I think we had one quarter in 22. That was better. But compared to what you can see here in 24, 25, it was a big, big step forward. Of course, driven by the big contracts in Norway with hits. It also means that the backlog has increased from below a billion NOC to 1.3 billion NOC, and roughly 70% of the backlog is now related to our PEM technology. Order intake accumulated, ended in line with previous years, below 2022, which was a very good year, but again, a big step forward from 977 million NOC in 2024. And as you can see here on this slide, most of the order intake in 2025 came on the PEM side. Important for Nelv is to protect our cash balance and the cash burn rate historically has been high as the company has invested into R&D and also production assets. We have been cautious in 24 and 25 to bring down the cash burn rate. We continue to invest into technology, but there is not the same need to invest into assets as there was historically. Compared to 2023, we reduced the cash burn by 35% in 2024, and we have reduced it further by 41% in 2025. Again, there will be some investments into production assets, production equipment for manufacturing lines, and also some investments on the technology side. But if you look at the operational losses and capex together, we will not go back to what we witnessed in 21, 22, and 23, and 24. We will have a controlled burn rate going forward. This is driven by a reduction in, among other things, full-time employees. We have gone from 430 people in total in now to 346 at the end of 2025. And as a consequence, we have also reduced personnel expenses from 646 million NOC in 2024 to 569 million NOC in 2025. That's a 12% decline. The impairments that we took in the fourth quarter actually reflect our optimism around next-generation technology platforms. we have developed a new technology that we believe in we believe the new technology will be superior to the technology we have sold traditionally and that means as a consequence of this new technology we expect demand to shift to the new platforms and there will be less demand for the old or existing products and that means the value of those platforms will be reduced and we have reduced also the book value of these assets. We took An impairment loss of 361 million NOC related to our atmospheric alkaline production assets, more specifically Line 1 at Herøya. And we've also taken 439 million NOC in impairment related to goodwill and intangible technology assets stemming from the acquisition of the PEM division back in 2016. Moving on to the commercial update. 2025 was not the last year. We also had some good progress. Among the highlights, I would like to mention the partnership agreement with Samsung E&A. We became their preferred global partner for hydrogen. We received the third purchase order from a major US steel producer. A nice big purchase order from Collins Aerospace for US Navy stacks, where we equip submarine vessels with our pen stacks. We sold a solution to the Aberdeen Hydrogen Hub in Scotland. As I mentioned, big orders from HIDS in Norway and a nice third order from H2 Energy in Switzerland. And also the recognition of Nell as the technology provider for Green Age projects in Kristiansund and Slagentanget. Going a bit more into detail on the contracts that we signed in the quarter. This is a picture of an installation we have done in Switzerland together with H2 Energy. It's in Kobel. It's close to a hydrogen power station. This is not what we will develop based on the order that we received but it shows what we have done with them and now they have placed an order for a similar facility and it represents the third such order to now from H2 Energy and we take pride in that because it means that when somebody comes back to you and orders more equipment they're happy with the performance In the hydrogen industry, and there have been lots of stories about equipment that doesn't work and suppliers that can't make plants run. This is a customer that has had the opportunity to take our equipment, test it, run it, and they come back to us to buy more. I think that's a nice testimony of the quality of what we now deliver on the PEM side. The purchase order for 40 megawatt from HEDS was the highlight in the quarter. The two projects they will develop are the high-fuel project and Kaupanes, 20 megawatt EEDS, and we plan to deliver the MC500 containerized tank systems to these two projects. Both projects are funded partly by Enova, and the total contract value exceeds $50 million, and that represents the largest order for PEM equipment that Nell has received so far, and also the second largest contract we have signed in history. We will produce the solutions at our PEM manufacturing facility in Wallingford, Connecticut. We will deliver more than 20 megawatts to two projects in Norway that will be developed by GreenAge. The minimum scope agreed for each of these projects is 10 megawatts. of electrolyser equipment, plus engineering and technical support. The two sites are designed to supply clean hydrogen to industrial and maritime users, and they will form part of the Green Ages network of distributed regional hydrogen production facilities. Again, these projects are partly supported by Enova, with funding, and Also size and delivery of the schedules for these two projects will be confirmed at a later date, exactly when we will produce it and what technology that has been chosen. If we sum up what is happening in Norway, on the maritime side it's actually starting to look quite interesting. There are the two projects with hits. Flore and Eggersund. There are the two projects with the Green Age, Slagen Tangen and Kristiansund. And then there's also the Ryukan project with the Norwegian Hydrogen, where they announced a maritime off-taker of the hydrogen they will produce at Ryukan. And all together, This forms a quite interesting picture of what is happening in Norway and also the fact that you can supply now hydrogen from different sites means that it becomes more attractive to invest in hydrogen vessels for ship owners because you're not dependent on one site only, you have multiple sites available and that that the redundancy of fueling options and bunkering options is important. In the fourth quarter, or actually that's not correct, earlier this year we launched the Electrolyzers for Europe initiative. It's an initiative consisting of six leading electrolyzer OEM manufacturers. all European, to promote electrolysers made in Europe. Europe has more than 10 gigawatts of annual electrolyser production capacity, but less than 1 gigawatt has actually been deployed. And that means we're lagging behind EU's targets of having 40 gigawatts installed by 2030. This slow uptake is, among other things, due to unclear and or too rigid regulations, insufficient uptake and cancellations across many early stage hydrogen project developments. What we aim to do with this initiative is to unite the leading electrolyser OEMs and help push for clearer frameworks, predictable demand signals and faster policy execution. And by speaking with one voice, a unified industry voice, this initiative aims to protect Europe's technological leadership, strengthen competitiveness versus subsidized imports and accelerate large scale hydrogen deployment. So that's a good initiative. Nel is one of the founding members of this body and we hope more industry players in Europe will join this initiative going forward so that we can help politicians shape the regulations that we need to drive the industry forward. Talking about or coming to the outlook section and offering somewhat a market perspective going forward is slightly challenging. But what we have seen is that order intake in 2025 increased by 15% versus 2024. And, again, it was not evenly distributed throughout the year. We had low order intake in the first – actually, first quarter was good, second and third quarter not so good, and then the fourth quarter was very strong. It accounted for almost 60% of the total order intake for the year. It's difficult to predict order variations between the quarters. But if we look at the long-term or mid to long-term trends, we are positive. What about the short-term trends? We continue to see several promising projects in the 20 to 150 megawatt range. And these projects are expected to take final investment decision over the next quarters. Especially on the PEM side, we see lots of opportunities. And the reason why containerized PEM has strong momentum is that projects have indeed become smaller. They have been scaled down from maybe several hundred megawatts to something which is slightly smaller as a first phase. Developers have to start with 20, 40, 50 megawatt instead of going directly to hundreds of megawatts in order to phase in demand. And that means with the first step of 10 to 50 megawatt, we are in the sweet spot for Nel's containerized PEM solutions. With a containerized PEM solution, you also get a proven, efficient and standardized alternative to customize solutions. And I think a lot of customers have seen that designing a hydrogen production plant from scratch is expensive. The amount of engineering and planning that you need to put into it is quite substantial. And then having something ready to go arriving in containers simplifies overall project execution and also enables you to shorten the schedule to go to market with hydrogen. It also improves the redundancy because you have access to multiple systems and it's easy to build it out stepwise to scale it over time. Significant CapEx reductions on this particular solution of course also help. We have worked hard over the past couple of years to get the cost down. The market is price sensitive. As a result of our cost reductions, we also see that we can enable more projects to move forward with a profitable business case. With respect to geographies, Europe is currently the most active and promising region for Nel, but we also have leads and opportunities in North America, the Middle East and Asia. Then we move on to the technology update. As I have said before, we have spent a long time developing a new generation of alkaline electrolyzers. We have spent more than seven years developing a brand new platform. It has taken a long time. But we really wanted to build it from scratch and build a product that is, in fact, better than what we have on many, many different dimensions. We want it to be the best electrolyzer the world has ever seen. And now we are here. This is not a PowerPoint rendering. This is a picture of the prototype at Harøya. It's close to our production plant. located inside the Herøya industrial park, where we for some time now have tested a real version of our pressurized electrolyzer. And what do we aim to accomplish with this solution? We hope that this new solution will set new industry benchmarks. We see that this solution is extremely compact. We can reduce system footprint by up to 80% if we compare it to our existing atmospheric alkaline solution. Why is that important? Well, especially in Europe, which is the most promising region at the moment, you don't have all the land that you would like to have. Land is expensive. And sometimes you need to locate your hydrogen production plant inside an industrial park, or you need to develop a brownfield site. That means having a compact solution that can fit on the site that you have access to. The plot that you have available is important. Even more important, I would say, is to get the system capex down, the cost of building the entire plant, not just the electrolyzer itself, but everything that goes with it. It's the complete system cost that has to come down for our customers. With this solution, we believe we can bring the total system cost down by 40% to 60%. that means we start to get close to a level where hydrogen becomes very attractive. Long term, of course, it's not only about the CAPEX, it's more about the OPEX side. And OPEX is driven by electricity consumption. This solution will significantly improve the energy consumption for generating hydrogen. We believe that on a system level we can get down below 50 kilowatt hours per kilogram of hydrogen. And that is a 10 to 20 percent improvement over most systems today. To add some color to why we are confident that we can deliver on these CAPEX and OPEX improvements. I'll just touch briefly on some important points. OPEX. Again, the electricity consumption. It's the design of the electrolyser itself. We have improved the energy efficiency. Zero gap electrode design, improved diaphragms. We have also spent a lot of time designing a smart system that limits the shunt currents that typically plague pressurized electrolysis systems. We have a unique and patented solution for avoiding shunt currents. So all of that design work leads to improved energy efficiency in the stack itself. Also important is the fact that you can operate the electrolyzer at different loads. We have a wide operating range, meaning you can run the electrolyzer at the 100% or you can run it at 10-20%. So that wide operating range is important when you want to optimize the electricity cost and how much hydrogen you produce at what hours during the day. We also have a quick ramp up and down. and that is important because it means you can respond to price changes in the market rapidly. If you spend hours bringing your electrolyser load down, you will not benefit from the fluctuations in electricity prices. Our system has been designed to use as little electricity as possible and still give customers the opportunity to optimize the electricity consumption based on pricing in the markets and how you want to run your system. CapEx reductions are driven by the fact that our system now consists of fewer and cheaper modules. Because there is pressure generated inside the electrolyzer, gas is coming out at 15 bar pressure instead of coming out at atmospheric pressure, we can avoid modules such as a scrubber and a gas holder. And we also, because of the pressure, can reduce the size of the modules. Our system has been designed for outdoor installation, which is rather unique. I'm not aware of any other pressurized alkaline electrolyzer technology that can be installed outdoor. Most are installed inside buildings. Having a separate building for your electrolyzer adds a lot of cost, because there are safety regulations linked to ATEX zones, etc., that drive up the cost of the building. So we avoid all of that cost. It can operate outside, even in the Norwegian or Nordic climate with the winter conditions. The footprint is small, as I commented on, and this helps. reduce tabling, piping, and site works linked to concrete, etc. It brings all of the construction costs down because you don't need to prepare, you know, thousands of square meters. You get the small compact footprint with less work. And that means all in all, also because our system is standardized, modularized, everything comes inside 20-foot skids, we significantly reduce the engineering, construction, and commissioning cost. Why is that important? Because the labor part sometimes accounts for more than 50% of the total CapEx for the customer. So it's not only about getting the hardware cost down, it's also about getting the labor cost down. And our system delivers on both of these things. We announced, I think right before Christmas, that we delivered first gas with solid results confirming our anticipated business case. And that led to the board of directors giving us the green light for building one gigawatt of stack production capacity at Haida. So very pleased with the results so far. and now it's full speed ahead to commercialize this technology. We have produced gas on the prototype plant, as we said, in 2025. We took final investment decision on the Gigawatt production line in the fourth quarter. We will launch the product commercially in the first half of 2026. May 6 is the magical date when we will invite customers and partners to come observe this technology and also share more technical data and commercial data with them for what this system can do. We aim to validate the full customer pilots in the second half of 2026 and be in position to deliver at scale. What does that mean? Well, it means hundreds of megawatts in 2027. This project is funded by the European Union. We have received 135 million in grants for industrializing the concept. It doesn't mean that we will spend all of that, but we are lucky and very happy that we have solid financial backing for building the production line and running the pilot tests from the European Union. Then we are done with the official presentation and move on to the Q&A part of the quarterly presentation. And then you have a script you need to go through first, Willem.

Thank you, Holger.

Before we start the Q&A session, just a few practical points. If you'd like to ask a question, please use the raise hand function in Teams. We will call your name and unmute your microphone, but please make sure to unmute yourself on your end as well. To manage the time we ask you to limit yourself to, I think we can... Take two questions at a time. If there's room at the end, you're welcome to rejoin the queue. We will also take written questions, submit it through the Q&A function if time allows. If we don't get your question, feel free to reach out to us at ir.nellhydrogen.com. And as a reminder, we will not comment on Outlook-specific targets, detailed terms and conditions for individual contracts, or questions about specific markets. Modeling questions are also best handled offline. And with that, I think we can get started. As of now, I see no one has actually raised their hand, but we have received some questions. There we have one. Anders Roslund.

I'll bring you on the screen. Please go ahead. Am I now?

Yes. Excellent. Excellent. You talked about this new pressureless alkaline system with the energy reduction of some 10 to 20% compared with most systems today. And the indication of below 50 per kilo is a bit vague, but could you just... give us an indication of what you think energy consumption is for alkaline today, or what the systems that you deliver are consuming?

I think the big... If you look at PEM and atmospheric alkaline, it's usually in the 55 to 60 kilowatt hours per kilogram range, depending on who the OEM is. And then there are lots of OEMs claiming to be at very low figures for pressurized alkaline. And the problem is Yes, you might be that on the stack itself, but you lose a lot of that electricity due to so-called shunt currents. So electricity spent on producing hydrogen where you don't want it in the manifold system. So if you look at the real energy consumption, it might be 15 to 20 percent higher than what is stated in data sheets because of that effect and that means you at you know in some cases are well above 60 kilowatt hours per per kilogram of hydrogen which comes as a big surprise to customers when they turn on the plant and they compare the electricity consumed versus the hydrogen coming out of the plant

And above 60 that applies for PEM or alkaline?

That's above 60 is for pressurized alkaline technology with high shunt currents. PEM is typically around 55 I would say on the system level. And then of course a lot of these systems degrade over time. there's a degradation effect of one to two percent per year and our system has been designed to minimize that degradation effect so that you end you know after say six seven eight years your energy efficiency is still okay and not just during the first couple of years and just to follow up because you said

You refer to the others out there with those electricity consumption levels, but I presume that also applies for your equipment, that your equipment is not materially different, since this is an improvement compared to what you already are producing.

No, I would say if you look at PEM, there are not those big variations. It's either 53, 54, 55, 56. I mean, most OEMs are in that range. And then plus the annual degradation. The big unknown is on the alkaline side. We produce... We produce atmospheric stacks where you have very low shunt currents, but higher energy consumption than we will have with the new technology. The problem is related to the existing pressurized alkaline stacks on the market today. And without throwing specific companies under the bus, we could say that most of these technologies are plagued by high shunt currents, which means you might operate in the 55 to well above 60 kilowatt hours per kilogram range. So we don't have the problem with shunt currents because we don't deliver pressurized alkaline technology today. When we do, The whole product has been designed to avoid that problem, and that is the differentiating factor.

Okay. Thank you. Thank you, Anders. I see no hands.

So let's jump to some written questions from Morten. Will you sell your old alkaline stacks in the future when your new tech is available, or just deliver on placed orders and then switch to pressurized alkaline?

I think we will still sell some atmospheric electrolyzers. There are some use cases for atmospheric stacks that are quite good. But as we have said, we think the majority of the market will prefer our new technology because it is cheaper. um the levelized cost of hydrogen will be lower for many customers and that is the reason we have done the impairment but we will be in a position to supply customers with and the old or existing products if they want them so i think we will sell both but over time um the majority of the demand will be related to the pressurized uh afterlife technology

Another one from Morten. Do you think there will be consolidation in the electricity world? And do you think Nell will survive these initiatives?

I think we can start in a new follow-up. I think that consolidation has already started. There are a couple of companies that have gone bankrupt or given up. I think that is likely to continue. There will be fewer players out there. Nell aims to be one of the companies that remain when the dust settles. And then, of course, we are a publicly listed company. Anybody can buy us. If somebody wants to buy us and pay a very high price, I think it's up to the shareholders to consider that. But we plan to remain a leading company. We remain to be one of the key players in the industry. And with the launch of the new product, first depressurized alkaline product, and in a couple of years, the new PEM technology, we believe we are in a position to capture a significant share of what we believe will be a sizable hydrogen market.

Anything to add, Christian? No, nothing.

So, Will you need PEM in the future when you have precious alkaline solution? And if yes, why?

So we will... PEM and alkaline technology have slightly different use cases. Some customers prefer PEM, some customers prefer alkaline. We are in a position to pick the one solution that fits the business case or the project the best. And then we are of the opinion that it's much better for Nel to disrupt itself than for somebody else to do it. That's why they continue to invest into the R&D side. The pressurized alkaline technology will cannibalize and over time outcompete the atmospheric alkaline version. It might even cannibalize the PEM product. And then if we launch a new PEM product, it is because we believe that product either has some unique benefits that will drive demand from certain segments or because it will even outcompete the pressurized alkaline technology. So Nel aims to bring the best technology to markets that we can possibly come up with. And if that means cannibalizing the old technologies, so be it.

Good. Also a question from Thomas here, and I don't think we can be very specific, of course, but maybe some general comments around it. Are there large UPC tenders where Samsung and Nell are currently jointly bidding on?

Yes.

Yes. Good. We've also gotten some questions from David Lopez on email. Some of these are already taken, but will the new precious alkaline technology be able to compete on price for projects worldwide with electrolysis made in China?

Yes, and especially outside China. If you go back to my comments earlier, that when you look at the total cost of starting a project, if you look at the capex side, more than 50% could be related to labor costs. And that is engineering hours, construction, commissioning, testing, et cetera, happening on site. Whether you start with equipment coming from China or equipment coming from Europe, you need to perform that with local labor on site. So even if the hardware cost is cheap, for Chinese equipment, that labor portion is still very, very high. And what we aim to do with our solution is to bring that labor cost down to a minimum. That means we can be a bit higher on the hardware side if we can be much better on the labor cost side. I believe that with our pressurized alkaline technology we are competitive on the hardware cost side and we are much better on the labor cost side and that means we have a winning solution for COPEX. Over time, the Chinese will probably, they learn fast, they move fast. We have to expect that they will have a lasting competitive advantage related to their supply chains that will enable them to beat us on CapEx. We will do as best as we can, but it's fair to say that they, or assume that the electrolysis coming out of China will have a lower production cost. What can we do then? Well, we can beat them on the OpEx side. The OPEX is still more important than CAPEX. CAPEX is the first hurdle, but for the levelized cost of hydrogen, energy consumption is key. And that's where we with this technology have taken a giant leap forward in terms of efficiency and where we still see opportunities to improve. And compared to what is there today coming out of China, we are many, many steps ahead on the actual performance on the electrical consumption. So I believe we have with the pressurized alkaline system, a world leading technology that will put Nell in a position to win projects globally.

Thank you. I'll do another one from David Lopez. Given the Trump administration's policies, have there been any advances in the Michigan plant project? And if the project has been halted, will we have to wait until the new U.S. election to see if the new administration is more supportive of green energy?

So we've said before on this topic that we will not build an empty factory. And unfortunately, with the market situation that it is, there is no market for building that facility. So we are not actively doing anything on that site. We would have loved to, but we would need to wait until there is a market.

Thank you. I see we have another question from Anders Rosenlund. Please go ahead.

Thank you. Could you comment on working capital and possible efforts to bring down the very large inventories?

Yeah, so the key thing on the large inventory is inventory that we have because some of our customers basically stopped their projects. Some of them even went bankrupt. We are working very hard to get that over to a cash conversion and working with several concrete projects, but we are dependent on new project wins to sell that. We're not adding to the problem by producing more. Also, for the PEM side, with the newly advanced orders, we are making sure that we hold back our commitments until we have money on the book. So you could say that the larger than normal inventory we have is a result of some of the historical project cancellations.

And the reason why it stays high for a couple of quarters in a row is because of or lack of alkaline sales.

Yeah, so there's limited new large alkaline orders that are possible to both sign and then deliver on. That's one of the things we are working very hard with and it's a key priority to get that sold.

Okay, thanks. Thank you, Anders.

It seems we are now out of questions, so I think we'll end the Q&A session here. If anything comes up after the call, you're always welcome to reach out to us at ir.melharjan.com. And I'll hand the word back to the management for any final remarks.

Yeah, I think if we look isolated on the 2025 financials, we are of course not happy with the figures. We wish the performance would have been higher, but it was, you know, it became clear quite early that we would have a difficult 2025 in terms of top line and EBITDA. What I'm happy about is that 2025 has definitely not been a lost year. We have used 2025 to strengthen key partnerships with strategic EPC partners, reliance technology development partners. We have massively invested in our new technology platforms and successfully developed those platforms towards commercial launch. um because of the difficult markets and and lack of demand for legacy products we had to accelerate the r d effort and bring the launch plans closer to us and i am proud of the organization for its ability to deliver on that ambition we go to market now with a new product in may and i i really, really believe in that product because it has been designed from scratch based on the right set of guiding stars for what is required to make hydrogen projects work. We have looked not only at our little piece, the stack, but we have taken a system view and really tried to look at this from the customer's perspective. What can we do to bring total system costs down? What can we do to bring the cost of producing hydrogen down. And that makes me quite optimistic about 2026, despite the difficult 2025. We had a good ending to the year with important contract wins in Norway. We still see demand for our PEM products. I think we're likely to sign more PEM contracts going forward, and then hopefully we can get more momentum on the alkaline side. through our efforts to get rid of the inventory of electrodes, but also start to build the order backlog for the pressurized technology going into 27 and 28. So with that, I think we will come back in April with even more news on the launch of the new product platform, and we look forward to maturing that.