NEL ASA

Good morning from Oslo. Welcome to Nell's first quarter of 2026 results presentation. My name is Håkon Voldahl. I am the CEO. With me today, I have our CFO, Kjell Christian Bjørsen, and our head of IR, marketing, communications, and miscellaneous functions, Wilhelm Flinders. We have the following agenda. I'll skip the NEL in brief and jump straight to the highlights for Q1. We have a short commercial update covering the most important commercial events in the first quarter and one subsequent event. A short technology update, and then we will, as usual, end with questions and answers. Quarterly highlights. Revenues came in at 148 million NOC. We had a negative EBITDA of 100 million NOC. Order intake at 85 million NOC. Order backlog ended at 1.1 billion NOC. And our cash balance ended at 1.4 billion NOC. A pretty quiet start to the year. First quarter is always a bit slow. What we are focusing on is the launch of the new pressurized alkaline platform. That will happen at Hyderabad on May 6th this year. In connection with that, we have been busy in the first quarter testing out new pressurized alkaline production line technology that is progressing according to plan. We also opened Korea's first off-grid green hydrogen production facility. That was commissioned in late March. And in April, we received a $7 million purchase order for containerized PEM equipment. Looking at more detailed numbers, revenue from contracts with customers down 5% year-on-year. Revenues from out-of-line division increased by 6%, but we had a decline in the PEM division of 14%. The 100 million negative EBITDA was a 50 million improvement year on year. And it's, of course, driven by the fact that we continue to invest in next generation technologies. And we need higher revenues in order to become profitable. Solid cash balance at the end of the quarter. And that does not include 11 million euros in the EU grant linked to our pressurized alkaline products. industrialization, which we expect to receive in the next quarter or in this quarter, second quarter 26. Alkaline financials, limited revenue recognition in the quarter. Despite that, revenue was up 6% year on year. EBITDA improved by 35 million NOC versus corresponding quarter last year due to positive impact of project deliveries. We have adjusted our cost base and capacity utilization to reflect lower market demand, but lower fixed costs will continue to negatively influence results until volumes pick up. As you can see from the chart, we do generate profits when we have good revenues. Coming to PEM, revenue was down 14% year-on-year due to limited megawatt project deliveries in the quarter, and mostly sales of industrial products. EBITDA was down 16 million NOC year-on-year, largely driven by delayed or canceled research grants in the U.S., We have historically received money from the Department of Energy to fund several research programs, and that has been under review, and parts of the grants have not been paid out since late last year, and that reflects performance so far this year. We have good hope that the grants will be reinstated and that money will continue to be paid out or resumed, We will resume paying money to Nell, but can't say exactly when that will happen again. We are also in the PEM division spending money on product development for a next-generation PEM electrolyzer with significantly lower levelized cost of hydrogen, and that development is progressing well. Order intake was 85 million NOK. was down year on year versus a strong quarter in 25. We expect the order intake to improve and have already booked the first order in the second quarter of roughly 70 million locks. So the first quarter you see here did not reflect any big project wins, just a normal course of business related to after sales and some industrial products. The order backlog at the end of the quarter ended at 1.1 billion lock. Due to a declining order backlog and limited demand over the past few quarters, we have reduced our Employee base, we try to adjust our cost to change market expectations. We are down in terms of number of employees, 26% versus the peak, and 19% versus the end of first quarter 2025. And we can see that this also then translates into a 21% reduction in personnel expenses in the first quarter of 2026. We have done these adjustments to make sure that we spend our money responsibly, but it has largely affected our ability to manufacture at scale and deliver projects at scale, so that variable, that muscle has been reduced. We have kept more or less our R&D organization to make sure that we can progress and deliver the new technology needed to bring additional volumes back. And once we get new orders and we see that the market is coming back, we can add back the manufacturing and product execution capacity. But for now, we have reduced our staffing down to roughly 300 employees. On the commercial side, we do want to highlight this. Korea's first off-grid green hydrogen production facility has been commissioned, happened in late March. It's a 10 megawatt alkaline system from Nell, supplied by a solar power plant, as you can see on the picture. There is no reliance on the power grid. And this project more or less validates large-scale off-grid hydrogen production as a model for future domestic and international projects. It's been a very interesting project together with Samsung C&T, where, of course, Samsung C&T acted as the EPC, and Nell provided electrolyzers and gas separation modules. In April, we received another order for containerized PEM equipment from Measure Process. It's a second purchase order from this client, and we're quite proud to see that whenever we get an order now, very often we can say that it's a repeat purchase. That means the quality we deliver is solid. Customers have good experience with the first products they have purchased, and they come back for more when they need it. This equipment will supply hydrogen for refueling stations and industrial applications, and it I think it sort of confirms the story that the MC platform, the containerized PEM solutions, has strong momentum across a wide range of applications. It's a fully modular design, and that enables rapid project execution. It's also a good way to build out capacity over time. You can add more modules if you need more capacity. And also, fits nicely with the market perspective. We continue to see several of these promising smaller projects, two and a half, five, 10 megawatt projects that are ideal for a containerized pen. But we also see some larger projects in the 50 to 150 megawatt range. And these are expected to take final investment decisions over the next quarters. Containerized PEM has a strong momentum, as I said, and to elaborate a little bit on that, the reason is that projects have become smaller than we saw a couple of years ago. Then customers spoke about 100, 200, 300, 400 megawatt. They now plan for something smaller, at least initially. They want a gradual increase. approach to this where they build out capacity over time when offtake materializes. If they start with the first step, that's usually in the 10 to 50 megawatt range, and that fits nicely with the NELS containerized PEMS systems. Multiple containerized PEMS systems offer a proven, efficient, and standardized alternative to customized and tailored solutions. We have achieved significant capex reductions over the past few years, both on the stack itself and on the system design, and combined with the growing list of references that we have around the world, this has increased Nel's competitiveness in this market segment. Europe is currently the most active and promising region, but we also have projects and deliveries in North America and interesting prospects in the Middle East and Asia. Then I want to end the quarter with a comment on the energy resilience. We continue to see fossil energy shocks, and we continue to see that we repeatedly subsidize fossil energy to manage these shocks, while investments into renewables face higher skepticism. Renewable energy can reduce exposure to certain price spikes and definitely help mitigate geopolitical dependency and vulnerabilities. The intermittency that we see from wind and solar. The wind doesn't blow all the time. The radiation from the sun is not constant. And that is a known challenge with renewable energy systems. But electrolytic hydrogen. enables long-term energy storage and system flexibility beyond what batteries can provide. As one example, a 200 megawatt plant in the United States has larger capacity than all the batteries currently linked to the electric grid in the United States, including the batteries from Tesla. So hydrogen is at another level when it comes to what kind of, the amounts of energy that we can store. Investing in renewable energy and green hydrogen is cheaper than repeat short-term subsidy programs for fossil energy. And it also, by the way, reduces emissions. So when we have debates about energy resilience and the security of supply, I think hydrogen should increasingly be part of that. And we see an increasing interest among defense contractors and politicians to look at the role that hydrogen can play in distributed energy supply. To give you one example of how hydrogen can help basically flatten out the demand curve for hydrogen, For electricity, we have a 20 megawatt NEL plant in Denmark. It's run and owned by Everfuel. They run this plant when there is excess energy in the system. So instead of then bringing prices down to a very low level, Everfuel will help prices stay more or less stable because they can also shut down the equipment when demand for electrodes is high. So this facility, the 20 megawatt facility, helps balance out these peaks and low points that we see in electricity demand. Implementing this on a larger scale will, of course, help avoid periods where operators and generators get absolutely nothing for the electricity they produce, but also help consumers avoid periods when demand is high and electricity prices go through the roof. It basically helps flatten out the price curve for electricity. Shortly on the technology update. We have shown this slide before, and I just want to remind you that when we talk about pressurized alkaline in NEL, it's not that we haven't looked at that before. We used to have pressurized alkaline technology 20 years ago. It did nothing that the atmospheric solution didn't do. We do, however, see benefits of having pressurized gas. And that's why we started back in 2018 to sort of reinvent our pressurized alkaline technology. In 2026, after years of testing this new technology, we are ready to commercialize it. It has taken eight years. But now we're getting ready for the commercial launch. It will happen on May 6th. We have invited customers, potential customers, partners, employees, and a lot of people that might find this interesting to Herøya to take a look at a real physical installation. proving that this concept is more than a PowerPoint concept. It actually works. It's a physical thing, and talk about the benefits that this solution brings to the world of hydrogen. We are truly excited to show the world what this technology can do. We will offer market perspectives by external speakers, and of course also dissect the solution and talk about the the value proposition that we believe this solution has. Therefore, we will not go into a lot of details today on the technology. We will share our presentations with the public on May 6th. Just want to give you a sneak peek of what is happening in parallel, because we are truly proud of the solution that we have. And, of course, we have to be able to deliver it at scale. And that's why we, in December, decided to invest in a production line for pressurized alkaline manufacturing capacity at Herøya. This is funded by the European Union. As I mentioned, the first milestone payment will happen shortly. CapEx per megawatt is significantly lower for this concept compared to the atmospheric alkaline or PEMP. Ongoing tests confirm product quality and exceed prototype production results. We have clear improvements in yield and fewer critical defects, and cycle times are coming down to support increased annual capacity and improved efficiency. We have a strong process understanding already, piggybacking on last, a century of experience producing alkaline systems, but there are new processes and new techniques that have to be mastered, and we're well into that. The goal is to have the first 500 megawatt of production capacity installed by the end of 2026, and that's why we commercially launched it now, to have time to build the order backlog and for customers to understand the benefits of the concept, and together with Nell, start to work out the exact, concrete, and specific projects where we can apply this beautiful technology. And that brings me to the final page. This has been our value proposition for quite some time. I think Nel has an unrivaled track record. We have a century of experience. We have sold more than 7,000 electrolysis globally, and we have a ton of prestigious references. But to stay a leader in this industry, you have to demonstrate technology leadership. We do that by having multiple technology platforms. We have both PEM and Alkaline. We have proven solutions for today, but we need new solutions for tomorrow. We need solutions that can bring the total cost of hydrogen down, and we don't develop that only here in Nell. We do it through a big network of world-class partners. What we will show in May is an example of cost and scale leadership. This concept will be an enabler for customers to realize projects that they could not previously realize because costs were too high. But Nell is a frontrunner in cost reductions. We make big leaps in terms of innovation and how we look at cost-down opportunities. and he combined that with market-leading production capabilities. So we will revert in May with more information about the new technology, and bear in mind, a couple of years later, we will have the next generation PEM platform also available. That concludes the presentation, and I will be joined by our CFO, Selkis Jan Jansson, to answer questions that you might have.

Very good. Thank you, Håkon. Before we start the Q&A session, just a few practical points here. If you'd like to ask a question, please use the raise hand function here in Teams. I see already there's a couple of questions coming in. We will call your name and unmute your microphone, but please make sure to unmute yourself on your end as well. If you don't get to your question, feel free to reach out to us at ir.nelhydrogen.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. First question comes from Martin Creamer. Please go ahead.

Thanks, I've just unused it. Sorry, it took me a bit of time. I'd just like you to give me some explanation of how long you can store the hydrogen for and what method you're using to store this. And then when it is released, do you turn it back into electricity through the use of fuel cells?