Eolus Aktiebolag (publ)

Welcome to the Aeolus Q2 2025 earnings call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO Per Whittleson and CFO Katharina Pearson. Please go ahead.

A warm welcome to this presentation of Eolus results for the second quarter of 2025. Your presenters today will be myself, Pervi Thorsson, CEO, and Katarina Persson, CFO. Eolus is the leading pure-play developer shaping the future of renewable energy. Please note that we during the second quarter changed the company name from Eolus Vind to just Eolus to reflect that our business targets several renewable techniques and energy storage. We are positioned to take advantage of the structural growth in renewable electricity demand resulting from the worldwide electrification and decarbonization trends. We apply our PurePlay business model to create value efficiently in every step of developing our diversified 26 gigawatt portfolio of onshore and offshore wind, solar PV and battery energy storage projects across six different markets. Leading energy investors, PPA off-takers and OEMs trust our 35 years of proven experience executing and optimizing market leading energy assets. I will begin with a walkthrough of the Q2 highlights and give an update on our portfolio. Katarina will follow with a closer look at the financials and I will then conclude the presentation with our review on the near-term outlook before we move to Q&A. And I'm now turning to page 5 in the presentation. This quarter we delivered 364 million SEK net sales with an operating loss of 74 million SEK. Despite the positive contribution of the PINVA transaction provisions following a decrease expected project margin in the POM project due to a delay caused a loss for the quarter. There are also some negative effects affecting the operating profit but where we have a positive effect in the financial items. EULUS business models leads to large quarter-to-quarter swings in revenues and earnings since transactions are timed to market demand, buyer needs, permitting milestones and grid connections. And this means that quarterly estimates are inherently uncertain. And even analysts who know our projects well face a challenge in predicting in which specific quarter a handover will close or how deals are structured. So annual numbers matter much more. value creation and financial performance are best measured on a rolling 12-month or longer cycle basis where the effects of timing even out more. So consensus should be read with this in mind and previews provide a useful benchmark but they should not be over interpreted as precise short-term forecasts. Katarina will go into more detail on the numbers later in the presentation. We're moving to page six, showing our product portfolio that is the core of our value creation, covering more than 26 gigawatts of projects diversified across markets, technologies and level of maturity. And we added more than a half a gigawatt of projects during the quarter and made good progress in existing projects overall. And one particularly interesting addition is land secured for battery energy storage in southeastern Sweden. It is an early stage 100 MW BES positioned in a good connection spot in SE4, which could provide supporting services to the national and regional grid. So we're excited to finally bring our experience in grid scale best projects to the Swedish markets. We move to page seven. So in the second quarter and thereafter, we showed resilience despite soft market conditions regarding new transactions. We sold the 147 megawatt Pinova project to Latvenego. That is our first project in the Latvian market and construction started immediately after the transaction was concluded. After the quarter, we also sold the project Fageråsen, which is a joint venture with Dalarvind that was sold to OX2. that offloaded significant upcoming grid connection commitments, releasing resources to recycle into further project development. There is a persistently slow market for projects in Northern Europe and therefore PPAs are becoming an increasingly important attractor. Regarding the POM, the project and the delay, the project has reached a degree of completion of 85% at the end of the quarter. And therefore the anticipated completion and handover is delayed from Q2 and expected to be completed and handed over during the second half of 2025. The project is fully constructed. As of today, commissioning has been performed. There are some final tests and some final approval from the authorities before we can hand it over. It is like... 200 million euro project when it comes to CAPEX. So of course any delays late in the project has an impact on project margins. with negative impact on expected project margin and consequently also Q2 operating profit due to the provisions made. But important to emphasize that POM remains a profitable project overall from start to finish. So we have adjusted the remaining expected cash flow contribution down to 10 million US dollars. Regarding refinancing, 550 million seniors secured green bond issue successfully closed despite bond market turbulence during the spring. And in addition to that 175 million SEK revolving credit facility and up to a billion SEK project finance facility signed in this refinancing package. This increases our flexibility and gives us more flexibility flexibility and for taking on our larger portfolio. We turn to page eight. Our progress in the value creation pipeline continued steadily in the second quarter, except for the delay of POM. We have almost 1.5 gigawatt of value in mature projects that we aim to realize over the coming three years. Fogelås, Boab and Dollebo, the construction proceeded according to plan. We have made continued progress on securing a PPA for the projects and are in exclusive negotiations and this ppa would lock in long-term revenues and strengthen the commercial attractiveness of the of the projects the next u.s battery project rocoseca is proceeding in line with the with plans we have the secured equipment suppliers with the appropriate clauses handling potential changes in trade tariffs and we have made good progress on negotiating a tolling agreement which is the equivalent to a PPA for a best project. Foggråsen was sold to OX2 after the quarter and OX2 assumes all rights and obligations of the project and will continue development with the support of EULUS and Dalarvind. CAPEX reimbursements and significant additional payments to EULUS are conditional on regulatory approvals and subsequent financial investment decisions from the buyer. We flip to page nine, looking now at the overall portfolio development. We added a net 675 MW to our development portfolio in Q2, with new projects in the US making up the largest part of the increase. Pneuma proceeded to construction and we removed the divested US solar and PV project Centennial Flats from the late stage portfolio. But remaining expected revenue from that projects are included in the order backlog. And changes in the portfolio are overall in line with our strategic focus on prioritizing value creation. On page 10, I'll end this section with a look at the progress towards our financial goals for 2025 to 2027. negative operating profit in q2 puts us at the 90 million sec cumulative ebit so that's somewhat below the track to towards the the 2027 total target uh return on uh equity uh is at 19% measuring the rolling 12 months period and our equity to asset ratio remains high at 59%. I'll now hand over to our CFO, Katarina Persson, for a walkthrough of the quarter's financials.

Thank you Per and hi everyone joining the call today and I start on page 12. Our net sales for second quarter amounted to 364 million SEK yielding an operating profit of minus 74 million SEK and earnings per share of 1.51 SEK. At the close of the quarter, our equity to asset ratio stood at 59%, and compared to 2024, our sales increased, but our profit decreased in Q2. Turning to page 13, we have some overall guidance to reading our statements, reiterating some points made by Per earlier in the presentation. As a pure play developer, our revenues derive mainly from large product sales. This means key reporting figures can be lumpy and vary widely between reporting periods. EBIT will rise considerably in the quarter of divestment and construction management revenue recognition. And we capitalise project costs on our balance sheet under projects under development, projects under construction and advance payment to suppliers. And project CAPEX for equipment and construction services increase the working capital significantly when we build on our own books. And then working capital is then rapidly reversed when we divest project with high capitalised CAPEX like home in Q1 2025. And our net debt position is similarly affected. It increases with product cash outflow and use of construction credit in products that are under construction, and then decreases as the product debt is either amortized from proceeds or transferred to a new owner when the product is divested. Generally, we advise investors to analyze our business over longer periods, rolling 12 months can capture the full investment and sales cycles. Nevertheless, I'll go through the changes in quarter to quarter numbers for the purpose of clarity. And just remember that this quarter on quarter analysis is not all indicative of a run rate. And on slide 14, we show change in the operating profit between Q1 and Q2 2025. And last quarter, we divested POM at 75% degree of completion. So there was a large and expected decrease in revenue in our second quarter. And underneath this change, revenue recognition from POM and proceeds from PINVA, Share Purchase Agreement, made a positive contribution. And POM revenue recognition contributed with 10% progression in the quarter, going to 85% in total. And correspondingly, the level of cost flowing through our income statement was much lower too compared to Q1. What this change masks is the negative contribution of the provisions made due to the delay to POM and lower expected project margin. But all in all, we reached a negative 74 million SEK operating profit for the second quarter. But on a rolling 12-month basis, the operating profit was 433 million SEK in 42 years. And next slide, looking at the balance sheet on the asset side, we opened the quarter with total assets amounting to 2,841,000,000 SEK and ended at 2,843,000,000 SEK. And that's a minor net increase of 2,000,000 SEK. The changes during quarter to quarter are due mainly to investments in Frågelås, Dollebro and Boa and transfer of Pinnabat to Latvinaga. And projects under construction increased by 325 million SEK. And that's also mostly due to the construction complex. We invested a net of 40 million SEK in development portfolio value creation, even as the Pinova project left the balance sheet. And advanced payments accounts receivable decreased and transfer the PIN of our product to Latvanago. On the equity and liability side of the balance sheet, there was a slight net decrease in total equity due to negative operating profit and the refinance increasing current interest bearing liabilities. Accounts payable decreased as we settled CapEx payments in Fogelås dollar bill billboard and at the end of second quarter our equity to asset ratio amounted to 59%. Turning to cash flow on page 17. Opening cash balance for the quarter was 200 million SEK and closing cash balance was 152 million SEK. Operating profit, tax and interest payments contributed negatively to operating cash flow before changes in working capital. And then investments in Ferrobilas, Doyle and Gobroa contributed to an increase in the working capital per quarter. Net flows from financing activities was dominated by refinancing and bond proceeds and amounted to plus 278 million SEK. but also includes payout of dividends during the quarter of 19 million sector shareholders. Finally, looking at projects under construction on slide 18, home has progressed to 85% degree of completion. P&V has been added at 0% degree of completion following the sale in Q2. And for the PNVAR project, the project management agreement differs somewhat from our usual construction management agreement, mainly that Aeolus does not view any downside construction risk. And PNVAR revenue will therefore be recognized based on predetermined milestones and project management service applied as the project progresses. And then handing it back to Per for a comment on the near-term outlook. Thank you.