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Ferroamp AB (publ)
11/7/2024
Hello and welcome to the Ampskvartals report for Q3 2024. I'm Kent Jonsson, CEO of Ampskvartals, and I'm William Ryan, CEO of Ampskvartals, who will help
answer questions. We will leave a lot of time
for questions, so feel free to ask questions in the chat. We will pick them up at the end and leave a lot of
time for questions today. We are in the market for
renewable energy. We believe a lot in this market from above. All signs point to that this will be a very interesting market. Currently, it is slow. We know the effects of it and many others in the industry. Our system should not go into too much detail. We have a very smart system, a smart power generator that connects solar power production, battery storage and power supply charger. This will be the driver of our system and will become
even more important from above. Q3 and numbers. Let's
start with the market. We see that the image of the economy is that there is more interest, but it is still in the business that is going on in the quarter. We see that there are many who are interested, but choose to wait. It is a pretty calm market, both for the will and the economy. Batteries have been a mountain and valley route over the year. In the summer, there has been a 50% increase and then they disappeared. Then they came back in the summer. The revenues from FCRV, which is one of several revenue sources on a battery that is used for support services, have gone up and down. The energy has been high during the first part of the year. After the summer, it falls quite heavily. Now you can see that it is moving forward. But during this quarter, it has been stable on this market. No increase. The electric car charging. Traditional AC charger. We see that it is still slow, driven by a slower electric car sales. Or affected by a lower electric car sales. So it has maybe backed up a little during the quarter. DC charger. Now there are public chargers in the present situation. They have increased, we see. It is an interest to build out the public charging network. We are not on that market, even if we work with DC chargers and follow the market closely. We work with V-Cut to Grid. We have a DC charger that is double-fitted, which means that you can also use the battery to drive your house, store solar energy and so on. There we see a very big interest. There we have tested the most car brands and it works, it goes well, we are ready there. What we are waiting for now is the car manufacturers to implement standard protocols in their cars and open up for the open standard. When that happens, we are ready. But the interest is big. Some business highlights. As I have talked about, a lot has happened on the battery side. We have had a new generation during the year. We have done a savings program that has communicated earlier about 30 million. Today we communicate that we increase it to a total of 50 million. We have also done newsrooms that have communicated and we have announced our first public car company in
Åbo in Finland. I will talk a little about the increase we
are presenting today, where we go from 30 to 50 million in revenue. This we do by reducing the demand. This can make it a larger product development project that has been running almost completely. We also focus on the attractive part, a decisive part of other actors' -of-sales restrictions. We will have less active direct customers and more active towards partners. In this way, we will create a strong revenue. Our role is to continue to develop an attractive software platform for energy optimization. The open APIs we have will be even more important in the future. It will enable a simple integration towards partners so that they can control our system and exploit all possibilities. For example, in the support market, where it is about both being able to use the battery and be able to control up and down solar production and also be able to control the electric charger. In the -of-sales processing, packaging, customer service and optimization services, we see that it is mainly at strong partners. We will have customer service and optimization services for standard needs. But for advanced needs in the future, we will work
together as partners. Financially,
we
have a
reduced sales in Q3. It is minus 42% compared to the previous year. We see that this depends on a continued monitoring market. A large part of the sales we have had during the year is batteries. The system is installed at a stable, maybe even an increasing level during Q3. But it happens with equipment that we have already sold and that is with distributors. So it does not affect our results now. But we see at the same time that one installer is soon two and will have normalized layers and then they will start to buy. We see that the first orders have begun to come under Q4 now. The gross margin is still not satisfactory. I have said earlier that for us it should be somewhere around 40% a company like us. We are still working on it and not satisfied with this gross margin. The decline in Q3 compared to the previous quarter is mainly due to the fixed costs such as storage costs. We have a larger margin now and a small turnover. If you look at a underlying gross margin, it is maybe a little higher than the previous quarter. This is the explanation that it goes down a
little compared to Q4-Q2. The EBITDA minus 22 in the quarter is
in line with the previous year's Q3. There we have a lower turnover this year's Q3, which shows that the cost savings are effective. We follow the plan that we have communicated earlier. The Q3 is the same as the previous quarter. The two savings that we have made earlier will be 30 and now 20 million on a year basis. They achieve full effect
during the first half of next year. The negative cash flow, the exclusive emissions,
the above-mentioned results and the change in capital as you can see in the right picture. The total of the tax is the total of the products that are paid. The sales of our tax will give a large effect on the cash flow and this will be seen when the last tax has been normalized. The savings program of 50 million, this new one, which has increased from 30 to 50, will have a positive effect on
the cash flow. I have summarized a lot of things where
you can see that the turnover is lower than the previous year's Q3. EBITDA is lower
than
the
previous year's Q3. That was what I was going to say here now.
Then I open up for questions and make
room for many questions if you have any. You can answer them.
I would like to remind you again that you can ask your questions directly in the chat or via email to the email address in the chat. We have received some questions on the email. The first is what does this extensive savings program mean for your ability to continue developing your products?
We have been very intensively developing the last few years. Now we have reached a point where we are starting to get done with the projects and then we are down. It is about now and here that we are about to be done with the project. We are still fully prepared to grow and when the market turns and opportunities come, we are still fully prepared to continue developing our products. We are now in the middle of the market and we are
now adjusting to that.
Please comment on the situation with your competition in export.
I think that we are doing well. Our customers like our products. I think they are very competent. I think that they are very flexible and flexible. They see many benefits with our products and our equipment. The other thing is that in the support service market, where mainly focus is on FCRD, there are also several markets where you can be on several different services where you can contribute and earn money. We are very good at this. We are very controllable and can get much more benefits on several support services. The other thing I would like to highlight is that we believe in an open ecosystem. Which means that you can choose which solar panels you want, which batteries you want, which chargers you want. We are a bit unique in this respect. For example, with a large investment in batteries, we make it possible for customers and partners to choose where they want the battery. While competitors lock in and force partners and customers to choose their batteries. We have the strength to give the best solar panels with the best price performance, the best batteries and the best price performance. And we can connect to the RWP and the balance services that give the best price performance to the end customer. In the meantime, the controllability we have gives opportunities and the openness we have will give opportunities in the future. With that said, I think we are good against competitors. And the price, we should not be the cheapest, but we have a modest and motivated price premium today.
Could you say something about the number of employees, including consultants, in Q3 compared to the previous quarter? The number
seems to be increasing. Yes, they should not have. We
made some of the cost-effects we have done now, start to give effect forward. We have people who are employed, some are already unemployed in September, which is written in the report. It will decrease further, and with the program we launch today, it will go down further with 20 people. So we will be down to 40 during next year. It will drastically go down here in the future. The savings programs we have done now have not been able to give the effect yet.
We have also taken reservations in Q3 for staff who will leave us. So that can also be a disturbing post. But the important thing here is that we have a look at the 50 million we did and communicated in 2022. We have followed that plan now in 2023. Now we add another 50 million, which will give effect gradually, but full effect towards the end of the first half of next year. Then we will continue to follow that. So we will take home these costs. It is not something that is forgotten in any aspect. These costs are followed and will be taken home.
How full are these 40 FDRs exclusively consulted? Yes. And how should we look at this forward?
Yes,
I interpret the question as ... How should one see? Is this commission enough, I can imagine. It would be a bit ... You are welcome to clarify if I misinterpret the question. But my answer to this is yes, it is enough. Now we are slimmer, we have tightened the whole organization. But we still maintain core competence and we are fully ready to change again. I see no danger in the fact that we have taken away too much. We have good control over what we are going to do, our commitments and our plans for next year. I feel that we will be able to deliver on that and at the same time be ready to grow when it is time. But here we have to affect what we can affect in a dry market. Then we can supply at the cost. But we are
now after the last drop, it will be. Another question
we have received on the e-mail is ... How do you see the market in the near future?
Extremely difficult to say.
I believe in it at a long-term. I believe very much in it. Everything points to the fact that this is a good market. It is what I think. But right now, I can not point to anything in numbers or anything that I can see a turn in the near future. And that is partly why we have done this expansion of the savings program. I do not dare to say anything about next year and what it looks like. I think a turn will come. But I
do not dare to say anything about when it will come. Can you comment on the collaboration with Aaron? Yes,
Aaron is a fantastic company to follow. I think they have a good strategy with a great potential in the market. They are addressing to change gas, mainly from Russia, to energy. And clean energy, where we can help. I think they are an exciting market. An exciting company. I believe in them very much. And the numbers they have released so far around their turnover. I am very impressed by their sales rate. And the markets they are working on. The commentators can say that I am impressed and I believe in them. And I am glad that we work with them and work closely together. I think that is very
positive. What questions have you received so far?
I ask you to write in the chat if you have any questions. Given the installation pace you see today, when do you start selling new systems?
When do we start delivering to the gas companies? We have orders from the gas companies that will deliver at the end of this quarter. It starts to move. And it will gradually get better and better. But this is connected to how quickly the market will return. I would like to emphasize that the system is being installed. And we have a stable, maybe somewhat increased level of activation. There is an interest in the market, despite the fact that it is slow. And things are happening outside. And this affects the logistics. Which will then, with a decrease, affect us gradually. So that we start selling new systems. New system for distributors we start selling at the end of this quarter. Deliver and factorize. And then it will gradually increase over the next year. But as I said, if there is an exact time, I will return to the market. It is tough in activation, but it is slow. And I do not see any clear data points that I can share with you. I see that there is no magic in this time that comes. It comes, but I do not know when.
What is the installation pace today in the system?
I do not want to be too much into details. What I can say is that it is stable during the year. And we see maybe a little bit of an increase here in Q3. But what I want to communicate with the installation and installation rate is that. It is happening in the market. And it is more so because when you look at our figures. You can think about if everything is still. So is there no one who likes our products? And I would like to underline that our products are good. They are appreciated. I think in the future we will only get more benefits from being so competent as a system. The benefits will be materialized by us and by our partners. I think we have things to do and we have advantages in the future. But I do not want to leave any figures and end up with a prognosis for the installation pace.
What are you counting on for investment levels for next year?
I think given the situation we will invest less. I can say that with certainty. And we will invest now to complete the important and large expansion projects you have run. So we are also ready for when the market turns.
When will the cost-optimized products come out of
the market? Yes, it is a little bit the same category as distributors. We will not produce it before we see that there is a demand. But there again we have to see that the market is turning. We get the activation going and we start to get normalized sales of distributors. It is a similar product that we will launch. It is as competent as the one we have today. The difference is that it is cost-optimized. We have looked through the production stages. It is cheaper to manufacture when we put it into production. I have said before that I feel comfortable that it will be a more cost-optimized product. We have worked closely with component manufacturers and manufacturers. We have a very clear picture of what it will cost. It is one of the projects that is finished.
How do you see that electricity prices are so low in the summer and how does it affect the economy for an investment in solar power?
Good question. Of course this affects a lot. If you have been with us for a while, you have been with us when we had a cold winter in Ukraine, gas, Germany, everything just went away. Then everyone would have it. Then came the summer and I felt that the price was low. Then it was not so bad anymore. Now it has been in a situation that it is not so bad. I had a meeting yesterday with a person who sat in the afternoon. He sat south of the building. He looked at his app and said that the price was 7 kronor. Then it is 7 kronor and then you are back to when everyone would have the system. That it has been low this summer has of course affected the economy. People have not had so much trouble. People have been able to pay attention. It is important. I am interested. I can pay attention a little. Now we will see what happens when prices start to vary and go up again. But it has affected this summer absolutely.
How important is the reduction in the rent on potential customers' bills?
I think it is important in the actual calculation but also a psychological thing. I can only go to myself. I think extra in front of all the costs and investments I am going to make now. Then it is so that if there is a reduction in the rent that you think in the future, then somewhere you have to change it. Somewhere it has to change the mentality so that people do not become so distracted by this aspect. I think it has a positive effect. How big and when the actual or mental effect is, it is difficult to speculate about.
With the introduction of effect tariffs for households, Fervent has a possibility. But how will the system be adapted to be controlled to cope with effect peaks and control after the price of a spot?
Yes, we can already today. For quite some time you can control the effect. So that can be done already today and put it on. Then when it comes to making more advanced predictions, some say that you have AI and you know a lot of stuff ahead, which is actually about trying to take into account the prognosis and how the house works and how the children shower and such things. It can be called AI if you want. But there I see that our primary focus is to work with those who are really good at it. We will continue to have quite standard things that solve most people's needs. But when it comes to something like that, I want to be the last one. The last savings, the last optimization and I would like to say that you have AI in the house in some way. But then we will be able to offer a partner. And then it comes back to this that we are very competent when it comes to being able to control our system via APIs with a simple integration. Then we can solve the standard needs ourselves and together with others.
If you want to say that you have AI, we can do that. It looks like all questions. There are a few more.
Thank you for all the questions. It was good questions all together and I hope you got a satisfying answer to the questions. And with that, I thank you for today. Thank you very much.