PowerCell Sweden AB (publ)

Good morning and a warm welcome to our Q4 report for 2024. I am now joined with Anders for the first time, so a warm welcome to Anders. Thank you. Thank you. I've been now with the company for two months, working initially in parallel together with Tobin Gustavsson and taking over from January 1st. And it is with pleasure that we're now presenting the quarter four report and also giving you some introduction to the general status in our industry and where we're heading with Powercell. Quarter four, 2024 became a slight recovery compared to what was previously a rather soft year. We were able to report a 30% growth for quarter four, which gave us an 8% growth all for the full year, which was quite good in what was a rather soft market that we have reported starting from quarter three, quarter four in 2023 and carrying over. Also happy to be able to report a small positive result, although it's just for one quarter. It's still a good indicator of the potential we have to leverage growth in Parasol. Other significant events in the quarter is of course the memorandum of understanding we signed with Serabia to explore the next generation aviation fuel cell. We are in the process of certifying the first part of the business for the smaller aircraft propulsion unit. where Zeravia last week received a G1 certificate from FAA in the US and Powercell this week reported that we completed certification of AS9100 which is the aviation certificate for designing and manufacturing for aviation which is indicating that the certification process and commercialization of the first part of the business with Zeravia is progressing well. The fact then that we add a collaboration or evaluation of a potential collaboration for the next part where we go for larger aircrafts is of course encouraging and a good indication of a very healthy joint development that we do with them. Also completed the direct issuance of share in December which we were happy about bringing in new stronger owners and of course fresh capital for the company strengthening the balance sheet and giving us more room to maneuver and accelerate our development because we think that we are in a very good position strategically. This gives us even more potential to act on what could be a potentially interesting market. Also positive cash flow that we improved. Anders will explore more about this because we have one time effect that is positive this time where we had some negative cut-offs effect last year. So really good underlying cash flow but something we need to continue to monitor and work on going forward. All in all, for us, it's been a robust market. The fundamentals is there for us. And we talked about this in previous calls as well. After summer in 2024, we saw a change in the market where we saw OEM orders coming in. First half of 2024, it was difficult to have any signed orders. Second half, the market accelerated and it's doing it with the OEM customers that we have been positioned and trying to establish contracts with for quite some time. The change is that previously the turnover time from initial negotiation to completion of delivery and an invoice was roughly five years. Now it's down to 18 months, which is a significant change in our industry. And that is not just from the Italian shipyard that we communicate, but that was in general the order intake of the second half of last year. Powercell have continued to focus on OEM business and commercial integration, which is important. Because in this market where you see a lot of uncertainty related to policy changes and regulations, working with OEMs that are doing this because it makes business sense and it's critical for them in the future competitiveness in their industry, I think gives us a bit more robustness to these fluctuations that we see in subsidies and policies. The segments that are driving growth at the moment are marine and power generation development. We see increased demand with really strong customers with a specific purpose to what they do, which is also very encouraging. If we then summarize 2024, it was a soft market, but we saw good improvement in the second half of 2024, driven by OEM orders to power us up. The order intake for the second half was about 50 milliseconds per month. And once again, with rather short turnover time from order to complete the delivery and after that, the invoicing. So a good progress in the market, not just in numbers, but in the characteristics of the orders. We were happy to introduce Marine System 225 and also the M2 power methanol power plants, which is adding to our competitive strength. And we saw with the introduction of Marine System 225, which was the upgraded version, we immediately received more than 75 orders or system orders, which is now the wrap up we do with serial production of this one, which is also a first for Powercell. And then, as I said, complete certification of the AS9100, which is a very important milestone for Powercell, because this is also one of these indicators how we are maturing as a company. And although this certificate is specific for the aviation deliveries, It is, of course, a very important fundamental for all our segments because it gives us a step of approval on the industrial stability and ability to provide quality and safety for our customers, which is really important. So when we exit 2024, we do it as a strong company. We have updated the product portfolio. We have an updated technology portfolio with the next generation fuel cell stack, which we were running for the first time in December as a full stack. This is the building block that we can configure between 300 kilowatt up to one megawatt of power, which will be a very important building block going forward. Even though we claim that we have the best energy density and thereby performance in the industry, this new generation, which is on TRL level 5 at the moment, it gives us a 55% improvement in performance, which is significant because it brings down weight, size and thereby also cost. So a very important part of our future development. The fact that we are now in start of production of serial delivery in quarter four and wrapping up in quarter one this year is really encouraging. We have a proven business model and we have also proven ability to leverage growth. And Anders will show this because we are managing to report a small profit, but we do it on also rather low levels of revenue. We have a very interesting business model which we have claimed previously to be asset-light and it's proving now to have a strong leverage in its growth. We also entered 2025 or exit 2024 with improved financial stability and we have strengthened the balance sheet which was a focus for us in the later part of 2024. So with that Anders give you an introduction to the numbers.

Thank you very much Richard. I will walk through the numbers. I will do that in a more reflective mood as the numbers are quite well described in the report itself and there are some elaborated texts associated to them. But I will try to highlight some of the things that I think either could be elaborating on what Richard has been saying and what I think is important to remember as you read the numbers. Starting with the sales number. Obviously, we see the quarterly differences here with a very strong fourth quarter compared to the previous three quarters. And if we would have looked at the year before, we would have seen the same trend. I think indication report gives at hand that we might see a more smooth ride here between quarters moving forward without having said anything about forecasts or anything like that. But this is the trend, and we had a very healthy Q4 with that respect. We can change slide, Richard, to the next. Then looking at the Q4 P&L, I think the obvious thing here is that we had some order intake that we accounted for as a stage of completion that generated a strong outcome of the top line. Although we have been to some extent conservative, this is one of the first real large such orders when it comes to the profitability on such a contract. But we still see that the fundamentals in Q4 came out very strong and we are happy to be able to leverage off that going forward. We can go on to the next page. For the year and the P&L, I think it's important to remember the one-time effect or the extraordinary effect that were taken in the previous quarters this year. That is a 30 million grant that was given to us, basically relieved. That is a 30 million plus to the P&L and you see that as a non-recurrent item for this year. although there were no such things in Q4 for comparison reasons. But I think that's the real key thing to notice here. So with that having said, I think we can go to the next one. The balance sheet, like Richard said, I mean, the focus for the company in the last half of the last year was basically to have a more stable balance sheet, including equity. And we have a successful round of bringing in equity. The other things that have changed that is obviously different from 2023 is that we do have capitalized a bit more of the research and development activities as we are moving into a more aggressive phase on those things and taking on more tasks. We also at the year end had the situation of that we had a lot of purchases following the order that we received in Q4. And we also had some prepayments for the funded projects that we're doing internally. those things together generated a very high level of current liabilities part of that is the payables of course and it's important for me to say here that as much as a negative cutover effect that had last year when going into 24 We might see a bit of a positive turnover effect here when we go into 2025. So the differences that I will share with you in a while will, yes, they are differences. And they are, like Richard said, there's a fundamental improved cash flow. But obviously, it has had some periodization effects when it cut over from last year to this and from this year to next, 2024-2025. So let's move on. And the outcome of what I just mentioned is quite well viewed here on this chart. There was a very negative operating cash flow by the end of last year or 23. And this year we have a positive operating cash flow. And I just want to make sure that everyone understand that there are cutoff effects that works in the opposite direction in the two different cutoff points. But underlying cash flow is positive. I think I'll leave it with Richard and potentially pick up questions after having finalized with some KPIs. I think these KPIs are fine in the report. I think it's for us extremely important that we follow the EBITDA as a result measure and of course the total cash flow. And talking total cash flow in this case, obviously we've had a significant improvement following both the the loan that we had from our funders and the share issue. Having said so, Richard, I'll leave it to you.

Very good. So if we then look at the strategic focus for 2025, we have a very strong focus on reaching breakeven. That should not be misinterpreted as a forecast, but it is a strong focus. And I think that this is why we talk so much about leveraging growth. and continue our top line growth, we need to focus on the OEM contracts because that is what is giving us a repetitive, sustainable business. We have now a number where we have designed in our technology into both marine OEMs and also part generation OEMs, which means that when they are out selling their core offering, we are part of that, which is a very, very good business model for Power Cell. That is giving us an opportunity also to scale by selling more of the existing product generation, which is very important and able to drive towards break even and a very good and balanced cash flow. But then at the same time, we are accelerating the next generation of products. And this is where I'm always coming back to where I'm most proud of PowerSell. The ability to actually have a growth that is one of the best in the industry, the ability to leverage growth while we're still investing into current offering on the product portfolio and into the future earning, because this is so important. We are not running PowerCell only to show short-term growth and short-term profitability. We are investing into the future ability to also generate money in the upcoming technology portfolios. And that is, as I said, really proud of that balance. We are continuing to work with the industrialized innovation concept where we are adding more and more product features. Last year we had two major releases of new technology and new offerings. In 2025 we will continue because this is still an innovation driven market. And we need to add more and more value to our customers which is part of the industrialized innovation concept. And as I said, I'm really proud of our ability to balance innovation, industrial stability and leverage growth with a clear path towards break-even. And I will be happy to explore more of that in the question section. We have said this before, we are now in a new phase in the market where we see a commercial market growth from OEM business, which is posing new requirements on companies like Paracel, where you need to have your technology, product and operation in order. We are now entering into a market where more traditional competitive perspectives are being We need to have delivery on time. We need to have good quality and good safety in our products. We need to focus on uptime in the application for the customer, etc. Which is really, really interesting because that's also proving PowerCell as an industrial company, not just a technology startup. So this also poses new opportunities because not everyone in the industry, they're not up for this. So we think that we are well positioned to capture this and we have prepared for doing this by investing into the product offering, investing into internal abilities and capabilities. We have focus on productivity in our operation and on internal efficiency. All of these quite, if I may say, boring characteristics of running a company, but that is what's creating value long term. Everybody can invest in new technology and in your brand and marketing, but you also need to invest in the fundamentals of being an industrial company. And that is something that PowerCell have been preparing for and hopefully can benefit from in the upcoming years. So if we look at the market, we now see what I call a bit of an ambiguous market characteristic. We see solid OEM driven growth rather than the subsidy driven growth. But we also have an uncertainty around policy and regulatory aspects. For Powercell, I am convinced that the energy transition, it is happening. We see more action in the market than we have seen ever before. We see more investments and actual deployment of hydrogen availability, hydrogen value chain and supply chain. So we see more actual progress, but we also see more questions and more negative sentiments around the whole energy transition. But to me, as I said, and I think that it could be a bit of a challenge sometimes, but we have not been chasing the subsidies. We have been trying to focus on OEMs that are doing this because they need it in their business model. Hopefully that can give us a bit more of a robust situation where the when you have some uncertainty on the policy side and subsidy side. So we are working with a clear commitment from OEMs where they have a focused effort and a clear, secure deployment plan. So we will come back to this in the quarter one report on how the market is developing. But for PowerCell, we are bit positive but not over enthusiastic when you have uncertainty in the market is affecting everybody but we're trying to navigate with our offering as we have done in the past and we do that with having leading technology and actually going into real commercial deliveries which is quite important for us So with that, we will come back and talk to you with interim reporting for quarter one on April 24th. Then we have the AGM in Gothenburg, where you're all invited to visit us. Most likely this time we will be at PowerZone, which gives you an opportunity to come and see production and meet the people and see the products firsthand. So with that, we open up for questions from the audience.