ADS-TEC Energy PLC Q4 FY2023 earnings call

Market Trends - Grid expansion is a hot topic globally for the transition to an all-electric world, but it faces delays, restrictions, and hurdles. EV adoption has long-term growth potential despite short-term fluctuations. The demand for grid expansion comes not only from EVs but also from photovoltaic, renewables, and hydrogen electrolyzers. - ### Strategy and USP - Focus on core competencies, not being an operator but providing technology and services to future power companies. Active in Europe and North America, with a broad base of new customers and partners. Has hardware, software, services, and features like a toolbox, with own battery modules, in-house software, various services, and customizable software components. - ### Customer Base - New customers and partners are being onboarded, with the sales cycle taking approximately nine months as customers need to understand the technology and potential.

In 2023, ADS-TEC Energy achieved revenues of EUR 107.4 million. The adjusted EBITDA in Q4 2023 was positive at EUR 4.6 million on a pro forma basis. For 2024, the company reaffirmed the target of revenue of EUR 200 million and above. Over 1,500 battery-buffered charging points were installed, and in total, more than 2,500 charging points were shipped and produced.

- Reiterated the target of doubling revenues in 2024 to EUR 200 million and above. ### - Expect the fiscal year to be back-end loaded in terms of revenue, with the second half likely to be stronger. ### - Aim to maintain margins as the company is in a good spot in the growing market without reducing prices.

- Economic turmoil, political instability, ongoing military action in Ukraine, conflict between Israel and Hamas, and other geopolitical challenges. ### - Grid expansion facing time delays, restrictions, and obstacles. ### - Uncertainty in the market regarding the outlook for EVs in the short term.

Q: Hi there. You have Canyon Hayes on for Matt Summerville. I just wanted to check-in on the 2024 guidance with respect to the first half and second half revenue and EBITDA cadence. Similarly, I was curious on your unit volume assumptions baked into that guide and similarly geography.

A: Wolfgang Breme stated that the fiscal year is expected to be back-end loaded in terms of revenue, with the second half likely stronger. He also mentioned that they are not disclosing exact unit volume numbers but expect to double output in terms of charging products compared to last year to reach EUR 200 million in revenues.

Q: Do you have any early feedback or any read on the ChargePost demand in the U.S.? Similarly, are there any existing supply chain or manufacturing challenges as of late?

A: Thomas Speidel said they already spoke about ChargePost and that they will introduce it in the U.S. considering NACS development changes and UL certification, with expected announcement at a 2025 exhibition. Regarding supply chain and manufacturing challenges, he mentioned ongoing developments but didn't detail specific current challenges.

Q: When we think about EBITDA positive for the year as a whole, should we assume negative EBITDA in the first half, positive in the second half? Is that a fair generalization?

A: Wolfgang Breme said it's a generalization that the second half is likely to have a stronger result as revenues in Q4 were positive, but they are not expecting negative EBITDA overall for the year.

Q: As you look to build a significant U.S. business, will that include establishing a manufacturing operation in the United States?

A: Thomas Speidel said they are still on track with plans for a U.S. presence, having started with battery assembly in Auburn. There have been delays due to NACS changes, NEVI fundings uncertainty, etc., but the plan to have a local-for-local strategy in North America remains, with step-by-step expansion.

Q: What was the percentage of revenue from Germany in 2023? And how will that change this year?

A: Wolfgang Breme said Germany was around 80% of Europe's revenue, and Europe is around 80% of total revenue. Going forward, the customer portfolio and countries are diversifying, with Europe expected to be stronger in the short term and then the U.S. will kick-off later.

Q: I was hoping that you might be able to talk a little bit more about your backlog and your business pipeline. Do you maybe have an updated number for us on the backlog today, the committed backlog at April 30? And, can you maybe characterize for us, you saw five-fold growth in the United States, those were very early units and many of those customers who are taking their first units last year. Are you likely to see similar strong growth in the U.S. based on what you have in backlog? And, then is the NEVI funding starting to support an accelerating outlook for you in the United States and business pipeline, anything quantitative that you could share would be really useful?

A: Wolfgang Breme said they will disclose the April backlog with Q1 numbers, starting with a solid backlog of EUR 80 million at end of December, with pipeline larger than backlog. Regarding U.S. growth, he mentioned the backlog and pipeline are positive but it's back-end loaded. Thomas Speidel said NEVI funding is an accelerator but not the basis of the business, as it's neutral and not the sole driver, with customers applying for NEVI funding but it's not the main factor for business development