ADS-TEC Energy PLC Q2 FY2022 earnings call

• Transformation to intelligent and decentralized energy supply is ongoing, and ADS-TEC develops and produces decentralized smart storage-based platforms and related services. - Electric vehicle adoption is growing globally, with strong tailwinds, and ADS-TEC's products are positioned to capitalize on this. - Identified market segments include charge point operators, retail establishments, condominiums, hotels, etc. Sales team is building a robust pipeline. - European business is growing with partnerships like JOLT, which is deploying ADS-TEC's charging stations. - U.S. business is progressing with determination of manufacturing site location and final negotiations, expecting to open in Q4 2022. - Company has seen a significant increase in order volume, with booked orders at EUR152.3 million and order backlog at EUR176.7 million.

H1 2022 revenue was EUR9.431 million, down from EUR20.9 million in H1 2021. The service segment contributed EUR636,000, a decrease of about 39% year-over-year due to reduced sale of spare parts and lower services related to charging platform sales. The commercial and industrial business had EUR2 million in revenue, a year-over-year increase of about 65%. Geographically, 94% of H1 2021 revenue was from Germany, while 54% of H1 2022 revenue was from outside Germany, with international sales expansion including 27% from the U.S. Gross profit in H1 2022 was minus EUR4.8 million, down from positive EUR1.5 million in H1 2021, mainly due to supply chain cost increases and build-up of manufacturing facilities leading to higher costs.

• Expect revenue for full year 2022 to be in the range of EUR80 million to EUR100 million, back loaded to the second half. - Charging unit sales are anticipated to still fall in the range of 400 to 500 units as previously guided. - Expect gross margin to improve by the end of 2022. - Current cash on hand is expected to support through the next quarter, with continuous monitoring of capital structure and growth opportunities.

• Continued COVID-19 pandemic, supply chain issues, and geopolitical challenges could cause actual results to differ materially from expectations. - These forward-looking statements involve risks and uncertainties beyond the company's control.

Q: With EUR176 million backlog, what is the visibility into 2023 deliveries and actionability of current pipeline?

A: From bookings now, everything is supposed to be delivered until end of 2023; there are no longer term orders in the backlog, and there is a high pipeline but it's not booking.

Q: Timeline for U.S. facility opening and ramping to full production rate?

A: Started searching for site in January, plan to be in location by end of September, starting with warehouse, battery assembly, and service team this year, and ramping up more in production development next year.

Q: Range for gross margin in 2022 as a whole?

A: Gross margin turned negative in first half due to supply chain constraints, expects to turn positive in second half but too early to give clear number now, and pricing has been adjusted.

Q: Effect of German electric vehicle market on charging infrastructure build out?

A: No effect seen, expect demand for chargers to not go down as there are more open orders and private sector is catching up.

Q: Acceleration of charging infrastructure build out in Eastern Europe?

A: No special request seen from Eastern countries so far.

Q: Difference between charging points for different vehicles?

A: Chargers can handle up to 300 kilowatt charging power for normal EVs, vans, buses; for big trucks with higher charging power, possible with technology but standards not set yet.

Q: Revenue mix and geographical mix of charging unit sales?

A: Services contributed EUR0.6 million and commercial and industrial application EUR2 million in H1 2022; charging unit sales are almost half and half between Europe and U.S.

Q: Impact of energy shortage in Europe on German facility?

A: Current situation is an accelerator for C&I business, but no significant power outage expected.