VivoPower Plc Q2 FY2021 earnings call

Management Statement and Operational Highlights

• COVID Impact: Revenues declined 28% y-o-y due to COVID lockdowns in Australia affecting Aevitas' scheduled works. Gross profit decreased 18% y-o-y but GP margin improved to 20% from 18%.
• Tembo Acquisition: Completed 51% acquisition in November 2020 and moved to 100% ownership in February 2021. Focus on customized and ruggedized EVs for mining and other sectors.
• Partnerships: Signed $250 million deal with GB Auto for Tembo EV distribution in Australia. Secured first sustainable energy solution deal with Tottenham Hotspur FC for their stadium and training facilities.
• Refinancing: Refinanced parent company shareholder loan in January with longer maturity and lower interest rates, improving credit profile. Capital raised in October 2020 increased cash balance to $17.4 million from $2.8 million.
• FY '21 Objectives: Ahead of schedule with 55% completion of key objectives, on track to deliver rest by end of June 2021.

Segment Performance

• Aevitas: Revenues were $22.3 million, down 29% year-on-year. Gross profit was $4.6 million (down from $5.6 million in the prior period). Underlying EBITDA was $3.3 million, down 80%, though partially offset by overhead cost savings. Revenue contribution from Aevitas was affected by strict COVID lockdowns in Australia.
• VivoPower (U.S. Portfolio): Net megawatt was 892 (slightly down from the original 922). In Austria, smaller solar projects like Daisy Hill were sold and Yoogali Solar was nearing sale, both expected to be profitable. J.A. Martin completed over 150 megawatts of solar projects with 300 megawatts in the pipeline.
• Tembo: Acquired in November 2020 and became 100% owned in February 2021. Revenues for the half year were $0.4 million (two months post-acquisition). Focused on customized EVs for mining, infrastructure (e.g., Tottenham deal), utilities, and govt services. Signed a $250 million deal with GB Auto over 4 years for EV distribution.

Guidance

• FY '21 Objectives: Tracking at 55% completion and on track to deliver remaining objectives by end of June 2021.
• Tembo Development: Work commenced on next generation 72 kWh per hour platform. VivoPower on-boarding and integration program nearing completion.
• Audits: Expect further audits in H2 '21 from mining sector customers globally.

Risks

• COVID Impact: Revenue drop due to COVID lockdowns affecting Aevitas' scheduled works and Tembo's production/delivery.
• Negotiations: Ongoing negotiations with joint venture partner regarding settlement of joint venture arrangements.
• Operational Disruptions: Tembo faced operational disruptions and delays in production/delivery due to COVID-19 lockdowns in the Netherlands and customer markets.

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