Advent Technologies Holdings, Inc. (ADN) Earnings Call Transcript & Summary

Welcome and thanks for joining us here at the Energy, Power & Renewables Conference. My name is Bill Peterson. I'm the transportation and fuel transformation analyst here at the firm. I'm really pleased to have Advent Technologies, Dr. Vassilios Gregoriou -- hopefully I said that correctly. He's going to walk through a presentation and also welcome to those on the webcast. So thanks for joining us.

Thank you, and I'm very happy to be here. Thank you for the direction and the invitation. And before I start, I would say I encourage all participants to review the full presentation materials, including the disclaimers as well as Advent's materials filed with the SEC, including the risk factors. . So what have we done with -- what we've done with Advent that we have invented and commercialized type of fuel cell was called the high temperature-PEM fuel cell. We work with the Department of Energy. And also, we have thousands of systems outside already, off grid and remote power. And also, there is a big opportunity for what we'll make in heavy-duty automotive, and in that respect also to aviation Marine. The 2 key drivers are, one, is the global mandate to decarbonize. As we know, is a key priority, at least in Western countries. And also lately after the very unfortunate event with the Ukraine. Europe really wants to have energy security and independence from Russian natural gas. So for that matter, immediately, we've seen a tremendous interest in -- going very forward with a lot of very ambitious green energy and green hydrogen projects, in particular. And if you think that fuel cells and electrolyzers are the 2 sides of the same coin basically, it puts a very good perspective of what we're trying to do. We listed on NASDAQ about 1.5 years ago, February 2021. We had about $60 million in the balance sheet at the end of March, and we're going to be very protected over this case, because we know that markets are tight. But there's always opportunities for good projects, energy projects, and we think 1 of the best. And in that respect, I'm going to walk you a little bit through what we've done the last 1.5 years because the comment -- probably different comment now that it was 3 years ago and we hope that it's going to be a completely different company 3 years from now. So basically what we do with the -- after the NASDAQ IPO is, with a couple of acquisitions we have consolidated the space. So basically we are now -- we can say that we have the manufacturing, we have the people, we have about 250 people worldwide, we have the tech, we have the patents behind it in the years of technical experience. And the last few months, we have very significant events happening. One is that we made available the next-generation MEA, the 1 that we're working with DOE. Second, we have entered into technology assessment with Hyundai and another very large global automotive manufacturer. And third, actually last week, we've got notification by the Greek state, which is in collaboration obviously with the European Union, about a big project, EUR 782.1 million, under the IPCEI framework, it's the large European projects that they actually become even more relevant after, as I said, the Ukraine situation. Now if we take a look where we are. We're headquartered in Boston, Massachusetts. We have operations in Livermore. We're building a manufacturing facility in Charlestown, Massachusetts for the stuff that we do mainly in the United States. But our biggest strength and our biggest, if you will, operation is in Europe. And there we have facilities in Denmark, Germany, Greece. We're going to build this large factory in Greece as well for the IPCEI project. So we think that this is where the majority of our operations will happen. And I will show in later slides why is this case. Also, we have operations in Manila, in the Philippines because we work there with the telecom people for the backup systems. Behind the tech also is an experienced executive leadership team. I'm the CEO, also the founder, and the people at the executive team here with me for a long time, most of them. And we have a proven track record of technological development and commercialization. So we're an experienced team. The tech is superb. The situation is good. So we feel very good about the future. So where are we actually can make a difference? If you take a look at the market and competitive landscape where Advent is positioned? We're talking about long duty cycles. And right now, we're talking about off-grid and portable. However, as you probably can imagine, there is a lot of interest in bigger systems. So there is large case systems, power to gas, gas to power that we can actually play plus when we go to mobility, there, as you can imagine, we're not going to make a track, but we can make all of the regextenders to work very close with the electric vehicles. And there, you can see that we're actually focusing on a particular subject, which is the heavy-duty mobility. Now if you take a look at the competition, we're trying, obviously, to play to where we have an advantage. And when the duty cycle is lower, the power requirements are low, batteries are fine for small scooters, or for small vehicles, batteries are good. But the minute we have more needs, then the fuel cell is going to be there, and that's a fact. What's the difference with our fuel cell? Our fuel cell is a hydrogen fuel cell, so it takes hydrogen, but also it takes other fuels. And in particular, we're very happy with methanol as a fuel, in particular, in methanol, okay? Because there, you have a system that's flexible. It can take different fuels. And also, it doesn't have problems with temperature. So we have very big temperature range. What does it mean? It means that we have multiple markets. You can imagine that in a lot of situations, people have 1 market after going around, we have many different markets because of this flexibility, and that's very good. Now the biggest problem with companies like us here is that how can we make a case that in the end, we're going to be profitable, okay? And one of the things that was very important to us is that we wanted to control all the parts, and we're 1 of the actually 2 companies at this level that we have this vertical integration. We make our own MEAs, okay? We make the stock, we get the reformers. So we have not only the materials in the innovation, but we also have an engineering innovation. And we make the product and we ship it in telecom, defense and now the heavy-duty trucks. So the idea here is that to reduce the total cost of owners, meaning how much per kilowatt, the fuel cell cost, and we do it by increasing lifetime or making better things. And also, doing a recycling financial play with platinum. The fact of the matter that we have the fuel flexibility means that we can actually change the reformed methanol, we got the natural gas or no reformer at all when we were with hydrogen, makes this technology very flexible. In the end of the day, though, we are a technology play, meaning that the way we see each other -- ourselves is that we have Advent inside as a motor, meaning that we're going to work with Tier 1 OEMs in order to go to the final customer when we're talking about big volumes. So in aviation, right now, we work with Safran in France. In automotive, we work with Hyundai and another very big automotive manufacturer, and we are in discussions with the oil and gas people. So in the end, that's our model, and we feel very comfortable that through this model we're going to get the revenue on the profit margin that we want. Now the projected revenue breakdown. I have the next slide there, really relies on capacity. And that will have a tie to the stuff that we're going to say there. 50% of the money we expect to come from systems of Greek telecom, defense, remote power, 20% from our advanced materials, 15% from engineering and license fees and 15% from grants. When we got some money to speak about even before the IPO, it was very clear to us that we want to go to green hydrogen because of the tremendous growth of this sector and the regulation, if you will, or the policies behind it. If you take a look at the global map for the Giga projects, you will see a lot of them in Europe, none of them in the United States now. And trust me, that will change. It will change for sure. So we're at the beginning of this. And in that respect, it is obvious that there will be a lot of effort from Europe to support this business, meaning that we want to create an industry that's going to stay there. Also, since Europe doesn't have fossil fuels to speak about, it has a very good merit to renewables, okay? So we're very pleased when we announced last week that we received notification from the Greek state for this IPCEI project that we had, it's called Green HiPo. And it is because of the innovation that we share, and also about the fact that we will create a big capacity, both in high-temperature PEM fuel cells and electrolyzers. And we're going to do it from the electrolyzers in collaboration with strategic partners. And we're going to do it in Western Macedonia, a region in Greece. And for that matter, we have the home core that bundles there. We know how things are. The funding is very significant. We spent EUR 782.1 million over the next 6 years. And this will tie also to hundreds of millions of sales of products that we make as the products are made through the years. A very big R&D component, very big first initial deployment component, and we'll be very happy to discuss all of this in detail in the Investor Day, which we're going to have July 7. So I invite you all to this so we can go through details with the numbers. Another thing that I said in there, there is an artist intention of it, is that, it is a very good match and very good merits, if you will, between renewables, photovoltaic or wind to the green hydrogen. So the minute green hydrogen becomes, I would say, equally cheap as green hydrogen, and there will be no reason why you should not use the green. So that's the projection. If you take a look at the numbers for photovoltaics at least in Southern Europe, the numbers are very, very low. Therefore, the produced green hydrogen is also very cheaper in kilogram. And we believe all of these projects, the 1 that we just discussed now, which is a manufacturing project, meaning that we have to make the instrumentation in order to, in the end, to make the gas as well. But they will go the way that other renewable energy projects has through the PPAs and all. So it is a model that we know for the last 20 years, and it will continue with hydrogen as well. Now again, a scientist, we had seen, as I said, even before all of this tremendous interest in green hydrogen that the power dense, the lifetimes, all of that, they could be better, okay? So you have one -- the cheap electricity and that will result in chip hydrogen. On the other hand though, if you have an electrolyzer that's more capable to begin with, that's all in the right direction. So there we have made a significant investment in the alkaline electrolyzer, and actually [ alkaline electrolyzer membrane ] for that matter. So in order to get the cost of hiring down, lower CapEx for the electrolyzer and also to do saltwater electrolysis, for us, it's important as well. Now let me show you a couple of the applications of what we make. As I said, everywhere, there is a diesel generator [indiscernible], of course, depending on the economics. So right now, we start with off-grid and portable because batteries in these cases are not desirable because they are very big and they need to recharge. So our product, and I think that's the 1 that we build all of the thing is a grid power product for telecom. We have success with it in Asia, where the grid is not that good. And we have sold hundreds of these and deploy hundreds of these systems for telecom tower operators around the world, and in particular, as I said, in the Philippines to begin with. Now everybody wants bigger systems. So we have implemented an effort to make bigger systems in a modular way to go up to 1 megawatt fuel cell system. And there, what would you need megawatt. You need megawatt when you're talking power to hydrogen to balance the grid for data centers, for off-grid power for mining. And the good thing is, as I said, we have the fuel flexibility. We can use natural gas, you can use methanol or you can use hydrogen when it's available. So one thing is, as I said, the CHP applications and the stationary applications and all. The other very big component for us for our growth will be mobility. And there, we have shown that if you use the Advent MEAs, if you know how to make tax or the Advent rates extend there, you don't know how to make tax and you want the whole extend there, that it's a very good addition to and solve the problems of the electric truck because basically, you have 2 big problems, right? You have a problem with slow recharge and the lack of range. So the minute you have a rate at standalone that works either, as I said before, with hires and work with e-fuels -- metal or even natural gas for that matter. You solve the problems of electric truck. And actually, you have a much better technical solution compared to low temperature PEM. And as I said, we will go into deep dive when we have the Investor Day in the 7 July to explain how that works. So what are the catalysts for growth in the next 12 months? So the biggest catalyst, obviously, is this big Green HiPo project, EUR 782 million, that it will start from this year. Second, we are completing the advanced manufacturing facility in Boston, and we'll start doing that in Europe as well. We made continuous progress with the DOE technology, for us is a game changer. The MEA is the key to all of these things, and the MEA is much better than you have a much better system in the end. Our collaborations and joint development agreements with the large global players will continue. And also, we're contemplating a potential strategic transaction in the next 12 months. So regarding the financials, the key metrics were on track to meet our 2025 goals, EUR 250 million in annual sales and EUR 50 million adjusted EBITDA. And we want to go through detail in order to make you feel comfortable about the numbers and how we're going to get there. So I said the July 7 is an important and we're all welcome to it. Thank you very much for your attention.

Thanks for the presentation, Dr. Gregoriou. So moving on to Q&A session. And again, if anybody has some questions, please raise your hand. You have a lot of different technologies. What would you say the main technology focuses for the company and I guess, the key core markets that you see?

Yes. I think the -- basically, we have 1 technology, maybe think about it. We have a technology that's based on the new materials that we coinvent with the -- who got developed with the Department of Energy because they are a game changer. So far, we have relied on -- reliable and I would say, well proven solutions that we had, but this is a new game. And it is a new game because the efficiency is much better. The lifetime also are much better and the temperature range is much better.

In the core markets.

The core market is stationary and mobility.

Okay. What are your current projects that focus on Advent MEA for longer lifetime and hydropower density?

So the innovative program we have the DOE. There, we have the Los Alamos, we have the Brookhaven National Lab, the National Renewable Energy Laboratory with us. And we're trying to go, as I said, to the next level, so we go from the stationary and we're going to go to automotive mobility. And if we go to mobility, it's kind of something with aviation because you have a much lighter system. The balance will plan better. So it's a different -- completely different product that they have. Now the same technology, obviously can be applied to the Green HiPo to the IPCEI project since we're under one roof, and we will transfer the technology to the European operations as well.

Okay. You talked about stationary mobility. But can you help quantify your market opportunity, the market opportunities for the fuel cells for stationary and mobile?

Yes. I think I've said in the beginning, a lot of these things are driven by policy. The fact that we're trying to replace the diesel generator now and that we're talking about very big numbers here. $37 billion in 2027, all -- everything that we can do there, it's going to be very, very good for us. The other thing is that the 12 million towers between 10 and 20 kilowatts each, so telco will definitely be a big market for us. And also by using e-methanol, which in reality is 100% emission-free because as you know, how it's made and what kind of message it makes. I think it makes a very good proposition. I would just have to keep on reducing the price and we do that in 2 ways. One is by making more and the other by changing the technology.

Is there any questions from the audience, please feel free. Moving on, so you had a presentation, but you can handle hydrogen, you can handle e-methanol. What is important and the ability to handle the multiple fuel cells?

This particular point is very important. It's very important because the hydrogen infrastructure is not there. Okay. It depends. You can make the case some advanced cities and all that. But in reality, we need this transition phase, if you will. And actually, that's what we cofounded the company because they were very good. Low temperature fuel cells stacks out there even 50 years ago once there was the hydrogen. Now the hydrogen will come, but in the meantime, all these hydrogen carried fuels would play the role of the initiative on the technology and slowly but surely will go there. So if you have 1 basically underlying technology and 1 system that with some modification obviously, can we have the multiple fuels, admittedly you get the multiple markets.

A number of questions here actually online. I guess a few of them are summarizing. What is the -- kind of what is the status of the White Dragon project? When will the EU assessment be issued?

Yes, we wait for the coordinator of the project to officially announce it. It's depo. It's not us.

Okay. So no problem...