Energy S.p.A. (ENY) Earnings Call Transcript & Summary

Good morning everyone, and welcome to this conference call, which aims to comment and give some color to the Energy Group results for the year 2023 approved, as you may know by the Board Of Directors last night. We are together with the management Mr. Davide Tinazzi and Mr. Daniele Manfroi respectively, CEO and CFO of the group. The presentation is available on the Energy website and will be recorded. I leave immediately the floor to Davide Tinazzi.

[Foreign Language] Hello everybody. Welcome here for this presentation of our 2023 results. Daniele, please.

Good morning also to my side. Federico, please, can you enlarge expand the window if possibly? We will go through a first introduction of the company, maybe some of you already know, but we will go quickly for resuming company's main features, and then we will see the financial year 2023 full year results and the Q&A time. Next one, please. We recall the fact that we are over 10 years now, have been creating storage system and selling storage system for renewable energy. And not only, I would say from home and to industry and grid scale application. We were founded in 2013 with the dream of making clean energy accessible to everyone. We are now more than 50 employees, and we are of course, an Italian company. And we work both on hardware and software also application. Next one, please. We consider, we do believe still that we are working in a global mega trend, which is by many sources considered to be consistent growth thanks to the transition of the energy, use of energy, production of energy. And so without going into details of this graph and this data, which are coming from BloombergNEF and we also still today consider one of the most important sources of information on the sector that despite momentary, let's say, situation of the market, the global megatrend is still confirmed by many sources. Next one. So we are listed on the Euronext Growth Milan Borsa Italiana and we are classified ourself as a Italian battery and energy storage system integrated manufacturer. We can see here a range of products, we go from left to right on the small scale with the zeroCO2, our proprietary brand products. And to on the right side, the industry or what we call Extra Large XL product, which range from basically 50 kilowatts up to megawatt hour in different forms with the shelter form that you can see in the center or on the containerized solutions on the very right. We have installed -- we have more than 62,000 systems sold since our foundation accounting for more than 300-megawatt total power of storage. And we are considered to be -- to have sold capacity for more than 1-gigawatt hour since our foundation. We consider ourself to be and to have become at the end of 2023, officially a Full System Integrator, BESS integrated manufacturer. Thanks to our installation of the assembly line for battery modules. From left to right, we have been in our past life, a system or product integrator, then an advanced system integrator and now a full system Integrator, which means that we cover a wide range of activities and knowledge we cover over our, let's say, added value chain from software design, which we work on our proprietary software, part of the hardware -- assembly of the hardware. And now also we go deep into the battery assembly knowledge and operations. Down below, you can see some reference players for each of these classifications which was referring back to the Politecnico di Milano classification of the different players in this market. Next one. Our go-to-market, we wanted to represent here because there is a small variation compared to the what we have published and unveiled, let's say up to now. We still have 3 main lines of go-to-market. So the first one for the small and large system and our target customers are distributors both in Italy and Europe, which we then divide it from specialist to generalist to differentiate. And then typically their customers and installer. And the installer will work basically mostly in this line on the residential and small C&I end users. I recall here that we do have a direct link with installers. Thanks to our after sale team service supporting them into the installation and the problem-solving phase. Then the second line of go-to-market. Our customers are value-added resellers. So typically company who add hardware or software on top of our product and using also white label product and typically this channel selling to multiutilities and then again, residential end users. And then the last line down, extra-large, so the large systems. We have EPC contractors as original and natural customer, which are working directly on large installation in condominiums, in shopping malls, in utility scale, general end users, agrivoltaic and industry. But we also would like to highlight utilities as a new, let's say, potential and actual customer that we have started to work with in 2023 exactly and all which are working on different levels of applications, both regarding industrial or let's say small grid scale applications. Next one. The company achievements in 2023, what we have considered to achieve in this year. So we still, we are, and we can confirm to be a reference player in the Italian commercial industrial market for BESS solution. We have still a first-mover advantage, and our product portfolio is quite wide to cover a large range of application, and it's ready to market already today. We have accounted 25 new installations. We have a book now of more than 40 installations already proved in this Extra Large segment. Then down, we have increased our international process in the EU markets as we will see later in numbers increasing our export as we have already as a target we'll see for our strategy. We have finalized an M&A in cloud solution through the acquisition of a Cloud Computing Srl through our energy and cloud controlled new founded company in 2023. And this allowed us to fully integrate the cloud computing and the software development for our, especially for Extra Large products but not only. Then we have insourced and industrialized production phases, as you probably know especially here regarding both the assembly and the construction of Extra Large systems, but also the assembly of batteries. We have maintained, of course, a solid committed suppliers and clients relationship and core shareholding base. This was maintained in 2023. We have reinforced our organizational structure with 14 total new people coming to the company. And of course, our setting and better reinforcing structure. We have reacted rapidly. We consider to adverse the market condition that we faced in 2023, and we have received finally, the Gigafactory permits that we are building in our neighboring area that we acquired in 2023, and the PNRR strategic funding of EUR 7.15 million for the construction that has already started. Of course over here we would like to not put the old story of energy, which is becoming quite long now, but just to focalize on some key facts of 2023. So the first in the left, the joint venture with PylonTech signed for, of course starting, initiating the assembly and the production of batteries here in Italy with the first step 1, what we call step 1, first line which we have finalized in 2023. And of course, this is what we'll cover, and we will follow a bigger Gigafactory in the neighboring area. And in July, the acquisition of Cloud Computing which allowed to expand and enforce our software development and cloud computing. The obtainment in November of the contribution of the funding from the government for the Italian Gigafactory, which is considered strategic for the development of European Gigafactory segment. And in January kickoff of the -- of this year, kickoff of the testing phase for the first lithium button in production in the new area, we dedicated to this activity to this production within our current building. And then also we would like to highlight in February the Net Zero Industry Act. We had a quite important commitment from the European Union in order to boost the green energy transition by supporting strategic production of European production towards the goals of energy transition, energy independence and climate targets. What are the company objectives in next year, in 2024, of course, and going also in the next years, we would like and we will still increase volume and market share in commercial and industrial C&I application in agrivoltaic and also in grid services which we consider to be one of the edge application of C&I, Extra Large storage systems. At this moment we see a more mature market in Northern Europe. But we know that thanks to European leveling of competition and we also see in Italy, this is becoming more mature through time passing. Then we enhance international presence in EU markets. In general, our export level, our footprint in EU will increase more in this and the next years, and we will also increase a third point new products for the targeted markets, because of course, we have seen an evolution also in application. Today, we cannot say -- we can say that storage system is useful for the grid more and more, not only for renewables, and so multiple energy sources, multiple meanings for the storage systems. And then of course, this requires energy to continue to developing new products. And we will also work on selected the new M&A opportunities and commercial agreements as we have done in 2023. This is still one of our strategic guidelines for the next years, and we will introduce a connected service portfolio resident and cloud based. Of course, this will need first to consolidate an hardware base of sold product that can work together with the grid or within a community. And then on top of that, we will integrate connected services, which we are developing now. We will still need to consolidate organizational structure. This is in line with the company evolution, of course, and increase the in-house Italian production. And this of course comes together with the assembly of batteries and other local assembly and sourcing of products and components for our storage systems. And last, but not least, of course, the brand zeroCO2 is still and needs still to be worked on in terms of visibility and awareness to increase its presence and is first in mind, let's say, effect both in Italy and in Europe. We would like to recall the strategic objectives and guidelines that we have in the plan containing the admission document and the time of listing to the stock market in 2022. And we have here totally 6 points in the admission document. We marked, we ticked the ones where we have already achieved the results and that we have considered to be effective. So the first thing in the chapter of controlling of production and supplies, in sourcing of the battery assembly activity ticked, we consider done and continuing to develop. Then a second point acquisition of a cloud computing company. This is achieved. Acquisition of a metal carpentry company is not achieved, is not pursued actually, because we consider this is -- it has become secondary in the light of the company, strategic needs for the short-term. Developing of the offer mix, distribution and channels and target customer the gradual extension of the offer of XL BESS, so Extra Large, we have introduced 3 new products in 2023, and we continue to work on that. So we consider that's done. And development of small and large BESS stackable system. This was one of the first achievement of last year with the plug & play philosophy in our portfolio product. And then finally, the promotion of the zeroCO2 brand we have. Thanks to the expansion of the offer mix and also the participation and the visibility that we can see and measure, let's say in communication channels. And also by interacting with customers and new potential customers, we can also confirm this is ongoing. Thanks to energy nature, let's say, core business, but also to a specific sensitivity and sensibility we have on ESG themes. We have started a project voluntary of integrating the logic and principles of sustainability to our business according to the main ESG areas in particular here, we listed all the materiality analysis results, and we have matched them with the 17 sustainable development goals of the United Nation agenda. In 2024 -- we are in the progress of this work and we can say that in 2024, we will publish the first sustainability plan and the sustainability report in preparation to the compulsory system that we will face in short time now in 1 or 2 years, probably. Okay, we will see now the financial results very briefly. The 2023 year was a slowdown time for the company compared to the positive and consistent growth that has characterized last year. It's the first year of known growth compared to all the 10 years before. And we had a sudden and expected stop in March exactly due to -- in Italy, in Italian business, but not only we are facing more drivers let's say that are like increasing interest rate and significant increase in inflation especially. But generally, we have seen economic situation and also a sector, let's say behavior that made the collapse of demand starting from March. And we experienced a partial recovery from May, but this didn't change significantly during the rest of the year. So we have to adapt to this situation and make the most of it. And also invest more in our diversification on products and our exports like as we have done and we will see in few slides. So the highlights in terms of numbers, revenues closed at EUR 63.3 million compared to almost half of 2022, still more than 2021 and all the previous year. EBITDA EUR 10.1 million with a 16% margin. This is mostly due to volume effect, of course because the fixed cost had not big changes, small changes in structure and fixed cost, but the volume effect reduced volume in the income mostly created this final result, still 2 digits and above 15%. EBIT EUR 8.9 million with a 14% margin. We have compared to previous years, a stronger impact on this of depreciation and amortization due to heavy investments and a net income of EUR 5.6 million, which is 9% margin. All these numbers, of course represent a significant reduction compared to last year for the reasons I explained before. And the net financial position, we are positive in cash by EUR 0.2 million versus EUR 4.6 million debt that we have in the previous position. The revenues breakdown. We can see 3 -- typically what we expose, it's the 3 breakdowns, the first on the left by geographic area. We have totally exported 23% of our revenues compared to the 15% of 2022. Therefore, we confirm the path towards more heavy, more weight in our revenues of exports, especially in Northern Europe and Central Europe and Spain. In terms of product category, we have more than doubled the ratio of Extra Large product compared to 2022 keeping an absolute value of EUR 4.2 million, same as last year, even though significantly reduced revenues. But we consider this is a first effect of investment in this product range, which is continuing also, and we expect to continue and enhance more in the following years. And breakdown by channel sees that there are still quite a nice balance between all the channels, but with the news that the gray part represented by the EPC and others. So the new channel, which is especially interested and targeted by the Extra Large product, of course, has doubled its presence in our portfolio, and we expect this to happen more also in the future. By explaining financial position, we try to kind of keep the structure or the representation much more similar, as more similar as possible to last year. But we have -- on that side, we see a different weight of long-term and short-term debt because we experienced a less need for short-term debt, thanks to our less needs of net working capital coverage. On the other side, of course, we have pushed more on investments, so we have more exposure on medium, I would say, term that size. On the other hand, thanks to release of net working capital and operational cash flow. We could finally end up with a more cash than last year and balance completely all the debt that we have open up in 2023. In cash bridge representation, we can see from starting on the left the EUR 60 million cash end by financial year 2022 and the consistent quite important operating cash flow generated by operation of EUR 18.2 million quite enough to sustain the EUR 8.4 million of CapEx of the year and which contain of course the investment in the Gigafactory and also investment in development of new product especially. And decrease of short-term debt by EUR 5 million, the decrease of medium and long-term by EUR 0.5 million and then we have other residual cash impacting movements by resulting finally in a plus EUR 2.9 million net cash flow so giving us EUR 18.8 pure cash in the financial year 2023. Thank you for listening to me and then we give space now to question-and-answers time.

So hands raised by Mario Coppola and [ Max Casini ]. Mario, please.

I have 3 actually. The first one is on 2024. If you could give us any indication of what you expect for 2024. So a little bit more color on the outlook, any quantitative indication would be much appreciated. The second question is on competition. So given that volumes of course, have decreased if you are seeing any raise to -- let's say any pressure on selling prices from competitors. And the last question is on the regulation and incentives by say as a public initiatives, if you could give us any let's say update on the status of these initiatives and if you expect them to play a role in 2024 already.

I'll try to answer. And then of course Davide please feel free to add or any comments on top. So, first of all, regarding 2024, as we said this, we consider to be a transition year for 2 reasons. One is that residential market for energy storage system for the visibility we are given today is let's say still going through a period which will be in general Europe-wide, will be characterized by the destocking or the release of stocks which are now present in many channels around Europe. Demand is still to be considered not visible enough to give long-term projections, I would say. There will be an impact and this recalls to the third question. Also, we are expecting, of course, an impact of new regulation and incentives also on this market. But we consider that -- we deem there is no conditions today to really make quantitative indications. For energy, it would be also transitioning year because we are expecting this year to see results more heavy, let's say, more tangible results of all the work that we have been done, both on technical side and on commercial side, on all our Extra Large segments. So we expect, really C&I market and also the mini grid scale market to give some results in this year. We are ready for that. We are just ready for that. And regarding second question on competition, as already we have recorded at the beginning of 2023 and at the end of 2022, in the residential market especially in Italy, we have seen the entrance of many new unknown -- first unknown brand-new small players, and we still see the presence of them today, of course. But at this point, we don't consider that strong pressure. We didn't experience a strong pressure on prices given by this competition. This kind of competition is honestly not such as qualified as it's really needed to put some real pressure on energy strategy and energy itself. We may face more pressure from the situation of stock that I explained before for a temporary -- this is a temporary transition, of course, phase that we will face.

Daniele, may I add something? If you can hear me because I noticed that due to the bad weather here, my coverage is waving, so I tried. Regarding the -- Daniele, please, if you cannot hear me, raise your hand so I understand. Regarding the competition, due to the fact that in the last 2 years, several new players have joined the residential segment of storage systems. Well, we wanted to move away, as we saw in the beginning from just a basic level of service and hardware package to Full System Integrator and then stepping into integrated manufacturer for moving away from the basic level of the competition. So we expected that it is happening and we are already moved to -- here it is, to Full System Integrator, which is best integrator manufacturer positioning. Yes, regarding 2024, in the past, there were a lot of questions regarding for residential segment, regarding Superbonus or the credit transfer blockage. I think that right now, the Italian context is already going through that and has just landed at the same level as other European countries where there are no specific subsidies. So for residential market, now, we are in a level of low volumes due to the fact that we all know is not only for this business due to the fact that families has very low expanding power right now. So that's why it's interesting to investigate and to be a first mover in other segments like C&I, grid scale and utility scale of storage systems. And regarding these again, all over Europe, because that is our playground, incentives are here and there, but they represent a temporary perturbation of the markets, maybe when announced with some wait and see effect. And then when they take place, there is a kind of increase in volumes, but then once removed, they have a kind of drawback of the volumes. But looking at the average level of this what we see all over Europe is, depending on the regulations in different countries, is possible now to have the storage systems starting from the C&I level and bigger sizes to move from a saving mode, which means that they are there just to self-use or to maximize the usage of renewable energy coming from PV or from wind production in order to be used when the renewable source is no longer available. Two, moving to a business mode where they provide services to the grid and the owner of the storage systems is well-remunerated for such services. And that make the business plan of such storage systems to be interesting, even if there are no specific incentives and that's related to regulations, which by 1st January 2025, are going to be aligned all over Europe. So we are, as we said several times today in the transition year, preparing for a European-wide market regarding services to the grid provided by storage systems. And this is the game for which we need to be ready for. And regarding incentives, particular incentives, for instance, I can mention in Italy, they are [Foreign Language] Transition 5.0, which is providing incentives to enterprises for PV plus storage. It is expected to take place in next 2 months.

I give the floor to [ Max Casini ].

I've got a couple of questions. One on the second half of '24, which is could you give us an idea of whether the -- I think your sales are about EUR 24 million or EUR 25 million. Is that completely clean of the Superbonus impact, or are we still seeing some deliveries that relates to orders that came in during the period of the Superbonus? And then the second question is about energy communities and agrivoltaic, and whether you can give us a sense of the timeline on these areas of demand. I mean, I'd imagine that from a mayor of a municipality deciding that they want to go for an energy community, there's quite a long process of approvals and tenders, et cetera. And so, it may be too early to even have a sense of this, but when do you expect the orders to start to flow from those areas?

Davide, will you?

Yep. I'll take this. Yes, regarding Superbonus, I would say that its effect has gone, especially for our value chain main distributors in Italy with which we work left the Superbonus scheme and joined the just 50% scheme that now has been increased and enjoying the credit transfer, but that's no longer possible to do so. So I would say that now we are back for residential to normal condition with no particular schemes. Still there are some, I guess, sale of Superbonus for condominiums, so multi apartment buildings. But here is controversial. I see many players that are not considering that kind of incentives, but considering more the different scheme of incentives, which is energy communities on the exchange of energy between the members of the community. And this leads me to the second question regarding the energy communities. Yes, it is quite complicated system at least for residential and for multi-member communities. This is also one reason for which when we talk about energy communities with potential customers we tend to segment that kind of application in the configuration work a big storage system is included. And just to make it simple for you talking back about condominiums, a big storage system can be related to a centralized storage system with a centralized PV and involving in an energy community, the owners of the apartments no matter if they have their own PV or their own storage. So that's a simple way to take the energy community scheme. And we want to tackle that first with significant storage system, which can be either in a condominium or commercial, industrial building and with a limited number of members that. So in this way, we are open to work with any aggregator and we just provide our Cloud computing services in order to make the big -- the C&I storage system working together with the rest of the nodes of the community. I give you kind of technical explanation, but I hope I give you the sense of the way we want to take advantage of the energy community scheme, which is a way that for us is easier because we have the product and we have the Cloud computing, and is easier also to implement because it requires a limited number of members, and particularly in some close areas like as I said, condominium or industrial area or commercial area, very limited. And then the agrivoltaic, yes we have something that is taking place, which is agrisolar, which means it deals with agricultural activity, but is our PV plus storage dedicated to a building for agricultural activity. So we are on that too. Yes, we have several experiences taking place right now for the agrivoltaic, which is considered the PV directly on the field, on top, all of the agricultural activity. Yes, this is controversial. There are not many examples of this, but still we have a couple of experiences in Sicily, which is PV on greenhouses plus storage. That's an important reference for us. And the most important thing is that in both examples I gave you, both for energy communities or agrivoltaic, we are already considering to add services to the grids. So whenever they will be ready as a regulation framework, we will add that because multi-stack, so multiple functions stacked on the same storage system will make the storage system being -- business plan being particularly attractive. And this is something that we can do for 2 reasons, because we control the system with our EMS and Cloud computing. And because after 11 years of record of using LFP cells, we are the unique player in Europe that had this knowledge on the effect of the stress of multiple services on our cells. So we can, I'd say, adjust the business plan of our customer that switch for self-use and add on top energy community or add on top services to the grid. So this is an added value that allow us to, I'd say, deliver special projects for which energy is requested.

I give the floor to Andrea [indiscernible] then to [ Vincenzo Napolitano ].

Very quickly, I mean, your partly answered to the question I want to make and I would like to have your idea, when do you expect, let's say this combination of incentives in the agrivoltaics or in the energy communities to have an impact on your sales? This is basically my -- we already understood '24 is a transition year, but you expect, let's say, all the combined, let's say, resources of PNRR and European Union resources will have an impact on your sales. This is my first question. And the second one is, do you agree that when we look at this kind of installed potential megawatt to be installed, thanks also to these incentives. If there is an attachment rate, which we can, let's say guess estimate to this, let's say, amount of capacity be installed in the solar business if it's possible, because I read that in some research, there is a 7% to 8% attachment rate on the, let's say, solar installed capacity with batteries.

So due to the fact that except for agrisolar, which I explain is already taking place. agrivoltaic is a little bit complicated because rules for that kind of applications are required, let's say, special technical solutions that are quite expensive. So the PV solution itself is taking time to take place. So storage comes later, and also energy communities are quite complicated and not so, I would say, interesting for the time being, for the level of incentive that is given [ said that ], so themselves are going to take place to generate volumes. Regarding energies says in lieu of them, due to the fact that, as I was explaining before to the question of Max, that our system can perform multi-functional services when talking with potential customer, which are interested to have storage systems, knowing that whenever is convenient and possible, they can add the energy community functional or other balancing to the grid services. We have more attractivity from those customers. Even the incentive scheme, they are considering is a little stuck, say in these months is happening that we have customers that are requesting our energy storage system because they are considering that incentive or that incentive. But knowing that even though that each of those incentive is a bit unclear now, they may consider to invest on the storage system because whenever they want to activate that scheme, they're able to do so. So those schemes are a bit stuck, but still energy is having attention. I would say also orders even from those that want to use those schemes. And if we didn't have this skill, they wouldn't consider right now still to have a storage system and regarding the combination of storage with PV, it depends on the segment. For residential, after the Superbonus effect, everybody now tend to ask storage if they ask for PV. So the combination, the decoupling percentage is very, very high. I would say higher than 80%. Regarding C&I instead, yes, I think that is reasonable, 7% to 10% of combination. But again, is right now that entrepreneurs are learning that PV plus storage can be not only for saving on the electricity bill, but also for making money because of the remuneration to the services to the grid. And we saw that already in some northern European countries where we already have some selling and some installation where the framework of the rules is some months or even 1.5 year behind that -- sorry, ahead that this kind of changing view from entrepreneurs on the PV plus storage application has been happening. So this is our view on the market.

And okay, if I may do you believe that in order to this scenario that, let's say, to have a meaningful attachment rate we need to come in an environment where solar price at peak level will be negative or close to 0, because there are some countries now that like Australia I read recently and maybe also maybe in Spain. So there are some moment of the day that solar prices actually close to 0, even negative. So is that do you think apparent condition in order to, for your business model to succeed? Or you can have also higher prices for solar in order to charge the batteries?

In one side, if energy prices had to get high, I don't say as high as 2022, but higher than now, which is can be expected. PV Plus storage is something that enterprises and also house owners, if they can due to the high tax interest rates, they will do. So of course, if energy price goes up, storage systems and PV are going to be on demand, but also vice versa. If due to some situation of the grid, in some condition, the grid is unbalanced, and that's, for example, for the electrical vehicle penetration, or if in the peak hour of the PV production, the prices are getting negative, in that case is more than the C&I or residential is the utility scale and grid scale systems that are going to be on demand. So due to the fact that we have the full portfolio we could enjoy in different territories of the Europe, different situations, of course, the price of energy is going to be common all over Europe. But the framework of the rules and the grid situation about related to the EV penetration, the storage penetration itself and the renewable penetration, which can lead some, a convenience on providing special services to the grid, is giving a hedge on us. For instance, I give you an example. In Belgium differently from Netherlands, where they have curtailment or they have periods where electricity price is 0 and storage is on demand. In Belgium, they don't have the same issues, but still storage is on demand because for the unbalancing of the grid on an aerial base in this district and that district or that district and scattered during the day, they need this kind of fast balancing that is remunerated up to EUR 1.6 per kilowatt hour, feeding in or absorbed from the grid. And thus, as I said, due to the configuration of the grid and the penetration of EV and renewables. So different territories have different situations. Of course, in Italy, we are going toward, as you can see from the islands or from southern of Italy, a curve of the price of energy over the day, we're going toward period where the price of electricity will be close to 0 and it is expected to be also this summer, the first period in which that is going to happen, so yes, we are also going toward that situation.

I leave the floor to Vincenzo, I don't see your hand raised, but I know that you had the question. And then to [ Stefano Corneliani ] in this last few minutes. Vincenzo, you are on mute. I don't know [ Vincenzo Napolitano ], sorry.

Mara, my name is Antonio, not Vincenzo. I have a question. So Davide and Daniele, so the last in Germany you talk about, so Germany is a very interesting market for energy product. The question already found some attractive target in Germany or looking for some acquisition, just an update. So what now in Germany is doing?

Antonio, those are price sensitive information. So if we didn't release that yet you need to stay tuned.

Very crystal and clear. Davide. Stefano, it's your time.

I have just one question. Davide and Daniele could you please elaborate a little bit on the inventory at the end of the year? And especially, I say, arguing on components inventor -- or better components that may be utilized within the residential segment only.

I guess your second part of the question was I understood that you meant to say how much of the inventory we had at the end of the year is related to residential segment. Is it that, that you meant Stefano?

Yes. You are correct. Davide, the underlying question is how long it will take to get to an inventory level within residential products, coherent with the current market dynamics. This is the final goal.

Yes, I start with a qualitative answer and then maybe I ask Daniele to give you the exact numbers, but inventory at the end of 2023 was at a similar value than the previous year in terms of number. But in terms of mix, it has changed because we got prepared to have inventory for the segment of C&I and grid scale. So batteries are quite different, are not the same models. Frankly, we expected some projects on larger scale systems to take off within 2023, but due to the changing of the economical scenario, those projects have been a little bit postponed. So that's why we had that inventory. But again, it's related to projects that for large scale systems that we have in our target and are going to be deployed. Part of the inventory, of course, is related to the residential segment. And basing on the current dynamics on these markets, on these segments, it would take time to be deployed unless there were some destocking activities that Daniele mentioned before, which that all players are going to have in these months. Still we are finding as we are developers of products, we are finding also new creative applications, let's say. I can already use more on that, on the components that we have in hands. So I would say considering not only application on residential market, but also in other markets. So that would have the activity of lowering the level, also the stock of components related, normally related to the residential market. Daniele, do you want to give some numbers on the level of stock?

So if I correctly understood the questions, I would say that we have more than 20% now quite close probably to between 20% and 30% probably of the level of inventory which is dedicated to Extra Large product. And this of course is a result of a change in composition during 2023. At the same time, we can also observe that from the 30 of June, which where we had important level of inventories we have decreased it by EUR 20 million. And now, we cannot say, as Davide explained, we cannot say exact forecast, which we don't have now sufficient data or element to say, how much it will be the rate of destocking. But of course we can confirm that our procurement is basically will be focused on the marginal missing components. And hopefully will be based also on products related to the C&I application as soon as they, we will see the switching on and the boosting of revenues and sales on that segment.

If I may, Davide and Daniele, just a follow up. If you would be asked to choose between cheaper or lower, which one you would pick up when talking about inventory destocking?

Well, it's a mix because it depends on the products. Say that we have no problem of shelf life with our products, in case we have full capability to recharge batteries and so on. So it is not an issue for us the shelf life. Of course there is some motion out there of the design trend. So some products may get obsolete in certain time, so because of design maybe, but again, as we are not a player only in one country, so you have to follow the trend in that country. But we have multiple places all over Europe where we can enter the market. So also these can be reduced. So for residential, we don't see the need now only to play the card of price. For C&I, till now there is not that need because they are less sensitive to the price of components. I mean, BESS for C&I are more sensitive to the level of sophistication of the system if there are some air condition in particular or particular energy efficient or particular fire protection system or even the Cloud computing services that we provide. So that segment is much less sensitive right now to waiving of the price of the components because of kind of a stock. So there's not a single answer to your question. It depends on the model of the components and it depends on the channels that we are going to be able to enable for their selling.

[ Valeria Vecchi ].

Can you please give us more details on your backlog as of today and especially in terms of amount, but also composition and visibility?

Our backlog right now in terms of order placed to deliver I guess is EUR 3 million something, which has been like that for a year or more than a year. This says that right now the visibility in terms of order intakes is very low. It corresponds to 2, 3, 4 weeks of advanced view on deliveries. But this doesn't mean that after 1 month there is delay. It's because this is the level of visibility that residential and small C&I gives right now. When there were shortage in 2022 everybody had much longer visibility. But on top of that order intake, we have planning with our customers and we have yearly planning, which can be 3, 4 months. And we have yearly agreements for certain volumes. Of course, we are in a very turbulent period. But what I want to say is that for a significant part of our product, the backlog is not the number that gives you the sense of our real visibility on the business for the following months. Of course when we talk about utility scale or grid scale systems, that is important to have much longer visibility because those are not products that you sell because they are available on the shelf. They are products that are based on the project. And here, yes, for us is quite new and we have some projects ongoing, which has not already become a contract, but we are working on that.

Yes, I mean, maybe if I may add, this is not the number that we can release, but the current situation is that the pipeline, especially on a larger scale, what we call Extra Large scale product, the pipeline is much bigger than the backlog itself.

Again, Valeria, I may suggest you to stay in tune in next short period.

I don't see any other hand raised. If there is any additional question, it's the right time. So thank you very much indeed for participating to this conference call. We will approve the -- we will call the AGM or let's say we have already called the AGM for the 24 of April. And then we will speak again about results on the 26 of September for the first half results. Let's keep in touch. Thank you very much.

And regarding to that keeping in touch, Mara, we are going to of course take part in some events and maybe they can contact you for having details on that.

Yes, right. Next week we will be in Paris, starting from Paris. Thank you. Bye.

Thank you. Bye.

Bye-bye.