Fastned B.V. (FAST.AS) Earnings Call Transcript & Summary

Hello. Welcome to the Fastned Q1 Trading Update. My name is George, and I'll be a coordinator for today's event. Please note, this conference is being recorded [Operator Instructions] I'd like to hand the call over to your host today, Mr. Michiel Langezaal, CEO, to begin today's conference. Please go ahead.

Thank you, operator, and welcome to everyone on this call as well as to our webcast viewers. Sorry for the late today, the operator of the call was experiencing some technical issues. The presentation used during this call is available at our Investor Relations website, which is ir.fastnedcharging.com. The cover page shows the project that I'm very proud of. This is a picture of the opening of the first Fastned Shop, located along a high-traffic motorway in Brecht, Belgium on the route from Antwerp to Rotterdam. We've worked on this project for 5 years from winning the concession in 2019 to finalizing the build early this year. Logically, building the very first and developing a concept together with an operating partner takes a lot of time. In our view, this is an investment that is crucial for the coming decade whereby service areas will go zero emission and the ability to offer a tailored proven concept in conjunction with the charging station sets you apart from others. Moreover, being able to integrate the shop offering into our concept also allows us to develop greenfield locations something that significantly expands our fishing pool for great sites. This brings me to Slide 2, please. With reference to the information provided in these slides and discussed during this call, please take note of the disclaimer, which brings me to Slide 3. My name is Michiel Langezaal. I'm the CEO and one of the founders of Fastned. Victor Van Dijk, our CFO, is also present in this call. We will present this webcast. Today, I will elaborate on the highlights of the first quarter of 2024 as well as the full year 2023. We'll look ahead on how we foresee the market and Fastned developing in the coming periods. Amongst other things, we will discuss the developments in the car and charging markets. We will elaborate on the progression of our location pipeline and take a look at the results from our construction team as well as their plans for 2024 and 2025. After that, Victor will take over and take you through the top line financial results for the first quarter of 2024 and the full year 2023. We will also update you on our station metrics together. After our presentation, we will answer your questions. Please limit them to two questions per analyst to give everybody the opportunity. We intend to end this call in one hour. Moving to Slide 4. Let's start with the highlights of the quarter about revenue growth. Revenue and kilowatt hour delivered grew rapidly and in line with our expectations. Revenue related to charging reached EUR 18.9 million in the first quarter of 2024, up 42% versus the same quarter last year. And sales volume grew by more than 40% -- by more than 50% to 31.4 gigawatt hour. Our growth in terms of revenue, people employed and the size of our network, which is reflected on our balance sheet makes that Fastned is now categorized as a large business. Only 1% of businesses are categorized as such. As you can imagine, I'm very proud of this milestone as in 2012, Fastned was only a handful of people embarking on the ground's mission. In early 2021, we raised EUR 150 million via institutional investors for the first time. This is a big step up for Fastned, and it allowed us to initiate the scaling of our rollout. Since then, we've been hiring and onboarding a large number of staff. It aimed evidence that these people start contributing. And before that happens, you easily need to invest a year or more. I'm, therefore, extremely happy to see our secured locations in Q1 hitting 52, which gives me confidence that the milestone of 100-plus new locations a year, the basis for us to get to 1,000 sites by 2030 is attainable. While stock markets are still depressed for companies with free cash flows, only becoming significant several years into the future, the demand for bonds is high. Last quarter, Fastned again raised EUR 27.9 million via its well-established and attractive retail bond program. This more or less funds the current construction base, whereby we see potential in the market to fund even the higher construction base foreseen later this year and next year. As such, we're planning to ramp this up. Another key highlight is the signing of our first power purchase agreement with a large solar park, but until recently, the vast majority of electricity volume was purchased on the wholesale market against spot prices. With Fastned sales volumes becoming significant, it makes a lot of sense for us to purchase a solid part of our electricity needs at pre-grid prices in their long-term contracts. In the last years, we have seen the value of stable pricing for electric drivers, and therefore, also for Fastned. Power purchase agreements allow us to deliver on that while at the same time, warranting our margins. Overall, we almost doubled our sales in 2023 and achieved positive EBITDA for the first time. Given the massive investments in network expansion, this is a financial metric I'm very proud of and it gives us a lot of confidence of what is to come. As we should not forget that only a couple of percent of cars are electric and logically, we are making these investments to build the infrastructure for millions of cars on our roads to be electric. So that's about looking back. Let's now look at the charging market and our outlook. Moving to Slide 5. EV sales are still strong despite some concerns. In all the countries we operate in, sales percentages are double digits, and our charging market, therefore, continues to grow. Belgium, for the first time, surpassed 20% of new cars sold being electric, and France is showing a steady growing share of electric cars quarter-after-quarter. Also in the Netherlands, our home market is remarkable with more than 1/4 of sales being electric. That is an astonishing achievement given the significantly reduced incentives for electric cars in our country. For which, by the way, a serious improvement was decided upon this week with road tax rebates for EVs being prolonged longer than initially planned for. Germany very suddenly stopped the subsidies for EVs in Q4 last year, which they initially planned to prolong. This is a consequence of the verdict by higher courts that their budget was not powerful. The lack of incentives to make people choose the sustainable option is hurting sales in this country, unfortunately. This brings me to a generic theme across all markets, analysts and the media generally expected even more. This news is fueled by situations like Germany or the Netherlands, where sales percentages stopped growing. The CEOs of OEMs logically are voicing their concerns that they are in dire straits as they are required to make the switch to electric and are investing billions in factories and research and development. While at the same time, being confronted with strong competition from China, how can they sell these cars if consumers don't want them. So what is happening? That brings me to market trends. Moving to Slide [indiscernible] that are moving from their initiation phase to their scaling phase, especially in countries such as the Netherlands, this is what is causing a temporary slowdown. The fundamentals that drive the transition to electric cars haven't changed or even better are constantly being confirmed in their development track. In short, battery prices continue to improve, making it possible to put more batteries in a car and give it more range, or make electric cars more affordable and offer an EV in a lower price segment. Lower battery prices are scaling this market. Technology continues to advance. How many conservatives have put aside the idea of a battery electric car because charging would be way slower than going for gas. This is like the photographers initially saying no to the digital camera as they would never provide the same image quality as traditional 35-millimeter film. Just a few weeks ago, I saw a video passing by of the updated [indiscernible] doing a charging test, whereby it delivered a top speed of over 500 kilowatts adding 60 kilometers of range per minute of charging. The entire charging session was finished in under 12 minutes. That hardly leaves time for grabbing a cup of coffee. This car is now on the market in China and will make its way to Europe in the next 1 or 2 years. And for those of you who are scared about rare earth materials, this is the new CATL battery based on its latest LFP technology, so cheap and no nickel, manganese and cobalt needed to deliver high charging speeds, plus the longevity of lithium iron phosphate. It is technology driving this transition with only one outcome. All cars will be electric and rather sooner than later. So what is it with these incentives that are hurting our perspectives on BEV sales. Only a few months ago, at COP 28, we agreed on the beginning of the end of the fossil fuel era by laying the ground for swift, just and equitable transition. It is the equitable part that is causing this. Until recently, many countries had subsidies supporting the sales of electric vehicles. With percentages of new cars sold hitting double digits, the scale of these subsidies is becoming an issue. In the Netherlands, for example, the tax rebate for company cars being electric became quite small. This led to news popping up that one could just as well choose for petrol car again. Governments across the EU are looking for new ways to support people in making a sustainable choice at scale. These incentives are more norm-based, a great example to this end is the ESG regulation that has come into force recently. This regulation requires companies to set ambitious targets for our CO2 emissions. With the basic charging infrastructure there and electric cars roughly at price and range parity with fossil cars, switching the company fleet to electric is a logical and easy measure to take. For many corporates electrifying their fleets will be among the low-hanging fruit in their ESG plants. The short-term negative effect is the change over from one system to the other, whereby car drivers, media, market analysts, companies and fleet owners need to get their heads around the new reality. Moreover, the ESG implementation at many companies is just getting started. ESG luckily is not the only example of such a norm-based incentive system coming in place and taking over from subsidies. France is a great example of this. Several media wrote about the negative effects that will result from the government stopping the EUR 3,000 per EV ecological bonus, but at the same time, taxation on new cars was made again more strict on CO2 emissions did only make the headlines later on. Choosing a new company car in France to be fossil-fueled is now simply an expensive decision. This change in incentive methodology is creating a feeling of fiscal instability as companies and consumers are to be informed and educated. Only after the period of changeover, one can expect the full effect of these new incentives. So that about market trends, which brings me to our outlook. When discussing the highlights of this quarter, I already mentioned being extremely proud of the pace of our location acquisition, 52 new locations signed in one quarter. This number does contain the outcome of a significant tender adding 34 sites, which is not to be expected every quarter. But the remaining 18 private sites shows an increase again for private locations. We reported 5 per quarter in 2022 and a bit more than 10 per quarter in 2023. All in all, it shows that the ramping up of our investments in network expansion are starting to pay off. The result of several years of hard work. This proves -- this provides a solid basis for us to deliver on our goal of 1,000 big charging stations at A+ locations by 2030. That said, we also see that the ambitions from tendering authorities, partners and grid operators have been higher than their ability to deliver on these. Tenders have been delayed several times and connections to the electricity grids are not realized faster despite the desires of so many. So the will from all these stakeholders is there but the ambitions do not always materialize as planned for. A conservative view on the coming 2 years, therefore, is that we -- is that overcoming these bottlenecks in all these projects will lead to a softer construction pace for Fastned in 2024, with base again increasing in the years thereafter. With our secured pipeline hitting 483 locations, we estimate that by the end of 2025, our network will have grown to 420 to 450 locations. To that end, it's worth noting that 95% of our secured locations historically translates into stations built. So we're more or less talking about timing, but not about whether or not they're built. Moving to Slide 8. During the highlights, at the start of our presentation, I already mentioned that it is going very well with our pipeline. Here, I wanted to dive a little deeper into the growth drivers behind us, signing 18 private sites this quarter, which is again a step up from the level of previous quarters. What is driving the change in acquisition pace for private deals. In our view, it's a combination of two things: one, a significantly bigger network development team that is starting to become effective at scale. This is something I already talked about before. Two, Fastned realizes market-leading station economics. This allows us to offer better rents than other charging companies or maybe even more important, it allows us to play in the real estate market and pay leases for strategic high-traffic plots that are starting to match those from fast food players such as McDonald's, self stores or any other retailer. This effect does scale our fishing pool for locations significantly and often not competing with other charging companies as many suggest, but more with generic other parties that have an interest in strategic plots of land. After all of this on private opportunities, let's move on to Slide 9 and do a quick update on tenders as well. On this slide, I would like to start with a remark about disciplined and selective. To this end, I will use the example of the [ Deutschland debts ] tender. We last year communicated that we had won two prime lots in regional tender. And some people asked why we were so positive about that result as there are also others who won more. But it's just more locations the measure of success or should, for example, the NPV be the actual measure for success. It's a very sharp bit but practically zero returns might win you lots of sites in a tender, but their cumulative value remains low. Disciplined and selective is about using our great concept to invest in infrastructure that creates returns and use those returns to invest again. For this, we select where we can make our concept deliver winning tender scores at proper hurdle rates. So we focus on the selection. The opposite extreme of this is spraying chargers, wherever the opportunity is provided. This allows one to scale its charging network fast and deploy loads of capital. Only given that the environment of tenders provides competition, returns in this segment will therefore be low or negative in a [ bearish ] scenario. Our approach is about the spiral upwards, scaling something that works, sign deals that create value and only clog up our construction teams with those projects and nothing else. Sites that create value, allow us to invest in the customer experience and deliver an award-winning concept to our customers and to many customers. This success lingers for more. Which brings me to elaborating on a few of the tenders out there. The Netherlands, no news, and we're awaiting a new government to decide on next steps. France, Belgium and Switzerland all have tender projects ongoing or announced, but nothing very significant. We're talking about a handful of sites country by country. Key here is that France still needs to make the step to initiate tenders on its public road network at scale. This is where our PA efforts go to. Interesting in our view is the places for London tender organized by Transport for London. We currently have one medium-sized station in London, and it performs like crazy given the lack of infrastructure and space available to develop that. The ambition of TFL to support this development by making places available through a public private partnership is applaudable. Currently, the project has 5 large sites concrete, but its aim is to scale this to 65 over time. The situation in Italy is questionable. Great work was done by the administration through a public consultation process last year, but the need for tenders and open market and competition well understood. How these needs were translated into directives from the regulator and tenders is only less fortunate. In our view, the key issues are two charging companies per service area being a requirement sharing a revenue stream and contract tenures are maximized to 12 years in line with concessions for petrol stations. This makes serious investments in charging infrastructure difficult, given the very low EV adoption levels today and for the coming years. For this reason, we decided not to participate in a far majority of cases and provided our feedback to authorities, the regulator and the road operator. From all we can see, many market players have done the same. Lastly, I want to mention tenders in Poland and Austria. These could be interesting opportunities for Fastned, the latter being the largest opportunity at the moment, potentially adding up to 60 sites, which brings me to Slide 10 and handing over to Victor Van Dijk, our CFO, who will start with our award-winning concept.

Thanks, Michiel. Slide 10. This is a slide we have shown before. To us, this is the proof that our concept works. We in-source all that matters, which leads to market-leading charging experience and also an efficient operation. EV drivers due to Fastned because of things like a recognizable design a 99.9% uptime and very good in-house customer service, where other struggle, Fastned simply works really well. This all leads to outsized usage of Fastned stations compared to others. We keep on repeating this as the importance of this is really not well understood by many in the market at this stage. Going to the next slide. The important shows here, since Fastned's inception, more than 10 years ago, we have been focused on building large, great and efficient charging stations on high-traffic locations. These stations have canopies to provide our customers with the same weather protection petrol drivers have. The canopies make the station very visible to all drivers. So EV drivers are able to find them and petrol drivers see that they are able to make the switch to electric vehicles. Doing all this is hard. You need to secure locations on regulated motorized service areas or on crowded private locations, so long high-traffic roads. And for the latter, you compete with the Starbucks and McDonald's of this world for cash space. We need to secure large grid connections with long lead times, a range for building permits for the development and the canopies, also with long lead times and design and build the stations in a scalable and efficient manner. What we see most others do is support all or many of these important elements and resort to putting down charges on parking lots of other retail businesses. We're adding a couple of chargers next to our petrol station or trying to avoid realizing serious grid connections by using charger with batteries. We're trying to avoid building permits and larger construction by not having canopies and not having a big station or accepting short contracts potentially linked to petrol stations when that was still allowed on [ multiple ] service areas. To us, this strategy -- these strategies allow you to put down a lot of chargers and put those on the map, but do not translate into the best solutions for EV drivers and the transition and do not translate into the best business cases. We have been scaling the hard thing. Hence, by now, it's clear that this is paying off, building great and large charging stations on high-traffic locations and operating them really well leads to predictable high session growth that scales with BEV fleet penetration, relatively independent of what other charging companies do on low traffic locations. You can see that in the graph, which shows sessions per station per day growth where we're clearly on a different trajectory than many others. This, in turn, leads to Fastned by now being a top three Western European fast charging companies in terms of sales, not in terms of chargers deployed, but in terms of customers held, kilowatt hours sold and revenues. We actually see the effect of this. With many of the top 10 fast-charging companies increasing pricing over the last quarter, well above Fastned's pricing. And that is because they have lower sales and, therefore, lower profitability. And this all will [indiscernible] Fastned pricing remained relatively -- remained stable, and our profitability grew at the same time. Ultimately, Fastned scaling the hard thing, leads to high customer value giving the ability to charge while they drive on high traffic growth at a reasonable cost. And that drives the transition by showing petrol drivers on the same roads seeing our visible canopies that the charging infrastructure is there, and they can make the switch to electric vehicles. Going to the next slide. Knowing that we have one of the highest number of sessions per station in the markets, as we saw on the previous slide, it is very likely we have one of the best station metrics in the markets. And this provides financial flexibility by being in the driver's seat when it becomes -- when it comes to price changes and tender and rent bidding, whereas others still have to deal with negative to low profitability. We saw sales per station increased by 27% year-on-year. This is slightly below BEV fleet penetration growth of 32%. We don't have full visibility, but suspect this is related to AC charging pricing and home charging costs in the Netherlands being relatively high in Q1 2023 and later on in 2023 in the wake of the energy crisis and normalizing again over the last months and quarters. This could have shifted some volume to fast charging in early 2023 and back to those markets now. In terms of fast charging market share, we do have visibility on other fast charging companies, except Tesla as they are not on the open system. There, our market share was stable over the last quarters and years actually. With station sales going up due to BEV penetration going up and with a high operational leverage, high operational EBITDA margin increased to 44% above our 2025 targets. With EV penetration expected to double by 2026 and fivefold by 2030, we continue to track towards our target of EUR 1 million revenues per station in 2030 and more than 40% operational EBITDA margins. In 2023, we reached positive EBITDA for the first time in our existence. We are proud of that because it proves we are on the right track. And we see the operational leverage at work here as we explained, and expected ahead of our equity capital raises in 2021 and 2022. Since 2021, revenues have fourfolded, driven by BEV fleet growth and by capturing the fast charging [amounts] by having the right locations, having a great concept and by new station openings. During the energy crisis, we show that demand is quite inelastic which always has been our prediction, and gross margin even expanded a little bit since then. And with that, our operational EBITDA, which includes all the costs to operate the network, tenfold, since our capital raise in 2021. And note that we have significant room for upside beyond this. With utilization only at 13.5% currently, due to significant capacity expansion over the last couple of years. And charge fees continuing to increase so that we can deliver more kilowatt hours over the same investments. We are able to cater for new EVs coming on the road and drive that operational leverage further. With pipeline growth increasing, as Michiel explained, we intend to capitalize on the station growth potential and increase network expansion efforts, which leads to network expansion costs to roughly double in the next 2 years. All in all, these financials proved that we are definitely delivering results in line with the strategy that we explained during our Capital Markets Day 2 years ago. Next slide. We updated our CapEx drivers. The main increase is coming from the fact that we installed 400-kilowatt chargers now instead of 300-kilowatt chargers. More and more cars come to the market with high charge fees as Michiel explains, which obviously is beneficial for financial station metrics. [ Equity ] funding. We have built a strong funding base, both on the equity and retail bond side. We are EBITDA positive now, which means being free cash flow positive is a choice. This provides us with a lot of financial flexibility. We have a unique self-developed retail bond program with about 10,000 investors that want to support us and that we provide with a good return of 6%. This is a very valuable program for us as it provides significant volumes of funding, but does not limit our financial flexibility, as it has no financial confidence. With that, for our 2024 to 2025 station rollout, we expect current cash levels and continued retail bond issuance to fund the up to 450 stations operational by year-end 2025.

That concludes our presentation for today or by on this final slide, Slide 14, we have summarized our guidance for 2024 and 2025, as we already discussed during our presentation. A final comment on the car market would be that the electric vehicle sales slowdown that everyone talks about is a slowdown in comparison to mighty ambitions. On looking at the numbers, generally speaking, they are still growing, only maybe not quickly as expected by many and the reason shifting methodology of incentive schemes. What hasn't changed sort of fundamentals. Electric car is simply a better car, and that is why sales continue growing. On that note, I would like to thank you all for listening. I would like to hand the word now back to the operator for questions.

[Operator Instructions]

Operator, are you there?

Yes, sir, I am speaking. Our first question is from Nikita Lal.

Operator to come back.

Nikita Lal.

Can you hear me?

Your line is open.

All right. Michiel, Victor. Can you hear me? I think that could not hear the operator.

Nikita, please ask your question.

Can you hear me?

Your line is open.

So I would have three questions, if I may. My first question is regarding the PPA contracts. So it started in February, as I understood correctly, which impacts can we expect here? And will this help to keep the gross margin above 70%?

Please respond. Nikita, can you hear me?

Yes, I can hear you.

Okay. Nikita, everything is clear. We're just going to wait for the speakers to respond.

All right.

Ladies and gentlemen, the speakers are just going to check the other side.

Operator seems to be having some operational issues today.

No. Sir, I hear you sir. Sir your line is open.

[indiscernible] to get the questions through. Please.

Ladies and gentlemen, please stay with us. Nikita, your still online?

Yes. I can still hear you.

Okay. And Nikita, please the line you line is open. We're just waiting for the speakers to come in. Nikita what was your question again? I think that they're having problems hearing you. But what was your question, to speak slowly chat with them.

All right. Yes, sure. It's about the PPA contract, which kicked off in February. So my question here is the impact, especially on the gross margin if this can keep up above 70%.

Okay, once again. Everyone. Ladies and gentlemen, just please do stay connected, do not disconnect. Thank you.

Great. Can everyone hear us again?

Your line is open, sir.

Great. Then let's go to the first question.

Nikita, please ask your question again.

Sure, Michiel, Victor. I hope you can hear me now.

Yes, I can hear you. Great to hear.

Yes. Perfect. Let me ask my 2 questions quite quickly. So my first one is about the PPA contract, which started in February, correct? So which is the -- which are the impacts here? What can we expect, especially for the gross margin? Can we expect something above 70% for the longer term because of this? And my second question is regarding your construction team. As we will see lower building rates this year, how do you want to manage the personnel costs?

So I'll start with the construction team. Yes, I think basically, what we see there is that the construction team that is working extremely hard on let's say, setting up the supply chain, all these new markets that we start construction for the first time. So there's a lot of, let's say, one-off work that needs to happen, building a relationship with new suppliers making our way towards new grid operators, et cetera, et cetera. So I would say, probably, it's the opposite that we actually need more hands than we actually potentially have at the moment in comparison. So that's really how I would look at the construction situation. It's basically costs and being an investment into the future. Yes, maybe Victor, about PPAs.

Yes. On PPAs, so it's -- by and large, the impact on the margin will be minimal unless we see big price increases again in the energy market. The way the PPA works effectively is that our purchase price is capped, and we pay a very small premium for that of less than EUR 0.01 per kilowatt hour. And so if we have an energy crisis again, our price is capped. And on the other hand, if prices go down, then we profit from price decreases. But if you look at the 70% gross margin, it will have a minimal impact on that, assuming that the prices are in line with what we see more or less today.

It's basically about stabilization of margins, right?

Yes.

Does that provide an answer to your questions?

Yes, sure. Maybe one additional question regarding the construction team. So I understand that this is helpful for new markets. But what about the existing ones where construction is like, yes, [indiscernible].

It's basically the same thing. So these construction teams. So I think maybe it helps to explain that if we're talking about construction teams, it's people basically working on preliminary work, right? So contacting grid operators, putting the supply chain together, requesting building permits. So all these activities need to happen to make sure you can get started. And then the final part is basically that they supervise the construction. So that supervising there, the volume is somewhat lower. But because we want to get the volume up for basically -- we're basically putting a lot of projects in that preliminary phase. And you can see that as well, when you look at that pipeline of 480 sites, there's ample projects for them to push through.

Our next question is coming from Hans Pluijgers of Kepler Cheuvreux.

Two questions from my side. First of all, on the seasonal impact in Q1. It's always, let's say, somewhat a better season for you due to the weather, but maybe give us some flavor on how did you see, let's say, the seasonal impact of this year? Of course, it's very dependent on the weather. Do you see, let's say, it was really a normal season or let's say, any differentiating factors compared to what you normally would have expected? And secondly, on your expansion for this year and next year, this year clearly slower than you initially indicated, you gave [indiscernible] flavor, you could give maybe somewhat more detail why pay so much slower than you, let's say, earlier had indicated and especially because, say, the tendering process is -- yes, have accelerated a little bit. It was Germany, over everything. So it's really [indiscernible] the connection to the grid becoming a big issue and especially why they do expect for next year such a pickup in expansion. And combined with that, let's say, you are now that you're seeing the financing for next year secured or, let's say, including still some additional retail funding. But how do you see the funding after that? Do you believe that you can do it from also again from purely debt funding? Or do you still believe to have require equity funding after 2025?

So I'll start with the last one. Yes. So on funding, indeed, the 2025 rollout we can fund, we expect to be able to fund from retail funding. And then the rollout '26, '27, it's too early to call. So there's a couple of factors there. It's how successful we are in retail funding. So there's upside to that. It's obviously also cash flow development and also pipeline development. So we have -- we see a growth in pipeline. Yes, if that continues, then of course, that has also an effect on to the extent we need to fund. So those are basically three moving panels that -- yes, we will need to assess next year again. And yes, we can't assess that truly right now. So it's hard to give an answer to that. Maybe then on the seasonal effect. If you -- so we see the seasonal factor. So we -- usually the Q4, Q1 being higher -- the charging needs in those quarters because of lower temperatures. We see that similarly now. I think Q1 is a bit higher temperatures, for instance, than last year Q1. So that has a bit of an impact. I think the biggest impact we think is what I explained before is that AC charging in the Netherlands show very low growth or even negative growth over the most of last year with pricing being very high and similar to home charging, and we see -- we expect there's a bit of a reverse of that going on, which has an impact.

Maybe to put it simple, as I think what we basically expect and we've seen messages of people doing that, that charging at home became during the crisis expensive, public charging at some point late 2023 as well due to the concession systems in the cities. And basically, people took decisions, hey, I have a charge card from my boss and at home I paid myself. So we've seen people shifting charging volume. How big that is? It's difficult to assess. But if we look at the data, this is the pre-assumption that we take and we see basically our market share being very similar in the D.C. markets and the fast charging market. So we don't see it being a consequence of competition. It's just what the development of the entire fast charging market is. Does that give you some more color on that?

Yes, that's clear. Now on the expansion question.

On the expansion, yes, I think maybe there, what I would say is we learn every year. And I think last year, we've already made our, let's say, pipeline outlook significantly more detailed than the year before. And I think we've been doing that again this year. So basically, we became strict there in the way we make our prognosis. And on top of that, we see basically that these projects that the requirements to build them this year on many of them are doubtful, putting them basically on the role for the year thereafter. So in the end, it's simply delayed.

I think it's good to stress that basically, what we do is we introduce the lower ranges in our target setting in a range that is at the low end of that range is much more secure because building permits are in place for those stations. And also grid connections have very high visibility. So basically reaching that lower range is fully in our hands. And then the operates is more comparable with the target setting we did up until this year. So introducing this range is -- yes, and especially the lower end of the range is -- we think it's a much more prudent way to show the market -- yes, the potential we see for station building this year. So it's also a bit of system change.

Yes. Okay. I understand. But at the same time, you still, let's say, see quite acceleration for next year, and you said yes, there are some, let's say, delays in [indiscernible] and whole planning and everything. So and on the grid connections. You know it already for the things you have now, let's say, already started up the whole process. But why are they certain for next year? Or yes, how should we see, let's say, the certainty of your guidance for end of next year?

I think for next year, it's so -- it's a different level of certainty, yes, and that's also why we have to range. We make the range better. And so everything for this year is already full and planning -- in construction planning. And like I said, for the low end of the range, we are building permits in place. We have very high visibility on grid connections. Next year's guidance is more based on pipeline development, which we see improving very favorably. But it's - there is, by definition, more uncertainty on next year because yes, it's not fully in the construction planning yet. But we do want to give an outlook there. Based on what we see in the pipeline now and the throughput, we expect in terms of building permits and grid connections, we do want to give an outlook for next year.

Our next question will be coming from [indiscernible] calling from ING.

Just going back on the question asked previously about Quarter 1 seasonality charging volumes. So we saw that charging volumes in Quarter 1, they grew to 52% year-over-year, but they were still slightly down compared to the fourth quarter in 2023 in absolute terms. So usually, we do see that quarter-on-quarter improvement. So you already mentioned that it was also due to AC charging, maybe home charging becoming more attractive in terms of pricing. So if you look at your own pricing, you had quite high gross margins in -- close to 80% also in Quarter 1. Is that a consideration in terms of could you lower your prices to make it more appealing to drivers with AC pricing coming down? The second question that I have is actually about your shop strategy. So you opened your first shop in [indiscernible] as well. Could you give a bit more information here. How many of the shops do you expect to open? And what do you expect in terms of top line contribution margins? And as well in terms of CapEx, how much does it cost to build such a shop on top of regular station and as well the OpEx impact?

Maybe to start on pricing. So good to mention that if you look at the top 10 slide, we sometimes show in terms of fast charging companies there -- by now, we are cheaper than most, except Tesla, that is, again, cheaper than us. But what you've seen is that many of the large similarly large fast charging companies, they have actually increased their prices. And that is, we think, due to them having lower station sales, having low to no profitability and pricing at demand being inelastic, so they raise their prices. That's what I explained also during the presentation. So that puts us in a favorable position towards them. If you look at AC charging pricing, we think overall with increased usage, with increased charging speeds, the business case for fast charging will be better throughout -- over the next couple of years than AC charging. So that does allow us to reduce pricing based on profitability increasing. So that is something that is -- will happen at some stage. But yes, that's not imminent. But it is pocket of volume that is in the future, within our reach and available. So that provides for a very nice pocket of volume growth over the next couple of years.

I think if we talk about [indiscernible], so it's a pilot. It's the first time that we do this. We, for coming year, have planned more pilots, and then we're talking about scaling up from this 1 to let's say, 5 to 10 locations with also smaller versions of this. Sites in Belgium, in Germany and a couple of them have been announced already, yes. So [indiscernible], for example, in the 27, if I'm correct, is a location we talked about before, big service area on both sides of the motorway with also a shop. So basically, it's part of expanding the pilot. Probably later next year, we're probably going to decide on a more significant rollout plan because we want to learn from these first pilots and also see where to evaluate and where to improve. Maybe your question was also related to like what we're investing that's quite a range, I would say. We see smaller shops in the order of, let's say, EUR 250,000. These bigger shops can go up to EUR 1 million or maybe even more, but of course, yes, that also leads to a different retail area and different revenue. And when it comes to sort of like sort of the exploitation of the shops, we work with that with operators and often is basically a revenue share-based partnership. But again, all in the pilot phase, I would say. So evaluations to come -- give a bit of color on the topic, [indiscernible]?

We'll now move to Paul de Froment calling from Bryan Garnier.

Two questions for me. The first, could you come back on the grid connection lead times? How do you see them evolve over the next 24 months? So that's my first question. And my second question is what's your view on the consolidation of the sector? And would you have any interest in M&A?

Yes. I can comment on that. The grid connections. I think what we see there. I think in the Netherlands, congestion is definitely an issue. So there is locations where timelines are long. That said, the majority of our network expansion activities is currently in all these other countries. So in that sense, yes, the lead times that we see there are more -- are still more normalized. And then we're talking about around 40 weeks for, let's say, delivery of transformers and often around sort of 30, 40 weeks to get a quick connection in place. So I would say probably, let's say, for 10%, 15% of sites, there is some sort of impact. And that is in the Netherlands somewhat in the U.K. as well. And probably over -- if you would ask this next year or the year thereafter, it's probably going to start happening in other countries as well, but we will have to see them. So that's basically about grid connections and maybe about consolidation. I think we've been -- we keep our eyes open in that sense. I think -- the way we look at it often is that we are looking for large strategic plots of land along high-traffic roads. And what we see is that probably is something that's easier to attain in real estate markets where you're basically talking to -- it doesn't matter which part you were basically a party that owns or wants to lease out those [ plots ] of land. While yes, let's say, other parties in the charging market, many of them are still spraying chargers. And then that doesn't really make you great takeover candidates, I would say. So I think maybe that's a bit of a high-level view, and maybe Victor can comment to it.

Yes. I think it's -- because of our location strategy, private locations, as we discussed in tenders, it's -- we see a limited number of other charging companies pursuing the same locations here. We see a lot of charging companies have a different location strategy. And there, we're not interested in those sites. So with that, it's actually quite unlikely that we do any meaningful M&A.

So it's not that we're not interested. We keep our eyes open, but we haven't seen a deal that, let's say, in a market where expectations are significant that is that we would like to go for. Any other questions? Sorry, go ahead.

Just if you could just give more detail on the bottlenecks in the grid connection. I mean, what's your explanation coming from substation transformer delays from administration. Just if you could give us some more color on the nature of the deal, it could be very helpful.

Sorry for making the assumption because I think I talked about this before, but so the issue in, let's say, most of the Netherlands and U.K. is that the energy transition with more wind, solar, heat pumps, gas furnaces being changed over to electric furnaces, basically, changing from a fossil fuel system to an electrifying system that is causing the electricity grid to be -- to deliver -- the need to deliver significantly more capacity to many more parties from wind parks to charging stations, but also to households and upstream basically is something that's in the Netherlands and in the U.K., they have been keeping up with for close to a decade now. So we're already on the way for more than a decade. But they're basically hitting some barriers where there are investment plans and their, let's say, pace of improving their grids to cope with that increased demand is just not possible. So you see areas in the Netherlands [indiscernible] reps? Are they basically saying these areas, you can't get capacity anymore for the coming, let's say, 2 to 3 years because we're -- we need 2 to 3 years to upgrade our grids. Does that give you sort of a more technical back end? And I think I look at it. I think, for us, in the Netherlands that this is also it really gives us -- it creates also a valuable position for us because it means that it's also difficult for a competitor to enter that market because the capacity is cars. Moving on to next question.

Our next question is coming from Thijs Berkelder from ABN Amro ODDO BHF.

Three questions. First, can you be more explicit in the cost outlook for 2024. You're indicating in the slides, your cost per charger network OpEx per charger is going up to 16,000. I thought it from something like 14,000, but -- and I heard Victor saying the network expansion costs were to double in the coming 2 years. So if I assume plus 50% to EUR 23 million or so in '24. Is that a right assumption? Second question is on the guidance. Your guidance for 2024 is for a positive underlying EBITDA. Well, your underlying EBITDA already was positive in '23, close to EUR 8 million. In Q1, your operational EBITDA is already up 46%. Despite these home chargers, let's say, switching back to home charging. So why not guide for a higher underlying EBITDA instead of just a positive underlying EBITDA? Third question is on your target of 1,000 stations before 2030. Can you explain what you expect from the Netherlands in terms of win rate when existing older sites need to be retendered in the coming years?

Yes. Shall I start with that one? And then you take over Victor on costs and so on. Yes. I think if we talk about the win rates in the Netherlands, I think it's still to be seen what kind of new policy environment they will -- the government will decide on for the new service areas. I think the let's say, the design that's on the table now, and that's up for decision for a new government, I think, is very, very good. We're talking roughly about, let's say, losing or let's say, 50% of our locations on that network are up for renewal before 2030. And on these sites, we would expect to see win rates which are similar than we see in other countries. So we will, in that sense, lose sort of a significant amount of sites there. The way we look at it, if you look at what the macro level is, you can't sort of, let's say, push for a policy that doesn't have competition in there. So I think we accept the fact that we would lose sites here to basically convey the message of a competitive and open market in the Netherlands to be something that should be everywhere. And then you basically have that same win rate, you can apply to many more markets, and that's the bigger win that's in there.

On the cost outlook, indeed, also on operational costs, we look at it on a per charger basis, EUR 16,000 per charger this year. And then on network expansion costs, we look at it on an absolute basis. So doubling from -- roughly doubling from 2023 to 2025. So indeed, we had a 50% growth assumption you make -- makes sense in that sense. On positive underlying EBITDA or even revenues there, we think, yes, we don't have the level of predictability yet on the revenues, EBITDA to really give a guidance with a certain range and a certain certainty. I think that's -- yes, and we want to be prudent there that we start doing that when we have that, when we have that predictability. I think positive underlying EBITDA is -- it means that we expect to be positive again. Of course, we expect to expand this from last year. But we didn't want to give more guidance there at this stage.

I think it makes a lot of sense given what I really explained we're in sort of a year of, let's say, changeover from an old system to a new system, especially in the Netherlands, one of our important markets, I couldn't have foreseen that, let's say, the road tax adjustment played out as it played out in the last weeks, and that will have a significant effect on market growth in the coming 1 or 2 years. So maybe that was an addition from my side.

Yes. Maybe add on question there because you primarily explain, let's say, the year-over-year comparison with, let's say, the home charger clients going back home. Isn't it maybe also a big impact. There's a lot of easy lease cars have been brought back to the dealerships and are standing idle somewhere in the middle of nowhere, but officially still are part of the [indiscernible] fleet. Is isn't that also a big proportion, especially Tesla, I see with hundreds, I would say, standing in the middle of nowhere.

I would say, on a couple of hundred thousand, let's say, electric cars out there, I don't expect that number to be that significant that it would have a serious impact. But yes, it will be there. I think it's definitely -- it is one of these things that is impacting it.

Is it not that taxi drivers are switching back or so, something like that?

No. Taxi drives are a small part of our sales. It's really -- if you look at charging volumes in the market so there's -- yes, there's simply more than 400,000 cars on the road. That's indeed, some of them are impacted, like you say. But yes, the charging happens and by now still a lot of it at home charging. AC charging has significant volumes. So when there are small shifts in those other drivers [indiscernible] there then it has an impact, a more significant impact on fast charging. So we think that is the reason for a slight underperformance versus the fleet growth.

Yes. Then you said coming back on pricing and that you see competitors further pricing up at least limit the losses they make. We're now entering the summer season. So normally grid prices or, let's say, power prices coming down mid-season, isn't it logical to simply expect gross margins to go even higher than the current level in Q2, Q3? And yes, that's why I'm still puzzled why not just expect a higher underlying EBITDA, but...

Yes. So if you look at energy costs, they've actually been quite favorable in the first quarter. It's already quite positive. What we see in the summer, we benefit a lot from solar production because a lot of people charge at those hours when solar production is high. So we actually -- our pricing is lower than the average market price. So yes, that could be a positive impact indeed.

Next question will be coming from Joren Van Aken from Banque Degroof Petercam.

Just a quick question from my side. It's on Poland. It's a new country for you guys. EV penetration seems relatively low there. So the question is, is there actually sufficient demand for charging to get those stations actually profitable or get a nice return on capital for those stations? Or do you anticipate an acceleration in the penetration there? Some color on that would be helpful.

It's a good question. So we looked at that, let's say, in more detail. I think we also need to learn in such markets. What we see, I think, with Poland is that compared to other countries, the car fleet stock is significantly larger with a larger, let's say, duration of cars staying in the countries that are older. We're talking about, let's say, 40 million cars with an average lifespan of 40 or 50 years. On the other hand, we also see quite fast economic development whereby there is, let's say, a certain percentage of these cars is new. So there's actually new car sales, which are higher than the Netherlands. And what we also see is that those cars are more expensive cars. So what we see generally crossover market is that more expensive cars are more often electric, so what we see is basically that there is an environment where by, let's say, with lower EV penetration, we could actually see very favorable economics at our stations. And that is why we think we actually should invest in a country which has a lot of traffic, a lot of cars and has significant economic development. So that's basically sort of a bit of an overview on how we look at that.

Yes. And of course, that needs to come with long tenure to be able to make that investment, then it again securing sites in a market [indiscernible], that you know it's a big market. It is you have a huge amount of cars and that at some size, will transition maybe later than others, but the transition will be there. So we then favorable when you secured those sites.

And is there some information on the tenure in Poland?

We're talking mostly about sort of 20 plus 5 plus 5 order of magnitude sort of, let's say, concessions that they're aiming at. I think, a very different story in that sense than Italy, maybe if we compare it to because both have adoption levels, which are currently quite low. You need to have some time to wait the hockey stick. But I think the ingredients of the hockey stick are very good. Any further questions?

Yes, sir. We do have one question remaining, and the last question today will be coming from Wim Lewi calling from KBCS.

I've just got some quick follow-ons and a lot of things have already been discussed. One is on the bond issue, which you will do in like private placements. Can you say anything on how you decide on the conditions as we see maybe interest rates going a bit lower, maybe also your business risk declining over time. Is that at 6%? Or do you think that you could, let's say, improve for yourself?

Yes. So we started out 6 years ago with 6%. We went down at some stage to -- down to 4.5% when the rate environment was really low indeed, and after a couple of the equity raises. We went up a bit because banks are now offering a bit of returns on savings accounts, which is for a lot of people, sort of the comparison. So depends a bit on how that develops to see whether -- where we can change our pricing. I think overall, if you look at a 6% coupon. It's -- yes, for us, it's very favorable. And to the consumer, it's also a nice coupon especially if you compare it to what people make on their savings accounts.

I think probably it's a well balanced at the moment, I would say. And I think the spread is in that sense, similar as or maybe even lower than historically, right?

Yes. Does that give you...

Yes. Sure, sir, is ceiling of what you're planning. Then something I read recently is that I think the EU is going to force fast chargers to accept all bank cards. And I was wondering, is that something that would be like big investment to adapt? And do you think that could also change some of the competition dynamics as you have these loyalty cards now and then you could basically stop at any place and just charge with your bank cards.

We've been really an early sort of advocator for this because in our view, it's in line with our mission, accelerating the adoption of EV, creating that freedom for people to choose their payment method then. You want to charge and why would you put a barrier in place. So we've been implementing bank card, let's say, terminals very early on. And that sense, we're pretty happy that, that is becoming regulation as well. We see some other parties in the markets having different sort of opinions on this. I think it might shift a bit volumes, but in the end, I think it's more an enabler. I see it more as a positive enabler to develop the charging market as a whole, then that I think it will have a very big competitive influence.

Okay. All right. Maybe just on the PPA, something that I've been noticing in some, let's say, competitors of yours, which also operate as utilities or as grid players. They have an advantage in a way when supposed lately, we've seen energy prices going negative that they can offer very sharp conditions. Is that something because now with the PPA? And I think, Victor, you also mentioned that you will benefit from lower prices, but suppose that we're in this period during holidays with lots of sunshine and wind that energy prices are negative that you can also follow those sharp promotions from these more utility-like competitors.

In that sense, the energy market is extremely transparent. So everybody has access to those low prices. The wholesale market is extremely efficient. So we have more little access to those low prices than people who produce them. It's just one market price. So in that sense, I don't see the advantage for people who would generate. And then if you look at our PPA, it's indeed effectively a cap structure whereby we do benefit from lower prices.

I think it depends a bit as well, Wim, on what you believe works as a experience to the end user. So we've seen some parties that very much believe in variable pricing to the end user, some with apps on screens and then saying the wind is up today. So the pricing is low. What we see from basically our analysis of the market is that, yes, there is a smaller group of, let's say, technical fuzzy enthusiasts that are very interested in that. But the far majority, especially the fleet owners, they are much more about stable pricing. And we've also seen that, for example, in a deal recently that we signed with [ Arval ]. They really like the fact that we're transparent and that we have stable pricing, much more than other parties in the market and that we don't differentiate that much between locations. And I think, in that sense, I would say that, let's say, trying to grow based on a very small percentage of users that is interested in variable pricing, I don't see that as a very successful strategy at the moment.

Okay. Lastly, and just something that triggers my attention when you spoke about the German manufacturers, and they all are looking to these Chinese cars that are piling up on our stores. Can you say what that impact would be if the Chinese producers with its low-cost cars? Is that something -- would that be neutral or positive for you because, yes, maybe they don't drive long distances because often they have shorter ranges? Or was that just -- was no, let's say, sentiment attached to that for yourself?

I think the sentiment in our view, is great that the Chinese are there because they put competition in the market, they accelerate the transition towards electric mobility. More affordable cars scales the market, so that helps and that in the end, scales our market and therefore, accelerates our company growth. I think I do see, let's say, the issue that some of the, let's say, European OEMs have and there are several solutions to that. But for Fastned, I would say, any competition on that market that accelerates the growth scaling of that market and prices going down is great. I think that leads us to the end of the call. Sorry for the technical hiccups. And thank you very much all for listening and being there. Looking forward to see everyone next time. Thank you.

That will conclude today's presentation. Thank you for your attendance. You may now disconnect. Have a good day, and goodbye.