Nel ASA (NEL) Earnings Call Transcript & Summary

Good day, everyone, and welcome to this webcast that we hold here today in relation to the soon-to-come listing of Cavendish Hydrogen, the spun out hydrogen fueling business of Nel ASA. Today, well, from a practical point of view, I would like everyone to wait with questions until after the webcast. We have enough time for that in the end. However, if you do have questions along the way, please post them also in the chat, then we can easily -- easier sort of get them up when we are at the end of the presentation. So with no further ado, I would like to introduce myself. My name is Robert Borin, and I am the CEO of Cavendish Hydrogen, as I said, the spun out fueling business from Nel ASA. I have been with Nel and been running Nel's fueling business for the last 3 years, roughly. Before that, I have a past in the offshore wind business, mainly with Siemens and Mitsubishi Vestas where my last position before joining Nel was heading the operations, so production, supply chain and logistics and so on. With me today, I also have Marcus Halland, who is the CFO of Cavendish Hydrogen. Marcus will introduce himself a little bit later. But Marcus has 6 years with Nel. The majority of the time has been as the financially responsible for the fueling division. Before Marcus joined Nel, he has a past as auditor in KPMG and also working with the financials in a company called Align in the oil and gas business. But again, Marcus will give a little bit longer introduction to himself when he gets on a little bit later. So Marcus will deal with a short financial update as well. So with no further ado, let's look into the agenda of today. First of all, we have an introduction to Cavendish Hydrogen. We have a little bit around the hydrogen mobility opportunity, why it's a good opportunity and why the timing is right as we speak right now. We will be presenting Cavendish Hydrogen and why we are a leading player in the fueling equipment segment. And then Marcus will go through the financials. And afterwards, I will do a roundup of the presentation before we take questions and so on. So today, I will walk you through why we believe that hydrogen mobility and hydrogen fueling is a great market opportunity in the not-too-distant future and why we believe that Cavendish is in a great position here with already the next-generation products underway. So in short, Cavendish Hydrogen is producing fueling equipment for the hydrogen mobility business, and we have been doing so for a little bit more than 20 years. We have sold in the vicinity of 140 systems worldwide. The distribution of these systems is roughly 50-50 between our key markets in the United States and in Europe. And on top of that, we have 15 stations installed in Korea. We -- most of these stations have been produced at our facility in Herning, Denmark. This facility is, as of now, one of the world's largest production facilities for hydrogen mobility equipment, probably the largest one outside of China. We have service hubs on 3 different continents with a key focus on the markets in U.S., Europe and Korea. These stations that I'm talking about, which has been installed on these locations, have been designed, assembled and installed by a little bit more than 250 employees worldwide. And last year, we had a revenue of roughly EUR 30 million. So that's Cavendish in a nutshell. Fueling and hydrogen mobility and the part where Cavendish Hydrogen is located sort of in the value chain, in the total hydrogen value chain. So Cavendish plays an important role in this value chain where we are in the sweet spot between hydrogen production and hydrogen consumption and hydrogen transport. This means that our equipment can take hydrogen from a source, we compress it and we cool it and then we put it on a vehicle either for transportation or for consumption on the vehicle, if this is a heavy-duty vehicle powered by a fuel cell. We believe that also trailer filling will be a big business area for Cavendish Hydrogen in the future alongside with heavy-duty fueling. And this is because of the big growth that we see also in the industrial segment, so that not all hydrogen is produced on the same location as it will be consumed. So trailer filling is an application which our equipment is also very well suited to do. Moving forward and zooming in a little bit more on our product offering. We are supplying everything from supply panels or connection panels where the source of hydrogen is being connected to the fueling station. We are supplying the hydrogen storage that is stored on the site where it's being fueled then we are supplying the actual fueling station and of course, a number of different dispensers, depending on what type of equipment we are putting the hydrogen in. So if it's a bus or a car or if it's a truck, et cetera. If we look at the services side, we are supplying everything from project engineering and design and manufacturing of equipment to installation and commissioning and aftermarket services like operational services, surveillance, 24/7 and so. So we are covering the full value chain also on the services side. So that was sort of Cavendish at the glance. Now I will look or move forward to the hydrogen mobility opportunity and why we believe that the timing has never been better as of right now. If we look at the total hydrogen market as of today, it's already now a large market with -- in the vicinity of 90 tons of hydrogen produced yearly. This is mainly driven by industrial use. If you look at the mobility part today, it's roughly around a ton a year that -- or 1 million tons per year, sorry. So given the fact that we believe that hydrogen will play an important role in the decarbonization of our industry moving forward, we believe or it's believed that the hydrogen market will grow a factor of 3 in the coming decades. Out of this growth, one or maybe the major driver is going to be hydrogen mobility, where high capacity fueling or heavy-duty vehicle filling is going to be playing the major role. And that's the segment that we are focusing our business on. If we are then comparing hydrogen mobility to other sources of technologies or other sources of energy when it comes to powering vehicles, we can see that there are a number of different advantages. Some of the more, I would say, apparent ones are, of course, the total lack of emission from the process and of course, also the long driving range when we talk about the comparison towards battery-powered vehicles. And this is, of course, especially when we're talking about heavy-duty vehicles for long-haul transport. So the driving range there is significantly higher on hydrogen-powered vehicle. Some of the may be less obvious advantages with hydrogen mobility is, of course, also the fueling time. Our coming high-capacity filling equipment can transfer energy corresponding to 1 megawatt hour of battery capacity in and around 10 minutes. And just to put this in perspective, 1 megawatt hour battery, that corresponds to roughly 10 Tesla batteries of today. So if we do this on the fastest charging technologies available today, that would take us in the vicinity of 5 to 6 hours, and even with a doubling or a tripling of the charging speeds or the charging capacities, this would still be in the vicinity of hours and not minutes as we have on hydrogen filling side. Also, if we look at the required grid connection, our high-capacity fueling stations of the future will be able to connect to the grid more or less on a standard grid connection for an industrial application where you -- for instance, if you compare this, with the grid connection required to power superchargers and several superchargers, you would need at least somewhere in the vicinity of 10 to 15 megawatts to power some of these high-capacity battery charging stations. And just also to put this into perspective, it's -- I can say that the City of Herning, where we have our production in Denmark, is a city of roughly 50,000 inhabitants. This city has a base load, if you exclude the industrial part, of somewhere in between of 11 to 13 megawatts. So if you then put that into perspective, you would need in the vicinity of a small city grid connection to connect a high-capacity battery charger that can do the same -- where we can do the same with roughly -- with less than 1 megawatt grid connection actually. So it's -- from a flexibility point of view, it's a significant advantage with the hydrogen compared to battery power here as well. Obviously, a driver for growth in any kind of market and especially markets, new markets, is the regulatory landscape and the funding landscape that is supporting this market. There has been a lot of good initiatives during the last few years in relation to supporting hydrogen mobility. However, not until last year, I would say, last year in June, there were some real good things happening where the so-called alternative fuels infrastructure regulation was taken into legislation. That means that it went from a recommendation of the states to build noncarbon fueling stations until a legislation where the AFIR or the Alternative Fuels Infrastructure Regulation states that all the member states of the European Union need to build at least one high-capacity fueling station with per every 200 kilometers along the so-called Trans-European Transport Network. And if you just do the math, you take the number of kilometers along the Trans-European Transport Network, which is the major network of highways going throughout Europe and you divide that by 200, you will get a number somewhere between 650 to 700 stations. If we have a conservative view on permitting processes and time lines and so on, we believe that at least 400 of those stations will be built before 2030. The regulation actually says that all these stations need to be built before 2030. But with a conservative mindset, we believe that we -- that the market for high-capacity filling in Europe is going to be at least 400 stations along the Trans-European Transport Network. And this is, of course, a great market opportunity to grab for us in this high-capacity filling business. It's important to mention also that this initiative or this regulation is supported by EUR 1.5 billion in funding that is available from '25 and on. So between the years of '25 to 2030, this EUR 1.5 billion will be available. And this is Europe alone. If we look at the United States, where we are also present, we see already now that the funding landscape is being -- is taking place with -- in the vicinity of USD 2.5 billion available for applicants to build out the hydrogen mobility infrastructure. The regulatory framework is still work in progress, but it seems like the United States are going in a similar way as the alternative fuels infrastructure regulation in Europe. So we are believing that something similar will be coming in the not-too-distant future. We also saw a very important indication on the California market, which is the main market for hydrogen mobility in the U.S., and that is that the LCFS and the HRI, basically the credit system for low carbon credits, also is now being expanded to include heavy-duty fueling and high-capacity fueling. So that, of course, is a very strong indicator that also the U.S. market is going to be taking off soon in relation to high capacity fueling. Then looking at the total market share or the addressable market share for Cavendish Hydrogen. Supported by a strong regulatory framework and a good funding landscape, we see that or we believe that the market -- the addressable market size for Cavendish Hydrogen is in the vicinity of EUR 6.7 billion in the years from now up until 2030. This includes light-duty vehicles, medium-duty vehicles, which is primarily buses, and high capacity and trailer filling applications. This is also -- this also means that we will not stop selling our current equipment right now. We will continue to sort of support the light-duty and medium-duty markets, which we see at a constant rate at the moment. It's not really growing on the light-duty segment. On the medium-duty segment, we see a slight growth, but the big growth is then expected to come from the year of '25 and '26 and on where the high-capacity equipment and trailer filling equipment is coming into the picture. And this is also what's supported by the Alternative Fuels Infrastructure Regulation, et cetera. So taking a little bit -- yes, taking a helicopter view on the hydrogen mobility market as a total. We have 3 different main categories, I would say. We have the production category or production segment and then we have the fueling segment and then we have the offtake and consumption segment. These 3 parts are all divided in 2 parts where you have the equipment operators and you have the equipment OEMs. We are, of course, then located in the fueling segment as an equipment OEM. And in this segment, we are on the third place worldwide in relation to installed capacity worldwide. What is important to point out here also and an indication for that this market is coming is that we see significantly increases in activity in all these 3 groups. So both in the hydrogen production segment, in the fueling segment and also in the offtake side. For instance, we saw large actors like Shell announce earlier this year that they are investing more than $1 million yearly the next coming 2 years in hydrogen production and carbon capture. So this is, of course, also important to make sure that there is a hydrogen supply chain upstream, which now we see large actors like Shell announcing major investments. If we are then zooming in on the offtake side, if we are looking more on the vehicle OEMs, there's, of course, a lot of voices asking, so what about the cars. I mean we didn't see that many cars coming on the -- in the LDV segment. It was basically only Toyota and Hyundai, who were launching the Nexo and the Mirai and in limited series. What we see on the vehicle OEM side is that we have movements from literally all the major players on the truck side, specifically long-haul trucks and heavy-duty trucks. We see announcements around pilot series and prototype testing already now and with serial production announced from the years of '26 and on. This is, of course, a huge difference from what we saw in the personal vehicle segments where there were only a handful or a few actors -- less than a handful, actually, actors in the market actually putting vehicles in the site. So we see significant movement on the vehicle side as well, which is, of course, important for the offtake side. So then let's -- so it sort of -- it goes without saying that we then, of course, believe that what we -- that we have what it takes to meet not only the demands from AFIR as of right now, but also have the ability to grow in the coming years here. We are a company that has been in the business for more than 20 years. We have -- we started -- we've been there from the start, and we are still in there, let's put it this way. That's, of course, extremely important. And we have been learning from our experiences all the way from the start. So this has been a super important learning experience for us. On top of that, we have technologies that we believe are the right technologies, which are protected by more than 75 patents worldwide. And we believe that these are, again, the right patents that we have in relation to compression and cooling and control of hydrogen systems. And we -- finally, we also have a very strong R&D division with more than 60 people working on the development of our current and next-generation products. So going from technical capabilities to production capacities, we are also well invested in our existing facilities in Herning. This facility will suit our needs in the coming years up at least until 2030. We will -- we see very limited investments required to go from the existing product platform to the next generation product platform. So all in all, we are, as of now, well invested where we are sitting. So a little need for increasing production capacity at Herning, a little need in relation to cash for investments moving forward. This facility that you have on the picture here is also is home to roughly 190 people right now, ranging all the way from production engineers, service engineers. We have R&D people, we have test and lab facilities. We have basically everyone from all the different parts of the value chain under the same roof here. So it's extremely important and valuable for us that we have the communication between all these different teams when we are developing the next-generation product as well. So again, this is also on top of it, one of the world's largest production facilities for hydrogen mobility equipment. On top of our production facilities, one of our unique selling points is also the number of data points that our equipment is collecting for every fueling that we do, up to 17,000 data points is collected for every fueling that we do. All our new stations that we are selling are connected to our global monitoring network which means that a remote technician is sitting somewhere in the world, sort of watching or surveying the stations on a 24/7 basis. If something would happen if there is an alarm coming in, the technician can review the alarm and see if there's something that she or he can solve remotely. If there's not something that can be resolved remotely, a service technician can be dispatched to the site to fix the problem. And this, of course, is a good thing when it comes to the operational part, but it's also, of course, super important when it comes to collecting data around the operations of our station because not only do we have these 17,000 data points per fueling, but we also know how the weather looked like when this fueling happened, what kind of car was that was fueling, what kind of truck or bus it was that was fueling. Was it the warm day, was it a cold day, was the humidity high, et cetera, all those kind of factors. And what was the type of problem that occurred potentially? So all those kind of things, we are taking into consideration when we are designing the next generation station and is also helping us to derisk the business case for high-capacity fueling moving forward. If we look at the market or the installed base of equipment right now worldwide, we are already working with some of the major players out there. I mean both in U.S. and in Europe, we are working together with Shell. We are also soon proud to announce a cooperation with a major U.S. energy company who we are cooperating and building as a starting point 9 stations in the state of California. We are super excited about that, and we can soon announce the name of this corporation in a couple of months. In Europe, we are working -- except for Shell, of course, we are working with companies like Everfuel and PAK-PCE in Poland. PAK-PCE might be an unknown company outside of Poland. But in Poland, this is, I would say, one of the major utilities not only within power and electrical distribution, but also within communications and media, so a big player in the Central European market, which we are a proud corporation partner, too. So we are supplying their fueling equipment too. And in Korea, we are working with the major players like HyNet and KOGAS-Tech. So looking at the utilization of our stations. If we just go a couple of years back in time, we can see that our stations have more than a factor 10 doubled when it comes to the actual utilization of the sites. This is, of course, really, really good when it comes to the fueling business as a whole. We have -- we see that it's actually starting to happen. If you look at the years '18 and '19, we were filling in the vicinity of 100 to 150 kilos per month on average per installation. And today, we are way past 1,300 kilos on average, which means that we have stations where we fill significantly more than 1,300 kilos per month. This has been sort of an expensive learning for us, especially in the years of '21 and '22 when we also started to realize that a lot of the use cases where our stations were installed were not necessarily exactly the same as we tested in the laboratories, which meant that we -- yes, for example, there's a big difference between fueling station up in the northern part of Sweden with minus 40 degrees to a station that is built in California with plus 45 degrees. So again, a lot of super necessary use case data came into our system in this period. It costed us a lot of money that we were also willing to spend in the year '22. '22 was one of our low runners from a financial point of view, but we also learned a lot in those years. And this is data that we are now using not only in the development of our current equipment but also in the development of the next-generation fueling station. So it's been expensive, but very, very good learnings that we have collected here. So with that, I would like to hand over the word to Marcus to go through our financials. Marcus, welcome.

Yes, thank you. Thank you, Robert. As Robert said, I will be the CFO of Cavendish Hydrogen. And actually, I think your presentation of me was quite perfect. So I would rather spend the time to go directly into the figures. The first thing to point out is that we have the presentation currency in euros, not NOK. Opposed to Nel, we have all our operations -- or we have no operations in Norway and our main currency is DKK and euro and the U.S. dollar. So that makes more sense for us. In 2023, we had a revenue of approximately EUR 30 million, and that is back to the level of '21 after a volume dip in '22. In '23 and also continuing into '24, we are recognizing revenue of approximately 3 to 4 stations per quarter. And our customers' project installations are being completed faster, especially in the European market. The U.S. is still lagging a bit, but we expect that, that would pick up in the next -- second half of 2024. In Q1 '24, we had EUR 10 million in revenues, and that is also driven by a nonrecurring effect from the Nikola termination. That was EUR 3.7 million in the cancellation fee of a framework contract. And that also spills over into the EBITDA, the profitability, but it's partly offset by termination of some sites in the Northern California, where we wrote down some inventory and spare parts. I will talk a little bit more about revenue on the next slide. But I also want to point out the profitability, EBITDA, in '22, that was negative. And it comes after the euro after -- I'm sorry, after the dispensed figures in '18 and '19 was very, very low, but it rapidly increased in '21, '22. And there, we saw a lot of learnings into '22 figures. So a lot of issues with high quality costs and warranty repairs. And that happened at the same time in different parts of the world with different versions of our equipment and since Cavendish always we stand by our customer commitments, we saw a lot of cost from our operational fleet in that period of time, and that affected the financials. Also in '22, we had to write down some goodwill relating to the H2 Logic acquisition and also some technology that was legacy products. Since then '23 and '24, we have seen good operational improvements, especially in the European and South Korean market, and that also affects the financials in a good way. And in '23 and '24, that is continuing to improve. So let's talk a bit more about the revenue streams. We have categorized the revenues into different categories, Equipment and Projects, Installation & Commissioning and Service. The first one in Equipment, we recognize revenue point in time when the stations are finalized and being handed over to the customer. In the previous 5 to 6 quarters, we have recognized 3 to 4 stations per quarter. And in '23 that amounts to 16 stations and '22, we only had 11. The other category is Projects, Installation & Commissioning and Service. And we recognize revenue over time. And the majority of revenue is then recognized during the installation and commissioning phase, which lasts 2 to 3 months. We -- and then the equipment is handed over to the equipment and then the service contract is initiated. In '21, we had quite a few installations completed in Korea, modest activity in the U.S. and Europe. In '22, there was low activity in Europe and modest in the U.S., while in '23, is mostly driven by European stations that are picking up. We always -- and where we enter into new customer contracts with supply of scope with equipment, installation and commissioning and also a 12-month service contract as a minimum. Currently, the revenue split is 55% to 45% on the equipment. And when we produce or when we expect to introduce a new product portfolio, we expect that the equipment portion of the revenue will be higher, so 75% to 25%. If we look at the order backlog, we have approximately EUR 28 million end of Q1. This is sufficient to have this type of activity in our production for the next 9 to 12 months and on our projects for the next 16 to 24 months. The tail is a bit longer in the U.S. compared to Europe. So we are working very hard as an organization to improve our order backlog. And especially there's the European market where we see good potential prospects, both on the short term and also in the long term. One positive news from now is actually 1.5 weeks ago, we signed a new contract with Alperia, which is a state-owned company in Italy. It is going to be delivering equipment to a site in Bruneck in South Tyrol and it will enable both fueling for passenger cars and buses. In addition to being part of the infrastructure in the area, it will also be specifically used in the Olympics, Winter Olympics in '26 in -- that is hosted in Milan and Cortina. So there, it will enable green transportations of staff and athletes to and from Olympic venues. So the contract value is close to EUR 4 million. It's supposed to be operational in the second half of '25 and we are very proud in Cavendish to sign this contract with a new Italian customer and also enter into a new market in Italy. And Italy is also a market where we see a lot of potential and it's one of the early adopters of complying to the AFIR regulation. So to summarize a little bit on the financials. We -- since Nel acquired H2 Logic in 2015, there has been more than EUR 125 million invested in operational losses, a new facility in Herning and also technology development. If you combine that capital already invested with a highly skilled engineering workforce, we have a solid and robust platform for further growth and that differentiates us in the market. We are now off to a fresh start, and we have approximately EUR 50 million in cash. That corresponds to 2 years of runway. That assumes then to 2 years with the current operational losses we see and also developing our new product platform, the high-capacity station. Another advantage we have in Cavendish is that we have a solid base of customers and partners, and we are eager to take a very collaborative approach and explore both public funding and partnership opportunities, for example, in developing and commercializing the new product portfolio. So Robert, with that, I give you back the word and take -- finalize the presentation.

Thank you very much. Yes. So I would just mention a few words around the road map that we are on right now. I will not go through all the details on what we are working on at the moment. But I will give you a sort of a teaser and something that we are, of course, especially proud of is our next-generation fueling station that will hit the market somewhere around or that will be commercialized around the second half of 2025. This is what we believe is going to be one of the first real high-capacity fueling stations in the market. It's going to have a nameplate rating of around 6,000 kilos per day, which corresponds to in real-life use conditions around 4,000 kilos per day, which means that we can fill up to 4 trucks per hour on the station. And that is corresponding to what we have in relation to the user experience we are looking into when we compare this to diesel and gasoline. This is also important to point out that this station is going to be fulfilling all the requirements that the Alternative Fuels Infrastructure Regulation is putting down in the station. And in short, it's also going to be living up to the SAE J2601-5 standard, which is the new standard for high-capacity fueling. So we are very proud to announce that this station is going to be hitting the market soon and we believe that this is going to be the major driver for our growth in the coming years. So to summarize, in 2023, we started the development of the high-capacity fueling station that we just saw on the picture here. We did so with a lot of good experience and user experience that we had from earlier years, especially from the year of '21, '22, where we could see that the user -- the usability of our stations went up significantly or the -- so all that is being taken into consideration, together with all the data points that we are harvesting on each different fueling. And then we are using that to derisk the business case around high capacity fueling. We are planning to have this equipment, next-generation equipment on the market the second half of '25. And in total, we are aiming at 15% market share of the EUR 6.7 million market that I was presenting to you before from now on and up until 2030. So with that, I would like to open up for questions. If there is any questions online or if there are any questions or sort of already posted in the chat and if there are any questions live that we can take. So I'm happy to, and Marcus, maybe you can come up as well, and then we can see if we can fit in the frame. It's good.

Great. Thank you very much, Robert and Marcus for that presentation. We have received some questions here online. So perhaps a question for you, Marcus, to begin with is, can you please confirm how much cash you will have on the balance sheet to start with.

We will have approximately NOK 600 million or EUR 50 million, EUR 52 million.

And then another question here. Obviously, the opportunities going forward are in high-capacity fueling, but how will you think about the low-capacity fueling segment going forward?

Well, we see that the segment for light-duty vehicles and low-capacity fueling stations are more or less constant. There are markets popping up around Europe. So there are pockets where it still makes very good sense to install light-duty fueling stations and especially in areas where there's -- there are good fundings for taxi fleets and fleet operators. This is -- this can also be operators of delivery services and so on, courier services. We see that specifically in France, where taxi fleets are heavily subsidized and it's a real good business case to build fueling stations to operate your hydrogen fueling fleet of taxis. So that we see still, but we don't see that segment growing significantly. We see that laying fairly stable as of right now, which means also that we will not exit the segment. We will continue delivering equipment to light and medium-duty stations, but we don't see that the big growth is going to come here. So our focus is going to be when it comes to growth on the high capacity equipment and trailer filling.

Great. And then another question here is which countries or regions are investing the most resources into hydrogen mobility currently.

Well, if we look at Europe, we can see that, as I said before, Poland is investing heavily at least when it comes -- when we see from our customer perspective. We also see that there's being a lot built or there have been a lot of plans for Germany. There's been announced a number of different auctions around that. If we look at the United States, it's definitely California. And then we also see in the frame of North America that Canada is coming as well. And we are installing our first stations in Canada as we speak up on the West Coast of Canada in Vancouver.

Great. And another question here is, do you have any numbers for the number of hydrogen trucks that Amazon and DHL already have in operation and in which geographies then perhaps.

Well, we don't have any specific numbers for DHL and Amazon and so on. We know that they are in discussions with our customers specifically. So we are sort of in the second line down from our customers in those discussions. We are not directly involved in those discussions, but we know that they are taking place. And we know that there is a high demand from these companies to decarbonize their delivery supply -- their delivery chains because this is something that the public is more or less demanding from these giants like Amazon and the likes that they can show that they are working actively with the decarbonization targets in relation also to their ESG strategies. So -- but we don't -- we are not actively involved with the customers directly. We are working with -- our customers are in dialogue with these customers, so to speak.

And then a question regarding the pending lawsuit in the U.S. Can you comment about that?

Well, I mean, it's very limited on what we can say because this is, of course, an ongoing case. So we will not go into any of the details. I mean what we can say is, of course, that we are not agreeing to the allegations in the lawsuit and we are fighting all of them. Of course, this is also something that we have made the counterparty in this case aware of. And -- but on top of that, we cannot say much more around that. That's unfortunately, how it is when these cases are present.

Another question here is what is the current capacity utilization at your plant in Herning.

Well, today, the capacity utilization is fairly low, I would say, which is also one of our advantages when we are seeing the growth coming in the years from '25 and on. As I said before, we are not seeing a significant growth in the medium -- light and medium-duty segments. So we believe that we will be stable on the capacity utilization we have today. But I think it's fair to say that we are using less than 20% of our capacity in Herning right now. And we have a big potential to grow here. Of course, we are not carrying the cost base related to that. So we are having staffing enough to produce the equipment that we are selling right now in relation to light and medium duty, but we have the ability to increase the number of shifts up to 3 shifts and also increase the production capacity that comes with that.

And there's also limited investments needed to produce the new high-capacity station when that is ready for production.

That is true. So very limited amount of additional investment needed there.

Great. And also another question here is, can you please provide more color on why the spin-off is happening aside from having 2 pure-play companies in Nel and Cavendish Hydrogen?

Yes. I mean, I usually turn that question around and then I ask so why was the reason why we were together from the first place. And to understand that you need to go a couple of years back in time around, yes, 5, 6 years back in time when the concept for hydrogen mobility was more or less to have hydrogen production and hydrogen fueling on the same site. So basically producing the hydrogen with an electrolyzer. That concept has completely changed today. And the business case supporting it is also very, very different today. The target is to have centralized large-scale hydrogen production and then transport either via pipelines or via trailers to the sites. So that means that the synergies from an installation point of view didn't really materialize. And then when there is no real business rationale for the cooperation between the 2 units, you have all the challenges as a backside of this. For instance, we are an assembly business. We are assembling equipment from mainly sourced and machine components. If you look at the electrolyzer side, this is a chemical process industry where you are dipping sheets of metal into different chemical baths and then you're assembling an electrolyzer by the end of it. So we have different demands in supporting systems as well. And in the end, I would say also to gain more focus, to have a focused management team, a focused Board of Directors that is only focusing on mobility and then also work more up against the mobility and automotive markets.

It's basically a divorce that makes sense for both parents and the parents will also remain friends afterwards.

Yes.

Great. And then perhaps 2 questions that are pretty similar. When does Cavendish expect to achieve a positive financial result? Or when do you expect the breakeven for cash flow and the EBIT?

Well, we say now that we have a cash runway of 2 years, we don't expect that, that 2 years will bring us into black numbers. But -- and we don't want to project anything specific either. But we see that in order to reach the black figures, we need to have the new product portfolio in place. So it will be after the introduction of the high-capacity station that we expect that also the figures will start improving.

Great. Other question here is how do you view competition from biogas markets. Are you confident that hydrogen is a better option?

Well, yes, of course, we are confident. And in the end, I would say there are pluses and minuses with biogas. There is an already established supply chain and so on for biogas. But on the other hand, biogas needs to be produced somewhere. And the production volumes of biogas just cannot reach the volumes of produced hydrogen that we are looking into. So in the end, it's a good alternative if you just look at 1 kilo of biogas versus 1 kilo of hydrogen or you're comparing it side by side, but when you look at the upstream production landscape of biogas versus hydrogen, we believe that hydrogen has a lot of advantages, specifically in relation to the volumes.

Great. And then another question here is, are you using robotics or advanced automation in your production processes? If not, do you plan to incorporate these technologies?

Well, as of right now, we are working with an assembly line, which is quite flexible, I would say. You're always building in constraints when you're adding automation to your production landscape, and we have been very careful to do so. So we are going from an all-in-one product to a module-based product, and we believe in, let's say, flexibility, in being able to move those modules around in our production. So that's going to be the foundation for the production concept that we are moving forward with. We are not having any major -- or any plans on major investments in robotics or automation. We believe that people are our best assets and people are typically very flexible when it comes to production. So that's where we are.

Great. And then another question is, do you have to deploy much CapEx to increase capacity for heavy-duty vehicles?

No. If you're talking about us, we do not have to spend extra CapEx in investments to be able to produce the new generation products. We will base the new product a lot on modules that we take out of our existing technologies, which makes it more flexible, but it's also making it easy for us to transition from the current production to the new generation production.

And then a question about EVs as well. So electrical vehicles are known to have issues in cold weather and difficult topographies. How well does hydrogen vehicle handle this?

Well, Hydrogen has, I would say, a significant advantage here and that is that the fuel cell is not as sensitive to temperatures as we see with batteries. So the tests that have been done on hydrogen electric vehicles versus, for instance, battery electric vehicles when it comes to heavy transport, there has, for instance, been tests done in the Alps, where there's both cold weather and a lot of hilly terrain, where the range has been significantly depleted by -- on battery electric vehicles by the hilly terrain and the cold climate. And we see significantly less effects on the hydrogen vehicles coming here. So there is, I would say, a fairly large advantage on the range side.

Great. You've also spoken about the market and your customers, but can you talk a bit more about your own supply chain for production? Can you source everything in Europe? Or do you need to source a lot from Asia?

Right now, we have more or less 100% Euro-centric supply chain, I would say. It's -- and we -- when we are moving forward towards the high-capacity equipment, we will have a euro U.S.-based supply chain, which is also a big advantage for us in relation to the initiatives or the funding landscape seen over in the United States. So for instance, the Inflation Reduction Act and the Bipartisan Infrastructure Act and so on. So we have those outlooks for the supply chain. Today, we are more or less euro-based 100%, but we will be U.S. Euro-based going forward.

Great. No current questions in the chat here, perhaps give it a short minute and see if anything comes up. Doesn't seem to be any more questions. So I think we can conclude on that. Thank you.

Okay, great. Then thank you, everyone, for listening in and watching in today. We hope that the information that we have provided today is giving you a good idea on what hydrogen mobility is about, what Cavendish Hydrogen is capable of doing. Oh, is there a question coming?

Sorry, one question popped in here. So do you work together with the Norwegian government to increase the use of hydrogen fueling units in Norway? Norway seems to be waiting on other countries to use hydrogen in industrial production?

We are not directly involved with the Norwegian government. But if they would like to, we are open for cooperation of course.

Great. Thank you.

Thank you very much. So if that was the last question, as I said, I hope that we have shed some light on both Cavendish Hydrogen and hydrogen mobility opportunity in general, a little bit about why the timing is right as of right now because we are standing in front of the Alternative Fuels Infrastructure Regulation being put into action from the years '25 to 2030 and also the U.S. market getting ready with a lot of funding already available. So the timing is right, and we believe that Cavendish is placed at a good place in the hydrogen value chain, in the sweet spot between production and offtake transport. So we thank you again for listening in and hope that we gave you the information that you were looking for. So thank you very much.

Thank you.