NHOA S.A. (NHOA) Earnings Call Transcript & Summary

Ladies and gentlemen, and welcome to NHOA Group Investor Call on the Group's Q3 2023 Trading and Operational Update. The investor call will be opened by Carlalberto Guglielminotti, CEO of NHOA Group; and with him to explain all details about our trading update will be Giuseppe Artizzu, CEO of NHOA Energy; Stefano Terranova, CEO of Atlante; and Alessio Caruso, NHOA Group CFO and also in his new role of Head of Strategic Planning and Investor Relations. Guglielminotti will open the call with the main Q3 2020 results, and then we'll go deeper in the results by business line with Artizzu and Terranova. At the end of the presentation, the management team will be available to answer any questions you may have. Please note that this investor call will be recorded. If you could not attend the whole call, the webcast and the presentation will soon be available on our corporate website on the dedicated page. Please note that all participants will be in listen mode. [Operator Instructions] Before we begin, I just want to point out that any forward-looking statements made during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement, which is included on Page 3 of today's presentation. This also includes the risk that the transactions discussed during today's call remains subject to standard conditions for this type of transactions as well as any other risks and uncertainties associated with the execution of transactions of this type. And as customary, the call will be governed by that language. So with that, I will now leave the floor to Mr. Guglielminotti. Carlalberto, here is yours.

Thank you, Chiara, and good morning, everyone. I'm very glad to be here with you today to talk about the results of the first 9 months of 2023. First 9 months that in which we registered once again, impressive results in line with our ambitions starting from revenues at group level, which have more than doubled year-on-year, reaching EUR 195 million. And this gives us an even more clear visibility towards getting to our financial targets for year-end, which is between EUR 250 million and EUR 280 million revenues and EBITDA breakeven at group level, obviously, excluding Atlante, given the nature of the business. Thanks to the successful capital raise. We can now count on more sort of sound financial position, increased credit worthness, which is well represented by EUR 430 million in cash and available credit lines, which is a testament of our readiness to fund our growth for the next month, for next years, in line with what we announced during the Capital Markets Day in July this year. Looking at the figures in detail, the -- on top of the doubling revenues, we see cash deposits to now stand at over EUR 280 million with the net cash so essentially including cash collateralized and excluding indebtedness, which is approximately EUR 200 million and, as said, the consolidated cash and credit lines available over EUR 430 million. This number is really important because give us also full visibility on the possibility to fund the growth in the business model -- within the business model of NHOA energy. She's requiring a lot of guarantees and a sound banking and financial credit worthiness and this is significantly thanks to the support of our majority shareholder, TCC, as you can see in the notes is heavily supporting the banking exposure that we have on top of the subscription of the capital increase. So this to say at the group level, impressive results were represented by our growth in sales, given the right trajectory of towards the financial targets for year-end in line with the plan that we announced in line with the guidance. Obviously, we stand towards the high end of our guidance. So the closed around EUR 280 million. And most importantly, EBITDA breakeven at group level, which was the very ambitious target that we set that we cash increment during the Capital Markets Day, and that represents the ability of the NHOA group to grow fast to do it in a very EBITDA positive and profitable way. And once again, to beat all targets and all guidances that we announced to the market. And this is what we can say from the financial perspective and at the group level, let me leave the floor now to Giuseppe to deep dive on NHOA Energy and its amazing results for the first 9 months of this year. [indiscernible], floor is yours Giuseppe.

Thank you, Carlalberto. Good morning, everybody. As you saw in our press release, revenues went up by 70% compared to last year. And in terms of backlog, which currently stands at EUR 160 million versus EUR 152 million on the 30th of September of last year. A bit of color on this, the number we had, I mean, the end of the third quarter is always a low point in terms of backlog because during the summer, it's difficult to close contracts while contracts are normally closed in the fourth quarter. One important element is considered that last year out of those EUR 152 million, 2/3 were from our shareholders. This year, out of the EUR 160 million, around 1% comes from our shareholders. So it means that while we are grateful for what our shareholder has done during the first couple of years widen the group in helping us supporting our flow projects. We have shown that we not only have fully replaced the backlog in terms of new contracts, but actually, we tripled practically the contract portfolio from third parties. And we are looking -- we are extremely optimistic about the new contract flow over the next 6 months, which is what we need in order to keep on the trajectory that we set for ourselves towards 2025. From an order intake perspective, it's EUR 243 million over the last 12 months against 10% more compared to the trailing 12 months ended in September 2022, and also on the same remark that I've just made applies. Online Capacity, we have 535 MWh online as of the 30th of September, and we expect to have around 1 GWh online around year-end. This is really -- we passed in the test of fire. So we had a step change in terms of commissioning. We've proven that we can commission in parallel large projects across 4 continents. So we have proven that it is for what you see in the background is the kind of project that we are putting on the ground. Under construction, we have over 1 GWh, as I said, around 0.5 GWh will be commissioned around year-end, a bit before a bit later than year-end, while the rest is split 2024. Activities, we continue to have a pipeline just above EUR 1 billion. As you know, by now, we are more and more selective in the definition of pipeline and the projects we take on important number is the one that you see at the bottom, we are 6 or 7, depending on how we define it proven which we are shortly stain reality is significantly better than this. A number of these projects we are preferred be there, and we are -- we expect to be able to close contracts by year-end and by the 31st of March. So looking good, and we hope that we would be able to provide guidance on 2024 early next year. So, so far so good. Back to you, Carlalberto.

Thank you, Giuseppe, congratulations to you and to all NHOA Energy people because I mean all of you from the guys watching us from Australia and Taipei, the ones that probably will watch the recording because they are living in Houston, the one in the U.K. and the one the [indiscernible] with us today. Really, thank you for your very impressive job. Moving now on Free2move eSolutions. Very good news from Free2move eSolutions as well. It's 1 year now that we changed the management that Mathilde Lheureux took the leadership of the company and as planned, the results are there. EUR 40 million revenues represent 5x the revenues we adjusted last year. Even if the manufacturing capacity is in line with the one we had last year, reality is that we have proven also with Free2move eSolutions, the ability to grow and to grow in a profitable way. So let's see, for the year-end, the clear path is set towards the breakeven also this year. And the growth we recorded is clearly saying and testifying the ability of Free2move eSolutions to address the market. Obviously, growth was mainly in the U.S., even if the European market is moving maybe slowly than expected, but certainly is moving in the right direction, setting the path for further growth in 2024. So congratulations as well to our teams in Free2move eSolutions, -- figures are good. I saw a few comments of some broker this morning saying that we have not given enough details and color on Free2move eSolutions in reality, the business model, the business volume is the same. The markets are the same, so Europe and U.S. and before. There is no need to give more details. I think the best representation of the figures is revenues, obviously. And then let's see what -- how the EBITDA will look like at year-end, but we are absolutely confident in the ability of the management team to continue that asset. We can now move to Atlante. So even if Stefano Terranova should have been on a plane, he has been able to free up the agenda. So Stefano if you can comment. The floor is yours.

Yes. Thank you, Carlalberto, and good morning, everyone. The headline number here is the one in the middle 2,000 -- more than 2,500 PoC, points of connection, online and under construction. PoC is a super important KPI. As you know, it's a unit by which we can serve customers, so every PoC is a charger available for customers to connect and recharge the vehicles. So we have -- we have registered more than 2,500 by the end of September, and that means that we have already beaten the guidance we were giving what as for 2023 with 3 more months to go. So that's -- I think it's a great number to show. The other key elements I would like to stress from this slide here is the fact that the pipeline continues to grow. We have -- obviously, as we have -- we're closing in on our 2025 target, we can become more selective. Same thing as Giuseppe saying for his business line. And in Atlante, we can be more selective, and we don't need as many sites to replenish the pipeline as before. So the pace of growth slows, we're still growing the pipeline, but at a slower pace because that's a reflection of the fact that we have -- we can be more choosy on the locations. In terms of utilization rates, as we onboard charges, especially in Spain and in France and more new sites in Italy. Obviously, there's always a ramp-up period. So we have seen a downward [ inflection ]. But as you can see, we're still above -- just above the 2% threshold, which is -- it's a very good result, including the fact that in places like Italy and Spain, the EV sales have been, let's say, disappointing vis-a-vis our original projection. But nonetheless, you can see that we have good utilization rates across the board. For Portugal, we publish occupancy rates, as you might remember from the previous call, because in Portugal, we are paid by the minute. There is the regulator has settled for a different business model, whereby the CPOs are paid for the utilization of the infrastructure. So on a per minute basis for the time being. As you can see, the occupancy rates have been growing steadily in Portugal, which is great, including the fact that we have been opening more and more fast chargers. We had inherited a portfolio of slow or quick fast charges and now we are moving into fast and ultra-fast and -- but still, we see a very good response from the customers. They seem to like very much as we expected, the experience of faster, ultrafast-charging. The rest of the figures are pretty much top for themselves. I would just like to point out that in terms of PoC actually opened to public. Back in September, we had almost achieved 1.5000 -- so again, a great result, and we keep pushing forward and opening up very nice sites all across the geographies.

Thank you, Stefano, and I think we can now move to our Q&A session together with Giuseppe, CEO of NHOA Energy; Alessio, Group CFO; and Stefano CEO of Atlante ready as usual to take any questions you may have. Chiara, floor is yours to open the Q&A session.

[Operator Instructions] We already have some questions coming. The first one will be from Mr. [indiscernible] from Mediobanca. I think we are not hearing you properly. You probably have a little problem with your audio system. We have other questions coming from Mr. Daniel Pires, which is actually asking the first ones about our recent capital increase. Following the capital raise and TCC's share in NOHA now close to 90%, does a commitment remain to keep NOHA listed as flagged in prior calls?

Thank you for the question. I mean we outlined in the previous call, but then in the context of our capital raise, we have been very vocal clear in saying that we don't have further indications from our majority shareholders. So frankly speaking, we stick to that message. Certainly, the trend of our stock price is not -- at least is -- I see that as totally decorrelated from our fundamentals from our results, if I may. But nothing to comment on that. This is what we said in the context of our capital raise. And at that time and also today, we have no further indications. Certainly, this is not ideal from the liquidity perspective, but this is what it is.

I think we have other questions coming from Mr. Auguste Deryckx from Kepler. We are probably experiencing some kind of troubles. Okay. I think that with that, I will just go on with the following questions coming from Mr. Daniel Pires from Dalmore Capital. As already -- well, as already addressed before, there were other questions concerning the recent capital raise, which are about if any members of the management team have participated in the capital raise? And what is being thought of to address the depressed share price and reward the minority investors that have supported the our journey for many years? And is for example, does it make sense to start providing benchmarking on peer valuations, public and private of EV charging networks?

Okay. I mean on the management team participating to the capital raise, I mean, the management team was even involved in the context of an LTI voted by the Annual General Meeting. So this is to say, our interest with majority holders are absolutely in line then for our management team, given the particularly complex environment in which we are living and the careful management of potential pre-digi-information does not suggest the possibility to participate directly. However, thanks to the LTI schemes, our interests are totally aligned. So back to your second question, addressing the depressed share price, you can trust me that the agent team has the same feeling you have. When you mentioned rewarding minority investors that supported the -- no journey for many years -- sorry for that. But the best way to address the interest of minority masters was to avoid the rights issue and the capital decrease. And this is the reason why the management team worked heavily in March, April, May and June to structure with the support of the majority shareholder EUR 250 million green convertible bond that was totally nondilutive. And however, as we all know, minority investors bought it down that during the Annual General Meeting this instruments voting positively for the capital raise. So I think the depressed share price is simply the results of a trend of our stock that certainly was not driven by the results of -- and the fundamentals of this company. Then minority investors have decided to vote for this capital increase that even if the conditions and the discount on [indiscernible] was absolutely in line with market standards because of the starting point of the share price when the transaction was launched caused a significant dilution of shareholders that not participated to the capital increase and a consequent further decrease of the liquidity. So from my perspective, that the current depressed share price that is just a result of that. That's a result of a very thin liquidity. And frankly speaking, no idea on how to, let me say, provide benchmarking. I think the best way to communicate to the market is to continue a very professional serious, transparent and intense financial communication. I think the best way is to meet the guidance, deliver expectations and continue, as we have done in the last years to deliver our promises to the market and the financial targets. Frankly speaking, doubling our revenues, setting the path towards profitability, meeting the EBITDA -- the EBITDA breakeven target at the end of the year is the best way. I don't think, frankly speaking, benchmarking on peers evaluation. I mean this is something that an investor can do. I usually do not comment on the multiples of the market. I mean 2 years ago, anything that was called with a sort of e-mobility related wording was multiplying without any limits beyond the sky. Now it's totally contrary. Why? I mean, this market sentiment, maybe the inflation, the current geopolitical context, the war tensions, the geopolitical tensions between U.S. and China, the war in Israel now, the war in Ukraine last year. Frankly speaking, I prefer to not comment on market valuations and multiples to be frank, I prefer to comment the very good. And if I may impressive results of our companies, the presence result, the impressive results of NOHA Energy, the very good results of Free2move eSolutions, the outstanding rollout of Atlante. This is absolutely in line with our strategic plan that is in line with the -- this is even better than the plan that we announced during the first rights issue back in 2021. This is in line with the plan that we announced in the context of the green convertible bond that then turned into a capital increase because of the decision of our minority shareholders. I mean we're doing our job, I think, very well. We continue to do it and they live to our investors, benchmarking peer valuations, public and private or EV charging network.

Thank you very much. We are experiencing actually trouble with opening the microphones of our callers. So they kindly send their questions in the Q&A chat. And actually, the question from Auguste Deryckx from Kepler and from [indiscernible] from Mediobanca are very similar, so I will just sum them up. The main questions are related to the pipeline for both NOHA Energy and Atlante. What can we see? What we can expect for the next month? And second for Atlante, if we can have an indication about the investments plan needed in 2024 and how many of the 1,814 charging points secured and under construction, how many are for 2024 and how many for afterwards?

Okay. Let me -- Joe can take the one NOHA Energy for the pipeline for 2024, and then I take the one for Atlante potentially even the floor to discuss. Giuseppe?

Thank you, Carlalberto. As you -- as I said several times, our conversion rate on the pipeline is normally around 25%, 30%. And even though the quality of the pipeline is improving for the time being, we're kind of sticking with this benchmark. And once we have that conversion on the pipe at any point in time, that becomes revenue more or less the following 18 months -- so if you want to do a bit of mathematics. So you may want to top up the existing -- the existing backlog over the next 6 months by around 1/3, 1/3 of the pipeline and then spread the revenue sort of the following 18 months. This is the way we think. I'm not giving guidance. So this is just intellectual scheme that I would use if I was you in making a stochastic assessment of our prospects. This the bottom line of that is that we like what we see. And we think it is definitely consistent with the long-term objectives that we have set for ourselves for 2025 and beyond. But we are on the right path to continue the rapid growth path that we have undertaken over the last couple of years, delivering on what we promised both on a revenue and profitability perspective.