Q1 2023 Advent Technologies Holdings Inc Earnings Call
Okay.
Good morning, everyone I will be your conference operator today at this time I would like to welcome everyone to advent technologies first quarter earnings conference call. All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session for advent analysts.
On the call today, we are joined by Dr. Michelle, It's Greg Oreo advent, chairman and CEO and Kevin Brackman advent CFO .
Before we begin the prepared remarks, you would like to remind you that avnet and issued a press release announcing its first quarter 2023 financial results shortly before market open today.
You may access the materials on the Investor Relations section of the company's website Www Dot advent dot energy.
I would also like to remind everyone that during the course of this conference call Advanced management will discuss forecasts targets and other forward looking statements regarding the company's future customer orders and the company's business outlook that are intended to be covered by the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 or forward looking statements.
<unk>.
While these statements represent management's current expectations and projections about future results and performance as of today advent actual results are subject to many risks and uncertainties that could cause actual results to differ materially from those expectations. In addition to any risks highlighted during this call important factors that may affect <unk>.
Future results are described in its most recent SEC reports filed with the Securities and Exchange Commission, including todays earnings press release.
Except as required by applicable law. The company undertakes no obligation to update any of these forward looking statements for any reason after the date of this call.
Lastly, information discussed on this call concerning the company's industry competitive position in the market and what's your op rates is based on information from independent industry and research organizations. Other third party sources and management estimates.
Management estimates are derived from publicly available information released by independent industry analysis, and other third party resources as well as data from the company's internal research and are based on assumptions made upon reviewing such data and with knowledge of such industry end markets, which it believes to be reasonable.
These assumptions are subject to uncertainties and risks, which could cause results to differ materially from those expressed in the estimates.
Please note this call is being recorded kicking.
Kicking off the call will be doctor with Philips, Greg or you Dr. Gary I'll turn it over to you.
Thank you operator good morning.
Everyone listening and thank you for joining Mastercard first quarter.
Erik it's Paul.
On today's call I will provide an update on the business I will then turn it over to Kevin who will get better.
Actual performance and outlook.
Right.
During my last update on March 5th third I highlighted that that bank has further consolidated its business operations.
It was focusing on the core sectors.
Stationary power.
This has continued into the first quarter.
We remain focused on expanding and executing our commercial pipeline with a view to embed our technology and product portfolio in these key power sector.
The opening of our new facility back in Boston Ah represents a significant milestone that timna horizon because.
This will provide fairmont birthright basis as growth in North America.
With park encapsulates R&D and production facilities as well as our headquarters. It's commission has expanded our global footprint for manufacturing.
We also continue with our capital investment program.
The other equipment.
Why is the complete our skin or production.
We therefore this progress to continue forward landscape.
Our Greek <unk> project.
The broad support for the energy transition.
<unk> and economic incentives.
Volume.
We believe the future demand for <unk> with better technology and related products, which creates a significant opportunity.
Relief Ogden would be ideally positioned to capitalize on it.
In the first quarter, we continued to execute on our strategy.
But maybe some focus and market share.
We look forward to growing our commercial activities and achieving long term profitable growth.
Our business for of course is on the production of advanced materials, leading to a direct sale.
The development of advanced fuel cell systems, and joint development agreements in collaboration with <unk>.
Hey, Bose glad Theyre long term licensing agreements.
The latter is expected to deliver revenue consistent of milestone payments and royalties, which would provide the upsides of our business.
I will now give you an overview chip business.
In March I've been trumped die announced the conclusion of a successful technology assessment.
Yes.
Evaluate advanced proprietary technology for supply.
High temperature needs and following its success the two companies entered into a joint development agreement.
These aren't good evening solidifies then there is the one of the world's leader in fuel cell technology to further develop the high temperature technology in collaboration with us.
The first step of a J.
<unk> focuses on the MTA.
<unk> goal is to provide in San Diego and Denver to advance fuel cell development expertise.
Look one of the most important factor is the next generation of fuel cell systems for heavy duty market.
Adam would pursue strategic John Dibella agreements to achieve its goal of supplying key MBA components and technologies with the mobility market.
In the maritime sector in February .
Announced a new collaboration with Siemens energy offering sustainable solution across the entire metrics about the same.
I've been in <unk> will work together with them.
I don't think 50 kilowatts, a 500 kilowatt Martin time pure sensor fusion.
Range of Super Yacht.
This will provide a sustainable and reliable source of auxiliary power and offer improved power density.
This maritime fuel cell solution is initially expected to be used as a hybrid power source, enabling.
Activation of generation instead of using conventional diesel engine to generate those court procedures, such as Onboarding and my Bloomberg as part of the agreement.
<unk> Z displacing Lisa Lord <unk> Mehta with box shield.
Fuel cell systems.
Following the completion of the project.
<unk> partners will explore the potential development similar solutions for a wide range of advanced applications, such as industrial power solutions.
Mark.
I've been announced that they opened up. They are then you are in their manufacturing facilities back in Boston, Massachusetts.
It is at the heart of one of <unk> newest innovation, they're not at the communities. The football facility will enable IBM to scale up and delivered on the increasing global demand for.
For chemical components in the clean energy sector by including state of the art potent machines to support a seamless transition from Brooklyn types to put a box around for advanced memory and electrodes.
Complete analytical facilities dedicated to the quality control.
Performance analysis.
Improving product lifestyle.
Pure shallow water electrolysis destination for statistical process control and development of our next generation materials and.
And mechanical engineering lab for development automated assembly processes forever.
One of the products will be manufactured part is the iron fed up an NDA, which is currently being development within the framework of a billion.
The company's joint development program with the U S Department of energy.
I've been intense the bids proprietary fuel cell products side, the CRE and <unk> 50 will incorporate the iron bare NDA beginning in 2024.
We expect that the reduction of the iron curtain NBA will significantly reduce the cost.
<unk> flagship product <unk>.
<unk> expense they have millions of addressable market.
They're more they expected system increase borrowed debt and lifestyle with highly differentiated admins June sales in the heavy duty mobility.
In may oven, and BSF environmental Capex in light of solutions and global.
A leader in precious metals and catalyst jointly announced an agreement to join efforts in building a closed loop component supply chain.
Fuel cells and then they're discusses the extensive partnerships into the field of what are the growth.
For 20 years, BHF, environmental catalysts and metal solutions has been a leader in membrane and NBA technology for high temperature.
With a strong foundation and precious metal servicing customers.
Temperature fuel cells operated 100 drive it to 180 degree <unk>.
Offered a broad operating window tolerate impurities in the hydrogen and fuel cells.
<unk> sales also enabled simplifying pooling and need not submit the application.
<unk> offers competitive fuel cell systems for stationary and portable applications based on my problem and on slide 34.
And in the future <unk> sales will also be available for heavy duty mobility maritime power.
The scope of the agreement includes <unk> and scaling up MBA for Baxter in the darkness.
State of the manufacturing facility in Western Mastodon inquiries lots of it and I think.
Its full portfolio of products and services to enable Cisco.
Let's see.
Both companies will cooperate on being a separate latest member development.
Z and then Barry.
Uh huh.
Women from the broker four months lifetime and cost competitive.
Finally, turning to bring people are was elected chair.
Of the EU important project from Goldman Europe , Yes, hi.
Hi, good thick facilitation group.
Lecture took place at the first general Assembly for price effects.
And heightened views towards the European Union's ip's yards.
General Assembly was shut in March in Berlin, and was attended by executives from companies were broadly classified by the European Union under the <unk> framework as well as government and media operations.
I think getting the Kimbo project, we received a notification in June 2022 for up to $782 1 million euros in fiber from the Greek state the highest amount of funding received for a project on the IP side.
It's a test.
The Europeans officially ratified the project in July 2022.
Good example would be based on the western Mastodon are reasonable risk for the state of their facility will be established for the island and protective of the Newark.
Fuel cells and liquor license systems for the production of power and green hydrogen and respect.
We have already progressed identify a suitable site and have now purchased the site and commenced bluntly.
<unk> is actively working with the Greek state for the Diamond design of the car.
We look forward to reporting our future growth.
<unk> is well positioned to take advantage of the growing focus on clean energy, we're continuously developing our technologies and consolidated our operations to address new and key opportunities.
We'll have a product portfolio that is focused on enabling greener economy Wanda.
Based in alliance from producers on fossil fuels.
And will the.
<unk> supply market, therefore, providing extra security to communities and economies.
With that I would like to go over to our CFO Kevin Brackman.
Thank you Joey and good morning, everyone.
Turning to our financials, we delivered revenue of $1 million in the first quarter and income from grants of 0.5 million for a total of $1 $5 million RN.
R&D expenses were $3 1 million in the first quarter, primarily related to internal R&D costs incurred in each of our businesses as well as our cooperative research and development agreement with the department of energy.
Administrative and selling expenses were $8 5 million in the first quarter combined with R&D expenses total operating expenses were $11 6 million a year over year decrease of $1 million, primarily due to administrative cost reductions implemented throughout 2022, which were partially.
It really offset by an increase in research and development expenses.
Net loss in Q1 was $12 million or <unk> 23 per share.
Unrestricted cash reserves were $19 5 million as of March 31, 2023.
Decrease of $13 4 million from December 31 of 2022, driven by R&D and administrative and selling expenses as well as annual insurance renewals, a $2 $2 million increase in inventory and one 9 million of Capex spending in the first quarter.
Sure.
Our existing cash balances and projected operating cash flows are not expected to be sufficient to support planned operations for the next 12 months.
However, as vis OE discussed earlier, we have been working actively with the green great state for a timely implementation of the funding mechanism for the Green Hill project.
Additionally, we have been evaluating various opportunities to raise additional capital and in April . This year, we finalized an agreement for an equity line of credit with Lincoln Park capital, which gives us the option to access up to $50 million of capital.
Over the three year term.
The use of this equity line of credit is entirely at advanced discretion and provides us with an effective buffer if required that can be used alongside other sources of capital.
In the meantime, we will manage our cost structure closely and capitalize on opportunities to reduce costs where possible.
I will now turn to our outlook.
Advent and our 2023 with a strong pipeline of opportunities as we all know however, not every opportunity in the pipeline will transpire due to factors that are beyond <unk> control.
Opportunities may not materialize or could be delayed.
It is a long term contract nature of our business model the timing of our revenue can also be difficult to predict.
Due to the level of uncertainty caused by these factors we are not providing a revenue outlook for 2023 on this call.
However, we expect to provide an outlook for revenue and income from brands on the next earnings call.
With that I will hand back to facility for closing remarks.
Thank you Kevin.
I'm going to be a significant opportunities for its technology advancement, there and fuel cell system program.
Along with good product.
Sheba project will cement, our global rights and focus in the mobile and stationary power markets.
Our brand is a clear energy technology company, developing innovation and products for key sectors that require clean energy, we look forward to growing the business and to give you a breath of development.
I'd like to thank you all for joining us today, and we are ready to answer questions from the comments. Thank you very much.
Thank you at this time I would like to remind everyone in order to ask a question press Star and then over one on your telephone keypad will pause just a moment.
And we will take our first question from Sanjay Shah at Panmure Gordon.
Yes, good afternoon from London, I, just wanted to check how important is this b S agreement in winning business for.
Fuel cell systems.
Can you give us some examples of those whether this has opened doors for you.
Yes, Thank you Sanjay.
The agreement is very significant because first of all endorses the technology, our technology and also.
Securities. If you will the supply chain is very central for these long there.
The scale of the business.
As you know <unk> is a global leader.
And for a long time on the high numbers of them.
Collaborate with them for a long time as well as their byproducts route license from them and now we have this tremendous opportunity with a greenfield project and the new facility when a bill to comment on Fox a load. These things work together also on the scale up of Ireland Baird.
So that's very important the second very big benefit for US is the management of the precious metals as you know.
We stopped selling all of these things become very very important.
Closed loop process of these materials.
Keith you need a giant like these.
Our long.
With us.
In our opinion to go to the next level and not get the prices down and makes the customer very happy about what they get because now and I'll take the opportunity.
With me he said we have big companies.
Okay.
Its energy and also big organizations.
Cylinders that are very excited to work with us they have their own announcements.
We talk a lot with them and these are the long term relations, we always wanted to share and we're very excited to have.
Hi.
These people with us and BSF in particular process.
Thank you.
We will go next to Jeff Graham at Alliance Global Partners.
Hello, Thanks for the time.
I was.
Quick question on the ion pair can you guys quantify at all to the extent you're comfortable kind of the cost reduction expectations. You may have for this.
And then regarding the rollout in 2024 I'm curious obviously were only in May here of 23, but is there any kind of pipeline building yet at this early stage that you guys can comment on.
Yes.
Thank you for the question now regarding the iron ore as you know this is a very revolutionary is the next level.
Get them back.
You remember the load numbers who've been requires pure hydrogen it shows.
This shows you have to take their members care of the humidity and Thats when it comes to <unk>.
Tracks and things like that it's very difficult to have a final product as we've seen so for that matter all of us be commenting.
Andi.
The other named Don which is another Dai.
But also Alfa Laval, Siemens energy Golar variances in a higher number serve them now with with the existing BEC will go that far.
Ireland Baird promises to be two times at least power density two times the lifetime Woods as you know.
Immediately becomes three to four times better product.
And it is our belief that were going on.
These are very exciting.
New MBA in our products in 2024, which as you say this is not.
Fire away.
So for US this is a big step and we put a lot of effort there, but so far it looks actually very very good.
Now regarding the pipeline, let's take a look about.
What we're talking about you remember before we have built.
The sales pipeline on the telecom.
And we said that the unfortunate things that happened last year, we actually ship.
Certain telecom operators.
Divesting their telecom towers without common so what do we do now we work with our farmers themselves in order to have these.
Sales as you know this is a long sales cycle, but we'll have successful proof of concepts. One of these things with the desktop. So one part of our pipeline will be built on that.
The other is from the Marlin in automotive you have seen the.
Brokers that we make there.
The San Lorenzo Centre in the shoe dies and the third thing next year, a lot of things will depend on the defense products, the honey Badger, which right now we are in the pre production states. If you will and Gordon our goal will be for production.
A lot of the systems.
2024 pending the approval from the Doj as Kevin said, because the IPC I E.
More than men.
Change for the company.
It really has a lot of.
Okay, MSA minus associated with it we will provide.
In my opinion, a very detail.
Our expectation for next year in our next call after the end of Q2.
Great Thanks for that detail.
If I can sneak one more in on the Green Hippo project. Thank you guys said in your prepared remarks that you.
You have a site purchase which is great to see that project moving forward can you talk to the extent.
Given that there's there's some funding.
Or should I say a lot of funding obviously, but.
Out of your control given the timeline there can you still kind of a dual track.
Some of the pre planning or pre feed kind of.
Items to the extent you can accelerate the project given that some of the funding is obviously out of your control from a timing standpoint.
No very good question. Thank you, yes, we ran this project as it were to go in there.
Yeah.
<unk>.
Sure.
Enthusiasm, if you will and commitment and belief comes from the fact that the chairman of the IPC I know.
A lot of things are there had been in the European level, you were talking about $5 4 billion.
That they would go there.
A lot of contracts already signed we're not that behind to be honest is just not Europe does not do things. Unfortunately at the MSA at the same day or something like that.
We expect that things will happen for us relatively soon but again, we cannot say today for obvious reasons, but we think it's going to be soon and also in the meantime, we'll schedule. Our R&D development work, we would have identified the site with board decides a beautiful site in Cassandra and we're ready to announce it when we have the signature.
Also we have entered into these agreements, which for me a very important strategic partners like <unk> that we announced and some others. We cannot announce right now, but we will announce at the appropriate site that.
We will show to the world.
This thing is going to be true.
Giga factory, if you will that we will sell.
Actually doing where we all want to reduce the price because our products are very good but as you know the expenses. So in order for us to go to the next level, we shipped to actually scale up and manufacture as the only way to do it with.
Established manufacturers because keep in mind, we come from the R&D side.
Thank the people in our mind parks are doing a magnificent job.
Denmark, and Germany, primarily.
And at the end of the day when do you Kevin Zions for manufacturing like BSF and other people were talking about.
I think things will become 10 times more smooth.
Okay, Great I appreciate all the details thank you.
And as a reminder, if you would like to ask a question. Please press star one we'll pause just a moment.
And we will go back to Sanjay Shah at Panmure Gordon.
Yes.
Nope.
The the contract with trucks in Asia.
Okay.
Are you the sole supplier.
It gives the more details about how the how.
The whole project.
It's going to work out for you.
Yes, we're very happy about it because first of all we came after a rigorous testing by their customers. So were selected and the significant note that if you think about because then the AP.
Also to the initial Lord bird, so future orders will come and we expect to be the sole supplier because.
In this election.
There is also the opportunity to say that China and India.
There will be seen methanol and biofuels.
As a very.
Partners because keep in mind in this part of the world and others <unk> well a liquid fuels are a key you know we don't expect that.
Youll build gas.
Pipelines in our hydrogen pipeline anytime soon however.
Much much easier to.
To carry around liquid fuel and the availability of this particular influence out there. So we feel that there is a great future.
Thank you.
Yes, thanks for that.
And at this time, we have no further questions that does conclude the question and answer that.
If you don't want to conclude I want to take the opportunity to answer some of the questions from retail if you don't mind, So give me a little bit of time.
There are some questions I love them will give already answered I think Kevin if you want to say something about Lincoln embargo things.
Options that we have as a NASDAQ listed company to get capital.
Capital as needed. So maybe you want to say a couple of things about other than I'll go to the next.
Yes sure. Thank you Sally.
As I mentioned in my comments today.
The Lincoln Park facility the equity line of credit.
It gives us the option to access up to.
$50 million of capital over the three year term of the agreement.
But we're not required to use that facility. So it's entirely advanced discretion on whether or not we.
We utilize the equity line of credit with Lincoln Park.
And so the way I view it as we it buys us time and flexibility as we continue to evaluate.
And pursue other sources of capital.
And so that's why we thought it was prudent.
To have a facility like that in place.
Okay. Thank you and now together Honda I think we answered when it comes to some market indicators. There are questions about it I think we have very nice.
Video that I came out the last few days I think it shows to everybody that we have facilities that are state of the art.
And keep in mind that we there was always this.
Discussion internally you know how much we're going to show you know people are going to comment.
And I say copier.
Gas lines or whatever.
That.
Of the.
Position that we have to show thinks as much as we can to convince people and excite people also.
So we will have more marketed.
Vegas, if you will first of all of our facilities and second about the new things that we do also have electrodes and everything.
Regardless how.
Much we believe in the company.
As.
Our largest.
Private shareholder and also my team here, we have not sold one share one set we were also once they are in.
All of these years almost 20 years for me so that shows the great confidence I will share in.
Compounding and our ability to have a better future.
We basically kept now because a lot of the things that happened is now that has to do with market conditions would be labor not necessarily.
How we grow I think we grow.
<unk> space.
Every.
And the sale that you might see over there just as dilutive stock options taxation fees in the U S and sell some.
You get some stock options or some others use you got to pay the tax but none of it.
Is there a real sales so in that respect we are fully aligned on a 100% behind it and we believe.
Very much in the future of this company.
Now regarding the U S. We do get.
Our senior people, who got some senior people now.
And lever more and we're going to get some more senior people keep in mind, we have to have realistic expectations I think will grow in a tremendous arrayed in very unfavorable market conditions.
So we need to make sure that we're.
We're going to be Victoria, So we have to run it at.
At the pace that we.
We think it's how can I say realistic again.
Now when it comes to.
I don't know my rough and polished and all that stuff as you know.
We will not get any bonus totaled 2022.
Our own decision in a way because.
We feel that that.
It was the right decision to take.
Now about <unk>.
I think.
Scott a lot of our crude park, it's both R&D and manufacturing. So it is going to be manufactured in place in the U S. Eventually and we have great expectations from that.
Now regarding the <unk>.
Okay Michelle.
Seo optimization of the workforce absolute.
We look at these things.
Very close and we believe that.
When we actually grew from a couple of acquisitions as you know.
There are always things that they can be a little bit better I think Kevin talked about this in the last couple of calls and with continuous monitoring.
The situation you know how much we spend versus what we actually get out of it.
So with the additional many wonderful products why we don't have <unk>, that's not true we have sales and we did.
Talk about the question is why we don't have more sense.
Part of the matter is that we have.
Relatively expensive products a product of the goal as we said before to people that the new one.
The environmental.
Advancement that we get from them.
Yes, we have.
We're selling to places that.
In addition to environmental.
On vantage.
The disease.
The total cost of ownership. If you will is favorable and these are not the most advanced place exited their development work.
Places so what we need to do as I said before we need to keep on dropping the prices keep on making.
More of these things and we think in due course.
Sales will come up.
Now regarding the Cassandra location I think I did talk about it we bought the site we're ready to go.
Second car manufacturer.
Cannot talk about it because it doesn't allow us but do your own due diligence you will see with this.
Have much update on the hydrogen to hub in the U S.
No update there so far but.
In our opinion overall, that's why I was talking a little bit more about the long term.
This is happening hydrogen this company is going to happen in Europe , mostly in the U S is going to fall because of geopolitical reasons as well. So that's why we're excited to be in electrolysis. That's we're excited to actually finally shipped these kind of.
<unk> working with us have been excited to work with us. So I think this is a matter of time.
I did answer the question about the 100 Badger.
<unk> gas, we do have a lot of discussions we were not again announce.
Some good things when we can announce them.
And.
For the.
The electrolysis, yes, we believe their remarks.
Alkaline.
Alkaline membrane electrode as it would begin at the close of the future. We combined the two combined spend in alkaline.
We have.
Very very good tax that I don't want to.
But we have very very good there.
Thanks to the efforts that they've been happened in the last few years. When we saw that green hydrogen is going to grow at that rate we're talking.
It's an amazing right.
My opinion is it reminds us a little bit worse.
The Internet was in the late nineties people say its going to grow it.
Presenting some people believe it is helping with that noise Mega happen. So that's why we believe now with green hydrogen and also other people said no no it's not going to happen and we say, yes, it's going to happen is going to be massive okay. So we have very very good technologies, there as well and we're ready.
To actually make commercial products.
From that in the meantime, as well we are of course looking at the existing technologies because.
Those are these demand Florida.
Capacity, if you will and Theres a lot of demand for these products would do chip.
Strategic discussions in place and we will announce them.
Yes.
At the appropriate time, so with that I think.
To conclude I'm not Kevin if you want to say something mark.
No I think that wraps up the call today and we appreciate everybody joining us.
Yes, thank you very much.
Bye bye.
And again that does conclude today's conference. Thank you for your participation you may now disconnect.
Okay.
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