Q2 2023 Advent Technologies Holdings Inc Earnings Call
Okay.
Good morning, everyone I will be your conference operator today at this.
This time I would like to welcome everyone to the I've been technologies second 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 answer session opened to add bench I analyst on the call. Today, we are joined by Doctor facility Gregorio I've been chairman.
CEO and Kevin Brackman, I've been CFO before we begin the prepared remarks, and we'd like to remind you that I've been issued a press release announcing <unk> second quarter 2023 financial results shortly before market opened today.
You may access the materials on the Investor Relations section of the company's website www dot ive been dot energy.
I would also like to remind everyone that during the course of this conference call I'd, Vince management will discuss forecasts targets and other forward looking statements regarding the company's future.
Customer orders in 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.
While these statements represent management's current expectations and projections about future results and performance as of today I've been actual results are subject to many risks in on certainties that could cause actual results to differ materially from those expectations. In addition to any bread.
It's highlighted during this call important factors that may affect <unk> future results are described in its most recent SEC reports filed with 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, the information discussed on this call concerning the company's industry competitive position in the market in which it operates is based on information from independent industry and research organizations. Other third party sources in management estimates management estimate.
So our derived from publicly available information released by independent industry analysts.
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 the knowledge of such industry end markets.
It believes to be reasonable these assumptions are subject to uncertainty and risks, which could cause results to differ materially from those expressed in the estimates.
Please note that this call's being recorded kicking off the call will be Doctor Vasili Gregorio Doctor Gregorio I'd now turn it over to you.
Thank you operator, good morning to everyone listening in and thank you for joining us on Heartlands second quarter 2023 earnings call.
Today's call I will provide an update on the business I will then hand over to Kevin.
We'll give a review of our financial performance and outlook in more detail.
During my last update on May 15, I highlighted that doesn't has further consolidated its business operations and was focusing on the core sectors of mobile and stationary power. This has continued in the second quarter with a gradual improvement in our cost spread as various non cores.
Are eliminated.
We remain focused on expanding and executing on commercial pipeline with a view to embedding our technology and product portfolio.
Our sector.
We also maintained our capital investment program in the state of the equipment that's required to complete the skin or production capacity. We intend for this progress to continue towards large scale manufacturer as soon as our green people project commences.
We believe that the future demand for <unk> High Tech high temperature band technology and related products will create a significant opportunity and we believe I've met would be ideally positioned to capitalize on this through a suitable partners.
We look forward to growing our commercial activities and achieving long term profitable growth.
Our business focus is on the production of advanced fuel cell by theater and the development of advanced fuel cell systems, leading to direct sales.
Addition, joint development agreement.
With Oems will enable us to enter into longer term license and supply agreements.
I will now give an overview of our recent business updates.
VHF environmental catalysts embattled solutions, a global leader in precious metals and gasoline and not been concluded the terms of a new agreement with <unk>.
Joining their efforts in building a full new components supply chain procurement.
For the past 20 years, meaning 70 by remember cabins and metal solutions has been the leader in <unk> technology for high temperature fuel cells with a strong foundation and precious metal Tegucigalpa.
Ben This is like maybe forgot manufacturer price number two fuel cell systems targeted medicine market and the symptoms of sustainable and decentralize their data sets, especially related borrower they can't replace diesel generators.
Power reported backlog of fuel cells and heavy duty market.
Hi, temp to Perm pure self operated 120 to 100 degree Celsius offered a broad operating window and can't tolerate impurities in the hydrogen fuel.
With fuel cells also enable simplified poorly at danone required for modification.
Our first competitive fuel cell systems for stationary and portable applications based on <unk> and onsite the department.
Looking ahead, hi, Denver's redemption says were long term.
For example for heavy duty mobility maritime empower.
The scope of the agreement includes <unk> and scaling up EMEA production at documents planned date of the hybrids and friction facility in Western Macedonia agrees, while long term advantaged full portfolio of products and services.
Enabling silicon labs.
Larry King material book.
Both governments will cooperate on being accept latest development.
Z and the new I am parent members by asking.
Aiming for a group of four months lifetime cost competitive.
Yeah, the aerospace sector oven signed a memorandum of understanding with a firm power systems, a leader in clean Dirty power systems and Turbo jet engine <unk>.
Leveraging our proprietary technology and soft brands aerospace notice and capacity capabilities with new collaboration will seek to advance the development of next generation high temperature.
Fuel cell technology, specifically for the aerospace sector.
High temperature band enables more efficient heat management versus low temperatures that.
<unk> is more adapted for applications requiring high amounts of fire combined with strong and aggressive growth trends as an M D.
The Asia <unk> bank is more robust and can withstand tougher prevailing conditions, such as extreme temperatures and pollution versus low temperature.
The collaboration further supported by a strong research consortium, including the research and Technology Center of Softbank Group.
Friends alternative advantages and anthem in the Commission Franco for instance, the French National Center for scientific research at the University of South Strasberg, and the I M D H energy.
Led by some prime power units and with the support required when the consortium safe secure the graph with a clean hydrogen partnership Fab project Atlantic from 'twenty to 'twenty three to <unk> 26. The project is funded by hundreds of horizon in Europe and the project's main objective is to develop America compatible.
<unk> generates from high temperature EMEA recent bulk optimizing and enhancing various components such as the catalyst layer membrane and gas diffusion.
Advent Xyrem patent made technology serves as the foundation for this advancement.
As part of the newly signed an Mou augments our comp our units are explored a joint development agreement for the advancement of hard number two facts June 17 aviation effort and hasn't been supply capability.
In May I've been announced a contract with a prominent fuel cell manufacturing specialize in exact application in the east Asian market under this contract.
We supply high temperature <unk> to support the.
Development of advanced fuel cell solution footprint.
Contract physical bank adviser for one point of $1 million and comes after a highly successful testing phase of our advanced proprietary MBA technology conducted by our customers.
Ben will deliver high temperature <unk> with a projected continuation of deliveries aligned to the customer specific time right.
The user rather than EMEA technology in fuel cell powered trucks is a critical is substantial and Kessler believes the technology effectively tackling the challenges associated with them as a sector and a limited range of pure Evs M. As a critical component of the fuel cell systems and Kevin people go wrong.
That means that the overall performance.
ADP efficiency weight and cost effectiveness of electrochemical products being power.
Argos Electrochemistry components business include electrodes membranes in EMEA, where components are critical for fuel cell electric Liza and for long duration energy storage such a flow battery.
In June I don't participate into the second European mix of lighter Samad children bracket.
He was part of an additional 30 <unk> represented a European litho laser manufacturing sector in the medium with European Commission 30 per tonne.
The primary purpose of the meeting we can discuss and address the executive outlined in the agenda correction of the May 2020, do you Electrolyze assignment the meeting John look or night by the European Commission hydrogen Europe as part of the electro Liza apartments brought together approximately 44 companies activating.
And the European liquor laser supplied Ted.
All in the second European <unk> summit, the industry remains steadfast in its commitment to achieve the ambitious goals set out in the refinery yocum indication, but the objective is to accommodate 10 million tonnes of domestic hydrogen production and import 10 million tons of hydrogen by 'twenty.
As part of this commitment the industry is planning for significantly includes electric laser production that you aim to ramp up capacity by a factor of seven within seven years. This will invoke scaling up from the current three gigawatt production capacity to approximately 21 gigawatt by 2025.
And there is a public document the Barrington members and the European Commission provided an update on the brokered by has been made one year. After the sign of the agenda collaboration with <unk>.
Document highlights the industry continued efforts to expand the European footprint.
I'll, let Dora framework was closer to completion.
Notable developments include the renewable energy directive delegated acts of additionality and the hydrogen bank.
So rather than going to keep a project we provided an update in may on its doctors. This update highlighted the recent milestone achieved so far emphasizing the collective dedication of the entire Hudson team towards decarbonization and the transformation of the clean energy landscape increase in Europe , most notably one odd.
<unk> successfully acquired the honestly, Brian Brian Boxer look real estate located in Kazan increase when its planned date of that facility for the Green <unk> IPC I project is expected to be located this.
This land acquisition underscores the outcomes unwavering dedication to establishing a robust infrastructure.
Effective list are physically support the objective of the Green cable IPC I project RV.
<unk> is also setup recorded the national plan in office in the center of resigning which will serve as the operator.
I will have with a grin keyboard VSAT broke.
Second <unk> has initiated the process of identifying the hiring key professionals, such as scientists engineers and monitored.
In regard roads and the new state of the acquisition <unk>. These individuals will drive critical functions, such as research and development, especially industrial deployment and supply chain management expertise will be instrumental in the development design and manufacture of the number six fuel cell system and make their license system.
Careful selection process will ensure that top tier talent is recruited to support the successful execution of the <unk> PCI projects, thereby ensuring the project success and innovation.
August Court rentals, a pre Ogden was important by the ministry of amassing the government partner.
Ric status can be reviewing the financial of IPC I tried to take accordingly, and as a prerequisite for a look into the states a foundry propylene Kimball.
Rig stays is examining the planning ways to implement actions and to strengthen initiatives that will contribute to the transition of the productive growth model of the Greek economy towards climate quite ambiguous for the planning of science accessing <unk> implemented project.
Pacific time.
The ability of the company proposed plan as well as compliance will recur liberty obligation and guidelines regarding the management of European fronts. We will provide further updates on grid and keep them at an appropriate time.
Our then suitably positioned to take advantage of the growth focus on clean energy will continue to advance our technology and consolidate their operations to address the <unk> of June we have a product portfolio. That's focus to enable a good economy Wanda will reduce the reliance on fossil fuels and will decentralize identity.
Supply market, therefore, providing energy security to commit the center corner.
With that I would like to hand over to our CFO Kevin Brackman.
Thank you Sally and good morning, everyone.
Thank you for selling and good morning, everyone.
Turning to our financials, we delivered revenue of $1 1 million in the second quarter and income from grants of 0.7 million for a total of $1 8 million.
R&D expenses were $2 9 million in the second 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 3 million in the second quarter combined with R&D total operating expenses were $11 2 million a year over year increase of 0.6 million primarily related to an increase in research and development costs as well as <unk>.
Tenses related to our new <unk> Park facility in Charlestown mass.
We recognized $9 8 million of asset impairment charges in the second quarter, mostly related to the assessment of goodwill.
And other intangible assets from the company's acquisitions in 2021.
Net loss in Q2 was $21 8 million or <unk> 41 cents per share.
Unrestricted cash reserves or $10 1 million as of June 32023, a decrease of $9 5 million from March 31, 2023, which includes $3 4 million of cash that we raised from the company's equity line of credit with Lincoln Park capital.
<unk>.
One 9 million paid to complete the acquisition of the fuel cell systems business in Denmark, Germany, and the Philippines.
0.8 million paid to acquire land land data because an increase for the Green Hippo project and 0.4 million paid for the build out of the park facility.
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, in addition to the potential funding from the pending Green Hepa project, we finalized an agreement in April this year for an equity line of credit with Lincoln Park capital, which gives us the option to access up to $50 million of capital.
Over that three year term.
The utilization of this equity line of credit is that advance discretion and provides us with an effective buffer that may be used alongside other funding rounds.
As I mentioned earlier, we raised $3 4 million in the month of June using this equity line of credit sufficient to cover our current monthly run rate for operating and capital expenses.
We also implemented in June and at the market equity program with HC Wainwright as sales agent under which we may sell up to $50 million of shares of the company's common stock through the agent without any commitment from AD that we did not utilize this ATM facility during the second.
Quarter.
Aside from raising capital, we will continue to manage our cost structure closely and capitalize on opportunities to reduce costs where possible.
Let me now turn to our outlook and then has a strong pipeline of opportunities as.
As we all know however, not every opportunity in the pipeline what transpire due to the factors that are beyond <unk> control.
Opportunities may not materialize or it could be delayed due.
It is a long term contract nature of our business model the timing of our revenue can also be difficult to predict.
This is a level of uncertainty caused by these factors as well as the fact that Green Hippo is still under review by the Greek State, we are not providing an outlook for revenue and income from brands for 2023 on this call.
With that I will hand back to facility for closing remarks.
Thank you Kevin I think there are significant opportunities supported high temperature been technology advanced materials and fuel cell system projects.
Israel.
Technology company developing innovative products for key sectors that are quite clean energy.
We look forward to growing the business that would keep you abreast of developments.
I would like to thank you all for joining US today before we open the line to any questions from the carbon and finally I would like to address questions submitted by less immediately with primary Gordon who was unable to join the call today.
The first question is can you provide an update on the Green Cubo project and expected Diamond Undervaluation confirmation of final funding documents and subsequent releases of funding.
As I said a little bit.
And discrete.
Very keen to officially launch the great Q4, and we have demonstrated particular actions.
It says that we're moving in this direction first of all with schedule really R&D and development work.
<unk> will ship.
Densify the suitable side, we purchased the land and we have commenced with planning.
Very important with your vendors is very strategic agreements would be.
Another apartment that we cannot measure right now.
We will announce obviously the details at the appropriate time that ensures that the minute. We start we have these giant with us to be able to.
Manufacturers.
The products with quality and at the right time.
In the meantime, as we've said we are.
Complaint to the European Union, because we feel that this is a big delays here from the states.
Acceptable by Us So I sent a letter to the commission and breath on Hu.
In intermodal now.
Scotsman within the European Commission.
Visit growth in the internal market industry and SME. These are policies environment <unk> Generale and that's what we've got bag is that despite the winter holiday months.
The European Union, where we're very close to the vehicle authorities to be able to inform us for us to inform the shareholders. The proceeds we will receive the foreseen public funds.
So I think we're in.
In the last days is in there as you know we.
Very big delays.
Within their accident with other European partners.
Course.
We have suffered we believe a big loss.
Valuation because of all of that so this things needs to be resolved as soon as possible.
Understand that this is a project of common European interest.
Great song.
<unk> for the northern or let's say it's not.
Transfer macphee.
Sure.
Thank you.
The Europeans will push very hard on this now we received.
I'll go to the board.
A letter by the Deputy Minister of economy, and finance from Greece.
Mr Nikolas public finances, and respond to my letter to him on July 25th.
Basically.
So the idea is and I will go over that later.
Yes.
Yes.
Ideas are the Greek state is examining and planning ways to implement actions and to strengthen the initiatives that will contribute to the transition that brought active and growth model of the Greek economy towards climate neutrality.
Parameters for the blending of satisfaction include implementing project specific signs the viability of the completed proposal plants.
As well as compliance with the regulatory obligations and guidelines for the governing the management of European funds the.
The group stages, Calgary UN funded for the <unk> program and we'll provide further updates at the appropriate time.
So the delays solely with the Greek state and we expect this to be resolved very soon you can imagine we'll do everything in our capacity.
Two.
Finish this.
We will keep you posted on.
And.
On the development, which as I said I think there'll be very strong.
Several questions.
Again, Tom Lacey can you provide an update on the issue date.
And next key milestone included expected first half.
As you know.
As with other automotive manufacturers, who doesn't know yet.
Basically there was development of the fuel cell system in collaboration with the Oems.
John Development agreement, now, where the Ogden EMEA and actually our fuel cell expertise as well will be incorporated in an automotive bijan <unk>.
And should that have shown great interest in the technology and basically the Ireland better technology.
We also there we.
Corporate G&A and technology as well, we'll use <unk> die catalysts for that particular program. So.
So assume that power targets.
They are conducive for automotive in order for this to become <unk>.
<unk>.
Okay.
Now.
As you know we have three core hardware models on the Microsoft royalties. So we had a good experience.
Earnings from using them.
And as I said.
Other quarters, where there is not an issue that we have.
The last component, but we cannot name, but we're working very hard.
With all of them.
The other question is how has the collaboration with Siemens energy Maritime fuel cell solution progress.
Is there a relationship progressing to GPA or similar dependent on successful technology testing.
And then.
In collaboration with <unk> as you know is on this very exciting sector.
Greenstein.
We're very happy that our methanol vision because we have this for quite some time now as you know the ones that you follow us.
The <unk> and eventually in methanol that derived from green hydrogen.
We believe it will be.
Key pure in the pass through of net zero for our maritime.
Not only some incentives but also alpha.
No.
Work that and we try to collaborate as many of them as we've done but we have.
There is some success with Siemens and sell Lorenzo.
And we feel very proud about that so.
Again, the idea is that when you use high temperature.
And the math we're.
We're talking about.
A similar system in an expensive one stage formation, whereas low temperature of them requires 99, 9% fueled hazards in the southern system Nava will use its made in <unk>, Denmark.
And we're talking about 100 kilo, but.
Actual also.
Okay.
And go to 50 easing so that's.
That's the status over there I think.
There is the right technology and the right market and it's all obligation if you will to grow this as fast as we can.
Another.
Question is how emphasis comp.
Compensation as part of the early stages of the <unk> agreement progress with regard to establishing the end to end supply chain in Europe . I think we discussed that also in the script basically the idea is that the <unk> agreement is very significant for us because one.
Endorses, our technology, and secondly, fortifies our supply chain.
We are working our high temperature Ben would be said for about 15 years now as you know <unk>.
<unk> is a global leader.
Our manufacturing and brands electrodes.
A lot of expertise with the BVI and as I said.
We're very close enough for me would be.
A key parameter this as well.
<unk>.
<unk>.
Accelerating the Green <unk> project.
Win win situation for both parties and very secure.
And if you will for the customer as well.
Another thing I don't want to be left out of the conversation is the ability of <unk> to manage precious metals in the closed loop the processing of these materials.
It's very important when we go from more pilot programs to true lacked scale manufacturing.
The next question is.
Does your current cash position and are currently.
To give you sufficient headroom as in funding, we received four and to execute on the Greenfield project and other commitments and 110 extra Kevin's for Kevin would you. Please answer this.
Yes sure. Thank you <unk>. So let me, let me share some information on our liquidity situation and cash burn rate. So.
So we finished the second quarter with right around $10 million of that available cash on our balance sheet.
As you know over the past.
Three months or so we've put in place a couple of different equity facilities. One is an equity line of credit.
With Lincoln Park capital.
There is an ATM facility with H C. Wainwright each of those facilities gives us the opportunity.
To access up to $50 million of capital.
Over the next three years should match.
At our discretion on.
Whether and when we utilize those facilities. So we have those two facilities in place as I as I mentioned in my comments. This morning, we raised $3 4 million in the month of June .
Utilizing one of those two facilities.
At the same time, we have also taken actions recently to reduce our costs and to reduce our spend rate.
So as I look forward to the second half of the year I'm anticipating that our monthly expand.
For operating and capital expenses will probably range between $2 5 million and $3 million carbon model.
And so.
The $3 4 million that we raised back in June is sufficient or even more than sufficient.
To cover what we expect to be our monthly.
Our spend rate in the second half of the year.
So that would continue to be our plan in the short term if they continue to use these facilities.
To raise the cash that we need to cover our operating expenses.
Until such time that we have received funding from either <unk>.
Or from other sources of capital.
And with that I will turn it back to Victor.
I think Kevin we are ready now to work with Q&A.
And are there any questions quick questions from us.
We'll turn it back to the operator to open the line for any other questions.
Yes.
Thank you the floor is now open for your questions to ask a question at this time. Please press star one on your telephone keypad, if any point you'd like to withdraw from the queue. Please press star one again youll be provided the opportunity to ask one question and one further follow up question.
We'll now take a moment to compile our roster.
Again as a reminder, the floor is now open for your questions to ask a question. Please press star one on your telephone keypad.
There are no more questions. Thank you ladies and gentlemen, this does conclude today's call. Thank you for your participation you may now disconnect.
[music].
Yes.
Okay.
Okay.