Q2 2023 Fusion Fuel Green PLC Earnings Call
This allows for high scale modularity southern National Parks.
It also minimizes the disruption during maintenance processes and during any system issues, reducing the risk of requiring an entire park apparel as has been seen.
In other systems.
One of the highlights I will go into this detail in the past, we have an industry, leading precious metal utilization.
This is the chart, we see here on the right.
We are currently well below the targeted pattern group metals usage in both the EU green hydrogen.
Roadmap and the U S Department of energy roadmap.
Principally we view.
Two pieces more than 2000 hours of new Ddos using an amount of.
Platinum group metals only targets has been reached around 2030.
And about one quarter of the value used by some amount more established competitors.
This product has truly differentiating that keep our technology is advantaged as it has in the market.
I'll touch upon the slide briefly but wants to keep it in as we always look to highlight where we stand versus what we set out to do as part of the year.
Most of the points have been covered on the previous slides. However, I would like to note that igo change gallon full commercial mode, and Thats, where the first argument due to the capture of oxygen from electrolysis process for applying for the system delivery at the end of the year.
The process of introducing one kilo of green hydrogen releases eight times that amount of officer.
Ses greenhouses as those carbon emissions were reduced through litigation.
In this transfer case decline underused phosphagen in industrial process, and therefore, we're able to add onto the system.
Austin capture capabilities.
We expect it to be included in more and more on proposal straightforward.
Last quarter, we highlighted our strategic priorities and we want to provide an update now on how we are executing gateways.
As we noted.
We have started and all assets personal tech sales with logical chain offering. This is resulting in more sales office going out in the last few months in the previous three years.
Importantly, this includes the five proposals project more from Europe , and the U S. Both key markets, where there's been much of an industry.
As Chris will walk in and to everyone.
Strengthening our capital position and balance sheet is a priority for the 2015.
The variance of detailed as Kevin noted that we can provide at this time.
Following discussions with capital projects to strengthen our capital position.
We do expect to make significant progress in the business in the coming months.
Given what I've mentioned before on where we are and project sales of Tech sales, which will also put us in a position to take further steps to strengthen our capital without having such a distress valuation.
As noted the Hugo trade offering is well advanced and commercially ready Ellington deliberate offers for prototypes of $5 five megawatts already.
It's important to note that the largest ever electrolytes and operation space 20 megawatts early.
So in the past.
Got it in March and this industry is.
Something that everyone is here.
For us delivering on smaller projects and scaling up gradually as how we intend to reach for the delivery of our projects in the future.
As the company grows from the industry evolves. We've also identified the need to review the structure and size of customer areas.
And importantly that we ensure that our resources are allocated in the most appropriate manner managed for our strategic thoughts.
This is a process of loan stock within the coming months will lead us to have some refocusing of our efforts and cost reductions where possible.
The plan that we can self fund pursuing some of the new opportunities that we have identified.
Lastly, regarding strategic partnerships as highlighted earlier with thrilled to be working with to Brooklyn is yet bringing.
Bringing not only our first one megawatt containerized OTA, but also unfortunately upon for commercial coverage at the Italian market.
With pursuing other partnerships to help us grow and bring a multiplier effect for our business.
And now in very advanced discussions with both Europe and beyond.
We cannot say more now, but hope to be able to announce some of the items growth was the one with the coming weeks.
I'll now ask Gavin advantage are joining me as we open the session for some Q&A.
Thank you.
Great. Thanks for Puerto Rico, and gotten some questions E Mail chat box kind of quick reminder, if you have additional questions.
You can send them to.
That's your relations mailbox.
Our infusion bashful about EUR entered them into the chat box in the webcast platform.
So I will begin with some questions.
Sure.
Chris Tsung of corporate research.
It's a handful of questions on the <unk> project announcements that confirmed three.
$3 billion.
Funding.
How do you plan to fund the remaining $2 5 million of capital investment for that project.
Great. Thank you Dan.
So.
This project is one of our <unk>.
Relative to our cultural projects is up one project that we are looking for infrastructure investors.
For the actually the uplift in the funds.
Funding partners for these projects.
We're already in advanced discussions with a renewable in Leicester.
For that project to notice that program.
What we call <unk>.
Level, one in the slide of the <unk> team.
Project Crunch overview, our discussions with that same industrial facility Gabon in Toledo.
But the project has also been changed to <unk> change the laser cubo chain, operator as well.
Most critically.
Together these products sold Crystal LIFO was the hygiene purchase agreements something we have announced as George already for that project.
So now we can be or who the next stage discussions with these investments.
Okay.
The question.
Yes, that's correct.
Guys.
Just a follow up to that.
There are four projects pre selected for grant funding as part of the first HP pipe narrows.
Call. It the remaining pre project still contention and if not how should we think about the viability of those projects.
So at the center so almost four.
One was awarded.
Yes.
Two.
We let go and one has been resubmitted to the new purchase without.
Toledo jus as the special one off we have resubmitted.
At present.
Great. Thanks.
What is the pathway to monetize.
Grants or.
Secured grants.
Given that only.
Six eight or so has been invoiced to date OXXO.
Grant decreased quarter on quarter from 70 million to roughly $60 million.
Can you provide some clarity as to what happened there.
Sure.
First of all <unk> and with Us orders.
Grants that reduction of the 10 million are related to Kevin mentioned, the two projects that we could not compete due to licensing delays.
Right.
Even though we had been we would not the only ones to suffer the total deliver in these.
Government programs, they look 40.
Hydrogen projects approved not a single one was implemented given the delays on the government side.
So we were not unique but it's <unk>.
It could be that matches exactly the decrease in gross value was us formally acknowledging that we will not be pursuing the projects.
In reality the ground will only expire at the end of the year, but we are already reflecting that.
<unk>.
Certainly knows I'm, sorry, I didn't ask the recognizing of the revenues so effectively the grants to support the capex.
<unk> of the project.
As we.
Transfer sales.
It's too.
To investors.
They will be the ones, who will benefit most of his crops. So there are there is a certain amount of <unk> funding.
We are taking receipt as the current holders of the SPV. This allows us to.
Sell some of our products to that STB, but for the time.
The grants, we do hope to see a decrease in that number in our own books as we transfer these suvs to third party investors.
So with the moving of the grants to third parties.
Truly benefit from them.
We will also see the contract sales.
Okay.
Great. Thanks for taking our final question from Chris on the revised guidance can you provide some clarity as to how revenue decreases expected revenue decreases by $20 billion of net income decreased by nine.
Sure I can take that one Ben.
So in terms of that revised guidance again important just to note the split between technology sales on our own project development Challenge.
So the cost of sales related to the two projects that I mentioned have slowly fallen away and and for those who have been following US you might remember that as.
<unk> and our most recently filed 20-F and our Q1 Investor update we recorded significant onerous contract provisions for our technology sales in December 2022, and which effectively under accounting standards required us to book the your best estimate of the loss.
Those contracts when you first realized about those contracts will be loss, making and so we recorded.
Provision in December .
And how that kind of works its way out as you record revenue and you want to record the corresponding cost of sales, but as those losses have already been recorded in the income statement. The amount that will be recorded once revenue has been recognized will actually be significantly lower and if a contract loss provision hasn't been opted in.
First sentence.
So sorry, a bit of a worthy response to that but hopefully I got the message across.
Thanks, Craig Thanks, Kevin a couple of questions from from Cowen.
RPC.
What are the next steps regarding.
Perfect product simplification strategy and perceived phase out you can silver.
We expect further impairments as part of that transaction.
So I'll answer the.
The next steps and Gavin maybe you take the impairment piece.
So for US as we mentioned we have.
We are already moving well along on the eco chain solution, we've been moving our projects towards the bigger chain offering.
And the advantage of the simplified licensing process.
Offers us.
At this stage.
No real.
Sort of.
Further the requirement for us to do.
Product simplification strategy.
More of those.
Thank you our efforts on getting the project charge flows which groups most directly.
To date <unk> solution government policy will be measured.
Yes perfect.
We don't expect any further impairments, but again, we can't be 100% dependent upon that.
What we have done is taking a pretty rigorous review of everything that we have in inventory.
And we feel that number that we booked in this quarter.
Correctly reflects the items that we booked we know for sure that we bought we use going forward.
And as I mentioned, who are looking to sell those and are.
Our recycle of our scrap and so hopefully that will be influenced in the future at but in terms of other items in our inventory that we have as Federico mentioned Heber solar is not debt.
We still have projects ongoing so we will utilize the materials that we have.
On our production.
R&D team have also done a pretty good job at that.
In reviewing the materials to be used for hemo chain.
Containerized in non containerized and we've been able to utilize many many components within the inventory.
That process wasn't done than they would have to be impaired.
And we will continue we will be on this journey for the next couple of months until hemo chain becomes and I think more recognized in the market and then we're actually installing the product.
So hopefully not just the Ontario based on the review that we've done so far.
Thanks, Kevin very good can you touch on the U S strategy has been the U S market and deep prioritize in the near term in favor of northern and Southern Europe .
Thanks Ben.
No absolutely not.
The U S market.
And North American markets.
Further in Canada in there as well.
The other priority for us.
As I noted.
We've been making offers for both.
Northern European markets as well as North American markets.
<unk> is a phenomenal opportunity for anyone in the team.
Green hydrogen space.
The.
And importantly includes our technology can benefit from the <unk>.
<unk> tax credits.
Hello.
A bunch of produce.
Certainly our focus decided that this is one of the.
Partnership discussions that we are engaged and so we look forward to be able to share more.
The rule related to our efforts.
In North America.
But just to note that it is certainly a.
A priority for us how we plan to cover that markets going forward beyond just us.
Ultra pool in biotechnology request.
Ongoing work on projects that were already in flight.
I believe will become clearer as we are able to announce.
Details around our partnerships, so I will be phased and hope to be able to communicate more in the coming weeks.
Greg will pivot now to some questions from different rapid NTP.
What are the remaining steps required to reach on the projects with Hudson ventures.
So so.
So the project is a sequential benches that we are.
With them. This is a project that we've been already to have the license fee of the power grid.
Hello.
<unk>.
Hydrogen production land.
So at the moment.
Is more around the contractual discussions.
I wouldn't hazard classes than doing the review and due diligence on the project or the project materials across contracts and so on so.
In terms of the <unk>.
Coming months, which will be on investor.
Invest a review of the project more than any particular.
Milestone.
Second question concerns the reference made in the second quarter materials for more standardization and rigor.
And sales efforts can you expand on what you mean by that and what benefit that standardization.
Yes.
Sure of course.
So that effectively when you do.
I think this is one of the advantages that Hubert chain when it leads to an equal solar projects every single project needs to be completely tailored.
The amount of potential to produce.
Finally, Brazil it depends on the local.
The issue of that site.
The overview of the land can change to the Lacoste our requirements.
And so on and so every single proposal needed substantial custom was on custom offering really doing a full product could you just put out an offer.
With the Hugo chain, we're able to have standard offers so we have effectively.
It's more standard building loss.
It can be applied anyways, given that it only requires a certain amount of that into place.
This has.
Allowed us to have.
Much from standard designs to standard of collectors layout.
Lay of CBD.
<unk> started until all the.
The ability to be able to deliver nearly 40 plus offers couple of loans simply none of them as possible with the Heber solar offering so that standardization is is what we're referring to.
Moving now to some questions from the audience.
So if the hero silver given the permanent talent just referenced turned the quarter.
And can you provide some additional commentary on those permitting issues.
Okay.
Sure.
Again on permitting issues. Unfortunately spring related to these types of items.
And the rules and requirements that each has reported has to go through.
As a result of loss.
<unk> is also part of the regulation that was called the simplex.
That allows hudson projects to be spent through.
A number of regulatory and licensing requirements.
Sort of a life.
Licensing light approach.
As of this year that position was robust and that accelerated process is impossible specialty projects that look to assume that as complex system.
Importantly, they lead to robust that's what the old Mcf.
Regulatory process. So that's the change of goalposts from the regulators they get very knowledgeable.
Various projects it particularly hits.
<unk> solar because the tide in the.
Just as the original.
But as the requirements that states and our robust adoption the.
The amount of licensing.
Should we say the required client.
Licensing hurdles significantly increases with the footprint size of the project. So when you are doing on one hand, the projects very differently during a connector project. So.
So effectively the law.
<unk> licensing process prohibit.
<unk> solar projects with any sort of.
Relatively decent sized method it already it would immediately hedged all the highest hurdles. Yes. This is development and the regulatory process.
That causes such a price driven.
The previous one.
Only implemented last year.
The change the change in Gainesville to keep us in these markets start to say that that applies to Morocco or automotive.
Portugal obtaining these.
One of the changes.
Effectively what we have done is we have.
Appreciate the hygiene.
Hydro production from the power production.
In terms of physical separation and we transferred the electronics to the.
Lisa.
This proves to be a very cost effective none of this is the pizza chain is actually performing fairly well exceptionally well.
It was very low.
Also very high efficiency low kilowatt hour requirements to keep up.
Thanks Peter.
Can you provide an update on the <unk> project, which was announced last year.
So that is the <unk> project and the <unk> products to be specific although the the two projects that were impacted by the debasement of licensing.
Kevin mentioned.
Some of the projects that we were expecting to deliver this year that have been.
We had to change the investments for those projects to other projects in our portfolio.
Thanks.
When should investors expect some clarity on the company's capital position.
So I think as Federico mentioned, we are in discussions with various counterparts regarding various different financing solutions.
So it is not appropriate for me to go through in detail right now.
But but hopefully soon but again, while it will build on my previous comments.
And is that our goal has always been for us to bridge, our finances to cash flow breakeven.
We continue to look at all the solutions available to us to protect shareholder value.
We don't want to fully fund the business plan on day, one, especially giving our depressed share price because any significant financing ends up being a recapitalization of the company. So we must move with caution on on these items. So.
So hopefully I'll provide an update.
Soon frederico anything to our test.
The chart.
Thanks, Kevin.
Are you in a position to disclose <unk> fuels localized cost of hydrogen from the Hubert train solution and then from a commercial standpoint are you seeing customer willingness to pay a premium for green hydrogen.
Ben on the first point.
Supercuts response, we've said previously while we noticed I'll, let less cost of hydrogen.
Our our hemo solution.
We are already at.
Point in time recognize that that level of cost of Hudson applies to both the heber solar and the Hugo changes.
And therefore, you can in the slide that appointment I would simply says Tivo solution.
So we have made that public before.
We believe it is.
Industry, leading.
And I don't know what the final cost of funding for any project very much depends on the cost of energy for our product and the load factor so its solar only of solar and wind.
Again, you'll see phenomenal results.
Next we are modeling at solar and wind.
With the <unk> chain.
So and so I would refer back to that Ben sorry, there was a second part of the question.
Yes, just touching a customer willingness to pay a premium for green hydrogen.
So absolutely.
<unk> been.
<unk> been able to close three dimensional purchase agreement.
This is something that is rare in the market and we are.
<unk> seen that happen more and more.
You'll notice that the.
<unk> guarantee of origin market is starting to truly take shape.
And we see the first.
Sort of associate demand and prices of that analysis of the market.
Those make in hydro projects extremely attractive. So we certainly are seeing an appetite.
<unk> assessed the balance of volume pretty much at a premium.
Great question, we are inherently proposed three pillar speculations being considered.
In the U S.
Would impact you from fuel and aspirations.
Our desire to utilize the $3 PTC if at all just chime in here as I sit here in the U S.
Rico.
Got it.
So for those who aren't aware the three proposed pillars are tempura matching so matching energy consumption with clean energy production on an hourly basis.
Additionality.
Using installed.
<unk> installed I should say renewable production and then deliver ability, which is using renewables production that is co located with the hydro facilities.
Interestingly.
And it was the first two pillars are consistent with the delegated acts that were adopted earlier this year by the EU. So we don't it doesn't represent a meaningful hurdle for us as we're already ensuring compliance.
With our project design definition in our European portfolio.
And then with respect to deliver ability.
Our modular technology is designed for co location.
Users as well as with renewables production. So we don't anticipate.
Meaningful changes to our approach to projects in the U S going forward.
And anything to add otherwise I'll move on to the next one.
Great.
Question here on the status of PSA submission has feedback been received.
And how does the transition from future silver to Cuba the impact.
That project at all.
Yes.
We have been modeling.
<unk>.
I'm now speaking generally not specifically.
But the old programs.
And during the transition from the <unk>.
We're changing in a coordinated manner.
All of this doesn't.
Cause problems to the different funding.
And awards.
Yes.
<unk> projects as I mentioned in my in my notes.
We continue to waste by the decision we have been receiving questions.
Pretty much continuously on uncorrelated throughout the last months.
We eagerly await decision.
Yes, no expectation on timing.
We do not have normal received indication as to when the timing would be.
Great. Thanks.
Perhaps a question for Gavin how are you thinking about reducing fixed costs within the commercial challenges and revised revenue guidance discussed during the call.
Yes.
We have embarked on a rigorous review of our cost base.
Mike from cost of materials to general operating costs.
All costs are being considered and I think it's.
It is of Paramount importance for us to ensure that our cost base matches.
And as much the debt reduction and the inflows.
And so that we can continue to be an efficient density.
And meet our milestones as quickly as possible.
Thanks, Kevin what is the status.
So you alluded to this earlier, but just in terms of the U S strategy given the departures of the previous co presidents infusion USA do you plan to hire new leadership at any point.
Yep.
The U S recognizes.
On a core market for US we've mentioned afterward.
Several projects.
Assuming that.
We are actively engaged in partnership discussions for the U S market per se.
Bring some clarity to that question I will just.
These are their own the note that yes. The U S market is a priority for us.
Yes, we do intend to us.
Coverage was together with local partners to make the most of the opportunity set.
In the Americas, we have already also have been looking at the what was talking to a process of licensing or <unk> solution.
Also the.
Have all the required.
Licenses for the sale in the U S. So suddenly start in Washington in our strategic priority list.
Thanks with respect to the new information on <unk>.
<unk> in India, what are the drivers of that project.
Our Indian aspirations given.
The notable difference in the subsidy.
Grant environment between India and Europe .
Yes.
Yes.
Such a note that India has.
And if those have substantial.
Hydrogen.
Project support Enel, So Hudson technology support.
<unk> is an attractive market for the future.
This is why.
Let's talk about <unk>.
Central.
Partnership with <unk> energy.
Just beyond just the demonstrated apart cemetery deposit needs to be seen in context of a broader FSP.
<unk> for the Indian market.
Given the.
Those discussions on what the efficacy is being done to that are.
Our own BTL side and not on our side of things go into the specifics of those projects.
But just to note that it is in the context.
Such as.
The attractiveness that we see in the Indian market.
Thanks, Kevin a question here from Tokyo, You're talking currently Securities can you just help us contextualize a bit more than $20 million reduction in revenue guidance for 2023 is that due to grants not being recognized as revenue.
Commissioning.
Or perhaps just elaborate little more on that.
Sure. Thanks Pam.
The 20 million reduction is purely because of the two projects, so <unk> and <unk> projects that will no longer go ahead in 2023.
And so the revenue that would have been recognized under our.
Contracts.
Was it related to the electrolyte is the EBIT that we would've sold to those projects, but its investors.
Have basically taken control of the.
The special purpose vehicle to develop the projects, okay, not not related to grants orders and the fact that because that's the grants required the projects to be completed in 2023.
He meant because the project could be completed in 2023, the clients, we're no longer at relevant that could be drawn down.
So it was more of a timing issue.
Projects Couldnt be completed.
We recognize the revenue.
As opposed to grants not being recognized.
Kevin I would just also note that.
The.
One of the projects that was impacted.
These projects and the Investor comes a thoughtful last.
Hydrogen ventures. It is by no coincidence that we have simply now moved Hudson benches to the Adam and Jeff.
So effectively the concepts the new space everything.
The same it is simply a change of site.
In the discussions. So this is why we are well advanced.
Neither of those.
Tax can be closed by year end. This is an evolution of the of the efforts that we're already making with them with the change of location rather than a whole new discussion.
Thanks for taking the last question before we close here relates to strategic partnerships more broadly, but there was.
A question around whether the company is considering.
Partnership our collaboration with companies like <unk>, given their stated desire to be a leader in hydrogen powered heavy heavy duty equipment.
Just.
For us we are looking at a broad spectrum of partnerships as we've noted before we have a partnership with Toshiba.
The R&D developments in maintaining a.
Leading position in the subsequent crude vessels.
Discuss with them.
The FERC earlier this year today, a partnership on commercial coverage for the Italian market.
We I mentioned before European partnership.
To fund and develop some of the projects in our portfolio. So we are looking at a number of the specific.
Specific users light industrial uses are heavy users of hydrogen are included in that I'm not going to speak about specific names and so all of those.
As you.
Understandable.
Yes.
We have various types of partnerships.
The engagement.
Thanks for <unk>, so that will do it for our second quarter webcast. Thanks to everyone who joined <unk>.
Additional questions or if you'd like to speak with myself with management. Please feel free to reach out to me IR.
Our team.
Fusion cash Bureau.
Well look focusing Europe again at our next update.
Thank you.
Bye bye.
Yes.