GuruFocus -
- Revenue: NOK366 million, up 21% driven by alkaline performance.
- EBITDA: Minus NOK90 million, compared to minus NOK60 million last year.
- Order Intake: NOK161 million, mostly from the PEM segment.
- Order Backlog: NOK1.9 billion.
- Cash Balance: Close to NOK2 billion at the end of the quarter.
- Alkaline Electrolyzer Revenue Growth: 37% quarter-on-quarter and 54% year-on-year.
- PEM Electrolyzer Revenue Decline: 40% decrease year-on-year.
- CapEx Reduction: Expected to come down by 50% in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NEL ASA (NLLSF) reported a 21% increase in revenues, driven by strong performance in the alkaline segment.
- The company maintains a solid cash position with close to NOK2 billion, indicating strong financial health.
- NEL ASA is advancing its technology with next-generation solutions, including a new pressurized alkaline solution and a new PEM stack in collaboration with General Motors (NYSE:GM).
- The company has a global sales network and partnerships with industry leaders such as Reliance and General Motors, enhancing its market reach.
- NEL ASA's strategic partnerships with EPCs like Saipem allow it to focus on core competencies while offering complete solutions to customers.
- The company reported a negative EBITDA of minus NOK90 million, reflecting financial challenges.
- Order intake was soft at NOK161 million, leading to a decrease in the order backlog to NOK1.9 billion.
- The cancellation of the gigawatt capacity reservation agreement with Hy Stor Energy in the US highlights challenges in securing long-term projects.
- The PEM segment experienced a 40% decrease in revenues year-on-year, indicating struggles in this area.
- NEL ASA is facing a cost disadvantage with green hydrogen compared to fossil fuels, necessitating political support to level the playing field.
A: We expect revenues from the Reliance agreement to be recognized in the fourth quarter of 2024. However, licensing agreements typically have an upfront part and a variable part related to volume, so not every quarter will bring in revenues from this agreement.
Q: Regarding the CapEx cut for next year, what is your capacity to flex back up if the market outlook improves faster than expected?
A: We have space to double the capacity on atmospheric alkaline and have done pre-studies and building modifications to be ready for new lines. On the PEM side, 500 megawatts should be sufficient for some time, but we have secured the Michigan site with substantial grants to move quickly if needed.
Q: If the undisclosed US customer does not pay what it owes, will you have to reverse the recognized revenues in your P&L?
A: Our current understanding is that we will not need to reverse revenues, depending on how the situation unfolds.
Q: Have you reflected the 8% cost reductions on the alkaline stack in lower sales prices to entice customers, or are you using it to boost margins?
A: We are passing cost reductions on to customers to help them make more final investment decisions. Our goal is to maintain current margins while increasing volume.
Q: How long can your current cash management mode last if no significant revenue pickup is observed?
A: With a 50% CapEx reduction next year and cost reductions already implemented, we have stretched our cash reserves. We will continue to adjust as necessary depending on market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.