Earnings call transcript: Alfen Beheer Q1 2025 sees revenue dip, stock plunges

Alfen Beheer BV reported a decline in revenue for Q1 2025, with figures dropping 8.3% year-over-year to €103.8 million. The company’s gross margin also fell to 29.8% from 32% in the previous year. Despite cost-cutting measures, the adjusted EBITDA decreased to 5.3% from 8.2%. Following these results, the company’s stock price experienced a significant drop of 24.49%, closing at €16.82. According to InvestingPro analysis, the company currently appears undervalued based on its Fair Value calculation, with a current market capitalization of €304.79 million. InvestingPro data shows the company maintains a healthy current ratio of 1.68, indicating strong short-term liquidity.

Key Takeaways

• Revenue decreased by 8.3% to €103.8 million year-over-year.
• Gross margin declined to 29.8% from 32% in Q1 2024.
• Stock price dropped by 24.49% following earnings announcement.
• Full-year revenue guidance revised to €430-480 million.
• New product launches planned for Q4 2025 to bolster growth.

Company Performance

Alfen Beheer’s performance in Q1 2025 was marked by a decline in key financial metrics, reflecting challenges in its core markets. The company noted delays in the energy transition and grid congestion as factors impacting its business lines. Despite these challenges, Alfen managed to implement significant cost-saving measures, reducing its cost base by 18.2% compared to the previous quarter. InvestingPro data reveals the company operates with a moderate debt-to-equity ratio of 0.33, providing financial flexibility during this challenging period. For deeper insights into Alfen’s financial health and extensive metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: €103.8 million, down 8.3% YoY
• Gross Margin: 29.8%, down from 32% YoY
• Adjusted EBITDA: 5.3%, down from 8.2% YoY
• Cash Flow: Slightly positive at €200,000

Market Reaction

Alfen Beheer’s stock price fell sharply by 24.49% to €16.82 following the earnings report. This decline places the stock near its 52-week low of €9.92, significantly below its high of €43.51. The market reaction underscores investor concerns about the company’s declining margins and revised revenue guidance. InvestingPro analysis indicates high stock price volatility with a beta of 2.05, while maintaining strong returns over the past three months. The platform offers 8 additional exclusive ProTips about Alfen’s market position and future potential.

Outlook & Guidance

Looking ahead, Alfen Beheer has revised its full-year revenue guidance to €430-480 million, down from the previous range of €445-500 million. The company anticipates challenges in its Smart Grid Solutions and EV Charging segments but expects stability in its Energy Storage Systems segment. Alfen plans to launch new vehicle-to-grid ready chargers in Q4 2025, which could support future growth. According to InvestingPro forecasts, the company is expected to return to profitability this year, with projected earnings per share of €0.54 for FY2025, suggesting potential recovery despite current headwinds.

Executive Commentary

CEO Marco Rollevelt expressed confidence in the continued growth of electric driving, despite current challenges: "We are convinced that electrical driving will still continue." CFO Ono Grubb emphasized the company’s commitment to regulatory compliance: "We try to make sure that we follow the regulations."

Risks and Challenges

• Grid congestion and regulatory constraints impacting market operations.
• Increased competition in the home EV charging segment.
• Potential slowdown in the EV market despite strong Q1 sales.
• Operational challenges in deploying grid infrastructure.
• Pressure on margins due to declining gross margin and EBITDA.

Q&A

During the earnings call, analysts raised questions about the challenges in grid infrastructure deployment and competitive pressures in the EV charging market. Executives addressed these concerns, highlighting ongoing efforts to manage inventory and project contingencies, as well as the implementation of vehicle-to-grid technology.

Full transcript - Alfen Beheer BV (ALFEN) Q1 2025:

Saskia, Call Moderator/Operator: Hello, and welcome to the Alphen twenty twenty five Q1 Trading Update Call.

Today’s call is being recorded. I will now hand you over to CEO, Marco Rollevelt, to begin today’s conference. Please go ahead, sir.

Marco Rollevelt, CEO, Alphen: Thank you, Saskia. Good morning, and welcome to this webcast regarding the twenty twenty five first quarter trading update of We appreciate the fact that you have taken the effort to participate. This quest this webcast and questions that may come forward are handled by the management board of Ofen, Dean Ono Grubb, CFO and myself, Marco Rulevelt, CEO. In this webcast, we will start with the highlights of the first quarter of this year, followed by a short review per business line. Next, we will go in more detail regarding our financials and outlook.

Continuous with slide four with the highlights of the first quarter of twenty twenty five. In this first quarter, we realized €103,800,000 in revenues. This represents a decline of 8.3% compared to the same period last year. The decline was driven by EV charging and for a smaller part to energy storage solutions. 27% lower EV charging revenue was mainly related to a weak home market and a temporary low number of charging stations delivered for public applications.

Energy storage system revenue was 8% lower due to last year price declines impacting this year revenue. The overall gross margin was 29.8% compared to 32% in the same quarter last year. The main driver of this aspect was the lower share of EV charging in the revenue mix. As a percentage of revenue, the adjusted EBITDA declined from 8.2% in the first quarter of last year to 5.3% in the same quarter this year. With regard to cost control measures taken in the second half of twenty twenty four, we have been able to reduce personnel and other operational costs with 18.2% compared to Q4 of last year.

The energy transition delays the energy transition delays and continue to impact our business lines. Our Smart Grid private customers are impacted by grid transitions, while our grid operator clients are working on a resolution of grid congestion should they face labor shortages and regulatory constraints. Furthermore, the softening of European CO2 targets for automotive OEMs delays EV adoption acceleration and as such EV charging infrastructure demands. Regarding energy storage solutions, we are a bit more positive. For example, in The Netherlands, some regulatory constraints have been resolved, and it’s noticeable to mention that we have won our largest energy storage deal to date, and with Return Energy this April.

The system size is 100 megawatt, 200 megawatt hour and will be connected to the Dutch the Dutch transmission grid and will be contributing to next year revenue. For the rest of 2025, we expect revenue to be at the lower end of the full year revenue guidance of $445,000,000 to $5.00 €5,000,000 Therefore, we adjust the expected revenue range to €430,000,000 to €480,000,000 And as a consequence, we will take additional cost reduction measures to keep our operational costs in line with the revenue development, and we have to adjust our EBITDA margin guidance from high single digits to a range of 5% to 8%. Our CapEx as share of revenue will remain below 4% of revenue. I will go to continue on sheet six with Smart Grid Solutions and this is our review. In this first quarter, the revenue was €54,300,000 This is close to the revenue in the same quarter last year.

We see weakness in the market for private clients due to grid congestions and agitations to invest in less solar park developments. The outlook for revenue with the grid operators for the remaining of 2025 will stay behind the anticipated volumes. Two of the major grid operators have decided to decrease their previously communicated volume numbers for 2025, and we aim to scale down our production. Grid operators are struggling to increase their installation capacity as labor shortages persist, and they have continued use nitrogen related permitting issues. However, of course, we support our grid operators in their appeal to the Dutch government to resolve these bottlenecks.

The gross margin was 23.9% compared to 27.8% in the first quarter of this year, and this was in line with our expectations. We had anticipated a lower gross margin due to a mix shift towards more substation for grid operators that are more standardized and are being acquired more through tender processes. On c seven, we go in a little bit more detail regarding the current situation with the Dutch grid operators. For scaling the grid reinforcement, manufacturers have to be need to be in place. On the one hand, it is clear that the long term objective for the digital operators to relieve grid congestion is to install 48,000 new substations up to 2,050.

This has been announced by the NetDNA Lands, the branch organization of the Dutch grid operators, that aims for optimal cooperation between grid operators and takes care of the interaction with the governments and the other stakeholder. On the other hand, there are short term challenges that hamper the ramp up of the installation rate. These challenges are obtaining the necessary permits, which is currently delayed by nitrogen restrictions. There’s also a problem with available transmission grid capacity, which needs to do scale in parallel. There’s limited availability of lands for substations, especially in densely populated urban areas.

One major element is also the constrained delivery of certain components, and of course, the limited increase of installation capacity due to continued labor shortages. All parties involved agreed on the fact that the installation rate of substation should ramp up, but also include that this will not happen in 2025. Ronald will now continue on sheet eight with EV charging business line.

Ono Grubb, CFO, Alphen: You, Marco. If you take a look at our EV charging business line, revenue of Q1 twenty twenty five was €28,800,000 This is a decline of 27% compared to Q1 last year. This revenue decline was caused by two factors. First of all, we see increasing competition in the Home segment and secondly, in our Public Charging segment due to timing of certain tender deliveries, we shipped a limited number of charge points. More than two thirds, 68.4% of our revenue was generated outside The Netherlands.

However, The Netherlands remains our biggest market, and we sold most charge points here, followed by Belgium and Germany. The number of charge points we produced in this quarter was a little over 28,000, which is a decline of 24.8% compared to Q1 in 2024. In the first version of this press release, we mentioned a percentage of 35.3%. This has been corrected in the meantime. Gross margin was 39%, which is a slight decline compared to Q1 twenty twenty four, in which margins were 41.8%.

The margins remain within our expected margin bandwidth, 35% to 45%. The margin decline was mainly caused by an inventory charge we booked during Q1. Overall pricing remained stable. Next slide please. We’ve seen a strong start of the year in terms of battery EV risk registrations in Europe.

However, the outcomes of the EU strategic review are mixed. On one hand, the fact that the European Commission has sticks to the 02/1950 emission target provides predictability for the industry and its investors, and this reconfirmation is vital to our positive long term outlook. On the other hand, the one time flexibility measures that allows car OEMs to meet the CO2 targets over a three year average rather than annually will delay the short term EV adoption in our segments. This impacts this year’s revenue expectations for Afton. I will share more about that in the 2025 outlook section.

Lastly, the European Commission has announced a legislative proposal to accelerate the electrification of corporate fleets. This will drive demand in the business and home corporate segment, which is a segment often is strongly positioned for. To ensure our product portfolio remains ready for the future, we are proud to announce that by the end of this year, we will be launching our new double plus and single plus chargers. These new chargers are ready for the future because they are ready for vehicle to grid, which means they enable cars to charge, but also discharge in case needed. We are first to provide this technology in the public segment as our trends have been able have been vehicle to grid ready since 02/2023.

These two new chargers ensure we’re also able to offer this technology to our charge port operators, business as well as own charging customers. The vehicle to grid feature is key for our customers. For charge port operated, it enables smart charging as well as ancillary services supporting them to increase their value. For building and homeowners, the vehicle to grid feature enables optimization of self consumption of locally generated solar energy. For example, a homeowner can choose to charge the car in solar peak hour midday and use that energy for running the household during peak hours peak demand hours.

The system has we have developed is compatible with a broad range of vehicle brands and energy management systems. Furthermore, these charges are lower in installation cost when installed in a group. They’re compatible with the latest protocols for smart charging and are user friendly with a secure ad hoc payment through the dynamic QR code. We will open our commercial book in Q4 this year. Then if we take a look at our third business line, Energy Storage Systems, our revenue were 20,700,000.0.

This is a decline of 8% compared to the first quarter in ’20 ’20 ’4. This decline was anticipated and is partly caused by 40% battery price decline we have experienced during last year. This decline is now impacting our revenues because orders closed last year against last year’s prices are this year’s revenue. Gross margin were 32.5% in this quarter, which is higher than the first quarter last year. It’s also above our expected margin benefits of 15% to 25%.

This higher margin can be attributed to one off effects as certain project contingencies were released as these projects approach completion. Looking forward in the rest of the year, often we’ll be doing more large scale projects, which will lead to the gross margin returning more towards the expected margin range. At the end of Q1, the energy storage systems backlog for 2025 revenue was €86,000,000 which means that all orders required to achieve the 2025 energy storage system revenue outlook are secured. As such, we have adjusted our expected revenue bandwidth slightly upwards. I will share more about that in the outlook section.

The backlog for 2026 revenue was $23,000,000 at the end of Q1 twenty twenty five. Please note that at the end of Q1, the order with return energy was not yet signed. Also, as you know, the precise timing of the backlog turning into 2025 revenue is dependent upon various factors that influence project execution. Furthermore, as announced recently, we won the largest energy storage deal to date with Return Energy in April 2025. This system is a 100 megawatt, 200 megawatt hour system and is the second largest in The Netherlands.

This system will be connected to the transmission grid and provides a central reserve capacity. This reserve capacity alleviates grid congestion and ensures a more predictable and reliable electricity supply as a share of renewable energy continues to increase. The battery system is expected to be operational by the end of twenty twenty six, contributing mostly to Office ’2 thousand ’20 ’6 revenue. We are proud to be able to realize such a large scale projects and are pleased with our strong four year partnership with Return Energy. This is the third major system we developed together, and we are looking forward to continue our collaboration in the future.

Furthermore, we are we are pleased with the announcement done by the Dutch transmission grid operator, Tenet. They will use a new type of time bound contracting that will free up nine gigawatts of capacity on the transmission grid. This creates opportunity for Alphen for more transmission grid battery storage projects in the future. We continue with the financials. Revenue amounted to 103,800,000.0 for the first quarter of twenty twenty five.

That is an 11% decline versus prior year, which is mainly driven by EV charging and energy storage solutions. Gross margin for Q1 is 29.8%. This is a decline versus the gross margin of 32% in Q1 twenty twenty four. This is mainly due to a shift in the revenue mix as we experienced a lower share of relatively high margin EV charging revenue. The margin per product line were broadly in line with expectations and guidance with the exception of the gross margin for Energy Storage Systems.

These margins in Q1 were artificially high as we released some contingency as certain projects came to an end. Adjusted EBITDA was 5.3%, which is lower than our guidance of high single digits, mainly due to lower revenue volume in the first quarter of twenty twenty five. In particular, the lower revenue share for EV charging did affect the gross margin in absolute numbers and therefore EBITDA. We did see the effect of the 2024 restructuring in OpEx, as I will discuss on the next page. Cash flow in the first quarter of Q1 was slightly positive by 200,000.0 mainly driven by working capital improvements of €3,500,000 despite the cash out for the restructuring expenses we paid in Q1.

In Q4 twenty twenty four, we went through a significant cost saving program, and we do see the result of this in the first quarter of twenty twenty five. Overall, our cost base declined by 18.2% versus same quarter last year. This was driven by savings in personnel as well as other operating expenses. If we look towards the rest of 2025, we adjust our expected revenue range of $454,000,000 to $5.00 $5,000,000 to a revenue benefit from $430,000,000 to $480,000,000 This is mainly driven by the downward adjusted outlooks for smart grid solutions and EV charging. In smart grid solutions, we do not see the anticipated growth materialize as two out of the three main grid operated clients decided to downscaled their order quantities for 2025 compared to earlier communicated volume numbers.

The grid operators are struggling to ramp up their station capacity and are held back by the ongoing nitrogen crisis with delays issuing of project permits. We therefore adjust our expectations to zero to minus that decline in revenue compared to 2024. In EV charging, we have limited forward looking visibility. The Q1 revenues were below our expectations because of the increased competition in the Home segment, as well as a temporary dip in charge port deliveries in the public segments. Also, the softening of CO2 targets for Automotive by the European Commission will not lead to an accelerated adoption of electric vehicles this year.

It’s therefore that we reduced our revenue expectations for this year to a decline of minus 10% up to minus 15%. In our Energy Storage System business line, we are well on track to meet our revenue guidance for this year as our guidance is fully backed by backlog. We therefore increased our revenue expectation by lifting our bandwidth to a maximum revenue decline of 0% to minus 10% compared to last year’s revenue. As our revenue outlook is reduced, our adjusted EBITDA margin range is adjusted downwards as well from high single digits to a range of 5% to 8% of revenue. To reduce the impact of lower revenues on our bottom line, we will look for further cost measures throughout the company to align our spending as much as possible with our revenue performance.

Our CapEx guidance remains the same, expecting to have less than 4% capital expenditure share of revenue. And now I would like to hand over to the operator for any questions you might have. Thank you.

Saskia, Call Moderator/Operator: Thank you. And up first, we have Niki Dallal from Deutsche Bank. I

Nikki Dallal, Analyst, Deutsche Bank: would have three, and I would go through them one by one. So my first question is on your cost measures you just commented on. Can you give more details on these? And how long will it take to materialize them in financials?

Ono Grubb, CFO, Alphen: Yeah. Thanks, Nikki. Cost measures will be across the board. So we will take a look in again into our OpEx expenses, temporary contracts, vacancies that we have outstanding and and well, for which we plan to cost. But we will also take a look at other areas in the company and not excluding that we will also take a look at certain job positions.

When will that take effect? Some of them will be more or less immediate, especially when you’re basically not fulfilling vacancies and some temporary contacts we are able to react a little bit more swiftly. Other areas will take a little bit longer, but we’ll try to execute on this as fast as possible.

Nikki Dallal, Analyst, Deutsche Bank: Okay. Thank you. And then related to this, how should we think about your midterm guidance for 2027 to reach a low double digit margin by then?

Marco Rollevelt, CEO, Alphen: If we look to the, say, medium term area, it’s good to put a bit in perspective to what we see maybe the also medium term effect of the energy transition. If you look to the three elements of the energy transition related to our products we are operating, it is EBIT charging, battery equipped solutions and substations. I think we tried to explain the substation market and say, yes, this year, we see no growth, but the ambition by the grid appraisers, but also the need to be able to strengthen the grid to accommodate the initial transition is still clear. So the expectation that at some moment, this will pick up is also clear. So therefore, we’ll should be able to grow the revenue in the coming years.

But if we’re charging the softening of the CO2 targets for the OEMs, We expect that this will be having major impact on or might have a major impact on this year, but that will be compensated by the growth in the years after. And for battery storage, we see that within different country, but especially also in The Netherlands, say that the regulatory elements have been changed positively to allow for large scale utility scale elements projects into the grids. So therefore, we have concluded, let’s say, the medium term elements are positive, and therefore, we don’t step down or step away from our medium term guidance.

Saskia, Call Moderator/Operator: Thank you. And we move on to our next question now, which comes from David Kerstens from Jefferies. Please go ahead. Your line is open.

David Kerstens, Analyst, Jefferies: Yes. Good morning, gentlemen. I’ve got two questions on EV charging, please. First of all, the what caused the temporary dip in the installation of public charge points? I understand it’s a bit more lumpy.

And what gives you confidence that it will recover in coming quarters, especially considering the easing CO2 targets? Maybe that’s not related to the public installations. And then the second question is related to the increased competition in the Home segment. Where do you see that effect mainly? Is that mainly driving the weaker than expected volumes as your ASP decline was only 3%?

And I think that’s also what you had baked into your medium term outlook for ASPs and EV charging. So where do you see that impact of the increased competition in the home segment? Thank you very much.

Marco Rollevelt, CEO, Alphen: In relation to the public charging stations for public applications, those are supply of charging stations to, say, parties that have won the public tenders for, say, the different provinces or bigger cities. So those are, say, multiyear contracts on which we supply more or less based on that contract in each individual months or quarter based on the fact that we have signed those contracts. To say practical services coming together, We have relatively high revenue in the last year and, say, a limited revenue in this first quarter. And we are due to several reasons, but our practical reasons why they have less installation capacity due to practical constraints, but also they wanted to take down a little bit of their stock to be able to have less pressure on their working capital. But we also know that installation rollout will continue in the coming year and also that the contract we have will continue also in the coming year.

Therefore, we are speaking of say a temporary lower revenue on public charges in that area. And if you look at the market for home chargers, we see that especially in the entry level where we’ve also seen, let’s say, a lot of hybrid cars have sold also to the lens where the requirement of the charging stations was more limited. We see that in the area where we are aiming for, that’s in the managed home, semi public, those type of areas where we can lean on, say, the differences in the product and also the way to integrate that in the back offices of our partners. That’s the area where we are able to maintain our position and also price. And we have seen that in the entry level of the market, there is more price pressure in that area.

David Kerstens, Analyst, Jefferies: Understood. Can I ask a quick follow-up, please? Can you can you remind us roughly what the split is between the the public and the home segment? I think in your CMD, you indicated that the overall market was 75% home, 25% public. Or how does it look for often now two years later?

Marco Rollevelt, CEO, Alphen: I think fundamentally, those is there’s a directional element of what is still correct. Only in the first quarter, we had, say, limited amount of, say, public charges, which is what we consider as to be a temporary element, where, say, more than 95% of the charges were, say, nonpublic.

David Kerstens, Analyst, Jefferies: And

Saskia, Call Moderator/Operator: we now move on to a question from Ruben Devos from Kepler Cheuvreux. Go ahead. Your line is open.

Ruben Devos, Analyst, Kepler Cheuvreux: Yes. Good morning. I just had a first question on smart grids. You talked about two of the three main Dutch grid operators sort of downscaling their order quantities. And I think the reasons you mentioned were mostly sort of execution bottlenecks, right, so labor shortage and and the grid permissions.

I mean, it doesn’t look like it’s it would be very much in isolation for these two grid operators alone. Does it how do you assess the risk maybe of a similar slowdown for the third grid operator? And from the guidance, it looks like you’ve now lowered it by 20,000,000 for 25,000,000 Would you expect those to, to a large degree shift into 26? Or what’s your visibility on 26 volumes from the Dutch grid operators? Thank you.

Marco Rollevelt, CEO, Alphen: If you look at, say, the three grid operators, we have, of course, not only talked to the two of them that lowered their numbers, but also had intensive discussions with the third one. It’s first not 100% clear whether, say, the ambition of the other two was too high in relation to the practical situation, but we see the the numbers we had been planning that they will be realized for this part of the year. And if you look to the more or less ambitious ramp up of the two other grid operators, they have to be compensated somewhere in the coming years because as also explained by myself, but also by Ono, say, NetBear and Avon still and the numbers they published about, say, the needs for the descriptive operators to ramp up their overall installation capacity, that need is still there. The only factor to relation is that, say, it is not something with very simple measure. It will automatically result in solution.

Therefore, we think for 2025, Although the vision is still there for the good reps to ramp up that it will not happen, and that the the maybe the first signs will be there in ’26 of ramp up, but it’s too early to to already bank on that.

Ruben Devos, Analyst, Kepler Cheuvreux: Okay. And maybe for energy storage, I think the backlog suggests that you already, you know, you have already fully booked for ’25, but then you’ve also got a bit of a backlog for ’26. And I think you’ve announced that return energy project. Right? Is it fair to say that that’s the large project included in that backlog for ’26?

So, yeah, just curious about the revenue contribution basically of that large project you recently secured.

Ono Grubb, CFO, Alphen: That that will be on that will be on top of the the the reported backlog that we Yeah. And and and sold out, I I think that that you’re sold out to the extent that any orders that we would get in at this moment in time for for to be able for execution in 02/2025 will be difficult to realize that it’s a difficult time ordering a battery and getting them over here and we have them doing so. So from that perspective, it’s not so much sold out as well as that there are physical limitations of what we still can install in 02/2025. As you know, we still have a number of mobile items on stock that if we get orders for those, then we would still be able to deliver those.

Ruben Devos, Analyst, Kepler Cheuvreux: Oh, okay. And then just just a final question. I think under the current, cost structure, right, so so excluding what you you might be implementing, going forward, what’s your revenue breakeven point, yeah, under the current cost structure?

Ono Grubb, CFO, Alphen: What do you exactly mean by revenue breakeven point?

Ruben Devos, Analyst, Kepler Cheuvreux: Yeah. Like, what is the full year sales that would, yeah, that would leave you, yeah, breakeven on on EBITDA line?

Ono Grubb, CFO, Alphen: May maybe you can explain a little bit different, and I’m not sure that’s correct answer your question. From an EBITDA perspective, we need about 32, let’s say 33,000,000 of EBITDA to be cash flow positive, so be operational cash flow positive or free cash flow positive. Any other we do expect working capital improvements during 2025 that will be in addition to that, but that’s more or less the number we target to be cash flow. So is that answering your question?

Ruben Devos, Analyst, Kepler Cheuvreux: Or Yes. Yes. That’s very helpful. Thanks a lot.

Saskia, Call Moderator/Operator: Thank you. And up next, we have Paul De Frommant from Bryan Garnier and Company. Please go ahead. Your line is open.

Paul De Frommant, Analyst, Bryan Garnier and Company: Yes. Thank you very much. Good morning. I have two questions related to EV charging. So the first one is that you mentioned difficult environment related to carmaker targets impacted impacting the the adoption, but the sales are up 30% year to date.

And if you look at Q4 numbers in your main markets, for example, Netherlands, it’s up 45%, UK, forty seven %. So I was wondering if the decline related to your daily numbers, is really related, to these targets. And if if you could comment on that, it would be helpful. And my second question, is that you mentioned increased competition, in home segments. Could you give more details?

Is it related to pricing? How do you explain the the loss of competitive advantage compared to this new competition? Thank you.

Marco Rollevelt, CEO, Alphen: If you look to say your mark on the car sales, we did saw, say, the first quarter, say, relatively strong growth in a number of EV cars sold. But if you look already in the Dutch numbers for April, we see almost flat situation where it’s we most anticipate to say maybe in the fourth quarter and the first quarter, sales was more growth was there, but we see that already the first signs are there that this growth will not continue in the remaining part of the year. That’s also why we more or less lean on that element. The element of competitive pricing, we see it especially in entry part of the market or with charging stations for, say, hybrid cars that we see that in the entry level of the market, the positive elements we can offer to our clients related to all kind of functionalities to include, say, all kind of options into the way of work of the charger and to support the CPOs in the overall management of the charging stations. That’s the area where we see especially on that entry level, let’s say, different manufacturers from different, say, geographical areas use that entry point in the market to leverage on, say, price to get a position into the market area.

Paul De Frommant, Analyst, Bryan Garnier and Company: Okay. And just a quick follow-up question, but don’t you think you will have to choose between market share and gross margin rate to be charging at some point?

Marco Rollevelt, CEO, Alphen: We, of course, are debating that element to what level we can use also, say, the the different price elements with regard to that position in the market, but we have not finalized that that approach.

Ono Grubb, CFO, Alphen: You very much.

Saskia, Call Moderator/Operator: You. Tys Berghelder from ABN AMRO Auto BHF has our next question. Please go ahead. Your line

Tys Berghelder, Analyst, ABN AMRO Auto BHF: First question, can you maybe help us with your reported EBITDA compared to your adjusted EBITDA? And how we should think of, your covenants? The second question is, can you maybe also provide an update on your inventory level? I assume that in the substation segment, inventory level has gone up. Third question is on your, vehicle to grid ready chargers, which you expect to launch in q four, what kind of pricing should we expect there?

And what does it really mean vehicle to grid ready? What does it take to make it vehicle to grid?

Marco Rollevelt, CEO, Alphen: Maybe to start with your last question, the vehicle to grid has two elements in itself. That is the ability of the charging station to accommodate, say, different type of, say, steering of the charging station, but also to be able to allow the energy to flow back from the car towards the grid. But say the charging stations in itself is not the the only component that needs to be able to be accommodated. Also, the bank offices, the control mechanisms used by the charging charge station operators, the electric cars, all of those elements have to be changed in order to be able to to make this possible, and that means depending a little bit on the way the charging operators look to will want to make use of this capability to charging stations. It might be that in the future, some settings have to be changed in order to accommodate those elements in the charging station to accommodate those type of way of working.

But we decided that we are ready, but dependent on the way the charging operator wants to make use of this aspect, it might be that some, say, some future software settings are necessary to be adopted in order to accommodate those type of business changes. But we first step is that we need to implement, say, these charges, the different communication protocols and allow for a different use of the charging stations, and then in the whole value chain, all elements have to come into play to make that possible.

Ono Grubb, CFO, Alphen: Okay. I will take the adjusted first reported EBITDA. We have a difference of 1,300,000.0 in special items, and that that that basically is is the difference that that has to do with some onetime organizational changes and some additional costs that we’re making for redesigning our R and D organization. Net debt ratio at this moment in time for the end of Q1 was 1.7. As you know, we have agreements with the bank that it can go up to 3,000,000 sorry, three times.

And of course, this isn’t something that we closely monitoring, not just from an actual perspective, but also looking forward our expectations and are we staying within the confidence. And at this moment, our forecast is indicating that we are staying very much clear of the €3,000,000 borderline that we agreed with the bank. On inventory perspective, inventory including the down payments that we have made December, it was 1 and €14,000,000 In March, it is €117,000,000 The increase is very much driven by the fact that we ordered some additional batteries with our main supplier, CTL. So the increase in inventory was due to energy storage systems. Smart Grid Solutions went down slightly, but about a million, and EV charging equipment went also down with around 3 to 4,000,000.

Tys Berghelder, Analyst, ABN AMRO Auto BHF: Are you saying inventory $1.01 7,000,000, end of March?

Ono Grubb, CFO, Alphen: 1 1 yes. Including down payments. So I

Marco Rollevelt, CEO, Alphen: if you if you take

Ono Grubb, CFO, Alphen: a look into our annual annual report, you hey. You would see down payments to be reported somewhere else, but we take a look at down payments because we consider them to be inventory, including down payments is €117,000,000

Tys Berghelder, Analyst, ABN AMRO Auto BHF: Yeah, Clear. Then a follow-up question on energy storage. Can you maybe indicate what the order intake in q one roughly has been, and roughly what you added after q one. That’s still not really clear to me.

Ono Grubb, CFO, Alphen: I will I will get back to you in a second. I’ll double.

Tys Berghelder, Analyst, ABN AMRO Auto BHF: Yeah. Okay. Thanks.

Saskia, Call Moderator/Operator: And we now move on to a question from Thibault Lenire from KBC Securities.

Thibault Lenire, Analyst, KBC Securities: Taking a look at their historical gross profit margin and especially looking at smart grid solutions, the the margin right now was with 24%, not that high. Now if I look at the historical gross profit margin in 02/2019 and 2020, it was above 35 percent. At that point in time, energy storage system was still relatively small as well as EV charging. So I’m trying to understand how you get from plus 35% gross profit margin in 2019 and 2020 towards the current gross profit margin in for smart grid solutions of 24%. I know that the product mix played a role, but I am wondering, especially given the fact that the ASPs increased significantly for Smart Grid Solutions from 2019, ’20 ’20 to now.

So I’m just trying to get a better understanding in the long term dynamics of the gross profit margins in the Smart Grid Solutions business, especially given almost a doubling in the ASPs.

Marco Rollevelt, CEO, Alphen: If you look to ASPs, it’s for also a large part related to the fact that, say, the average, so you call it, power rating of the substation has increased, while we historically supplied two fifty kVA, 100 kVA also as part of our portfolio. We see now a shift to six thirty and even 1,000 kVA, where also the associated components in transformers and high voltage switchgear is contributing a lot to the increase of the average sales price. And if you look to the gross margin situation is that, say, due to the back of the situation of last year, we still have, say, for part of this year, a little bit of higher cost price in relationship to the effect that we need to include iron reinforcements to be able to give comfort to the grid operators about the quality of our product. We we are thinking that with the somewhere in the February, we will be able to to resolve that. And and that we also see, let’s say, in the latest round of, say, tenders with the grid operators, given the high end numbers, we more or decreased our gross margin a little bit compared to the situation a little bit before that time period.

Thibault Lenire, Analyst, KBC Securities: Okay. So part of it is temporary and part of it because we do go towards higher switchgear components. If that trend continues in the future, that’s with further with pressure on the gross profit margin in the mid to long term.

Marco Rollevelt, CEO, Alphen: That’s correct.

Ono Grubb, CFO, Alphen: And

Saskia, Call Moderator/Operator: from ING, we now have Thijs Hollisterle with our next question. I

Thijs Hollisterle, Analyst, ING: have a question about the Energy Storage business. What is exactly the nature of the project contingency released in the first quarter?

Marco Rollevelt, CEO, Alphen: ’2 things.

Ono Grubb, CFO, Alphen: Basically, we do is when we calculate a a project, and you you you always take into consideration that something might go as as you anticipate. And then over the the course of the project, turns out that things are going better than than originally anticipated, you can release some of the contingencies. So that’s more or less kind of what’s happened there. On top of that, what you do see is that there is a certain timing effect, and it’s small. But, I mean, because of the thing that’s affected, the prices went down quite rapidly last year is between order intake and the the and the moment that we order batteries with our main supplier, there there could be one or two weeks in between.

And in in this case, there there there were a couple of those cases that basically were in our advantage. We try to keep that as close as possible, the the the timing effect as close as possible because something that basically is now in your favor could otherwise also be not in your favor. So it’s not one of the things that we are trying to accomplish, but it’s actually trying to reduce it as much as possible.

Thijs Hollisterle, Analyst, ING: Okay. Yeah. That that is clear because I’m a I’m a bit concerned about specifically that business because it’s indeed a project based business. And, also, you’re you’re mentioning that the projects are getting larger. Yes.

So there is indeed a lot of risk that you have, yeah, arbitrage cases that there are variation orders with clients, and you have to I mean, on revenue recognition, recognition accounting wise, it’s fine. It’s proceeding the execution of the project, but it is kind of arbitrary on the profit taking. You’re following a conservative approach here because that’s yes, that is quite important for me.

Ono Grubb, CFO, Alphen: Yeah. And I think, yeah, we yeah. We yeah. I’m conservative in the sense that we are following IFRS, which doesn’t know the term conservative. But now we we we try to make sure that we that that, yeah, we follow the regulations.

Thijs Hollisterle, Analyst, ING: Yeah. So any, let’s say, potential hiccup or change which increase the cost has been booked and reported immediately and not, let’s say, at the end or that you take a view that you might recuperate some of that at the end of the project?

Ono Grubb, CFO, Alphen: Correct.

Thijs Hollisterle, Analyst, ING: Okay. That’s helpful. And then I also have a question about, are there, at the moment, let’s say, internal discussions being held about, let’s say, the potential pitfalls in the communication of the complete energy transition value chain. Some in the light that maybe some industry participants have been snake charmed by the initial years of strong growth, which leads to, yeah, constant downward adjustments on everybody’s ambitions, plans, investments, and orders, and that’s been feeding to Alpha, which you’re basing your your outlook on. How are these discussions being held at the moment?

Marco Rollevelt, CEO, Alphen: If you look at, say say, the the broader picture, let’s say, energy transition and and the constraints within the the grid in especially in The Netherlands, they are quite known. That’s also why in the past years, the cooperation of the grid operators through NetBeam, they’ve made a very big of what is needed try to translate it to an investment plan. And also because the governments, whether it’s local governments or central governments, are more or less responsible for the ownership of the grid operators, but also they need to be able to participate in the, say, political element to a free up money to be able to support the investment they have to do. So in the past years, there have been many discussions between grid operators and the government, whether it’s local governments or central government, but also with the suppliers in the whole value chain, what is needed in the coming years so that everybody could anticipate on, say, the requirement step ups. What we see now is that, say, the step up is still necessary.

On the other hand, also, we see a combination of practical constraints, whether that’s now the nitrogen situation or the ramp up in installation capacity. This also might be included more or less on sheet seven of our webcast, more or the numbers of technical personnel needed to be able to support those electrical the addition of substations in the grid, that those elements, although everybody is anticipate try to anticipate all the growth and also is convinced of that the growth is necessary, that the practical constraints are at this moment making that the ramp up is not as anticipated. And therefore, we also took the approach that for this year, we said we don’t expect that growth to be there. And for next year, although we see already elements come into play that might support this, but we are careful in not already putting that in our numbers because it could well be that the time needed to be able to realize the temp up could be even a little bit lower than only this year.

Thijs Hollisterle, Analyst, ING: Yeah. Okay. So, yeah, indeed, you’re already making downward adjustments on the poolingness of your of your customers because indeed, Alfa is listed and those guys are not. So I would indeed be as conservative as possible if I were you guys. And

Saskia, Call Moderator/Operator: our next question now comes from Jeremy Kinkert from Vallanschott Kempen.

Marco Rollevelt, CEO, Alphen0: A couple of questions, just digging a bit deeper into the competition in the EV charging home segment. Can you talk more about the people or the competitors who are initiating this competition? Are they Chinese or non Chinese competitors? Do you know if they are profitable? And also, can you split out the minus 27% decline you had in EV charger sales?

Can you split out how much of that was due to higher competition and how much of it was due to the temporary impacts you mentioned in the public segment?

Marco Rollevelt, CEO, Alphen: If we look at, say, the temporary impact, if we still do the average of the elements of revenue in 2024, then the average in the all the quarters was around €5,000,000 So in 2024, not all quarters were the same, but that is the average number we you could consider also for, say, the this quarter that was more lagging behind. And if you look to the situation of the the whole market, we see different type of players. We see some areas where we see Chinese players, but also we see some semi European players, whether that’s Zaptek or easy from Norway or, say, Spanish competitor, but they are mainly operating for, say, standardized charging stations that could be and that that the primary function is just to charge the car but are less equipped to be able to be steered by the charge port operator to accommodate also future type type of business that also can be modified according to the wishes of the charge bond operator. And we see that entry level of the market, which is more price oriented, that companies that are aiming for, say, the price approach are at this moment gaining some share.

Ono Grubb, CFO, Alphen: And and maybe on the question. Yeah. Sure.

Marco Rollevelt, CEO, Alphen0: Go ahead, I was just gonna say, therefore,

Ono Grubb, CFO, Alphen: is it fair to assume that

Marco Rollevelt, CEO, Alphen0: some of these competitors are not profitable then?

Marco Rollevelt, CEO, Alphen: That is you can assume, but to say we didn’t make an investigation in that about, say, how all those parties are more or less targeting this market because not all of them are public. So I think it is too easy to say some of them are loss making. On the other hand, we know some of them are loss making, but doesn’t mean that everybody is operating in the same way in this segment.

Marco Rollevelt, CEO, Alphen0: Great. And then one final question. Obviously, you had a discussion with Paul just before about the EV sales data, which was obviously very strong for the first quarter, but obviously, it dropped off in the month of April for The Netherlands. But if you look at some of the other countries which you’re exposed to, like Germany and maybe, to a lesser extent, Denmark, the EV sales data remains very strong in those markets. So I was just wondering if you had any other evidence or any other color which you could help give us to better understand your guidance as to why you think the second half of the year will be softer as a result of the changing CO2 regulations.

Marco Rollevelt, CEO, Alphen: If you look to the countries, the the the the overall picture in there is quite complicated. If you look to April, we see Netherlands and France being a little bit more or less flat or a small positive. Germany has a big increase also in April. But say, there is, for us, sometimes complicated to have, say, the direct donation of the sales of electric cars and the increase of numbers of charging stations. What we typically see, there is a delay in the ramp up of cars coming to the market or registration of cars because that’s also not maybe the right word because registration doesn’t mean directly that the car is already driving, that there is a delay in number of charging stations follow-up.

On the other hand, we are we don’t want to bank on those type of numbers and then anticipate, and then we are now taking approach that we most leading the fact that we see happening with our distributors and market parties operating in the market and use that information to predict more or the numbers for the coming quarters.

Ono Grubb, CFO, Alphen: Thank you. Understood.

Saskia, Call Moderator/Operator: And from the idea, we now have Martin Verbique with our next question.

Ono Grubb, CFO, Alphen: Martin Verbique, the idea. You have revised down with your revenue as well your EBITDA margin, but still, that decline is much less than the drop you expect in the gross margin. Estimated it about €5,000,000 That means that your savings of, you indicated, of 13,000,000 should go up to 18,000,000. That’s up 35%. So could you provide more color how you will achieve that that kind of saving?

Your your number is slightly higher than the number that that we are calculating, but, I mean, we have to I I think I said I indicated that we are looking in every part of the company to to realize savings, and that is in in in the products that we are that we are buying, but that is also in the organizational that’s in the organization that is on operating expenses, etcetera. So it’s it’s it’s somewhat of an effort that we will go through. But at the same time, I think we also believe it’s it’s doable. Thank you.

Saskia, Call Moderator/Operator: And we have a follow-up question now from Nikita Dalal from Deutsche Bank.

Nikki Dallal, Analyst, Deutsche Bank: One question on the CO2 targets. I mean the EU Commission confirmed for now the 02/1935 target to reach zero emissions. The industry, however, is already discussing some kind of softening of this target. What is your expectation on the BV market if the EU Commission drops the so called ICE ban? And should we expect that the charging business will not pick up in the long term if this will happen?

Marco Rollevelt, CEO, Alphen: This is a complicated debating question.

Ono Grubb, CFO, Alphen: If you look

Marco Rollevelt, CEO, Alphen: at the long run and all elements that are now into play within the European space. I think one of the general now being in the general direction is still that at the end, that electrical driving is the way forward. We see that supported not only by, say, regulation elements, but also that we see also that, say, the cost price development of a battery vehicle is coming down. And we also see already, you can best compare it in lease car situations that the run I call it, run price of an electric car is now also going down as a consequence of price, but also therefore, the overall acceptance in the market of the electric car will be not only related to is the government forcing us into that direction, but also the economical element will come into play. And all in all, we are convinced that even there might be an element of softening of the CO2 targeting in whatever way, we are convinced that the electrical driving will still continue.

Nikki Dallal, Analyst, Deutsche Bank: Okay. Thank you.

Saskia, Call Moderator/Operator: You. And as there are currently no further questions in the queue, I would now like to hand the call back over to you, Mr. Rodefeld, for any additional or closing I

Ono Grubb, CFO, Alphen: still owe a question to Thijs, so I’d like to answer that one. Battery intake for for q one, about 35,400,000. And battery intake in the second quarter, I’m be a little bit less precise, but it’s north of 40,000,000.

Marco Rollevelt, CEO, Alphen: Okay. On our debt to question being answered, we would like to thank everybody for participating in this response and the questions that have been proposed, and we’re happy to engage you again if there are any further questions on a later moment. So thanks, everybody, for participating. Speak to you next time.

Saskia, Call Moderator/Operator: Thank you for joining today’s call. Ladies and gentlemen, you may now disconnect.

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