Earnings call transcript: HydrogenPro’s Q2 2025 results show energy gains

HydrogenPro reported its Q2 2025 earnings, highlighting a revenue of NOK 13 million, largely driven by the Salcos project. Despite facing challenges with transport and storage, the company improved its EBITDA slightly to -NOK 48 million from the previous quarter’s -NOK 50 million. The stock saw a minor decline of 1.26% in pre-market trading, reflecting investor concerns over continued net losses and a shrinking cash balance. According to InvestingPro data, the company’s market capitalization stands at $29.8 million, with the stock down over 67% in the past year.

Key Takeaways

• HydrogenPro’s Q2 revenue was NOK 13 million, primarily from the Salcos project.
• EBITDA improved slightly to -NOK 48 million compared to Q1.
• The company implemented a cost-saving program targeting NOK 40 million in annual savings.
• A new production line in Aarhus was launched, enhancing electrolysis technology.
• Stock price declined by 1.26% in pre-market trading.

Company Performance

HydrogenPro’s performance in Q2 2025 showed some progress despite ongoing financial challenges. The company’s revenue was primarily driven by the Salcos project, while a cost-saving program was initiated to address financial pressures. The energy consumption improvement in electrolysis technology and the launch of a new production line in Aarhus demonstrate HydrogenPro’s commitment to innovation.

Financial Highlights

• Revenue: NOK 13 million, primarily from the Salcos project.
• EBITDA: -NOK 48 million, a slight improvement from -NOK 50 million in Q1.
• Net Loss: NOK 76 million.
• Cash Balance: Decreased from NOK 165 million to NOK 107 million.

Outlook & Guidance

HydrogenPro’s forward-looking strategy includes expanding manufacturing capacity and exploring new markets, such as the Middle East. The company aims to enhance its technology and maintain its competitive edge in energy consumption and electrode performance. Guidance for FY2025 and FY2026 indicates a focus on improving EPS and revenue, with projections of -0.17 USD and 42.64 USD for FY2025, and 0.07 USD and 174.84 USD for FY2026, respectively.

Executive Commentary

CEO Jarle emphasized the company’s focus on core electrolysis technology, stating, "We are a pure play OEM company focusing on core electrolysis technology." CFO Martin Holte highlighted the global scale of their business model, saying, "Our business model allows us to pursue projects on a global scale." These comments underscore HydrogenPro’s strategic direction and commitment to maintaining and developing partnerships.

Risks and Challenges

• Transport and storage issues impacting gross margin.
• Continued net losses and reduced cash balance.
• Market volatility affecting stock performance.
• Dependence on key projects like Salcos for revenue.
• Potential challenges in expanding into new markets.

HydrogenPro’s Q2 2025 earnings call revealed both advancements and hurdles, reflecting the company’s ongoing efforts to navigate a challenging economic environment while pursuing technological innovation and market expansion.

Full transcript - HydrogenPro AS (HYPRO) Q2 2025:

Jarle, CEO, HydrogenPro: Good morning, and welcome to HydrogenPro’s second quarter presentation. Today, I’m accompanied by CFO, Martin Holte, who will present the financial figures. And I will take you through the highlights and our recent developments, market updates and our partnership strategy. About Hydrogen Pro, I know many of you have seen this before. But for those of you who do not know us so well, we are what we call a pure play OEM company focusing on core electrolysis technology, which is well suited for the renewable energy sources.

We deliver high pressure electrolyzers and the gas separation skid. We are addressing market for decarbonization of selected large scale industry segments already using gray hydrogen for or where decarbonization is hard to achieve through electrification. Hydrogen Pro is delivering to two of the largest projects in the world. A 220 megawatt project starting up now and a 100 megawatt project, which we have delivered main components and now producing our third generation electrodes in our new factory. Few other electrolyzer OEMs are delivering to projects of the same scale.

Of recent highlights, HydrogenPro announced last Tuesday a partnership with Indian EPC and technology company Thermax. Our new production line in Aarhus is now fully operational producing generation three electrodes to the Sulcos project. And three hundred inaugurated its Geiger assembly plant for hydrogen pro electrolyzers in Erfurt, Germany. We completed the last transaction in the 140,000,000 equity raise by our partner Longge finalizing their contribution of 70,000,000. We have improved and continue to lower the energy consumption for our electrode technology based on the full scale testing and new production line in Aarhus.

In second quarter, we saw several European projects receiving EU funding from various programs and now initiating engineering studies and inviting to tender process. Health and safety being on top of our agenda. It is satisfying to see the good trend continuing. The ASUS project as we call it is now ready for hot commissioning and ready to start the first electrolyzers. I must say things are going in the right direction at site and we will for sure hear more from them as they are progressing towards full operation in the next coming weeks and months.

On the SALCOS delivery, we have delivered all components and assembly of the generation two electrolyzers coming to completion. As some of you might remember, approximately 50% of the electrolyzer consist of generation two electrodes and 50% of generation three electrodes. And we have now started production of generation three electrodes in Aarhus which will produce will be produced and delivered during the next months. ANDREITS is demonstrating their commitment to the energy transition and having invested in a Giga capacity line for assembly of hydrogen pro electrolyzers. The Salskyter electrolyzers are currently being built now in the Erfurt plant.

The new coating line which is actually called line one despite we’re having one former a smaller line is now in operation. We are currently producing the generation three electrodes for SALCOS as I mentioned. And it is encouraging to see the quality results from that line. It’s high consistency and very good uniformity which improves performance in the electrolysis process. The full scale test last spring, we saw significant improvements, but some variations between electrodes protruding in the old production line.

Now we are eliminating any variations. We’re focusing on increasing productivity, but at the same time expanding quality control and developing new and even better recipes for enhanced electrolysis performance. And I am happy to see that the new line is actually giving us a great platform for further improvement driving down the levelized cost of hydrogen. Comparing various electrolyzer OEMs, few are documenting performance data based on physical measurements of energy consumption and produced gas volume. We have to recognize that measuring gas volume is difficult As hydrogen is a very light gas and it’s difficult to accurately measure the volume.

And this is one of several reasons why we together with ANDRIDs conducted a comprehensive full scale test of the electrolyzer as we informed last quarter. The good results was physically measured and well documented as to where we stand. It has also given us a unique insight in areas we can improve further to put Hydrogen Pro in the absolute forefront. With a combination of full scale testing and a stable and uniform production of electrodes in the new line one, I will show you something very interesting. The main cost factors when producing hydrogen is the energy consumption per gas volume unit measured in either cubic meters or kilos.

The energy consumption is measured by the voltage in each cell. The graph I’m showing is illustrating the constantly measured cell voltage over time. There are three things we can observe. The first, you see a big gap between the upper curve and those below. The upper gray line is showing the cell voltage of what we call generation two and what we have delivered to for instance project.

They are uncoated. The red line marked full scale test is the result of the test I just showed you and produced on the original coating line, the old one so to speak. And there’s a difference of 17% in energy consumption. The second thing you see is that all curves start quite low and are increasing in the beginning for then to flatten out. This is an immediate degradation effect you will see in any electrolyzer.

And here, it is the matter of getting the curve as low as possible and to flatten out as quickly as possible. The third thing we can observe is under the red line. There are several lines close to each other, purple and green, each representing an improved new coating recipe for electrode plating. We will not produce all these, but are now testing them out in lab scale for further and larger testing in September, October in our stack test center in Pozkron. With these improvements together with shunt current improvements we have developed, we will get down to record 4.5 kilowatt hour per cubic meter and hopefully even better.

We will update you as soon as we continue our performance improvements. And this concludes my first part of the highlights and recent developments. And I will now give the word to Martin.

Martin Holte, CFO, HydrogenPro: Thank you, Jarle. Then I will go through the financials for the second quarter this year. So revenues in the quarter came in at 13,000,000 and these revenues mainly relates to the deliveries to the Salkos project to Andrits, which is our customer. We are now ramping up the manufacturing in Denmark and the remaining share of our deliveries now to the Salkos project will be delivered from Denmark during second half of this year. Gross margin in the quarter was 22% negatively impacted by some issues related to transport and storage on our delivery to the Salkos project.

Personnel expenses were down NOK 7,000,000 versus the second sorry, versus the first quarter mainly due to the fact that we now start to see an impact of the cost saving measures. The EBITDA came in at minus NOK48 million compared to minus NOK50 million in the first quarter. Net financial expenses are driven by an NOK 18,000,000 impairment of the convertible note to DG fuels. DG fuels has suffered some delays on their first project in Louisiana and a fair value assessment has resulted then in this impairment. The net loss in the quarter ended at 76,000,000.

Then let’s look at the development in the liquidity position in the quarter. So the cash balance at the start of the first of the second quarter was 165,000,000 and ended at NOK 107,000,000. So the changes in the cash position were as follows. The EBITDA was minus NOK 48,000,000. Changes in net working capital of minus six driven by an inventory buildup.

And in the quarter, we recognized 2,000,000 of investments. The investment budget, that is unrelated to the ongoing expansion in Denmark. And investment budget was originally at NOK 70,000,000. We have reduced it to now NOK 60,000,000. And by end of the second quarter, we had recognized some million out of that, meaning that there is a remaining NOK25 million to be paid during the 2025.

And important to say, the equity investment from Lundy is not reflected in the cash balance at end of the second quarter as that transaction was completed in July. The backlog was decreased from 318,000,000 to 287,000,000. Cost discipline is very important to us and we have initiated a cost saving program consisting of three main elements. One being downsizing in Europe, reduced use of external consultants, and number three reduced cost in our China operations both in Tianjin and in Shanghai. We have previously guided that we will take out more than million annually and we are on track to deliver on that.

We as of end of the second quarter, we have achieved more than NOK25 million. And in the second half of this year, we then plan to take out an additional NOK15 million, mostly rated then to reduced activity in our operations in China. So that will place us in a position by end of the year to take out more than 40,000,000 of annualized savings. I’ll now give the word back to Jarle who will go through the market update.

Jarle, CEO, HydrogenPro: Thank you again, Martin. In the last quarterly presentation, quarter one, I highlighted the three market geographies we are focusing on. We have a foothold in The US, which we maintain together with Mitsubishi Power America. But since the last quarter, we see that the projects are moving quite slow towards possible FID. The so called 45 v in the IRA policy was expanded with two more years which is good.

But with the effect that the already granted project FIDs are being pushed out in time as they have two more years to break ground and get still get the incentives. The market is by no means dead but developing slowly. Europe remains our main focus together with Andrids. And Tuesday this week, I announced our cooperation with Thermax and thereby getting a foothold in India. Our next step is to get a foothold in The Middle East and I’ll give you a bit further on the rationale for the three main focus areas.

This is a busy slide, but in essence describing the regions with most attractive prerequisites for hydrogen production. The world map in the background picture paints the attractiveness for hydrogen production based on cost effective renewable resources. The green areas, we see countries and regions like India, Middle East, North Africa and South America and Australia as the most attractive in addition to parts of Scandinavia. But on top of the attractiveness based on renewable resources, there are three main drivers as based for hydrogen production. Economics obviously being one that is production cost and competitiveness in the country or region itself.

Regulatory incentives and obviously off take. Based on these drivers, we see that China having the strongest prerequisites for hydrogen economy with all three drivers in green. Other areas are coming up much driven from low renewable energy in own region but based on off take markets in Europe. Looking closer at Europe, infrastructure and distribution are key factors for driving demand and a 122 gigawatt of pipeline of project has been announced with COD by 2030 and also resulting in a compounded annual growth rate around 30%. This means that the projects are going into pre engineering and tender requisites.

We see competitive energy prices in countries like Spain and The Nordics, but higher production cost than for instance Middle East and Africa. Europe has also the strongest regulatory regime to support the energy transition. And developers and strong EPCs like our partner Andrids are taking position in this development. Regulatory incentive schemes and funding programs have for long been unclear. But they are now taking shape and as we have seen during the last six to nine months.

We see more developers initiating engineering studies and tender invitations. With Spain and parts of Northern Europe in the forefront together with Germany. India after China is emerging as the fastest growing hydrogen market with some of the lowest levelized cost of hydrogen due to attractive renewable energy prices. Hydrogen becomes competitive to other energy sources. And also, India is dependent on importing fossil fuels and to lower their dependency of imports, get resilience and increasing self sufficiency of energy production and at the same time reducing carbon emissions are now factors excelling the hydrogen projects.

India is a very competitive market in all aspects. But public tenders, as we know are seeing coming out, are limiting Chinese suppliers due to political climate. Most of the off take will be for domestic consumption, but the low levelized cost of hydrogen, also opens up for export of, for instance, ammonia and biofuels. The Middle East and North Africa are two other regions with attractive prerequisites for hydrogen production. Renewable energy prices are among the lowest in the world, if not the lowest.

Although The Middle East fossil energy driven economy, we are seeing strong drivers for utilization of renewable energy. With an off take, not only for export on low levelized cost of hydrogen, but also for domestic consumption, for instance, in refineries. After India, our next ambition is to establish a foothold in The Middle East. Thermax is a very good fit for HydrogenPro when entering the Indian market. We wanted to enter the Indian green hydrogen market through a mid sized asset light partner, but also with an already strong project pipeline and short timelines for execution.

We have targeted partners open to a fair deal enabling viability and also even under tough conditions as we see in India. But also having shared that we share the same common values and compliance. We preferred one with potential to evolve in a low cost manufacturing hub outside China and leverage current restrictions on Chinese suppliers in public tenders. We can also use assembly in Europe, but private projects remain open also to Chinese importers. The main collaboration spectrum or the key highlights that we see together in our cooperation agreements is number one, exclusive rights in India for alkaline electrolysis system including after sales and upgrade.

That means that, Termax will now supply on an exclusive basis our electrolyzers that we are manufacturing. On the after sales they will provide the service but we will then provide the upgrade and the electrodes coming from Denmark. We are together with local manufacturer and co development of our gas separation units. As some of you know, we are not producing the gas separator unit ourselves. It has been outsourced earlier in earlier deliveries.

But we are the technology owner. We design it and we develop it. And now we will, based on our technology, modify it to the Indian market. We also have a deep technical collaboration on engineering and localization of other subsystems and components. And we also have a provision in the agreement to possibly set up a stack assembly facility in India.

And there’s a life cycle support with O and M and refurbishment facilities if needed. And also, right now, Termax is setting up what we call a short stack test station, and that will be established to jointly develop advanced solution for India and also possibly other emerging markets. The Lundgie equity investment was completed in July, which enabled us to fully engage in the cooperation process. And we are now together with Lundgie working on a comprehensive strategic partnership program, which will cover all complementary areas from manufacturing footprint to optimize the supply chain. So throughout the whole value chain.

By with this cooperation, Hydrogen Pro will now have gigawatt delivery capacity from an expanded manufacturing footprint. But at the same time, we are able to reduce our fixed cost base and avoiding more capacity into the market. Lundgier has a broader scope of balance of plant delivered than Hydrogen Pro currently has, which offers an area we see potential of an expanded product offering. Hydrogen Pro on the other side offers high performing electrodes in Aarhus and European local content solutions together with Androids. As presented in my initial slide, Hydrogen Pro is focusing on core deliveries which is marked with the square number one in the picture.

Through our partners, it puts us in a stronger position and addressing the market but also developing the technology. So when HydrogenPro is focusing in development and offering of its core technology and equipment, the partners provide the full project scope for hydrogen production and risk sharing at levels that Hydrogen Pro would not be able to alone. And to illustrate the type of partnership we are developing, common for all partners is that they are committed to energy transition and to hydrogen. They represent a broader delivery scope and gives bankability towards the customers and having strong technical and engineering resources. And we will continue to maintain and develop all of our partnerships foremost by broadening market and customer reach, but also on a broadened project offering and technology development beyond what we could have done alone.

The model we have with Mitsubishi, Andrids and Lunde is an objective for all partnerships we are entering. And with this, I would like to invite Martin back on the stage and opening for questions. Thank you.

Moderator/Analyst: So revenues from field studies are zero now. Is it just a temporary or part of the strategy that only partners are responsible for gaining projects and the Hydrogen Pro delivers the electrolyzers? What is the strategic rationale for Longi to stake stake in Hydrogen Pro?

Jarle, CEO, HydrogenPro: On the the feed study revenue, it’s clearly our partners being in the front forefront. They are addressing the customers and they are also having large staff of engineers and service functions for FEED studies. It’s natural that we share parts of it, and we will see that coming in the future, but not going into specifics right now. There was some more to that question.

Moderator/Analyst: The strategic rationale for Longitude to take stake in HydrogenPro?

Jarle, CEO, HydrogenPro: I think we have explained both at the time of announcing the whole equity transaction back in January and further also in the previous quarterly presentations. The rationale is that we see that there are synergies as I explained that we can take out. We see that we can optimize on the manufacturing footprint. We see that Longhi for instance from our side is strongly engaged in solar project, which we also see some of them expanding into hydrogen projects downstream. And for Lundgier’s part, they also see that HydrogenPro has a strong brand and a good foothold in Europe and good possibilities for cooperation in that aspect.

In addition, they value the technology and the development we have at our coating factory, electrode factory in Denmark. So this is probably not an exhaustive list of rationales for the cooperation and the equity injection, but some of the most important.

Moderator/Analyst: Next question. What do you consider long term reasonable gross margin for Hydrogen Pro?

Martin Holte, CFO, HydrogenPro: Yeah. So, of course, as you know, we don’t guide on on financials. But to put it in perspective, in in the second quarter, we we had a gross margin of 22%, and that was negatively impacted by some additional costs mainly on the salt cost project that was mentioned in the presentation. So we have adjusted for those costs, the gross margin, which is calculated revenues minus raw material cost, then that would end at 62%. Of course, the numbers in the quarter with activity level is fairly low, but that tells at least that we are aiming for a considerably higher gross margin level than what we delivered in the second quarter.

Moderator/Analyst: And also can you talk a little bit about the impairment of DG fuse convertible notes? And are there anything to recover?

Martin Holte, CFO, HydrogenPro: Yeah. So, of course, when we publish financials, we do a fair value assessment of that note. That was a convertible note that did you that the Hirendt Pro entered into back in late twenty twenty one to be a part of to fund their first project in Louisiana. That project has suffered some delays. We have now reviewed it one more time and concluded that there is now a need to to do an impairment of 18,000,000.

So there is a nominal value of that of 3,000,000 which we invested, and we have then made an impairment. So in our books today, it stands at 1,200,000.0 US dollars. And we believe that’s a fair assessment of the current situation where they’re at.

Moderator/Analyst: And what is the latest status on the electrolyzer commissioning and the startup at the ACIS project?

Jarle, CEO, HydrogenPro: Thank you. As I mentioned in the presentation, we are now right at the startup. So it’s taking place actually these days as we speak.

Moderator/Analyst: And what is the status on the potential 100 megawatts new order from Andrett?

Jarle, CEO, HydrogenPro: The the potential is is there. The we believe that this project will materialize.

Moderator/Analyst: And could you also give a short update on the status on the 100 megawatt project where the FID was due in June?

Jarle, CEO, HydrogenPro: It was well, that was the same we just answered.

Moderator/Analyst: Another question is related to Thalmax. And could you talk a little bit more on the test station with Thalmax? Will the electrodes be produced in India?

Jarle, CEO, HydrogenPro: Or Yeah. Now the test station that we mentioned, that’s like in a relatively smaller scale size and where we will test basically materials that we could use for certain components in the electrolyzer and see if either obviously giving increased improvement. It’s part of our 30 bar development project that we have commented on before and also on the cost position, if we as a supply chain matter. However, there will be no electrodes produced in India. The electrodes will be produced in Aarhus and we will never outsource that type of production.

What could be in the future when we see the market growing and we see also orders being placed that we could, as we have in Europe, possibly set up an assembly entity in India.

Moderator/Analyst: So we have time for two more questions. One is related to what do you what do you see for HydrogenPro’s business model going forward?

Jarle, CEO, HydrogenPro: Well, what I see as the Bidzen model is that we have the technology, we develop the technology. Going to market, we are focusing on the strongest regions to get a foothold there, but in strong collaboration with strong partners who can cover EPC, can cover some technology, giving us as well technology development support as we have seen strongly and successfully with Andrids. And we also now see with other partners taking place. And providing, call it, stronger bankability to the various projects. Those being the main factors.

But the core technology and the ownership of the technology will remain with HydrogenPro.

Moderator/Analyst: Last question. Could you also please give a short update on the development of a pipeline?

Jarle, CEO, HydrogenPro: Martin, will you comment on that? I think we have said before, it’s pretty stable. There are obviously projects which are canceled or delayed so long that we do not count them anymore. But at the same time, as I mentioned in my presentation, there are projects now that we see coming in, request for tenders, where we have given tenders and where we are in further discussions. But plus and minuses are remaining basically the same and which is the reason why we didn’t show a pipeline figure this time.

Anything more? Yes.

Martin Holte, CFO, HydrogenPro: And as Jare said, which translates a bit into our business model as well. I think I alluded a bit to it through the presentation today, but we are still sort of with a with a lean setup at IronPowel. We we are still able to to to reach actually to pursue projects on a global scale. And that’s why we see now some tailwind and increased activity on tenders in Europe. But our business model allows us also to go into new markets.

Now we announced with Termux. We believe that the Indian market is extremely it’s extremely could be very attractive during the next few years, maybe even shorter as well. And now also moving into Middle East, we see significant opportunities in The Middle East, and we believe with our partnership strategy that we are in a very good position to also then move in to that region to take a large position there.

Moderator/Analyst: So thank you. In case you have further questions or your questions are not directly answered in this sending, you are welcome to contact us.

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