Earnings call transcript: PowerCell Q1 2025 sees 42% revenue growth

PowerCell Sweden reported a significant revenue increase in Q1 2025, achieving 42% year-over-year growth, building on its impressive five-year revenue CAGR of 38%. According to InvestingPro data, analysts expect sales growth to continue, projecting a 30% increase for the current year. Despite this, the company’s stock price fell by 3.14% to 28.68 SEK in pre-market trading, reflecting investor concerns over broader market conditions and foreign exchange impacts. The company continues to innovate with new product launches and maintains a strong industry position.

Key Takeaways

• PowerCell’s Q1 2025 revenue grew by 42% compared to the previous year.
• Stock price dropped by 3.14% in pre-market trading.
• Foreign exchange effects negatively impacted revenue by 18 million SEK.
• New product launches include a methanol-to-hydrogen fuel cell power plant.
• The company received a major OEM order worth 150 million SEK.

Company Performance

PowerCell Sweden demonstrated robust performance with a 42% increase in Q1 2025 revenue, driven by strong order intake and new product innovations. Despite the challenging market environment, the company maintained its competitive edge in the fuel cell technology sector. The rolling 12-month growth stood at 11%, showcasing consistent progress.

Financial Highlights

• Revenue: Increased by 42% year-over-year.
• EBITDA: Improved to -6 million SEK.
• Order Intake: Consistently over 150 million SEK for three consecutive quarters.

Market Reaction

PowerCell’s stock price fell by 3.14% to 28.68 SEK in pre-market trading following the earnings announcement. This decline comes despite the company’s strong revenue growth, as investors remain cautious due to foreign exchange impacts and broader market conditions. InvestingPro analysis shows the stock has experienced a significant 29.5% decline over the past six months, with a current market capitalization of 167.23M USD. The stock currently trades between its 52-week high of 49.8 SEK and low of 21.9 SEK, with a beta of 1.34 indicating higher volatility than the market.

Executive Commentary

CEO Richard Berkling emphasized the company’s pioneering role in the evolving energy market, stating, "We are acting on a novel market. Business development in any technology shifts requires the pioneer mindset." He further highlighted the importance of building infrastructure for green hydrogen, adding, "We cannot wait for the perfect solution with green hydrogen. We need to build the infrastructure."

Risks and Challenges

• Foreign Exchange Impact: Negative effects on revenue due to currency fluctuations.
• Market Sentiment: Cautious investor sentiment amid mixed policy signals.
• Longer Decision Cycles: Extended timelines for project approvals.
• Regulatory Variations: Geographic differences in hydrogen regulations.
• Supply Chain Constraints: Potential delays in production and delivery.

PowerCell continues to focus on expanding its installed base and enhancing system value, with a strategic shift towards structured OEM partnerships and commercial deliveries. The company anticipates growth in the power generation and marine segments, supported by its strong technological capabilities and partnerships. According to InvestingPro, the company maintains a healthy financial position with a current ratio of 2.37 and more cash than debt on its balance sheet. For deeper insights into PowerCell’s financial health, growth prospects, and 10+ additional ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.

Full transcript - Powercell Sweden (PCELL) Q1 2025:

Richard Berkling, CEO, PowerCell: Good morning, and welcome to PowerCell quarter one twenty twenty five presentation. We’re looking forward to spend half an hour together. It’s myself, Richard Berkling, and Anders Steading’s CFO since the last six months. So let us dive right into the quarter one presentation. We issued the presentation earlier this morning.

And as we have as a headline, it’s steady pace through rough waters. And we’ll try and elaborate on this one together now for the upcoming twenty five, thirty minutes. So we still see a rather interesting growth. 42% growth in quarter one is something that we’re quite proud of with 11% growth rolling twelve months. We are seeing an improved EBITDA to minus 6,000,000, which means that we are closing in on breakeven as is the ambition of the company, of course.

What was important to see as a performance highlight in quarter one was, of course, the large breakthrough order on our newly launched methanol to hydrogen fuel cell power plant, 150,000,000 as an OEM order, which was very, very encouraging. Not the least to the fact that we introduced this product quarter four last year to see that we get traction quite early on with new product introduction is, of course, very encouraging and important. Equally important is to also build industrial stability. So receiving the certification AS 9,100, which is a quality certification for aviation suppliers, is very important because it really proves that we are an industrial mature company, which is something that is extremely credible, important in the process or or timing that we’re entering into right now in the market phases. We see a decline in cash flow from working capital to customer orders, something that Anders will comment more on.

But we also see that we now, for the third consecutive quarter, have an order intake from product sales over SEK 150,000,000. So we continue to see this steady pace, but we also acknowledge the fact that it is a difficult market sometimes out there, especially when it comes to policy making and regulation. Moving on. If we come at the strategic execution and what we do, we now see that we continue to shift from the pilot driven sales that we have before to more structured OEM focused partnerships, particularly in the the marine and power generation sector. The new platforms such as the m two m two Power two fifty that we received the the large breakthrough order and the Marine System two twenty five that was introduced in quarter two last year, They are designed to support integration into the customer workflow.

This is not just technology evolution or that we are providing one off projects. We’re now designing in our systems into the customer offering, which is the important baseline of volumes that we’re trying to build with the OEM business. So the strategic focus is on growing installed base, but we also need to increase value per sold system, which is the the growth strategy of of PowerCell. Expand number of installation and, of course, expand value per installation. That is extremely important in the stage that we are in this technology shift.

We have a clear focus on supporting the long term industrialization at our customer sites. Achieving this AS 9,100 certification, as I I commented, it underlines the readiness to support really demanding applications, including aviation. But this is also relevant for our marine and power generation customers because we are now going into a phase where products are put into commercial operational use, and that means that we need to be able to support and control over a complete life cycle. So this is the introduction to the quarter one report. And if I hand over to you for the financial comments and updates.

Anders Steading, CFO, PowerCell: Thank you, Richard. Will start to just swiftly walk through some KPIs. Richard already mentioned some of them, but I would like to as you maybe have noticed in the report, there are some explanations about foreign exchange effects that has been affecting us in q one. The the the reason behind, and I think this is important as we is more a company that delivers according to percentage of completion in projects. When they are reevaluated, that impact our top line depending on the way the currency swings.

And in this quarter, it has affected us by minus 18,000,000 SEK. Those changes have occurred in the past, and they will occur in in the future. And we will be careful about making sure that, you understand how they impact us, from an accounting standpoint. Although it’s important to notice that as basically all our transactions are done in euro from a pure financial standpoint. This is less of an impact, more of a accounting situation.

And we will do our best to guide you and make you understand how that impact us quarter on quarter. However, in this quarter, it’s about 18,000,000 that affected top line and about 8,000,000 that affected the EBITDA level, both obviously in a negative favor for us. Looking into the cash flow, if we walk over there and we’ll go down to that line, I think when we had the large order in last quarter and we had the presentation, we were curious about we we were concerned about making sure that it was understood that the very strong cash flow in q four will have rollover effects into q one as we have purchased in q four, will pay in in q four, and start deliver not yet being able to invoice and collect in q one. That’s why we have the big shift, and one should, in order to understand the underlying flow, basically, even out those two quarters so that you find the the average between the two to make a more robust analysis and understanding of how we perform.

Richard Berkling, CEO, PowerCell: I

Anders Steading, CFO, PowerCell: think that I will make no comments on the equity ratio, but rather move into the next page, which is about sales and EBITDA development over time. We have spoken in the last quarter about that we would see a more, let’s say, even out sales during the quarter. We think that this first quarter is an indication of that. However, I think it’s important to recall that a a flat variance between or no variance between quarters in the coming year cannot be expected because we will still have the the the kind of hockey stick effect over the quarters, but it should be expected to be less articulated than it has been in the past. Looking to the EBITDA level, one can say that we we had last year in q two a hefty negative such thing that we have make differences to how we operate.

We have had leverage from our sales, and we have gradually been able to manage EBITDA in a better way. And, obviously, like, everyone can understand as we grow and if we continue to grow, we will soon and hopefully, which is an ultimate target for the company, find ourselves at a breakeven level. One can maybe have some some trust in that q four and q one in combination. It’s a breakeven on EBITDA level. With that, and looking forward to potential questions following on, I would hand over to Richard again to continue.

Richard Berkling, CEO, PowerCell: Perfect. So then if we move over to what is the strategic focus for 2025, this has been presented before, but it’s a good reminder, and it ties into what Anders said. Main focus is reaching breakeven on rolling twelve months. This is not the forecast that we will do that on in the current calendar year. But as Anders points out, for the last six months, we are now on rolling six months breakeven.

We are quite happy with the top line growth of 44% that are driven by the OEM contracts. That should not either be taken for granted going forward because what we do is not easy. We are acting on a novel market. Business development in any technology shifts requires the pioneer mindset. Pine PowerCell, we have set a very clear path.

And as I said before, we have a golden rule of growth strategy, grow number of installations in the market and grow your value creation per installation. When we do that, we will capture the volumes that are out there, and we will drive more penetration, and we have a clear perspective on how to create value for the end customer. What is important where we are right now as a company is also not just to grow from OEM OEM contracts, but to scale from existing product generation because that will drive towards breakeven and balance the cash flow. But with that said, we remain really strong in accelerating next generation of product portfolio because we need to continue to be competitive going forward as well. I stated this before, we could reach breakeven if sooner if we would delay future product development or technology development, but then we would jeopardize the future earnings.

So the whole management team is is extremely dedicated to find this balance point where we do enough innovation to to remain competitive and stay ahead with the offering that we have, but at the same time, growth so we can show breakeven on the early volumes in this technology shift. So we’re proud of the ability to balance innovation, industrial stability, and still leverage growth with a clear path towards breakeven. So that is the whole focus of 2025 on a higher level. If we look at it from a market perspective instead, we can now say that the market, and we have said this before, it’s shifting shifting market dynamics. We see now a clear direction going forward.

In the broader business context, it is challenging with a cautious market sentiment. We see longer decision cycles, and we have really mixed policy policy signals. When I say mixed, I’m being very, very, liberal in my interpretation. Despite this, we see continued demand from customers, and they have now a more structured procurement process, and they have the defined industrialization plan. This is a sign of a maturing market.

We also get encouragement from external assessments like the e n e r c, which made a long term reliability report, which is showing that this is not just about decarbonization. We need to get more energy resilience into, society today because we are sitting on rather old infrastructure, and we see a growing demand from electricity throughout the whole world. So that is a trend that is reinforcing our, our underlying business, and we see that we see clear cases of implementing our products into customer applications that goes beyond just decarbonization. So even though short time volatility is likely to continue, we remain really focused on executing against the long term fundamentals, and we do this with a realistic and adaptive approach. So if we then summarize where we see the market now and where we see ourselves, we see an ambiguous market characteristic, but we also see OEM driven sales rather than just subsidy driven growth or project driven growth.

There is an uncertainty around policy and regulatory aspects, but at the same time, we see clarity from IMO that is is pushing the marine industry to really support energy transition where it’s becoming business critical or a business advantage to be early out with a new technology because you are then future proofing your assets. We remain a technology leader and a product leader in the marketplace. We still have the best value added fuel cell technology in the industry together with Rob and Bosch. And we now can also, with some pride and and humble state that we have successful products that are reliable and high performance. We are now also going into the commercial deliveries.

So this is not just a technology exploration, but it’s becoming business critical for our customers. So we are starting serial delivery to commercial applications, and we are scaling our production. We’re actually running two shifts, PowerCell in Gothenburg since two weeks back. So if we then look forward to where you can meet us next, we have the AGM next week in Gothenburg. You’re more than welcome to join physically if you have the time.

Otherwise, we have the interim report for the first half on July 17, and then you can see the rest of the agenda or schedule going forward. So with this, we open up for more time for questions and comments from the the audience because that’s quite often where it’s most interesting. So we have a question from I cannot pronounce the name, Mark. Is Emoji still a customer to to PowerCell? Yes, they are.

We still have a very good collaboration with Emoji. Emoji is the leading provider of ammonia reformers to hydrogen in the industry focused on especially marine. We have a continuous dialogue with them, but as every part of a technology shift, some areas move faster than others. A year ago, ammonia was viewed as the ultimate solution for especially oceangoing marine vessels. Now we see that methanol have a slightly faster pace, time to market, but at the same time, ammonia remains one of the most important fuels to put into the mix, which is an energy carrier for hydrogen going forward.

So they are, for sure a very interesting partner for us to continue to work with. Then we get a question that is, of course, really relevant at the time we see right now from from Pamela. How do we see the potential impacts as they currently stand? Well, the problem with the question is the the final part as they currently stand. Tariffs tend to shift more on a daily basis on on what’s the current flavor from the White House.

We don’t really know. We don’t see at the moment a large export of going into The US, which would be the kind of underlying question. It would be high tariffs. It it would affect us, but it would most likely affect most of our competitors as well. So at the moment, we don’t see any significant negative effect for PowerCell.

We have an opportunity to source from Europe for the European market. We will have an opportunity to set up production or or final manufacturing in The US if that would be the case with a large customer because we have this asset light business model where we can more easily establish new assembly sites close to the customer. So it’s affecting our industry, but it’s more affecting our industry with uncertainty rather than actual cost that we have a difficulty managing. We have a question on Bosch and their ending their relationship with Sirius Power. How is our relationship with Bosch?

Do we notice any sign that they will end relationship with PowerCell? No. On the contrary. The fact that Bosch clarified their strategy to be PEM fuel cells only supported by also, their electrolyzer business. I think it’s it’s a very good focus for PowerCell because that means that Bosch is supporting our technology at the moment.

And we see strong, interest, especially in China, for the Bosch products that we have our technology designed into. So we have a very good relationship with Bosch, and they are still not just an major a larger owner at PowerCell, but they are also developing PowerCell as an industrial partner. So we have a very appreciated collaboration with Bosch. And then we have from Henrik Alderskog from Redeye. From the marine segment, you expect your methanol system to make up for the major part of new sales in the next few years considering restrictions regarding access to hydrogen?

That is a very good question. While we see restrictions regarding access to hydrogen, I think you referred to the green hydrogen. We also see a compensating trend where more customers are are accepting other versions of of hydrogen. We have now a more diverse view on hydrogen as a fuel. So we we have customers that we initially operate on gray hydrogen, perhaps moving to blue in the future.

Not a perfect solution. We all know that the green hydrogen is the best solution from an environmental perspective. But at the same time, I think it’s a very important and and appreciated Sometimes I say sobering up from the industry that we cannot wait for the perfect solution with green hydrogen. We need to build the infrastructure, and we need to get the value chain rolling on other sources of hydrogen because that would build the the volume, that would build the critical mass, that eventually will be the offtakers of the green hydrogen that is available. So methanol, yes, it’s complementing hydrogen, but it’s not replacing, and we don’t see it as competing.

I think it will be at short term, it will be determined on availability from a geographic perspective. And methanol is a good complement because it is available today in many areas where our both power generation, marine customers are operating. So it’s a really viable fuel to accelerate the deployment of fuel cells into industries where you need to go greener. And then we have a question from Henrik as well on the commercial products for Hitachi and HyFlex. Well, of course, equally with Bosch, we cannot comment on our customers’ business or our industrial partners’ business.

But we see from the communication from Hitachi that they have a really high activity related to HyFlex. They have communicated a number of customer partnerships and customer, applications. So hopefully, we will see that as orders coming into PowerCell, in the future. Then we had a question once more on the, which type of customers or segments will prefer methanol reforming versus prefer pure hydrogen. And and as I said before, it’s not necessarily so that we can distinguish its segments from a customer segment perspective.

I think that we will see or we expect to see growth both from power generation, marine, both with the methanol reform solution and traditional fuel cells with hydrogen. So it’s more about, as I said, availability of different fuels and also what kind type of installations you have and how fast you can get regulatory support for hygiene because that is sometimes limiting. We see California as a very good example. They are stimulating electrification in a very good way. They have funding available, but the regulatory process to get certificate for handling hydrogen is extremely slow.

That is why Texas, despite being more negative towards the green aspect of this energy transition, Deployment in Texas and buildup of volume in Texas is going faster than California because of the rather slow regulatory processes in California. So it will be interesting to follow this going forward. Interesting question from Danny here. In the long term perspective, plus ten years, what will be our main segment in in our business? And this is a question that we discuss constantly within PowerCell.

I’ve said in the past, and I still stick to it, I think that stationary power or power generation will be the dominant volume segment because of this issue of energy resilience that we see throughout the whole world. So from a volume perspective, that should be the the main segment. We will have the backup power, peak shaving, etcetera, main power in remote areas where you don’t have grid access, etcetera. So there is a a palette of potential applications where we see a a really interesting fit together with access to green sources of energy like wind and solar. And you have an energy storage in the form of electricity back while reforming it, and and then running through fuel cell.

So very interesting applications. Marine, think, will be very strong more from a financial perspective for power cell because those are more specific applications, much more demanding. So they will have a higher price for us and also most likely a higher gross margin. Both of these segments will have an interesting aftermarket revenue as well as we go forward. So marine and power generation, they are our main segments when it comes to growth of volume and also growth of of top line.

If we look at it with with aviation as an aspect, aviation has never been the volume segment for PowerCell. Aviation is our, like, formula one segment to automotive. This is where we push technology. This is where we expand the boundaries or or explore the boundaries of new products and features. We try new materials, etcetera, to qualify it for, our more volume segments.

So even though the new generation of fuel cell stack that you see on the image here, which is the the heavy duty stack that can be configured up to one megawatt. We are developing that with aviation requirements, and aviation is leading and accelerating that development and industrialization. Most likely, deployment as a product will happen in power generation and marine before because time to market in those segments are different than aviation. But aviation is still a very good accelerator for PowerCell and our products going forward. Now I commented on aviation.

I have a number of questions here from that. Also, the newborn project is developing. That is the collaboration projects around this new generation stack that is progressing well. We have a very solid consortium of fourteen, fifteen contributors led by Honeywell, and they are leading in this in a very impressive way. So we see good progress.

We have built a number of full stacks that we are running. We see very good progress when it comes to developing more performance from the stack. I think we have commented that we expect to have 55% better energy density, which of course then gives us more power at a smaller footprint at a lower cost. So it is it is really an interesting development. And and as we said, the project together with the consortium is going really well.

And lot of questions here. An interesting question here from, Kaneige. The increased value per system, this goes back to the growth strategy. With the methanol to hydrogen fuel cell reformer package, the methanol power plant that we we received in order on in quarter one, The sales value per megawatt is significantly higher than when we just sell the fuel cell system or the marine system 02/2025. And that comes from the value of integrating more solutions into our application and simplifying for the end customer and, in this case, the the marine vessel builder.

Of course, climbing the value chain comes at a benefit. You get a a higher top line growth. You get a high gross margin. But at the same time, you also assume more responsibility. I wouldn’t expect to see the the same multiple on on revenue per megawatts going forward on the methanol reformer.

But now the initial one is, of course, a a really valuable breakthrough, but it will be significantly higher than just selling standalone systems because that that is a value from from integration. And this is why we have the growth strategy of truly trying to to integrate more and more value into our offering because integration is not just about building top line for PowerCell. It is truly simplifying for the end customer, taking responsibility, minimizing the technical risk, minimizing time to market, and minimizing investment for the end customer. So doing this is a very, very important enabler to go and build a volume base out there. Anders, do you see any questions here that we have missed or that you want to address?

Anders Steading, CFO, PowerCell: I I noticed some questions on the cash flow, and I noticed some questions on the currency effects. And I can only go back and Please. And articulate what we said before. The the the cash flow need to be viewed over time depending on the significance of individual purchases and individual deliveries we have at my project milestones. And I think that’s important to to take into account when you look into the rolling six, rolling 12, rolling 18 cash flow when you try what way you will do your estimates for the future for those of you that work with forecasts for us.

I I also think that, mentioning the FX effects, they they have been in the past, always associated to, well, items on the balance sheet and particularly the those project where we have have a buildup of asset the project as such. What is happening now, and I think it is obvious that the the ratio between the crown and the euro has gone in the wrong direction for us. At the same time, we have proceed further in our projects, which means that it’s a bigger asset base to reevaluate at any point in time. And at the point when the euro has a negative impact on us and the asset that we reevaluate is larger, the impact effects effect is growing. Obviously, when we get into more balanced portfolio in the future, this will even out.

But for the time being, when we have a more mature project portfolio at this point compared to previous quarters, the effects of the revaluation is higher. And one need just to understand that mechanism.

Richard Berkling, CEO, PowerCell: We also have an additional question here on our competitors. We comment on competition from Toyota, new hydrogen technology, or other competition. We welcome that competition, and and we think it’s extremely important. Unfortunately, we or not unfortunately, but we we are not head to head competitors with Toyota because we are not active in the automotive segments. That is through our partner, Bosch.

But I think it’s really encouraging to see companies like Toyota and others continue to invest into fuel cell as technology and product portfolio, deploying more and more systems into the market because we need to have healthy competitors. 2024, unfortunately, led to to a situation where a number of our colleagues in the industry, went away. So, if you are positive, you say that the parcel relative competitiveness is increasing increasing by that. But we would rather have more and stronger competitors competitors because we think that that we have a very strong product offering to the customers. We have a very good understanding on how to support the customers through this transition.

So so we are not discouraged by having strong competitors. Quite the contrary, that would make us even better. So, we continue to to, monitor what is happening in the industry. We continue to learn from from the breakthroughs and and and really great development that they are doing, but we are also quite proud and and confident in our own ability both from the the product offering and, of course, the expertise and commitment that we have in our employees that are out there at the moment doing commissioning and deployment at customer operations at a very high pace. So more competition is welcome from from PowerCell.

Now we have final question from Konstantin Hess. Can you comment on your order book and what visibility you currently have for Q2? And will you be able to continue to report breakeven? What about order intake in Q2 so far? Well, this is an ongoing dialogue between Konstantin and I, where we don’t comment forward looking.

We will do that going forward to give better guidance. But if you if you look at the order book buildup from what has been communicated from quarter three, quarter ’4, and quarter one, you will get a rather good understanding of of how our order book looks. What is still the case is that a lot of the orders are now coming in with a short turnover time. I think I stated this in quarter four and quarter one. Previously, from initial discussions, order and delivery and then payments from customer, that cycle time was five years.

What happened after summer twenty twenty four was a a really shift in the market because now we have commercial customers, and and they don’t have too much time to spend. So turnover time from from initial negotiation to customer delivery and payment is now between twelve to eighteen months. So that is really accelerating the the industry, and it’s a very healthy indication of what we said before for mature customers that we see. And I think, Anders, you answered the the question on cash flow that was there. If we expect positive cash flow this year and how we think about the development throughout the quarters.

As you said, we need to look at cash flow over a number of quarters to see them balance out because you have rollover effects over the quarter. Do you want to comment on that one?

Anders Steading, CFO, PowerCell: No. I think that is exactly the way one need to understand the situation we have, and we are dependent on large orders and large pre purchase for them. And, obviously, they will be on a rollover fix between quarters. Yep. And I think maybe one should just comment, and I think, yeah, the the this is potentially stating the obvious.

But like Richard said before, we are aiming for a breakeven situation. And, with everything else in our financial books, excluding the r and d section, breakeven will bring us closer to a, breakeven also when it comes to operating cash flow by by gravity, you can say.

Richard Berkling, CEO, PowerCell: Yeah. And then also, need for explanation that that Constantin has noted here. We have now for the third consecutive quarter an order intake on product sales over a hundred and 50,000,000 per quarter. That means more than 50,000,000 SEK per month for nine months in a row. That is something that we’re quite proud of.

And it is a shift in the industry, in general and, of course, for PowerCell. So then, to summarize, we are continuing to navigate through rather rough waters. We keep a very good pace, a steady pace. There are no guarantees in what we do, but we feel that we have a very strong position where we managed to provide 44% growth in quarter one. We get a leverage from that growth, improving, EBITDA and operational income while we’re still investing into new capabilities all over PowerCell from industrial stability, production buildup, but also innovation development of next generation product portfolio to remain competitive and and secure future earnings.

So we are happy with the position. We would, of course, be even more pleased if the underlying market would clarify and get uncertainty out of the way regardless if it’s being around tariffs or or regulatory instances. But we also see that the underlying market that is out there, that is driven from customers that are pioneering is at the moment supporting Parcel growth journey in a very interesting way. So with that, we thank you for, listening in. And as always, you’re more than welcome to reach out.

You can find Anders and myself, through email, LinkedIn, and, of course, pop by, Parcel in Gothenburg if you want to make a factory visit and and meet the people. So with that, hope you enjoy the day, and have a nice weekend when it’s time for that.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.