Earnings call transcript: PowerCell Q2 2025 sees stock surge 28%

PowerCell Sweden reported its second-quarter 2025 earnings, showcasing a record revenue milestone and the company’s first positive EBITDA over a rolling 12-month period. Despite not being specified in the earnings forecast, PowerCell’s stock surged by 28.42% following the announcement, reflecting strong investor sentiment.

Key Takeaways

• Record Q2 revenue of SEK 130 million.
• Achieved the first positive EBITDA for a rolling 12 months.
• Stock price surged by 28.42% post-announcement.
• Significant reduction in operating expenses from 41% to 28% of revenue over two years.
• Expansion in the marine and aviation sectors with new product approvals.

Company Performance

PowerCell Sweden demonstrated robust performance in Q2 2025, achieving a record revenue of SEK 130 million. This milestone contributed to surpassing SEK 400 million in rolling 12-month revenue for the first time. The company also reported its first positive EBITDA over the same period, marking a significant financial achievement. PowerCell’s focus on operational efficiency was evident in the reduction of operating expenses from 41% to 28% of revenue over two years.

Financial Highlights

• Revenue: SEK 130 million, a record for the company.
• EBITDA: Positive for the first time over a rolling 12-month period.
• Cash position: SEK 72 million, with an additional SEK 50 million in unused credit.
• Operating expenses: Reduced to 28% of revenue from 41% over two years.

Market Reaction

Following the earnings announcement, PowerCell’s stock experienced a significant surge, rising by 28.42%. This movement reflects investor confidence in the company’s financial performance and strategic direction. With a market capitalization of $185.88 million and a beta of 1.2, the stock shows higher volatility than the market average. Based on InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels, despite the recent positive momentum. The stock’s performance contrasts with its 52-week range, which saw a low of 21.9 and a high of 49.8, indicating a strong upward trend post-earnings.

Outlook & Guidance

PowerCell continues to pursue a controlled growth strategy, emphasizing industrial partnerships and exploring aftermarket service opportunities. The company remains focused on expanding its presence in the US and Chinese markets, which are showing potential for significant growth in hydrogen fuel cell technology.

Executive Commentary

CEO Richard Berkling highlighted the company’s transition from achieving milestones to building momentum, stating, "We are going from milestone to momentum." He emphasized a strategic approach to growth, noting, "We will continue to grow, but we will grow with control and not necessarily just with speed." Berkling also underscored the importance of building trust with customers, "We are building trust with customer by customer, project by project, and delivery by delivery."

Risks and Challenges

• Market competition: The hydrogen fuel cell market is becoming increasingly competitive.
• Regulatory changes: Stricter emissions regulations may impact operational costs.
• Supply chain disruptions: Potential disruptions could affect production timelines.
• Economic conditions: Fluctuations in the global economy may influence market demand.
• Technological advancements: Rapid changes in technology could require ongoing innovation.

Q&A

During the earnings call, analysts inquired about PowerCell’s ongoing order from Saudi Arabia, which was confirmed to be progressing. The company also discussed an accounting adjustment related to its contract with Bosch and addressed potential future capital raising. Additionally, the potential of China’s hydrogen fuel cell market was highlighted as a significant opportunity for growth.

Full transcript - Powercell Sweden (PCELL) Q2 2025:

Moderator, PowerCell Group: Welcome to the PowerCell Group Q2 twenty twenty five Report Presentation. For the first part of the presentation, participants will be Now I will hand the conference over to the CEO, Richard Berkling and CFO, Anders Duhring. Please go ahead.

Richard Berkling, CEO, PowerCell Group: A warm welcome to this summer presentation of the quarter two report. As presented, it’s myself, Richard Berkling and our CFO, Anders Duhring, making the presentation. So let’s dig into this quarter two result. The headline is that we we say that we’re going from milestone to momentum, and we see that the numbers are are confirming this. We have a a stable growth and a a rather strong order intake.

Record result in quarter two with SEK 130,000,000. And for the first time in Parcel history, above SEK 400,000,000 rolling twelve months, which is quite encouraging. We see that the order intake remain high, that we are averaging SEK 150,000,000 per quarter for the first half of the year. For the first time, we can also present a positive EBITDA for rolling twelve months. This is an important milestone.

There’s a confirmation of the momentum. We can also now conclude that the sustainable breakeven level for PowerCell is around 400 to $450,000,000 SEK depending on the product mix. This is no confirmation that we will continue to report positive EBITDA quarter by quarter yet because it this is still a difficult market out there. We are pioneering in a technology shift, but it’s very encouraging to see that we can reach this milestone as a company in 2025. Highlights in quarter two when it comes to orders is that we received the first OEM order in power generation from the long lasting partnership with Hitachi, where they now sold HyFlex to the industry.

We also had a first IP revenue since 2023. This is part of the product mix of PowerCell selling IP, but it’s been a difficult market to be able to to get paid for intellectual property. Now we see that easing up. This was an extension of the Bosch automotive license that we’ve had since 2019. We also saw, which is very encouraging, the first OEM order and commitment on the next generation fuel cell stack, which is indicating not only a quite strong commitment from the marine industry to decarbonize and use fuel cells as a as a solution for that, but also that innovation is paying off.

We’re now balancing both the ongoing business and and short term growth with existing generation, the s three platform, but we’re now starting to see the first revenues and and commitments on the next generation as well, which is highly encouraging. How we manage to do this is, of course, through being very disciplined in execution of a rather clear strategy. We are staying in the course. We have remained focused on real demand and and practical application rather than just chasing subsidies. We have avoided destructions and built around a common platform logic that takes a lot of courage, and then we also need to extend a gratitude to the board who has supported us throughout the years.

But it’s also a step by step process. Positive EBITDA on low volumes is showing that we can leverage the growth, which is quite encouraging. We don’t need to scale to mass market to be able to show profit. So the operation model remains very lean, cost discipline, and with the flexibility without overreaching our structure and and critical mass. We also see early signs of commercial consistency.

Not to be confused or mixed up with traditional business where you can see recurring revenues quarter by quarter. Now we see the orders from the right customers, OEMs like Hitachi, Bosch, and the Italian OEM that we have built prior business with. It’s also to see encouraging repeat interest around our core systems and not just that we need to develop new solutions all the time. So this was a overall summary of of how the numbers were created. And now over to Anders to present the numbers in in detail.

Anders Duhring, CFO, PowerCell Group: Thank you, Richard. I I think when it gets to the details here, really, the way they are spelled out here and in the report is, to some extent, quite self explanatory. What I would like to share with you are some reflections I think one should do reading the report. And, Richard already touched one saying that, yes, we had an IP transaction in this particular quarter that, of course, those both revenue and profit. And like Richard said, that is nothing one can expect at that level for every quarter.

However, that is part of the business model and the product mix moving forward. And I think that is important to just make sure that we all understand when we read report and the future of PowerCell. On that matter, it’s also important for us to see that the underlying business. When I say underlying business, that is everything else but royalties and IP. And if we look into the quarter in particular, you’ll see that we have had the growth in that area as well, and we’ve had a increased gross profit margin on that account as well, which is very encouraging.

As like Richard said, this is not promising anything by the future, but it’s about making sure that we have a stable underlying business as well. I think that we can move on to the next picture and go on the aggregated numbers for the half year from there and conclude that the same thing really is applied for the full for the accumulated 2025. I think one need also to recognize when when I say that we had a a stable gross profit margin on the underlying business, you that were around a year ago and even more than a year ago, you recognize that in the first quarter twenty twenty four, we had a very hefty positive FX effect. We have been able to keep the gross profit margin at approximately the same level despite the fact that like you now know in 2025, the positive effects in 2024 for us having predominantly euros as a revenue currency have been in the other way around. So from that standpoint, we feel very comfortable with the underlying business, the gross profit margin.

And I think that’s important when you read this report, particularly when you have such a large item being an IP item. Also, and I know Richard will get back to that later on, it’s about the operating leverage. He already mentioned it, but he will get back to that. We we now have a very stable platform we can stand, and we can see growth from that. And I will not take away the opportunity for Ricci to share the future on that one on coming slides.

So I stay with that. And then, of course, looking into the cash flow, that’s important. I mean a growing company with a lot of stress on working capital. What are the items that have affected the cash flow during the first half year? I think one thing that is very important to remember is that we amortized the loan we had, and we now have a traditional Swedish Czech credit instead, which was unutilized by the end of the second quarter.

And we feel comfortable with the liquidity that we sit on for the current moment. And that is to make sure that there’s no misunderstanding. That’s the SEK 72,000,000 we have in cash on top of that, the unutilized facility of SEK 50,000,000. Let’s move on to the next page. And only to basically underline what we are just been talking about so far.

We see a good trend. We’re not promising things for the future, but we have established a platform for around four, four hundred fifty million where we can make operating profit or EBITDA profitability. And that has been the primary objective for 2025. And it’s very encouraging to see that we given the product mix that we have and that we believe is the long term product mix, we can keep that level. With that, I will leave it back to Richard to continue the presentation.

Richard Berkling, CEO, PowerCell Group: Okay. Very good. Thank you. Just for clarity, we have a small technical issue on this presentation where I cannot hear Anders. It’s not an analogy that I’m not listening to my CFO, but some technical issues where Anders can hear me and I don’t hear him.

So if we repeat ourselves, please bear with us. So if we then break down the segment highlights. In Marine, we see a strong commercial pull. We received type approval for our two twenty five kilowatt system, which was according to plan. And the commercial pull is also then clearly linked to the OEM demand where we see well articulated value propositions.

We see now different actors in the value chain going out and not just claiming that they want to decarbonize by using fuel cells, but they have a valid business case behind it. And that is really a strong testament to the the transition and will help accelerate growth going forward. We also see increased competition in the segment, which we welcome because that is also a sign that things are maturing and other are trying now to go to the market where we see the best accelerated more growth. In power generation, of course, the first HyFlex order from Hitachi was quite important. We call that internally, we call that a trigger event when some large OEM like Hitachi is putting a stick in the sand and saying, now we do this.

We also see now an additional off grid potential being built up in the in the industry. Aviation, in the quarter, we continue to support Serraven certification process and and going according to to plan. This is breaking new ground because nobody has yet to certify a fuel cell driveline, but Serraven is is well positioned to be the first one to do this together with PowerCell. And then, of course, we have the development in the newborn project where we see the next generation heavy duty platform, which we now have have a commercial order in marine. But the the interesting application of aviation is, of course, very strong because we have a strong demand to get that next generation that is taking our technology from the current low temperature PEM to the intermediate temperature or or mid temperature, which is creating a lot of advantages, especially for the aviation sector.

So strong interest in that development as well. Looking then at the commercial progress to the right, you can see a number of crates. These are 70 parcels, the largest shipment of goods to a customer yet in parcel history, something we’re very proud of. We have mentioned Hitachi and Bosch. We have mentioned the next generation marine system to the the European OEM in marine.

All in all, last time we talked about steady pace through rough waters. Now we can conclude that we are doing steady pace through improving waters. It is still choppy waters out there, but we have a good pace and a very clear direction. So internally, we continue to prioritize control over speed, which we have done now for the last four years. We also see that every order matters.

We are building now trust with customer by customer, project by project, and delivery by delivery. So we are entering into phase where it’s not enough to just be innovative and creative anymore. You need to be industrial industrially stable, incredible over a ten, fifteen year life cycle, which is quite encouraging for a company like PowerCell. I also wanna emphasize the operational leverage, which is one reason why we can break even at the the rather low volumes that we see. We now have been growing quite well without inflation of the cost base.

So we actually have lower operating expenses ’25 compared to 2024. We can also see that the operate OpEx share of revenue is down from 41% to 28% in two years, which is the development you want to see in a company like PowerCell. Fast growing companies in technologies tend to have a one to one ratio of cost development and revenue development. Companies like Parcel need to break this to to prove that we have a sustainable business model, not just to the financial market, but also to the customers because customers needs to have a supplier that will be there in five years time, ten years time, and have the ability to continue to innovate. And this indicator is extremely important to do that.

And the strategy that we have been working on for the last years is to have a very asset light operational model. We have a very strong fiscal diligence, thanks to Anders and his team in the in the financial department, and also a good cost consciousness throughout the company. But also a clear product offering where we can protect the margin and and be very clear in the value creation we have with the customer. So if we look at then the market signal, it’s been a bit ambiguous, and it continues to be be a difficult market where you always need to work for your orders. But we see now the OEM driven growth that we have been been working for for the last years.

We are also strengthened by the fact that IMO is updating stricter rules on especially particle emissions and greenhouse gases. Also, encouraging to see that the The US section 45 v, which is an extension of the existing support to hydrogen and and fuel cells in The US, which is clarifying that the current investments will get funding for at least two years, which has been a uncertainty that has been dampening growth in The US. We see the more clear path we have to do that. We have still the best validated fuel cell technology in the industry, which is a strong enabler. That was was validated in the two trade shows in Marine that we participated in in June, the Nord Shipping and Electric Hybrid Expo.

Very clear and strong industry interest. We also see firm commitments to the industry, not just to PowerCell, where large OEMs are taking a stand with a focused effort and and they’re deploying products with a clear business case, not just for from greenwashing or for tech exploration. Especially in marine, we see that the cruise, defense, and off shore customers are moving now from demonstrators to commercial deployment, which is encouraging. Looking then at what we do internally and how we’re going to build growth going forward. Of course, the marine system 225, which now is type approved and in delivery to the customers, is a very important building block.

Having something that is a standard component that is industrialized with a long short time from order to deliver is a backbone for any growing company. You need to have those bread and butter components. But we also have the the more high value products like the methanol reform fuel cell installation. Strong interest from across segments, still just one order, but with a very high value, and we we look forward to to increase those orders and and build value from that one. Once again, strong interest in what we do for the next generation, both on stack level, but now also on system level where we have the first order from the marine industry.

So balancing a strategy, we need to be very competitive and have a high value creation on your existing generation of product platforms, but also being innovative and building the future revenue streams. That is equally important for PowerZone. So if we then look at where we are and and how we have built this going forward, we also we need to work with a clear strategic focus. We have a platform mentality on technology, on systems, and on products. That is what is giving us a record revenue and a strong positive e EBITDA.

What we need to do going forward with this is, of course, have a strong delivery, being trustworthy as an industrial partner to our customers. And those industrial partnerships have been a strategic focus. We have been working quite hard to get the OEM orders. Of course, we have a number of proof points. What we need to do with those is to go even deeper, really get into their business model and be a part of their offering to the market, and then, of course, scale with control and and deliver with precision.

But then equally important is the fiscal discipline that Anders is is safeguarding and that I think is a strong culture throughout the company. That is what allow us to make breakeven on low volumes, and we need to continue to to focus on that going forward on protecting our margins and be able to show leverage growth as we move along. Now focus for the second half. I need to stress that the market remains complex, but we see that it is improving. We see that from the orders and the tenders that we are receiving, that the maturity is much higher, that that that we see a clear path of deployment, and they have financing to a high degree than we saw two, three years ago.

So final investment decision, the ratio is higher now than we saw twelve, twenty four, thirty six months ago. Strategic focus for for PowerCell is to be able to work with some of the rather boring stuff of being an innovative company, And that is equally important in the phase that we are at. So concluding, once again, we see steady pace through improving waters. We will continue to grow, but we will grow with control and not necessarily just with speed. And we’re going to build this on one order by order, one delivery to the other.

So with that, we conclude this section and we open up for questions. And then please bear in mind the communication or lack of communication between Anders and myself, and we’ll try to guide you through this Q and A. Thank you. Have Q A a number of issued online, but we’re waiting for the audio ones. So before getting those, we will go for the written questions that have come through the system from Henrikavsky regarding the 165,000,000 SEK order to Italian shipyard signed in 2024 with delivery in 2025 is running according to plan.

Yes, it’s running according to plan, both when it comes to production and deployment, but then also delivery to the customer So yes, that is running according to plan. Then a follow-up question from Henrik regarding the Saudi Arabia order. Is the SEK 1,500,000,000.0 order from 2022 still valid? Yes, it is.

We have been very clear with that one. That is conditioned that Saudi Arabia is approved and certified with their set a 600 driveline, which is the driveline that is now in certification in in Europe. Serbia in quarter one reported their first firm commercial orders from a smaller cargo aircraft carrier in in think it was in Great Britain. So that is is from our perspective running according to plan. But, of course, for any growth of of Serbia, please look at the Serbia communication.

Your report note three states that royalty in quarter two were minus 4,700,000. Can you clarify? Then I will look at Anders for that one. And when you’re done with that answer, just smile and nod.

Anders Duhring, CFO, PowerCell Group: I I will. That is going through the, let’s say, the the new contract with Bosch, many parts were in in in in that discussion room. And one part was how we will treat the various business that we have. And we simply concluded that revenue recognized in q one was credited and was added into the new. So basically, this is something that is a a I wouldn’t say correction.

The time was right. But when looking into the contract that we signed, this needed to happen in order to justify the bookkeeping as such. So it’s just something that went into the contract and needed to to manage from an accounting standpoint in this way. So it’s nothing special.

Richard Berkling, CEO, PowerCell Group: Then since Anders, you’re up and running from Munch, we had a question. What is the cash position after first half of twenty twenty five?

Anders Duhring, CFO, PowerCell Group: That is the cash the available cash or the cash in the balance sheet is SEK 72,000,000. And on top of that, the SEK 50,000,000 check facility that we have unutilized at that point in time.

Richard Berkling, CEO, PowerCell Group: Good. And then a follow-up question from Munk was, are the Norwegian ferries fully delivered an invoice? And no, we are still delivering and deploying those. So they will both generate revenue, but especially positive cash flow later in 2025 and and running over in 2026. So they they are not completed.

Let me see if we have any other questions. Fairly detailed questions. Do we have any orders from leaking line? No, we don’t. But if you have any leads there, please pass them on to us.

These are actually all the questions we have seen so far. Of course, we will wait for additional questions. One question here. Any more preferred stocks being published? Anders, do you care to comment on that one?

Anders Duhring, CFO, PowerCell Group: No, I can’t see the question. Can you repeat? I can’t see the question, Richard.

Richard Berkling, CEO, PowerCell Group: It would be very interesting to listen to that answer afterwards. If you’re done, just

Anders Duhring, CFO, PowerCell Group: Well, if the question was whether we think about issuing in more stocks, I mean, we have the mandate for 10%. And that is something we consider all the time as an opportunity, but not anything confirmed as that would have been given public attention to.

Richard Berkling, CEO, PowerCell Group: Good. So a very good question here, which I can elaborate on for quite a long time. What can we further expect from the Bosch deal and the Asia region? A very good deal. I would say that the IP sales to Bosch is it’s quite diverse and interesting agreement that we’ve signed.

First and foremost, it it solidifies the interest that Bosch have in PEM technology. They have pulled out on the SOXC, which is a complementary or in some aspects of competing fuel cell technology. And they’re doubling down on the PEM fuel cells, which is the technology we have. We’re also now extending their interest in the license around s three, further investing into that technology portfolio and technology platform, which is highly encouraging. And they do that because they see an increasing market in China, Quite similar to to solar and and batteries, China are now really pushing for hydrogen and fuel cells.

They’re doing it with incentives. They’re doing it with with legislation. They’re doing it with investment. So China is now the fastest growing market when it comes to fuel cells and hydrogen. Availability of hydrogen is improving, which is also, of course, a very important driver for growth of fuel cell sales.

So we expect to see a positive growth in China. We have now seen in quarter two a number of press releases from Bosch and their industrial partners on where truck manufacturers have integrated the S refusal into their offering and starting to deploy an order. So, hopefully, we can see a rather interesting growth in China. A benefit for PowerCells beside the royalty revenue is, of course, that the volume base on our core technology is increasing, which gives us everything from, of course, better component costs, but also validation of performance, technology, application knowledge, etcetera. So where the the fact that we have this industrial collaboration with Bosch both as our largest owner, but also the ongoing operation performance or collaboration is highly valuable because it gives us access and knowledge to to a volume base that would otherwise be outside of Power’s reach.

So I am extremely grateful for the collaboration we have with Bosch. And I also need to stress the fact that even though we are quite small and Bosch are are they are one of the largest automotive companies, they’re treating us with with a great respect and a and a very strong collaboration of spirit. So I’m I’m regarding this as a very strong collaboration. From Kanyegi, we get a question, how does the potential aftermarket service look in the context you’re currently in place, especially in marine? Of course, in marine, the the aftermarket revenue is something that we are quite interested in.

In traditional combustion engine based products, the aftermarket revenue is roughly 100% equal to the CapEx sales over a ten year life cycle. It’s still to be determined what the revenue will be for fuel cells because the service intervals are lower because we have fewer moving parts. That benefit, that cost benefit will, of course, ripple down also to customer in the sense of slightly lower service cost. But we are working quite hard with our our colleagues and and our partners in in the value chain to make sure that we are safeguarding our position and revenue in that part. So we will come back when we have signed the first aftermarket contracts related to our larger installations, but that is still to be renegotiated and signed.

A question is what is our expectation for growth and the cadence in The US market following the 45V extension? I I have to come back on that one. It’s difficult to to predict. The US market is a difficult market. It’s still quite subsidy driven and also a bit scattered because you have the geographical differences with availability of different fuels.

But I think that the diverse portfolio from PowerCell where we can run on both hydrogen and methanol gives us an opportunity to capture what we see. But we need to come back on that one when we have more firm orders and also a better understanding on how this will now be implemented because it’s been a standstill in that region for quite some time. We had a question if we expect growth in royalties in the upcoming quarters. Since we don’t comment forecasts, I will pass on that one. But I can also then give an indication that especially China is seeing growth in hydrogen fuel cells.

How much of that Bosch will be able to capture and how much will be transferred into royalties to Parcel, we’ll be reporting quarter three and quarter four. We had a question on cash flow, if we will stay cash positive in the future or will the cash flow fluctuate to the negative side again? Anders, I think that one is for you, and I think we want to be clear on that one.

Anders Duhring, CFO, PowerCell Group: Sure. I can be clear on two things here. First, we don’t, as Richard say, any predictions for the future. I think that the the cash or the working capital position once in growth will always be stressed and will be in the same situation. There will be quarters where you can see a positive operating cash flow, and there will be quarters where depending on the growth situation, it might be negatives.

But, I mean, this is nothing that deviates from any other situation where a company like us will be in. And I also think that I can pick up on the next question on that subject. I think the challenges we have when it comes to the cash situation is not regarding the CapEx as such as more regarding the working capital situation. And we do have a mandate. We may use the mandate, but it’s discretionary for us to do when we think is needed.

But for the time being, we will feel comfortable, and then we’ll see what happens.

Richard Berkling, CEO, PowerCell Group: Good. A follow-up question to that one, which is quite interesting, is do we need to raise capital in the near to mid future if customer demand picks up due to the needed CapEx investment? Anders, you want to elaborate on that one where we distinguish a bit between the working capital and and and the ownership capital?

Anders Duhring, CFO, PowerCell Group: I just did that, so we are fine.

Richard Berkling, CEO, PowerCell Group: Okay. You have answered that one. Perfect. Thank you. With that, I think that we have completed all the questions we see here.

It’s summertime. It’s at 09:01. So from Parcel, we wish you a nice, Thursday, and also a nice summer. And as always, you are more than welcome to visit us in in Gothenburg if you have time and interest, also to reach out to either myself or Anders. Thank you very much, and have a nice day.

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