Hi, everyone. Welcome to ADS-TEC Energy's H1, 2022 Earnings Call. My name is Cary Segall, and I'm the Head of Investor Relations. A recording of today's call and a presentation can be accessed from the investor section of our website. Joining me on today's call are Thomas Speidel, Founder and CEO of ADS-TEC Energy.

And Wolfgang Breme, CFO of ADS-TEC Energy. Today we will be discussing ADS-TEC's latest financial results for H1 '22, guidance for the second half of 22 and conclude with a Q&A session. Please indicate your interest in asking questions, as the operator addresses, and we will address them at the end.

During the call, management will be making forward looking statements regarding full year 2022 and our outlook for expected growth and investment initiatives.

These forward-looking statements involve risks and uncertainties, many of which are beyond our control and could cause actual results to differ materially from our expectations, including, among other risks and uncertainties, the continued COVID-19 pandemic, supply chain issues and geopolitical challenges.

These forward looking statements apply as of today, and we undertake no obligation to update these statements after the call.

For a more detailed description of factors that could cause actual results to differ please refer to the risk factors section of our Annual Report on Form 20-F previously filed with the SEC and posted to the investor section of our website. Also, please note that financial measures presented on this call adhere to IFRS and non-IFRS.

We use non-IFRS measures because we believe they provide useful information about operating performance that should be considered by investors in conjunction with the IFRS measures that we provide. A reconciliation of these non-IFRS measures to comparable IFRS measures will be included in the earnings release and investor presentation.

With that, I will turn the call over to Thomas Speidel, ADS-TEC Founder and CEO.

Thomas?.

Thank you Cary. A warm welcome from my side, dear ladies gentlemen and ADS-TEC investors. Today, we would like to provide you with an update of our business for the first half of 2022. And we want to discuss why we are convinced of being on track in terms of latitude [ph] and corporate development.

The transformation to an intelligent and decentralized energy supply is still in its infancy, and our battery-buffered technology puts us in a unique position to capitalize on this moment. ADS-TEC develops and produces, as we know de-centralized smart storage-based platforms that are a crucial basis for the transformation of the entire energy system.

We manufacture the complete hardware system, the software, as also the services to charge point operators and power companies assisting them in the transition to a let's say, more or less electric world.

The decentralizing of renewable energy supply and the associated sector coupling can and will only succeed if future energy providers can optimize decentralized business model individually and as a group.

Currently, this is what we see happening in the energy market, and it’s the vision of ADS-TEC to provide the smart eco platform and services for all future power companies.

Our chargers are delivered complete with feature, interfaces and services that enable our customers and partners to run the best and most efficient business models to service the end customer.

The transformation from combustible engine to fully electric vehicles over the next few decades is one of the trigger points we see for the decentralization of energy supply. As such, it is vital that all the electric vehicles appearing on the road have access to the necessary quantity of electricity in a convenient and timely manner.

This is where ADS-TEC comes in with the development of our battery-buffered ultra-fast chargers that is currently available in the form of the ChargeBox which is well known and now this year the ChargePost and also the ChargeTrailer. All these products follow for charging in minutes, not in hours, even on a low power or limited grid.

Let's take a step back for a minute as it's important to point out that there are strong tailwinds in place today in terms of electric vehicle adoption that underpin adoption of our technology. In 2021, global EV sales were 6.6 million, more than double the 2.2 million sold in 2019. This year, we are on the pace to see more than 10 million sold.

The North American Q2 electric vehicle sales accounted for 5.6% of new car sales. In Europe, the number was more than 10% and in China even over 20%. The numbers are expected to grow exponentially over the next decade. And we must have convenient and fast charging available even in power limited areas, or let's say anywhere.

There will continue to be ultra-fast ChargeBox located along nature forest paths [ph] and high density areas where the grid is deficient or might be extended. However, to have complete adoption of EVs and eliminate range anxiety ultra-fast charging must be made available everywhere so that it is convenient and lowers cost.

Our platform will not require expensive adapters or extensions, don't suffer from peak demand charges from the utility companies, can store electricity when it's cheap, maybe regulate frequency in the future and our ChargePost can even be used as a billboard and advertising platform with up to 72 inch advertisement screen.

We have identified the following market segment for our platform and services for ChargePoint operated for sure, retail establishments, condominiums and apartments, hotel operators, office industrial buildings, car manufacturers, auto dealerships, rental car companies, fleet operators, municipalities, utility companies as well as oil and gas companies offering convenience stores and turning services.

These segments all have the need for fast charging on often power limited grid that would be too costly and time consuming to upgrade. Our sales team led by John Neville is building a robust pipeline with significant new customers in retail, telecom, transportation, utilities, and oil and gas companies.

Our European business continues to grow with the expansion of existing relationships and the recent announcement of strategic partnerships such as JOLT, in Dublin, Munich, Boston, and they are owning and operating ultra-fast charging solutions in urban areas.

They view our charging technology for example as -- in plants in terms of power pricing and charging time and cost reduction by eliminating the need of expensive grid upgrades.

JOLT has already begun deploying our battery-buffered charging station at EG Group, which is ESSO for example in gas station in Munich, Berlin, Hamburg, Frankfurt, Stuttgart, in Dresden, Dusseldorf as well as Nuremberg. We also see TAMOIL stations in the Netherlands. So JOLT is working with ADS-TEC on the extension of their partnership.

And that includes for JOLT North America in the future. They aim to install and operate more than 5,000 ultra-fast charging stations over the next few years. That's just one example of a partnership with a new company, but one that is a specialist one.

In our last call, we reported that our first contract has been signed for the ChargePost for the new product with a strategic customer who did not wish to be named at this time. The initial order was 50 units and it will be supplied in Europe as early as 2022 for this project.

In August, we announced that the company has significantly increased the order volume for the product in fiscal year 2022, since the publication of the financial forecast on April 28, 2022.

The order primarily involved the company's battery-buffered ultra-fast new charging system, including the ChargePost, the new one but also includes stationary storage systems for commercial and industrial applications. For contractual reasons specific customer and projects could not be published, announced at this time.

We were able to more than double our booked order year-over-year to EUR152.3 million and we're pleased to announce that our order backlog increased to EUR176.7 million, which give us a good visibility of our growth opportunities going forward.

And effectively geographical expansion of our business we are exciting and executing on our plans in the U.S. We have determined the location for our own manufacturing site and are in final negotiations with the respective partners.

We expect to open this location in Q4 this year already for 2022, to handle services, warehouses and also first assembly jobs with local manufacturing with [indiscernible] follow next year.

Since we launched our North America business in January the receptivity for our product has been very positive, despite the electric vehicle adoption rate sitting around 5% in the U.S. U.S. federal government initiatives such as NEVI will further accelerate the EV growth in the U.S., and with our U.S.

presence we will be well-equipped to serve our American customers with local production and also services. With this overview, I would like to hand it over to Wolfgang, CFO ADS-TEC Energy who will provide a more detailed explanation around the financials. Afterwards, I will be happy to answer any questions you might have. Wolfgang, over to you. .

Thanks Thomas, and good day everyone. After covering our H1, '22 results, including revenue, results before tax, gross profit, order book, cash on hand and charging unit sales, I will provide some guidance for the second half of 2022 in respect to revenue, order book and charging unit sales.

H1 2022 revenue was EUR9.431 million, down EUR11.5 million from revenues of EUR20.9 million in the first half of this year. As we stated in our April earnings call, we expected that our revenue for the full year 2022 of EUR80 million to EUR100 million would be back loaded to the second half.

And this is what has played out and accounts for just EUR9.4 million for the first half of this year. Given our current order backlog of EUR176.7 million, we still feel quite comfortable with the full year revenue guidance range.

The decrease in revenue from contracts with customers for the first six months of fiscal year 2022 in comparison to the first six months of fiscal year 2021 is mainly driven by the decrease of revenues in the area of charging.

A major contract with a customer that has been completed in the first half of 2021 could not be fully compensated by new completed contracts with customers in the first half of 2022. The service segment contributed EUR636,000.

That represents a decrease of about 39% year-over-year, driven by reduced sale of spare parts and the lower amount of services in connection with the decrease of sales of charging platform. The commercial and industrial business had EUR2 million in revenue. That equates to about 65% year-over-year increase.

We are pleased to have announced to diversify our revenue stream which we believe lays the foundation for a strong fiscal year 2022. From a geographic perspective, H1, 2021 revenue was 94% from Germany.

The extension of our sales efforts in the second half of last year and the first half of this year resulted in 54% of our H1 2022 revenue coming from outside of Germany, including new business from Spain, UK, Switzerland and other European countries. Our international sales expansion continues with the launch of our U.S.

business in late 2021 and accounted for 27% of our H1 2022 revenue. Turning to gross profit and loss, our H1, 2022 came in at minus EUR4.8 million down from EUR1.5 million positive in H1 2021. The reduced gross profit mainly resulted from the fact that the supply chain cost raised significantly in the first quarter.

Because of material shortages at some of our suppliers, we had to revert to brokers to complete customer orders. Since then, we have redesigned our supply chain. We are comfortable that we will return to gross margin as we have seen in the past.

Secondly, the build-up of our manufacturing facilities led to an increase of payroll-related costs in the cost of sales area. Coming to OpEx we saw a significant increase in SG&A expenses in comparison to H1, 2021. Legal and consulting fees went up because of the merger with EUSG and being a publicly-listed company now.

Personnel expenses were increased because of the buildup of our U.S. presence. Furthermore, the first time recognition of stock option expenses contributed to the increase. Other expenses increased because of higher insurance expenses.

Finance income was largely driven by income from the warranty valuation and operative currency gains because of the stronger U.S. dollar compared to the Europe. In total, we reported quarterly net loss of minus EUR7.309 [ph] for the first half of 2022.

Turning to the balance sheet, inventory rose to EUR28.462 million driven by the higher expected business volume in the coming quarter. Trade and other receivables increased to EUR7.8 million mainly driven by higher advance payments to suppliers as part of our supply chain strategy, securing selected components.

Trade and other payables went up because of growing deposits from our customers. Our cash balance decreased to EUR65.72 million euros from EUR101.8 million at the end of 2021. This was mainly driven a higher working capital due to strong growth of the business. Now I would like to turn to guidance for the second half of 2022.

We have been a public company for two quarters now and our business is really growing with booked orders of more than EUR152 million, a huge increase compared to previous years. We are very excited by the reception in the U.S.

for our battery-buffered charging technology, and we are having very constructive conversations with many customers in all our targeted segments. As a result, we expect revenue from the fiscal year 2022 to come in the range of EUR80 million to EUR100 million and the revenue is back loaded as said before, to H1, 2022.

The shipment depend of course upon the stability of the supply chain. In terms of charging units sales we provided guidance in April in the range of 400 to 500 units, and anticipate that number will still fall in that range.

But this number compares with the second half of fiscal year 2020 where the majority of the numbers for parts that were shipped in the latter half of the year. We expect that our gross margin will improve by the end of year 2022. Finally we expect our current cash on hand to support us through the next quarter.

That said we will continuously monitor our capital structure and growth opportunity for the future. With that, I will turn back to Thomas. .

Yes, thanks Wolfgang. I think it's important to understand what we already said last year that this year will be very back loaded to the third and fourth quarter. And those who know me know how important it is for me to explain the ADS-TEC business model and where we see the unique and one in a century transition.

And I just want to spend one minute to explain that we are not a pure charging company, and therefore not directly comparable to all of the upcoming charging network companies.

Our vision comes from the realization that the future world will be very electric, renewable -- and renewable energy such as wind and photovoltaic generate events we stated in time and place to the resumption in demand. Electromobility but also the increasing generation of heat will demand massive changes here.

Decentralized generation and decentralized consumption with increasing low peaks must be brought together. Pure grid expansion cannot stop this [ph] stuff. This is made possible by decentralized intelligent platform that includes storage. The storage is needed to meet the required flexibilities, and charging is one of them.

ADS-TEC develops, produces maintains and services such intelligent and decentralized platforms. We see ourselves as the ones who provide these platforms, including services over years and decades. Our customers then use this platform to realize the best operating models with their own intelligent software.

Our customers take advantage of all the possibilities our platform offers. The opportunities are in grid services, such as frequency control, peak capping, arbitrage energy trading, photovoltaic integration, car fast charging just one of these solutions, even now advertising with the ChargePost.

Our customers can write also their own applications and software on our platform or connect to their own platforms and get the most out of ours for their customers. We service technology with software, lots of data APIs, application programmer interfaces and services.

We are proud that with the new orders, we have been able to win customers who are now using exactly these extended business models, and not just fully charging. The success showed that a great deal is becoming possible here, in fact more profitable than simply charging EVs. This also means more revenue from various applications stacking up.

ADS-TEC is a platform company that offers its customers not only a piece of hardware, a charger at the power supply or storage at the buffer. We see ourselves as a long term partner of the future energy providers to orchestrate, operate and build the individual business models to millions of end customers on and with our platforms.

Always different depending on how local optimization required. I'm extremely pleased that this vision is increasingly becoming a reality with the latest orders and wins. Attached to the presentation, we share some picture of installation showing not only the ChargePost at different locations, but also samples of our C&I portfolio and project business.

It gives you an impression about how the vision of thousands of decentralized energy platforms can look like and where it makes sense already today. Yes, we are a company which just has been de-SPACed recently. We know that the current market sentiment is not the best one and the world is in a special situation.

That is why we are proud to be able to serve the unique future topic. We have already given proof of our technology and its production capability with an order intake that is clearly above the forecast, the possible growth is not only predicted but confirmed by binding orders. Feedback from the market shows us that we can continue to accelerate here.

Now it will be particularly important for us to be able to finance this growth. Long delivery times and still difficult supply chains must be countered by early orders and forward-looking procurement on our side. A key competitive factor will be who has the capital to prepare -- to be prepared for delivery.

With that, I will turn it back to Cary and we are happy to receive your questions. Cary, over to you..

Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] The first question is from the line of Matt Summerville with D.A. Davidson. Your question please..

Hi, this is Will Jellison on for Matt Summerville today. I wanted to start --.

Operator, can you give us the question please?.

Yes, the actual questioner is live.

Can you hear us, Cary, Thomas?.

Yes, we can hear you..

Yes, the questioner is live. Please go ahead..

Okay, great. Thank you. This is Will Jellison from D.A. Davidson on for Matt Summerville today. I wanted to start the questions by asking you about the backlog. With EUR176 million, it would seem that a lot of the revenue you expect to generate in 2023 may already be secured in that backlog.

I was wondering, what is your level of visibility into 2023 deliveries that you believe the current backlog provides you? And what about the actionability of the current pipeline of orders that you might be in conversations with at the moment?.

So from the bookings we have now up-to-date, everything is supposed to be delivered until end of 2023. So there are no longer term orders in the backlog. That's number one. And number two, we see very a high pipeline and opportunities on our sales side. But that's not booking, it's in our pipeline..

Right. Okay. And then I wanted to ask my second question about the U.S. facility. If I remember correctly, that facility was originally envisioned to be very similar to your current plant in Dresden producing about 5,000 chargers a year.

I was wondering what is the timeline from the facility opening in quarter four of this year to ramping towards that full production rate.

What's the timeline towards that?.

Yeah, thanks for that question. So we've started to search the right site in January. We plan to be in our facility or in our location in June, which is postponed now to end of September. A lot of also official work and evaluation consulting work has had to be done.

And to answer your question this year we start with the warehouse, with the battery assembly and with our service team. And so by next year, and the years after, we plan to go more and more in the depths of production development in both resources. .

Understood. Thank you. .

And step by step, we're starting with services, warehousing, battery assembly, so the first batteries are coming. The cells are coming directly from Asia now to the U.S.

So there's no detour to Europe anymore so that we take the direct way in step by step because the ChargeBox and the ChargePost are very complex systems and we cannot change everything from -- within one day with the plant which will last over the next, at least a year..

Great. Thank you Thomas for answering the questions..

Yes. You are welcome..

The next question is from the line of Graham Price with Raymond James. Your question please..

Hi, good morning. This is phenomenal chance. Pleasure to ask a question on your call. I wanted to look at gross margin first. The margin in the first half of the year was obviously quite negative, reflecting I assume the low volume. You said it should turn positive in the second half of the year.

Can you maybe give a range for what you think gross margin will be for 2022 as a whole?.

Yes, good morning to you. This is Wolfgang speaking. So you're right that our gross margin turns negative in the first half of the year, as I mentioned, due to supply chain constraints, which we saw in the first quarter.

Because of the reason we all know, we expect the gross margin to turn positive again, in the second half of the year, as I said, because we have just changed our supply chain, and changed also our way of, let's say, securing volumes for critical components.

Nonetheless, it's too early to say right now, where the gross margin exactly is going to be by the end of the year, because we still have to take into account what we said, the supply chain is uncertain. So we would not give out a clear number at this point. .

So what we did, just to add there, we adjusted also the pricing because as we know, inflation and material costs went up in the first half of the year. We had to cover some of these increases because of binding contracts. Then the market would go down.

Now we adopted adjusted the prices in DC [ph] over the last week that our gross margin already is on the way in the right direction, month by month...

Let me also ask you about the German electric vehicle market for some of the similar reasons you mentioned, supply chain, battery shortages. We have seen maybe lower than expected EV sales in Germany over the last five, six months, despite of course, very high oil prices.

Is that having any effect on the build out of charging infrastructure in Germany?.

No, we cannot see that. And if you look at the numbers, first of all, there are more open orders that cannot be fulfilled also by the automotive OEMs. Lead times are very long, and we see, in that projection now we see the high order, incomes, order for ADS-TEC and the numbers we have order on our backlog is higher.

We see that the acceleration of building out the network is at the beginning. So we expect that now it's a race of who will own all the charging sites.

And we explained that several times that once we have these public chargers on the highway, where you pay now EUR0.80 or even more, but they are hundreds of thousands of possible charging points at our municipalities, hotels, our industrial sites.

We see now that the private sector is catching up and that they say okay, I cannot drill a hole in my garden and get oil out of it to charge my car but I can use the electricity on my own ground to supply and provide electricity for my fleet.

Especially now we see that electricity prices are going up like hell, and that even is a big driver for auto companies now, taking money, makes themselves more, let's say, a really green company. So they invest in photovoltaic and they invest in EVs. Unfortunately, they don't get it because the midterm is too long.

So to answer your question, very clear now, we don't think that the demand for chargers will go down. We rather expect that now over the next year people will prepare themselves for the EVs coming..

And lastly, I want to ask you something that I remember we talked about six months ago on your very first call. And that was of course, right at the start of the war. Do you envision any acceleration in the charging infrastructure build out in Eastern Europe? So Poland, Czech Republic, Bulgaria, Romania, the Baltic states.

It seems logical that we would see this, but I'm curious what you are observing in actual customer demand in the East..

We see from all European countries, there is no special, let's say request coming from the Eastern countries as far as we can see it now..

Okay. Okay. Very, very clear. Thanks again..

Yes, you're welcome..

The next question is from the line of Anne Margaret Crow with Edison Group. Your question please..

Thank you. I've got a technical question, actually. I'm wondering is there any difference between a charging point for fast charging a standard passenger car, and one for charging an electric truck? Thank you..

That's a very good question, Anne. I think we have to be -- even three to five years ago, they were providing a charging capacity of, let's say, 50 kilowatts, which at that point of time was a lot. Now it's less. With the prototype we can go almost up to 300 kilowatt charging power with the private car. And now we are in the range of normal EVs.

Let's say they are between 120 and 300. So this is a development we see all over the cars being integrated into our plans. And this is now a range where this makes sense also for vans and lorries. You might have seen the F-150, which is the light truck. And so we see charging capacities being in the same range.

Now, if we look at Renault, now also GM with the Hummer, and we see that also with the buses. So ADS-TEC is providing chargers for buses, public buses, as well. So they are also taking 300k, which can be provided by our chargers.

If you talk about the big trucks, where people talk about one megawatt or even above one megawatt charging capacity, then we could do that with our technology, because our power electronics is able to be adopted in parallel. So we can increase the charging power. And it would be possible to build a system which for example, provides 1.2 megawatt.

So far we did not do that, because the trucks are not available. We expect that in the next year there will be a standard, because you might know that also the charging standard for the megawatt is not is not set so far. We have different discussions still going on.

And so to answer the question, yes, up to now, we believe that in the range of 300k, we have a good position also for the light trucks and for the buses and for the vans. For the big ones, let's say 40 tons and above, where we might see charging power of a megawatt, we can do that, we could do that.

But so far we have no products present and we wait for the standards to be set on the -- for the platform -- for the truck itself..

That's very helpful. Thank you..

You are welcome..

The next question is from the line of Greg Wasikowski with Webber Research. Your question please..

Hey, guys. Thanks for taking the questions. And sorry, I hopped on a little bit late. So my apologies if any of my questions have already been answered. But I'll start with the backlog. So your revenue reported in the FY22 guidance you can kind of back into what portion of your backlog is slotted for FY23.

Is that all limited to the first half of 2023 activity right now or is some of that FY23 backlog kind of stretching into the second half at this point? And pretty much just trying to get an idea of what the lead times are and how far out are deliveries stretching at this point..

Yeah, as I said, these orders, which we have now on the backlog, they are planned and scheduled for the full year 2020. So from not only for the first two quarters..

Okay, got it. Thanks..

Yeah, we have to distinguish, the pipeline, which is -- our base pipeline is big and -- but we are talking about binding orders and the binding order of 170 something, they are scheduled to be delivered until end of this year. And what we get in addition now, that is what I just mentioned.

It's a question of how much material, how much obligation can we take to buy battery modules, to buy power converters. Because one thing is important now, lead time, and so far the supply chain is critical at least for some of the components. So we still see the time 15 weeks and more.

So the sooner we buy the major component, the better we are prepared to then serve the customer in the short way..

Understood, okay. And then my follow up on the U.S. market and it's a two-parter. You mentioned several key segments driving that business growth since January in the U.S.

What segment in particular is kind of leading the charge? What segment are you seeing the most demand? And then also on the partnership side of things in the U.S., would you be -- are you actively seeking partnerships similar to that you have with JOLT? Or would potential partnerships come in a different form in the U.S.?.

Yes, our sales team has many, many of these discussions right now. One of our major partners that we announced is GenZ, which is similar to JOLT, and with GenZ we are addressing now also the U.S. all of the automotive OEM dealerships and network. This is what is ongoing right now. And some of the orders we announced are coming from that segment..

Hello? Does this answer your question? Greg, can you hear me? I think I lost him. .

Yeah. That's great. Thank you guys..

We have one more question..

Yes. [Operator Instructions]. And the next question is from the line of Michael Filatov from Berenberg. Your question please..

Hi, guys. This is Eric on Michael from Berenberg. So I was wondering if you guys could provide some clarity on your revenue mix. I know the majority comes from charger sales.

But what about from services and commercial and industrial segments too?.

So from this first half, this year's revenue EUR0.6 million came from services and EUR2 million came from commercial and industrial application. So that was EV charging..

Okay, thank you.

Also for that 400 to 500 expected for this year, what is the geographical mix? What do you guys see on the horizon? Is it mostly Europe? Or would it be more split a bit more evenly from Europe and U.S.?.

So it is almost half and half. .

Half, okay. And if you guys don't mind, I just have one more. I don't know if it was asked already. My line dropped off a bit earlier.

But for the energy shortage in Europe, do you expect that to impact you guys, specifically your facility in Germany going into the winter?.

That's a good question. So we're discussing that all the time and trying to be as best prepared as we can be. So to be honest, nobody knows. What we see is that, that is helping our C&I business, because people now willing to invest and this is what I try to explain them.

Now we see the acceleration not auto PV installations will go up because first of all is in now our mandate, so they will increase. Secondly, the electricity price is so high that storage makes 100% sense. So it's not only that the early adopters are thinking about storage and optimizing their electricity flow and cost is now more or less is needed.

And therefore yes, we see that the current situation in Europe is kind of an accelerator for that business. That's when we see. Your questions was what will be the outage or power outage? Nobody knows. And I think we are living in a country with one of the most stable network.

I'm confident that they can manage it and even we will see that, that might be for one day or some hours, but I don't expect a really significant outage, power outage for many days. I don't expect that..

Okay, thank you. That really helps..

There are no further questions and I'll hand back to Cary Segall for closing comments..

Thank you. Thanks, everybody. This concludes our earnings call presentation. We appreciate your interest in ADS-TEC and for taking the time to hear our update. If anyone has any additional questions, please don't hesitate to reach out and we can schedule a follow-up call. Thanks again. Be well and stay safe..

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye..