Good morning or good afternoon, and welcome to the Wallbox Second Quarter 2024 Earnings Call. My name is Adam, and I'll be your operator for today. [Operator Instructions] I will now hand the floor to Michael Wilhelm to begin. So Michael, please go ahead when you're ready..

Thank you, Adam, and good morning, and good afternoon to everyone listening in. Thank you for joining today's webcast to discuss Wallbox's second quarter 2024 results. This event is being broadcast over the web and can be accessed from the Investor section of our website at investors.wallbox.com.

I am joined today by Enric Asuncion, Wallbox's CEO; and Luis Boada, Wallbox's CFO. Earlier today, we issued our press release announcing results from the second quarter ended June 30, 2024, which can also be found on our website.

Before we begin, I would like to remind everyone that certain statements made on today's call are forward-looking that may be subjected to risks and uncertainties relating to future events and/or the future financial performance of the company. Actual results could differ materially from those anticipated.

The risk factors that may affect results are detailed in the company's most recent public filings with the SEC, including in the Annual Report on Form 20-F for the fiscal year ended December 31, 2023 filed March 21, 2024. We will be presenting unaudited financial statements in IFRS format that reflect management's best assessment of actual results.

Also, please note that we use certain non-IFRS financial measures on this call and reconciliations of these measures are included in the presentation posted on the Investor section of our website.

Also, a copy of these prepared remarks can be obtained from the Investor Relations website, under the Quarterly Results section, so you can more easily follow along with us today. So with that out of the way, I will turn it over to Enric..

the Supernova 220. DC revenue showed remarkable growth of more than 60% compared to the same quarter last year, mainly driven by sales in the U.S. market. In total, we delivered almost 48,500 AC units globally, including sales by ABL, and approximately 380 units of DC during the period.

Gross margins stood at 39.1% in the second quarter, remaining steady compared to the previous quarter and improved 936 basis points compared to the same period last year. We believe this is a great proof point that the cost engineering and strategic sourcing actions taken in the previous quarters show consistency.

We believe we can continue to hold the 38% to 40% range in the year to go with opportunities for improvement in the future. Luis will provide more detail on gross margins shortly. On a consolidated group level, in Q2 2024, we saw an 11% year-over-year reduction in labor costs and OpEx.

It is important to remember that we were able to achieve these cost reductions despite ABLs contribution to our cost base. As we continue to optimize the operations across the group and leverage synergies, we see additional opportunities to reduce our cost base.

We are excited that in the second quarter, we continued to reduce the adjusted EBITDA loss, now landing at EUR 11.2 million, which represents a year-over-year improvement of 47% and more than EUR 2 million improvement as compared to Q1 2024.

As mentioned during our last earnings call, we believe that top line revenue is the main catalyst to future profitability. Despite the current EV market slowdown holding back the acceleration of our top line, we remain very committed to our path to profitability.

So we are fully focusing our attention on what we can control and will continue doing to achieve adjusted EBITDA breakeven this year. For the second quarter 2024, Europe contributed EUR 34.5 million of consolidated sales, or 71% of total revenue, and grew by 44% from the year-ago period.

We saw strength in Benelux, DACH, and the U.K., while in Southern and Nordic European countries, we experienced some softness in line with the EV market. North America showed a strong quarter and contributed 23% or EUR 11.4 million, a 65% growth compared to last year and more than 140% compared to Q1 2024.

We were delighted to see the strong performance of the AC product portfolio as well as the very successful launch of the Supernova 180 sales. Congratulations to the U.S. team for their effort in scaling the DC sales and boosting AC sales growth.

The progress of both APAC and LATAM show the advantages of being a global player and how this geographical diversification can help us capture pockets of additional growth. AC sales of EUR 32.2 million represented 66% of our global consolidated revenue, a 55% year-over-year improvement.

We see traction for both the newly introduced Pulsar Pro and ABL's eM4, strengthening our position in the commercial AC segment and accelerated by cross-selling activities. We are also seeing continued interest in our dedicated Pulsar residential chargers.

In total, we have now sold over 500,000 Pulsar residential chargers since its launch and entered into fruitful commercial relationships with the likes of Generac, Free2Move, Lucid and, more recently, Luminus, setting us up for further acceleration. Free2Move, as an example, has now launched its charging offering across the U.S.

in support of the rollout of Stellantis' EV vehicles. When customers purchase an EV, they can choose to get a Free2move Charge Home charging station provided by Wallbox or credits to charge in the public network.

In the case of Lucid, we announced earlier this year that Wallbox has become their official home EV charging partner in Europe and we are now expanding this partnership to the UAE market.

Luminus is a Belgian utility, part of the EDF Group, and will distribute Wallbox solutions to local partners, providing a solid start to what we expect to become a long-term commercial relationship.

DC contributed 22% of the revenue in the second quarter, a 64% increase from the prior year period, which shows the continued strength and diversification of our business. After the introduction to the U.S.

market last quarter, the Supernova 180 has been very well received, resulting in recurring orders from existing customers and the signing up of new ones. We are seeing the same trend in Europe.

Software, services and others contributed nicely to our quarter-over-quarter growth with EUR 6 million for the second quarter, representing 12% of our total revenue. In parallel to our commercial expansion, we continue to develop the Supernova product line.

We are introducing the Supernova 220 which is Wallbox's highest power-to-footprint ratio DC fast charger yet. The newest addition to the product family is designed to charge up to 220 kilowatts, meaning that it can fully charge a passenger EV up to 100 miles in as little as 8 minutes.

The introduction of the Supernova 220 meets our customers' expectations for more powerful systems and a broader range of power options. This new version has the same award-winning compact design as other Supernova models.

Increasing the power while maintaining the installation efficiency, maintenance and space, improves the return of investment for charge point operators, especially in high-volume locations. Supernova 220 services 1 EV at up to 220 kilowatts or 2 EVs simultaneously at up to 110 kilowatt each.

It is fully compliant with the latest AFIR regulations without the need for any accessories. Currently, we have an early adopter program in place and we expect the first shipments in September. We believe that our product improvements and focus on cost engineering have resulted in continued strong gross margins, close to 40% for the quarter.

In particular, the Pulsar and Supernova product lines experienced strong improvements which contributed significantly to the consolidated gross margins. We are already moving to the new and more mature generation of Supernovas which are more efficient to manufacture, especially the Supernova 180 North America. Now, let's talk about the market.

We remain very positive about the long-term growth and future potential. EVs are on an irreversible path, and we believe that we play a larger role than most competitors in that transition with our wide range of EV charging solutions and geographical footprint.

We are seeing much softer growth for the residential charging market and a shift in customer preferences in DC.

As reported by Rho Motion, in the second quarter, there were close to 1.5 million EVs sold in our core markets, representing a 19% increase in the rest of the world, a 11% increase in North America and a 3% decrease in Europe, all year-over-year growth rate.

This is very subdued to the double-digit growth everyone expected and, as I show in the graph, there are differences over the quarters instead of consistent growth.

However, the stage is slowly being put in place for massive adoption as more affordable models are being introduced, inflation and interest rates normalize and more expansive public charging infrastructure is being set up. These solid fundamentals are irreversible, despite any uncertainty on the policy front.

Luis, I'll turn it over to you to comment further on our financial details..

revenue, cash costs, and adjusted EBITDA. We present cash costs in this slide, which is the EUR 32.3 million of labor costs and other operating expenditures plus capitalized R&D minus severance one-offs and non-cash items.

Overall, we have seen flat cash costs compared to last quarter despite the significant revenue growth, and a 3% decrease compared to the same period last year, which did not include ABL yet.

When looking at the contribution of the different components, OpEx readings for Q4 2023 and Q1 of this year benefited from warranty, freight and bad debt provision releases, creating a tougher comparable for Q2. But the underlying operating expenditures are being managed down and should read through in the year to go.

Cash personnel costs have continued to decrease from EUR 24 million to EUR 21 million. With the continuous reduction efforts, we are confident this trend will remain throughout 2024. We ended the quarter with EUR 65.2 million of cash, cash equivalents, and financial instruments.

This predates the strategic investment led by Generac as announced yesterday. This $45 million investment strengthens Wallbox's balance sheet and provides capital to accelerate the company's ability to manufacture and sell more chargers throughout the world.

Considering the expected revenue growth, continued cost management initiatives and the new investment, we believe we have a comfortable balance sheet position to get to future cash generation. Long-term debt was approximately EUR 91 million at the end of the quarter, approximately EUR 5 million decrease to the previous quarter.

CapEx, excluding capitalized R&D, was again purposely light, with less than EUR 3 million invested in the second quarter of which, approximately EUR 450,000 on property, plant and equipment. To reiterate what was shared last quarter, our CapEx will focus on the development and production of higher power charging products.

We expect to invest less than EUR 10 million for the full year 2024 as we have ample factory capacity to scale already in place. We ended the quarter with EUR 84.9 million in inventory for the consolidated group, a 5% sequential reduction or close to EUR 5 million in value.

Optimizing our inventory is central to free up cash and this is another key objective of improvement delivered. The goal is to keep bringing the total inventory down in the year to go and we are on the right track to do so. Enric, I'll turn it back to you to provide some closing commentary..

Thank you, Luis. As I look back at the first half of the year, we have been executing well in a difficult market. In this environment, we achieved milestones on all fronts ranging from revenue growth, award-winning-product introductions, securing strategic partnerships for added growth, margin improvement, as well as cost and inventory reduction.

And I think all of this improves our competitive position as the entire industry is trying to navigate the current cycle towards mass adoption. We have the products, we have the technology, we have the production facilities, we have the funding, we have the best people, and we have the competitive position to benefit long-term.

With that, we're ready to take questions from our analysts..

Welcome back, everyone. [Operator Instructions] Adam, I think you have some instructions for our analysts..

[Operator Instructions] Our first question comes from Leanne Hayden from Canaccord Genuity..

Congrats on the progress this quarter.

First, I just want to ask, do you still plan to be positive EBITDA in the fourth quarter of this year? And if not, then when do you expect to reach that milestone?.

Thanks for the question.

I couldn't hear all that clear, but I think you were referring us to being positive EBITDA in the year to go?.

Yes..

All right. Thank you so much. So we are continuing to improve as we presented, and it remains our top priority as we're saying, to turn profitable and generating cash. And what we said is that, in June alone, with higher levels of shipments, we were already positive. So our financials already show those proof points towards that profitability.

And meanwhile, we are bringing our cost base down and we are expanding our margins. So the reality is that we've experienced a market that, as we all know, has been slower than anticipated.

And that is kind of bringing that challenge to the profitability, but we will continue to aim for that positive adjusted EBITDA in this year, as I said, as we continue to manage our margins and our costs. So we're going to do our best to achieve that feature by the year-end..

Understood. Okay. Just one more from me. You've raised $45 million yesterday.

Can you please discuss any additional capital needs or provide us a bridge to free cash flow positive, please?.

Leanne, thank you for the question. So we decided to strengthening our balance sheet to make sure we were able to, one, continue financing our growth. We -- although the growth was not as we expected, it has -- it's at great growth levels. We are growing almost 50% year-over-year and also to be able to navigate the current cycle towards mass adoption.

So this funding, as Luis was saying, does not impact our -- or slow down our efforts to reach profitability. We're actually committed to -- by this year to be profitable. And at the end, we believe that we have a very comfortable balance sheet position, as we've commented, until we start generating cash.

So we don't expect additional funding until the company generates positive cash flow..

Our next question comes from Alec Scheibelhoffer from Stifel..

So just to kick us off here, you alluded to, during the call, some of the softness in terms of the pace of EV sales growth in North America as well as all your core markets. However, your AC unit sales kind of -- they posted a solid quarter.

So I was just wondering if you could kind of just break out some of the puts and takes of the drivers of that and how you're thinking about volumes for the back half of the year?.

Thank you, Alec. So I understand the question is regarding the growth in -- and which are the main drivers for our growth in AC. So just in the U.S., obviously, we have all these great strategic agreements we have been announcing and now are starting to create a lot of value. We spoke about the Free2Move deal, which is part of the Stellantis group.

This is -- as car manufacturers continue growing, we get advantage through these programs because at the end, there's a huge investment between EV sales with car manufacturers and these products we have. We have this program with Stellantis. We have this program with Nissan, also the Generac agreement, we expanded yesterday.

So we closed a deal with them earlier this year and already brought several thousands of AC units in North America as an initial second recurrent order. And at the end, Generac is a great partner to have. They have almost 9,000 installers nationwide.

And the idea is that many of them take advantage of our products and our products become part of their ecosystem. So right now in North America, the huge expansion in our AC sales come from strategic agreements. Also, there's an additional thing, which is the expansion of our product portfolio.

We used to have Pulsar Plus in North America, but now also, additionally, we have Pulsar Pro. And this is a commercial product. It's more focused on parking companies. So, we have a product that attacks a different segment in the North American market. And finally, we are really happy with our team and how well everyone is performing.

If we go to Europe, ABL, when we acquired the company last year, apart from bringing strength in a key market, which is Germany, to give you an idea, now, Germany is our second biggest country in the world after North America.

More important than that, we -- it brought a new product, which is the eM4, that now we are selling in all Wallbox channels in Europe. And at the end, we have done this integration, it's going very well, the integration, and we can sell all these products everywhere. So, at the end, it brings additional products we can sell in the European market..

Great. And then, just as a follow-up to that, just -- you made some reference to the solid margin progression you made.

I was just curious, from a mix standpoint, how you're thinking about how margins on the DC side kind of shape up in the back half of the year with the integration of the 180 and the new 220 Supernova?.

We see a lot of potential of improvement. We are very comfortable the way our DC margin is improving. We are already in the third generation of our Supernova products, and they are very cost-optimized, and we are still seeing lots of opportunities to improve the margin.

So our goal is to get them closer to the 50s, the DC fast-charging margins, from the close to high 40s it is today. When we look at AC, there's a mix here because, as you've seen, we are reducing our inventory.

So our focus for AC products, where we have EUR 84 million in total of inventories, to reduce the inventory, so, we cannot really, in some of those models, optimize gross margin -- the margin as we would like. But for the new models, like Pulsar Pro, Pulsar Max, margins are also quite high.

So, taking advantage of the reduction of inventory, and in the process where we don't have inventory, we already have strong margins. We also see an improvement above the 40% as we go into the next year. And finally, ABL, there's a lot of synergies.

And taking advantage of the vertical integration of Wallbox, we have the RS in our group, which is an electronics PCB manufacturer in our group. So, these are things that we are sharing, our vertical integration, we are sharing strategic sourcing.

So, all these synergies, these are programs that are in place, and we expect to start seeing them as we start the next year..

Adam, do we have any additional questions?.

[Operator Instructions] No further questions..

Okay. Then I would like to thank you all for joining us today. We hope you found today's call good use of your time. Let us know if we can help you in any way..

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines..