Wallbox (WBX) Q4 2022 earnings call transcript

I'd now like to turn the call over to Matt Trachtenberg, Warbox's Vice President of Investor Relations. Matt, please go ahead.

Thank you for joining today's webcast to discuss Wallbox's fourth quarter and full year 2022 results. This event is being broadcasted over the web and can be accessed from the investor section of our website at investors. Wallbox. com.

I'm joined today by Enrique Asocian, Wallbox's CEO, and Jordi Lines, our CFO. Earlier today, we issued our press release announcing results from the fourth quarter period ended December 31st, 2022, which can also be found on our website.

Before we begin, I'd like to remind everyone that certain statements made on today's call are forward-looking. That may be subject 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 U. S. Securities and Exchange Commission, including in the post effective amendment number three to our registration statement on form F-3 filed on December 14th, 2022, which can be found on our website at investors. Wallbox. com and on the SEC website at www. sc. gov. 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'll turn it over to Enrique.

Thank you, Matt, and thanks everyone for joining us today. In addition to reviewing highlights from the fourth quarter and full year 2022, I will also discuss the rationale and intended impact of the recently announced cost reduction program and offer some recent commercial wins. Jordi will then step in and offer additional detail on our quarterly performance and some recent fundraising transactions, as well as some guidance on expenses and capex. And finally, I will return to the current market outlook and how it impacts our guidance for the first quarter and full year 2023.

We will end by taking questions from our covering research analysts. We have a lot to get through today, so let's get started. Looking at the full year 2022, I thought it may be helpful to revisit a few of the wins we saw last year. Because while it's important to focus on what's ahead, it's equally important to celebrate and recognize your wins. And there were a lot of wins in 2022. We expanded into an additional 21 countries. We announced strategic partnerships with leading global brands like Nissan, Fisker, Lyft, and Polaris and expanded existing partnerships with Uber. We launch new distribution channels like City Electric, Svea Solar and IKEA and Napa Auto Supply. We strengthen relationships with utilities like ENI, EDF, B-Charge, Atlante and Iberdrola.

We open a state-of-the-art manufacturing facility in Barcelona which allow us to immediately begin shipping our new DC public charger Supernova. While bringing one new factory online is a difficult task, we also opened a second factory, this one in the US, to provide products for the North American market. That facility opened in the fall and continues to ramp up production, putting us in an enviable position to qualify for meaningful government investment. We acquired two attractive companies, Aries Electronics, a leading PCB supplier, and COIL, and North American installer, both of which provide competitive strength.

And we navigated a challenging supply chain without ever being in and out of stock position. In summary, 2022 saw its highlights and its challenges, but we believe the market of performance illustrates we are executing well and we are well positioned. Revenue for the full year 2022 was approximately 147 million euros, representing growth of more than 100% over 2021.

Crossing 100 million euros of revenue at our age is something we are very proud of. There are not many businesses of our size who can point to that type of growth, but we can, and we did. And while we are proud of what we have achieved, we are even more excited about what's ahead. 2022 market share gains in both North America and Europe were solid, as illustrated by our ability to grow consolidated revenue four times faster than the overall market. As you can see from our regional competitors, this is not easily achieved. Execution versus the competition has been strong and will remain so. Of that we are confident.

But performance versus your expectations is important as well. So we are working to better understand how our customers behave in volatile economic environments.

Attractive gross margins are something we've been able to deliver, and we deliver 40.5% on a full year basis. Introducing several new products with drastically different financial profiles, customers, and market drivers adds a new level of complexity. but we are confident that in the long run we can move margins back into the range you've come to expect from us. That operational leverage is a critical element in our path to profitability and you will hear more about today as well. The fourth quarter finished slightly below our expected range impacted by three main drivers.

First, channel inventory. Our partners had sufficient inventory to service others without replenishing as they normally would and their desire to remain conservatives for the foreseeable future. That channel inventory was a result of second half 2022 expectations within the industry that did not materialize. Remember, they often buy for more than one quarter forward, and forecasts in Q3 were still at 3.3 million European EV deliveries.

Second, geographic mix. While EV deliveries in Europe have the strong finish to the year, some of that strength occur in markets that we have lower share. While we are working hard to change this, it takes time. And third, seasonality. Q1 is always down sequentially from Q4, but the ordering pattern was unusual closing the year. As we made our way through the fourth quarter, it became clear that customers were more cautious on Q1 EV deliveries than we expected. And in December, the Bloomberg Energy Finance full year 2023 European EV delivery forecast decreased by 23%, from 4 million to 3.1 million units.

Digging deeper, the Q1 European delivery forecast now expects half the volume seen in Q4 2022, and no volume growth over this time last year. That low growth in Europe is not expected to persist, but clearly impacted customer behavior in December and January. Q4 revenue of 37.3 million euro grew by 44% on a year-over-year basis, a reasonable result when compared to 37% year-over-year growth we saw in the quarter from North America and Europe combined.

Gross margin of 35.7% was below the expected range and impacted by both unfavorable product and channel mix. We sold more DC relative to AC, driven by what I just described in Europe. Our DC portfolio brings a lower margin today, and we sold more to OEMs who traditionally receive better pricing. Supernova continues to run path, but brings with a lower margin profile. However, Gen 2 of Supernova already has a better margin profile.

And as that is delivered in the first half of 2023, some of that will be alleviated. Our fourth quarter results were fueled by exceptional strength in North America, growing revenue by 425%, and key markets, including 700% growth in Israel, 185% in Spain, 133% in Belgium, 117% in France, and 76% in Italy, all on a year-over-year basis. We continue to make great progress in Asia-Pac and Latam, growing at 104% and 360% respectively, both of which are early in the Ribi transition.

We continue to cultivate the relationships we establish in these young markets and look forward to them contributing materially in future years as EB adoption ramps up. North America now contributes 25% of total revenue, an increase of 18 percentage points over the prior year period. This exceptional growth drove in part the geographic mix shift from Europe, which now represents 66% of revenue. Asia-Pacific provided 6% of consolidated revenues in Q4, and Latin America was 3%. This meaningful shift is both deliberate and helpful as we continue to diversify both our geographic and product mix. Our AC charging portfolio represents 72% of our total revenue, with fast charging at 13% and the remaining 15% provided by software and services, a growing portion of which is recurring.

And finally, we saw more than 48,000 charges in the quarter, where revenues doubled from the third quarter and public DC volumes almost tripled sequentially. As we said in the past, as our public charging portfolio ramps up, you will see the impact of higher prices and lower volume on consolidated results. In addition to the financial performance achieved in the quarter, I wanted to highlight a few other items worth noting.

First, the White House recently released the National Electric Vehicle Infrastructure Standards and Requirements and mentioned Wallbox as one of the few who has made the necessary investments to help drive this initiative. While there were a number of important elements included in this document, the one that we are most pleased with and impacted by is that of Buy America requirement, which stipulates that final assembly must occur within the U. S. immediately with no transition period.

This is something we were deeply involved with, and we believe they made the right decision. The purpose of these public investments are to both electrify the roads and encourage U. S. business activity, i. e. create jobs. Wallbox is extremely well positioned to participate in these subsidies today given our Texas facility, and we look forward to bringing Hypernova to market later this year. This is not a common position among our competitors, and many are scrambling to build factories. This takes time, time and money that we invested in beginning on 2021. So we believe we have an attractive head start, and already we are beginning to see real interest from customers for Hypernova. Today, we have more than 300 units on LOI representing nearly $30 million.

As we continue to build that order book, we will provide more color. Second, remaining on the topic of pallet charging, we continue to ramp up production well. To give you some context, we anticipate shipping several thousand units of Supernova this year. But ultimately, on a global basis, we believe we have the capacity to produce 20,000 units of both supernova and hypernova combined. That production capacity, with all appropriate caveats, put us in a position to meet the massive wave of demand we see in the U. S. and globally. The capacity is there, and the demand will dictate how quickly we ramp up production. Supernova, which we are in the process of rolling out Generation 2 already, is seeing encouraging uptake.

Gen 2 includes a split-charged 150 kW CCS configuration, something that has been in high demand from customers. Pipeline for units continues to grow and totals several thousand units. Third, Douglas Alfaro, who many of you met on our Q2 2022 earnings call, has accepted the role of Chief Business Officer. Douglas has been with us since 2018 and has served as General Manager of our North American business.

Having grown that market from nothing into what it is today, our largest geography, we are ready to give him his next challenge. Douglas will bring the same rigor and process that he deployed in North America to our global business and I looking forward to seeing what he can do He will join us on the next earnings call to give you a better understanding of our global sales strategy And fourth, there continue to be commercial wins and partnerships that you should know about.

One worth nothing is Sam's Club. This massive retailer, a part of Walmart, will soon carry full surplus in 50 stores across the U. S. This exposure is very valuable and is another proof point that measure names are trusting Volbox to provide innovative EV charging and energy management solutions to their customers. Of course, there are always commercial wins that you don't hear about. This occurs for one reason or another, but respecting our customers' needs is our first priority. One that we are especially excited about is a new partnership with a very large European OEM. They have agreed to allow Quasar II to discharge their vehicles.

This is important for two reasons. One, bidirectional CCS charging requires acceptance and approval from the OEMs. Their protocols must be obtained for the discharge to occur. So this illustrates the trust we build with major brands for innovative technology. And second, acceptance by one often leads to others. So we hope to build momentum following this agreement. These new customers also include a large transportation and logistic provider who has requested a comprehensive offering including chargers, Sirius, our commercial energy management application, and services in Europe. Or a major OEM that has selected Wallbox as their preferred provider of hardware as they expand their EV offerings. You will get more specifics about both of these soon, but know that while you may not read about them in the news, we are doing exceptionally well in winning competitive opportunities.

In summary, the conversations we are having and opportunities we've won give us confidence in our strategy and want you to share in that as well. I also want to share more detail on the cost reduction program we announced in January. We did not make this decision lightly, but recognized that actions were necessary to ensure the long-term health of the business. The factors that drove this decision are largely related to lower market growth within Europe, which was impacted by lower EB deliveries than expected at the start of 2022. As you will expect from a responsible company, when a downward revision to revenue occurs, it must be accompanied by an adjustment of cost as well. That cost adjustment will result in removal of approximately 50 million euros of OPEX and employee benefits, essentially payroll, this year from the previously expected levels.

To that end, we've been very deliberate in where these cost reductions will occur. Preservation of growth, innovation, and market position is critical to the future success of Wallbox, so we evaluated the investment profile project by project, function by function. The areas impacted by these cost reductions predominantly have longer-term horizons. And while that is important, given the market variability we experienced over the last year, they will be posed for the foreseeable future. You should not expect these actions to impact revenue.

As a result of these actions, we expect to drive profitability through the business almost a year earlier than originally planned. Therefore, we anticipate break-even adjusted EBITDA in the fourth quarter of this year, and positive adjusted EBITDA on a full year basis next year. Over time, we believe that consistent gross margins of approximately 40% combined with this new cost structure can drive adjusted EBITDA margins of 10% in the midterm and 20% over the long term.

You've likely heard us talk about three pillars, cash conservation, achieving profitability and growing in excess of the market. This construction, which was completed yesterday, is directly aligned with two of the three. What you see today is a company that is establishing processes and spending capital in a responsible manner. And I'm excited to see Worldbox enter this new phase. What you have come to expect will continue, capturing market share by offering innovative hardware and software in a young and fast-growing space. It's a process and change that our companies must go through. And we are looking forward to showing you how successful we know we can be.

Jordi, I will turn it over to you to comment further on financial details.

Thank you, Enric. Good morning and good afternoon to everyone. Given the continued challenges the EV market is experiencing and the supply chain disruptions that we work through, I'm satisfied with our quarterly results and know that 2023 will be an even better year. For the fourth quarter 2022, revenue was 37.3 million euros, a 44% increase from the year-ago period, driven by volume, new products, and M&A, slightly offset by end-of-year pricing discounts. The seasonal pattern we saw as we moved from the third quarter to the fourth was disrupted by the channel inventory dynamic Enric discussed earlier, but we anticipate that being solved in the first half of the year. EV deliveries improved quarter over quarter, but still fell short of earlier estimates.

However, our goal is to grow in excess of the Europe and North American markets combined, And we achieved that once again in the recent quarter. Now let me share with you some key highlights that drove our results.

First, our regional mix, now with more than 113 countries continues to improve upon the benefit of geographic diversification. North America accounts for 25%, up from 7% in the prior year period. And Europe now represents 66% of our revenue mix, down from 88% last year. Asia-Pacific is currently 6%, two points higher than last year. And Latin America is 3%, up two points as well. We expect this shift to North America to continue as EV adoption accelerates and U. S. subsidies takes hold.

Second, gross margins on a full year basis of 40.5% were resilient in the face of continued component shortage, but in the quarter were impacted by product mix shift from AC to DC. As we have said all year, as Supernova ramps up, we will see downward margin pressure, and this did occur. But it did occur more than anticipated, largely due to the lower mix of AC sales in Europe. We continue to aggressively cost Ingenier Supernova, now in Gen 2, and believe we can make meaningful improvement this year.

However, just as Supernova is going through its post-launch engineering process, Hypernova will enter. We will provide as much color as we can to ensure you understand the drivers of our margin performance. Adjusted EBITDA loss for the quarter was €29.1 million, up on a sequential basis driven by lower revenue and gross margins and higher headcount costs. Adjusted EBITDA loss for the year was €88.3 million. As we review our growth trajectory and our revised cost basis following the actions Enric discussed, we believe we can reduce this materially by more than half in 2023 and into positive territory next year. We have sharpened our focus on profitability here. Philosophically, profitable growth is one of the key tenets that drive our strategy, equally important to operational excellence and innovation.

To our shareholders, we are committing to you this renewed focus and look forward to proving this out. We were also very busy improving our balance sheet in the fourth quarter. As you may have seen, Wallbox raised approximately $43 million through a sale of ordinary shares to a group of investors, including Enric, board members and nearly private holders who believe in the long-term value we are creating here. In addition, we completed a loan of 16 million euros and expended working capital by 15 million.

Our balance sheet remains solid, with almost 90 million euros of cash and equivalents available at quarter end. In the first two months of 2023, we've also brought on an additional 25 million euros of cash through loans and other financing instruments. Opening two new factories, accelerating Hypernova to market and building a robust supply chain for Supernova in Europe to support the demand we see ahead requires capital.

But we do not intend on spending at this rate. CAPEX is relatively light going forward as well. Additionally, we continue to evaluate opportunities to bring additional capital onto our balance sheet And we believe we have access to the cash we need to run the business until we generate positive free cash flow in 2025.

And finally, as we discussed last quarter, we hold more finished goods, work in progress and raw materials that we would in a normally functioning supply chain. Our intention is to continue to work through those components as we progress through the year. We ended the quarter with 44 million euros of long-term debt. which now incorporates assumed debt from recent acquisitions and other additional facilities. As of December 31st, there were more than 1,250 full-time Wallbox employees around the world. Any headcount additions we do this year will be done in key areas of growth. CAPEX for the quarter was 17 million euro, of which 6.5 million was PP&E. For the full year we spent 36 millions of ppne we would expect approximately 26 millions of ppne in 2023 as our factories are up and running and do not require significant additional investment until 2024.

with that i will now turn it back to enrique to provide you with some commentary around the fourth quarter 2022 was a volatile year of that we can all agree and that gives us a greater sense of caution as we look at 2023 market volatility occurred for many of the obvious reasons including the war in ukraine persistently high inflation supply chain disruptions oem capacity constraints, fears of recession, etc. We do not believe that most of these are long-term systemic issues. We do believe that we will begin to turn the corner late in the second half of the year.

As we look into 2023, we focus on two data points. One is the new European EB delivery forecast of 3.1 million units, a 23% reduction from when we last spoke. The second is our January and February sales data. For this, we believe a conservative outlook is the responsible thing to do. But the year, by many measures, will still be widely successful and productive. Growth rates between 60 and 100 percent are not often seen from a company of our size, but we believe we can achieve them. And those growth rates are well in excess of the overall market. Again, not a common occurrence. And an uncertain economic climate presents us with some opportunities that we have not yet discussed today.

It allows us to get ourselves in better shape for the tidal wave we see in the coming years. That wave is driven by customer preferences, more accessible public charge infrastructure, more affordable vehicles, government subsidies, sun setting icd vehicles and new e-ve capacity coming online for us is driven by this but also by the exciting partnerships we've spoken to you about all year uber p-nissan fisker best buy by lyft and many others by new product introductions new customer verticals new geographies that getting in shape is about optimizing our business some of which was announced in January but it's also about our focus on cash conservation and profitability. All of these things will set us up very well to come out of 2023 in a much stronger position than when we entered it.

That position of strength must be built today because the amount of infrastructure needed is difficult to comprehend. We intend on winning in the marketplace and to do that these actions are needed now. That's our plan. Therefore For the first quarter of 2023, we anticipate revenue within the range of 35 to 40 million euros. This represents year-over-year growth of 33% at the mean point. We also expect full year 2023 revenue to be between 240 and 290 million euros representing growth between 60 and 100 As we make our way through the year this range will tighten up And we expect Q1 gross margins to be flat sequentially and approximately 38 percent for the full year.

With that, we raise the question from our analysts. Welcome back, everyone, to our analysts.

Hi, George. Thank you for attending, and thank you for the question. This is Enric. So in Q4, basically we were able for the full year and by the year to grow more than the market. So that's important to note because our markets grew 37% in Q4 and we were able to grow 44%. So we kept our path to acquire more market share and more presence in the market. However, it didn't grow as expected before because we had some channel inventory in our partners that given the reduction in the last 60 days from industry forecast in EV deliveries, they were more cautious on stocking for the next quarter. You have to think that they buy the products that are going to be delivered the following quarter many times.

So they have stock, they have to replenish many centers, many retail stores. So, well, basically, we overperform the market. That's very important. We grow more than 400% in the U. S. But in Europe, we are seeing and we saw that industry forecasts for 2023 were dropping 23% for EV deliveries. And that made our partners to be more cautious.

So, we are monitoring this with our partners, and we expect to see still some reduction inventory during this first quarter.

Yeah, George, we think we will be through that inventory through the first half of the year within our channel partners. First quarter. Yeah, first quarter, sorry.

But we're having good discussions with our channel partners in terms of what that right level is. And certainly, industry forecasts impact that, right? You have to think that, for example, Q1 2023 is, in terms of EV deliveries in Europe, is half of the EV deliveries in Q4. So that obviously impacts the consumption of inventory. That's why we have even the guidance for Q1.

George, anything else? Thank you.

Yeah, so actually, in terms of wall walks, thank you, Mariana, by the way, in terms of wall walks performance in Q4 in North America was exceptionally good. we were able to grow 440%, 425%.

So we overperformed clearly the market that grew on double digits. And we even got, as we explained, orders and agreements with OEMs in North America. So that really fueled sales in the market. So the market may have not performed well or not, But as Walvox, we overperform very well. The market's growing more than 400% in North America.

Does that help, Marianne?

Sorry, I wanna make sure we understand your question. Are you asking for a better view into 2024 and 2025 in terms of North America?

Yeah, we are seeing a big uptake, actually a big growth in fast charging pre-orders in North America coming from the Navy program. The fact that we have a factory in Texas already up and running and has been commented and approved the White House as one of the few ones that are ready for the Buy America requirements. It's obviously impacting very well in our future sales for the next years in terms of fast charging in North America. So in that regard, we already have collected more than $30 million on LOIs and pre-orders for Hypernova, the fast charging product we are launching in the U. S. later this year. So So, you know, we are seeing a lot of potential growth in the U. S. , even the fact that we are ready in terms of manufacturing and we have the right products that fulfill the government requirements.

And, Marianne, the impact of both NEVI and the Inflation Reduction Act is really exceptional. And so, while it's hard to give you a number for 2024 and 2025 on a regional basis, you know, we feel like we're ready and we feel like we have the right products to sell. So, we're excited about next year.

Anything else? Charlie? Perfect, thank you.

Yeah, thank you, Mahit, for joining us today. Basically, the gross margin Q4 was just impacted because of the mix of sales. Basically you know that we are on a ramp up of Supernova sales, which is our public charging new product and as in last quarter Supernova DC sales has represent higher percentage versus the total sales than expected through the EV marketing Europe was not as expected. It makes that how we are on the ramp up of production it has been impacted on gross margin. However, we are expecting as we have announced today that we will maintain these excellent gross margins for the total 2023.

Yeah, and to add to that, thank you, Mahib, for the question. So this is something that you have to expect from us as we are launching new products. We are focusing on time to market. We launch a new product like Supernova, and the first six months, few months, gross margin is a little bit lower. After that, which we are now in that phase, we do engineering improvement and operations improvements to radically improve gross margin. So right now we are launching generation two supernova, which is higher power, but also higher gross margin and lower cost product. All the things we've learned, all the operational things we could do, we redesigned some parts like we always do every time we launch a new product to improve gross margin.

So during this month of March, we will start delivering the first units of Supernova Generation 2, and next quarter we will start seeing an even more positive impact of gross margin in fast charging sales. And all this transition to Gen 2 is going to be almost over at the end of the year, but you know the volume of Gen 2 obviously is growing and it has a much better gross margin. But this is normal in our case that new products that have just been launched have a lower margin. But after six to eight months, we are back on our expected gross margin.

i think that that midterm is sort of a one to three year range and obviously it will ramp up as we make it make our way through that that period uh but we do think that you know we'll break even uh as we exit this year and and and next year it'll probably be at the lower end of that range uh and and continue to move up from there and that there are a lot of variables that will determine how quickly we move up including the market forecast and as you know market forecasts have been changing uh fairly drastically over the last couple quarters and so i think we want to take quarter by quarter and year by year and and we'll give you a better idea as we come out of 2023, if that's okay, Mahit.

No, absolutely enough.

Thank you. Thank you. Charlie? Thank you.

Hi, Greg. Thanks for the question. and I'm just looking through the data now Jordi and Enrique are just looking through our bridges and so I would say the biggest impact to gross margin sequentially was from volume and then and then we're looking at mix and so that lower volume of AC relative to what we expected and then the volume of DC was It's not more than we expected, but obviously when you compare the two, that product mix shift did drive that gross margin lower than we had thought I wouldn say there a material I wouldn say it material impact from channel or from end pricing but they did come into play And, you know, in Q2, well, thanks, Eric, in Q2, Gen 2 is going to be already available in the market.

As I said, this month of March we are delivering the first unit of Gen 2 to selected customers and it starts with a margin closer to the 40 percent. So we expect that to ease already in Q2.

And Enric, Gen 1 is different from Gen 2 how?

Well, it allows higher power charging so gen one supernova can charge up to 60 kilowatts gen two can up to 150 kilowatts so it can be used for commercial centers but also for highways and it has all the improvements in terms of uptime quality service and cost that we learn from Supernova Gen1. And maybe one important difference is that it doesn't have CHAdeMO charging. So Gen2 is a split CCS product that doesn't have CHAdeMO. But at the end, it's an improvement in power and technology from what we have been selling the last year in Fort Supernova.

Does that help, Greg?

Sure. Charlie?

Sure, yeah. So I think that let's put that number into context because that's a long-term aspirational number. I think we've been getting a lot of questions internally, sorry, from analysts and investors in terms of what are our long-term capabilities, manufacturing capabilities, when we think about the public charging portfolio. And so it's going to be a mix. And I think that that mix is going to evolve based on customer preferences, based on projects, especially when we look at NEVI and IRA in North America. But, you know, by the time we get farther out into the curve, you're going to be in future generations of supernova.

And remember, we're making some assumptions with that 20,000. We're making some assumptions in terms of continued capacity build out. So expanding our factories right to their full footprint, adding production lines, doing full shifts. That is designed to give you sort of an extreme boundary. And if the demand is there, we will continue to ramp that production up to meet that demand.

Yeah, I think, thank you, Alec, for the question. But with this 20,000 number, which obviously has been deeply tied by our operations team, we wanted to show the capacity that the current facilities and warehouse we have today, how much they can produce. Obviously as Matt said we will need to invest slightly additionally in assembly lines but in terms of facilities and the factories the footprint we have today and the capes we invested last year in Texas and in Barcelona they allow us to have this capacity of 20 000 and we are talking about a three to five year target for these productions but you know the investment is already done except for a few assembly lines got it got it thanks for the color there and uh for the clarification um just just as a follow-up as well just i know matt i think you touched on the nevi funding uh when do you think we're going to start to see some allocations of that that could be 23 years more of a 24 story and for those 300 units i believe of hypernova they have in the pipeline Is that tied to the NEVI funding or just starting to see some incremental demand for that product takeoff?

Yeah, that's a great question. So those units are a mix between both U. S. and Canada. So it's nice to see that they're not all tied to NEVI funding.

And they – sorry, your question about the NEVI program. So in terms of the when those projects are going to hit the calendar, you know, we believe that there are some infrastructure upgrades that need to take place. I think Douglas has talked about this publicly and and we expect this year to have discussions publicly with regards to project wins and where we're going to participate. But installation and having it hit hardware vendors' TNLs, it's probably either late this year or first half of next year. That's when you're probably going to see disbursement of funds to where we are in the marketplace.

Thank you for the question, Alec. The key here is that we have COIL as part of our portfolio. The company was COIL last year. They installed it in the U. S. and they are experts on upgrading the power, building the switch units, the transformers, making all the installations for fast charging. So what we are working very hard now is to make sure we can provide a turnkey solution that can be quickly adopted by our customers because their main challenge is not only the hardware, that is by America, and we can provide that. Also, everything what Matt was explaining, making the upgrades and everything. And we think we could be able to provide a faster track for our customers, so we will help us to get more business.

I'll turn it back. Charlie?

Yeah, I think, Abby, what you're asking is, you know, what does the roadmap look like in terms of electrification, in terms of needs, in terms of certainly our public chargers. And remember, Hypernova is a generation ahead of most other products coming to market this year. It goes up to 400 kilowatts. And so we think that we've built in quite a bit of future-proofing for our customers. We want to make sure that we preserve that long-term investment value for them.

some of this is dictated by the OEMs right what they're building into the cars some of it is dictated by battery technology a lot of it excuse me is dictated by some of these subsidies that are going to be coming to market you know this year and next year and so I think you know for the next couple years I think that that 400 kilowatt for the next year or two at the very least that next that 400 kilowatt configuration is probably enough given what we what vehicles we see coming to market yeah exactly so there's a heavy there's today actually few vehicles that can charge up to 350 kilowatts not even 400 and however we are seeing especially in the US that cars are getting bigger and bigger batteries we are seeing the Dodge Ram coming with 200 kilowatt hours of battery, which means that it will take you half an hour to charge this battery with a 400 kilowatt charger.

Obviously, it has a long range, but it's maybe too much time for this kind of cars. So in a few years, as Matt says, maybe in the longer term, power will be upgraded. But for this program and for the next two to three years, 400 kilowatts with the current roadmap of carbon factors and technology is more than enough and is future proof.

Anything else?

Thank you.

Yeah, sure.

Yeah, go for it. Yeah, please do. Go ahead.

So obviously for fast charging it's good in terms of cost and form factor but it's even more important for bi-directional charging in the home and that's where we believe we have the the biggest advantage even more than two years in this area. Because we have the capacity to discharge CCS cars. We have a product already available, which is Quasar 1. And Quasar 2 is soon to come. And it's going to be, again, the first home CCS bidirectional charger. Quasar 1 was the first bidirectional charger for the home. Quasar 2 is going to be the first one for CCS. So we are very excited. And the key of this advantage, and being the first, is our technology that uses silicon carbon MOSFETs.

Charlie, we have one more.

Yes, that's correct.

So thank you, Jeff, for the follow up question. So it basically depends on our capacity to deliver the product in this year. We are trying to accelerate the launch of the product to make sure as much as possible from these LOIs can be delivered, but we don't expect the huge numbers for this year. So not all the 30 million are going to be delivered during 2023. It obviously depends also on UL certification, which is something we cannot control 100%. So there's also opportunities to be more, and that's baked into our guidance. But I can see that not everything is going to be delivered this year, but we will try to deliver as much as possible.

You got it. Anything else? Charlie, anybody else in the queue?

Great. Well, I guess that's our last question then. So, thank you all for joining us today. We hope you found today's call a good use of your time. Also, please note that we have several upcoming investor events in March. So watch for our website for details if you're interested in meeting with us. Let us know if we can help you in any way. Have a great day everyone.

Thank you. Thank you.