Wallbox (WBX) Q4 2024 earnings call transcript

Now let's turn the call over to Michael Wilham from Warbox to begin. Michael, please go ahead. Thank you Charlie, and good morning and good afternoon to everyone listening in. Thank you for joining today's webcast to discuss Warbox's fourth quarter and full year 2024 results. This event is being broadcast over the web and can be accessed from the investor section of our website at investors. warbox. com. I am joined today by Enric Ausención, Warbox CEO, and Luis Boada, Warbox CFO. Earlier today, we issued our press release announcing results from the fourth quarter and year ended December 31, 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 related 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 the annual report on the form 20th for the fiscal year ended December 31, 2023, filed on March 21, 2024. We will be presenting on other 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 reconciliation of these measures are included in the presentation posted on the investor section of our website. Also, a copy of these paper remarks can be obtained from the investor relations website on a quarterly result section, so you can more easily follow along with us today.

So with that out of the way, I will turn it over to Enriq.

Thank you, Michael, and thanks everyone for joining us today. I would like to start this call reflecting on President Dihor, which included exciting achievements and solid progress on the challenges we are facing. To start, President Dihor has been a challenging year due to the slowdown in the AV market, which also impacted our results. If we look at the AV market in the main region, we operate in Europe, North America, and rest of all, which are all countries, excluding China, the AV market only grew 6% year over year. This market growth continues to be subdued compared to initial market expectations. However, at Walbox, we believe that we are managing this downside cycle in the AV transition as one of the best in the industry.

Revenue for the full year total 163.9 million euros, reflecting up 14% growth compared to last year. The main growth drivers were the full year contribution of AVL and solid growth in the North American market, and more than 40% year over year. We have achieved the results and growth to 1,000 DC units during the year, allowing us to provide 1 million charges full in the history of Walbox. We have achieved the results with a more efficient organizational setup as we continue to drive down labor and operating expenditures, down 11% compared to last year. As a result of this growth and cost optimization, we improved the adjusted data by 21% year over year, from negative 74.2 million euros to negative 58.8 million euros.

We remain confident that last year's strategy initiative, we continue to improve our adjusted data with the positive impact of this effort becoming more visible in the coming quarters. The new business infrastructure introduced last quarter is allowing us to more efficiently service each target segment, home and business, past charging and so forth, supported by a manufacturing. In parallel, our product portfolio continues to evolve with new versions of our chargers and software solutions, and we believe we remain a technology leader in the space and find opportunities to improve our margins. Examples include achieving the U. S. certification for our bidirectional charger, the Quasar II, as the first one in the industry, and the launch of the new Supernova and Pulsor versions, such as the Supernova UL, Supernova 220, the fastest Walboxy charger today, and the Pulsor Profoke, which is showing strong traction in the commercial segment.

We have strengthened our commercial relationship with parties such as NG, Gen. Act, free to move, for the apparent light, I don't know whether online and in 2024 raise a additional $45 million for our strategic investors, excluding the $10 million private placement that took place in February 2025 and announced earlier this week. While these are notable achievements considering the challenging market backdrop, we are not satisfied. It is important that we continue to focus on our strategic plan, continue to right-size the organization, and further secure the fundamentals to be successful with the long term.

We believe we have an unparalleled platform for further growth with a complete product portfolio and global footprint, coupled with strong commercial partnerships and the invaluable trust of our strategic investors. In our opinion, the transition to U. S. is going to take place. It is only a matter of when, not if, based on different indicators, such as declining battery prices, interaction of affordable EV models and continued investments, we believe we are close to the inflection point and we are well positioned to benefit from the massive growth that lies ahead.

Now, we will go into the highlights of the fourth quarter and share our perspective on the market. Afterwards, Ruiz will offer a closer look at our financial results and our key financial metrics. And finally, I will return to closer conversation and provide Q1-25 items. Q4 revenue was 37.4 million euros. Down 14% year-over-year and missing the item range we provided in our last earnings call, but did improve with 8% compared to last quarter. The main reason was lower DC fast-charge sales, which was down 34% quarter-over quarter as certain customers pushed out expected orders. As committed on our previous earnings call, our CPU customers have been building a inventory as their focus has shifted from highly accelerated rollout towards profitability.

This trend was more significant than expected and is impacting the whole industry. We are working closely with our CPU partners to understand the role of plants, including product requirements to improve our visibility and pipeline. In parallel, we have continued to see enough new commercial partners with the more recent example belief. The CPU operating in the United Kingdom is expected to allow different versions of our supernova product to further expand their charging network. Growth in AC of 14% quarter-over quarter partly offset the slowdown in DC fast-charges, but not sufficiently to cover the gap toward guidance range. As previous mentioned, North America kept seeing significant growth, as well as an uptick in other markets such as Belgium, France and the UK.

In total, during the fourth quarter, we delivered more than 38,000 AC units and more than 100 DC units. Providing was 34.6% in the fourth quarter, which is lower than our target range of 38 to 40% and guidance provided last quarter. The main items impacting the resolver product mix due to the lower pipeline contribution of DC fast-charges and ADM.

We are actively looking to unlock several algorithms and expansion opportunities to reach and potentially exceed the 38-40% prior target range, which we will discuss shortly.

On the cost side, one of the levers where we have greater control, we have made significant progress and continue to do so. When we look at our cash costs, which is defined as labor costs and topics, excluding around the activation, non-cash items, and one of expenses, we achieved a year-over-year reduction of 19%. We expect further improvements in the coming quarters, and we continue to find ways to optimize the organization with the further implementation of the new regional unit structure. For the fourth quarter, just a bit that was closer to the improvement trend we had seen earlier this year, at an negative of 0.3 million euros, and improved with 43% compared to last quarter. The main drivers were the bounce vacuum growth margin and a 10% quarter-over quarter reduction in labor and topics costs.

The cost improvement positions the company for the future, but was not sufficient to cover the gap to adjust the data guidance of 7 to 10 negative million euros. We monitor closely our solo metrics and can see that the inventory in the channel is healthy and that our solo performance generally outpaces or is aligned with EV sales in our key markets. We therefore stand in a privileged position to capitalize on our anticipated massive growth of EV sales. Nevertheless, as the volatility in the market continues and top-line visibility remains challenged, we continue to push for right-citing the organizational sector and becoming profitable at current top-line levels.

For the fourth quarter of 2024, Europe contributed 25.7 million euros of consolidated revenue, or 69% of total revenue, and remains the largest region. Considering the softness in the European market based on the sell-out data, we have been able to halt our market position and we will leave this will result in an uptick in selling in the near future. North America remained the strongest growth market in 2024 for wall walks and in the fourth quarter contributed 10.5 million euros or 28% of the total revenue. This represents a 64% year-over-year growth compared to the fourth quarter of 2030. While the EV market in the region grew 12%. In the past, we mentioned the importance of North America market and we are excited to see the progress we are making with our strategic partners such as Generac and Fritumu.

It was great to see one of our coolsir being featured in the Western Super Bowl act of JIP. For 2025, we see an opportunity to grow in the region despite a change in the EV sentiment, which I will comment on shortly. AIPAC contributed 900,000 euros or 2% and LATAM was approximately 400,000 euros or 1%. AC sales of 26.9 million euros including AVL represented approximately 72% of our global consolidated revenue. Compared to the previous quarter, the AC sales grew 14%, mainly due to continuing momentum in North America and increasing demand in Europe for the Pulsir family. Especially with the introduction of new Pulsir versions such as the Pulsir Pro and the Pulsir Max in the residential segment, there has been good traction.

We see improvements in the upgraded versions of our products which are designed to be easier to install and offer new features. Also, our support remains a key differentiator, enabling customers to officially manage their charges. The wall walks up and hases our home EV chargers, providing features like real-time monitoring, scheduling and remote operation via Wi-Fi or Google. Our app is recognized as one of the best in the space which gives us a clear competitive advantage. With built-out port, planned iteration, our chargers can contribute to reach stability and enable users to participate in energy markets, further reinforcing our leadership in smart charging solutions. The attractiveness of our smart charging solutions allow us to continue to support existing partners and signing up new partnerships.

For our partnership with the likes of free-to-move and EV roller, we continue to sell thousands of chargers to companies such as cheap, Alfa Romeo, Mercedes, Volvo, Maserati and Hyundai.

This is sales worth 2.9 million euros, representing 8% of sales in the fourth quarter and much lighter than expected. As mentioned before, this inventory build-up with our CPU customers and orders have been pushed to 25. As they slow down the rollout of their networks as the EV fleet is not growing as fast as expected. In the US, we learned the Supernova at the beginning of 2024, which was a great milestone as we expanded our product offering in this region with fast charging.

We have made a very successful launch and are still ramping up our commercial efforts and order work. In Q4, we received the hydraulic certification to sell our Supernova in German and are in the process of receiving the CTEP certification to be compliant with regulations in California. Both of these certifications will expand our other solar markets significantly. As we continue to see enough customers that look for the product specification, reliability and high-power-to-food pre-radio that Supernova can offer. Software, services and others for the fourth quarter, representing 20% of water revenue and 18% growth compared to last quarter. We are excited by this segment rapid growth, which is already feeling a scalable competitive edge in our market. As mentioned, at the start of the call, 2024 has been a challenging year for EDC.

The market growth was volatile and clearly below expectations. Especially Europe has been soft, which was down 2% compared to the full-year 2023. North America and rest of the world show more promising growth, with respectively 10% and 28% year-over-year growth rates. However, these markets are smaller, especially for World War and are still catching up. As reported by Rome Ocean, in our residual markets, combined 6.1 million EVs have been so representing a 6% year-over-year growth.

Looking forward, while the near-term market busy will remain slow, long-term prospects point to massive growth. For 2025, we in research firms such as Rome Ocean, expect the market to continue to grow with high double digits, including North America and Europe, with 23% and 21% respectively. In Europe, stricter emission regulations come into effect, and we see already strong initial sales numbers, picking up in the last quarter of the year before, and in the first month of the new year. In North America, there is a change in sentiment, now that the new administration has taken office. This has impacted certain subsidies such as Navy, and will impact fuel-acronomy standards, limiting the legislative pressure to increase EV sales.

Other subsidy schemes, such as the IRA, which includes the EV tax credit, are currently being reviewed. Meanwhile, automakers keep betting on EVs long-term, and are allowing to give certain incentives in place and push for gradual phase-out, as more affordable EV models become available. Also, several states continue with their own regulations and incentives programs. In the end, we believe the new administration is not opposed to EVs, but that the industry must be commercially viable without government support. There are many proof points that we are getting close to this infacture point, with decreasing battery prices, more affordable car models, and continuous investment. Leaving any emissions and environmental concerns aside, I am a strong believer that EVs will eventually terminate the auto landscape.

They are more efficient, better performers, cheaper to maintain, becoming cheaper to buy and safer. If we look at what this means for wall walks, we recognize the proof points and are optimistic about the market. Nevertheless, we are very intentional about reaching profitability and cash generation, depending on market growth. That's why we've realigned the organization around the key levels we can control, massaging, op-ex and working capital, to drive sustainable growth and ensure our long-term success. Please, I'll turn it over to you to comment further on our financial details.

Thank you, and Rick. Good morning and good afternoon to everyone. Our fourth quarter results are softer than expected and missing the guidance provided in our last earnings call. The revenue was 37.4 million euros, down 14% year over year, but showed an improvement compared to the previous quarter. AC sales showed a strong recovery, with 14% growth quarter over quarter. The North American market continues to grow fast, and the European business is recovering. However, AC sales were much lower than expected, mainly due to inventory build-up with customers and purchase orders being dropped to 2025.

With 34.6%, the growth margin is lower than expected, and outside the target range we communicated before. The main reason is weaker sales of DC fast charging and AVL, impacting the as these are higher than the group's target margins.

Looking forward, we continue to see opportunities to expand growth margin through improved build-up material costs, increased economies of scale, and the introduction of newer version of our products with higher quality and expanded features. Q4 labor costs and op-ex landed at 28.8 million euros, which was flat compared to the same quarter last year, but does not clearly reflect the cost reduction achievements in the past year due to AVL entering the perimeter on November 1st, 2023, an inclusion of one of items. On a full year basis, labor costs and op-ex decreased 11%.

If we look at our cash cost instead, which is defined as labor costs and op-ex screening R&D capitalization, non-cash items, and one of expenses, we achieved a year-over-year reduction of 19% in Q4. Cost control remains one of our highest priorities on our path to profitability.

Among others, the activities we're undertaking are right-sized in the organization, removing unnecessary spend and renegotiating necessary spend. As part of the efficiency efforts, we have reduced headcount by 35% compared to the same period last year. Consulated adjusted EBITDA loss for the quarter was 12.3 million euros, softer top line and lower than expected gross margin, having the main reasons why we did not land in our guided range. And yet, the results show a lean organization that provides an improved adjusted EBITDA margin on lower level of revenues. This will show incremental improvement on profitability in the upcoming quarters as the top nine increases. We ended the quarter with approximately 46 million euros of cash, cash equivalent and financial instruments.

This is excluding the approximately 10 million US dollars prior placement announced earlier this week from our trusted strategic shareholders. Loans and borrowings were approximately 198 million euros at the end of the quarter, with approximately 91 million euros in long-term debt and approximately 107 million euros in short-term debt. In order to strengthen our balance sheet, we successfully negotiated with our main lenders, Santander and EVA for an interest-only period of 18 months starting in November 2024. We are now actively expanding that interest-only period to our cool of loans to minimize loan repayments in 2025.2024 loan repayments amounted to almost 20 million euros.

CapEx was again light, but slightly higher than the last quarter at 3.9 million euros. 1.5 million euros was invested on property plant and equipment. Full-year PP&E and intangible CapEx excluding R&D capitalization was 9.9 million euros, below 10 million euros at respect.

These represent a 39% decrease in CapEx spent compared to the full year 2023. Echoing earlier comments, we continue to expect limited CapEx because of significant investments made in the past to achieve our existing unique growth and global positioning with excess manufacturing capacity ripe for future growth. One of the other items we continue to book success with is the reduction of our inventory, which now lands at total 71.1 million euros.

That is a 23% reduction compared to the same period last year. We expect this optimization to continue as our business unit-led organization manages the excess inventory down, which should in turn result in operating cash and improved margins.

And I'll turn it back to you to provide some closing commentary.

Thank you, Luis. I would like to end with what I started, which is to recognize 2024 for a challenging year for the industry. However, challenging times are part of every industry, and what is most important is managing these down cycles, especially in a general industry that has experienced significant volatility. Being agile, it's crucial, and World War has taken the opportunity to become a leader, a more efficient company that maintains a unique feat and strong propositions for the massive growth and life ahead. 2025 will be another year of growth for the industry.

We recognize that the volatility in EV sales could persist as a transition of these magnitudes takes time. However, at World War, we are excited about what the reason to fight will be.

We have made great progress in the past year and are starting to reap the benefits of these efforts, with incremental improvements expected for that coming quarter. The World War is to generate profitable growth, and we are getting closer and closer to these objectives. We believe that the platform we develop to generate shareholder value has all the elements in place, including a diversified product portfolio, large geographical presence, key strategic partners, capacity in place, and a great team. We have high ambitions in building out our leading position in the transition to sustainable mobility, and we appreciate the continuous trust of our shareholders.

We also aim to provide the market and our shareholders better insights in what lies ahead. Therefore, we want to provide guidance on what we expect for the first quarter. Revenue in the 34 million euros to 37 million euros range, for a margin between 37% and 39%, and expecting a negative adjusted beta between 8 million euros and 11 million euros negative.

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

Welcome back everyone. To our analysts, we ask that you pose one question with a follow-up if needed. Then re-enter the queue if there's more. This will allow each of you to ask your questions upfront and we get to as many additional questions as time allows. Charlie, could you please share instructions to our analysts and take the first question?

Hi, Stephen. Good morning, this is Enrique. So, in the US, we are seeing that the mix should be improving towards fast charging. We have been launching the Supernova UL at the middle of last year, and we have also included the certifications of the N-TEP and C-TEP, which will be announced and launched soon. So, at the end, this increases our addressable market for fast charging in the US, which it's a vector of growth for fast charging for us. Also, the fact that we launched the product in the middle of last year, no, or in Q2 last year, most of the deals and most of the accounts that we have take time to mature. In average, we are seeing that a deal for fast charging takes around 200 days to start seeing this center or big interest in revenues.

Now, at the beginning, the CPO makes a small order. There's the product, and then after that, after 200 days, you start seeing volume of order. So, these two together should make that the mix increases, and our goal in the US, as we look at, is eventually to be 50 percent fast, 50 percent home and business. We are seeing also a positive note in terms of growth for home charging in North America, this quarter, sellout is growing nicely, and as well as selling. So, it doesn't look that it's very impacted by new policies or new sentiments, or maybe this is accelerating the orders of some electric cars, because people are worrying that some incentives might disappear, so in the short term, we are seeing a growth for home charging, but also respect the growth for fast, given the fact that we launch new products in this as well market, and the opportunities are maturing.

So, basically, while we've done so far, the last year, even it was a challenging year for the eBITDA market, is being able to exceed the most markets or maintain our sales compared to the eBITDA market, the eBITDA vehicle sex, you know, so we've been maintaining our markets, or increasing it in many countries. For example, a clear example of that is North America, the eBITDA market grew around 20%, and we've grown 40% in this market, you know, so that means increasing market share, having new customers, and we can see this with all these new brands we are launching. So, when we look at our performance, that's what we are committing for the following 12 months, you know, being able to keep our market share, and we see less competition, we see new partnerships coming, and at the end, it will depend a lot on how the eBITDA market performs.

We are seeing positive things. For example, Europe, if the missions continue, the mission regulations continue, you know, and it looks like it's going to be like that, there's a 20% growth potential. And in North America, industry sources say 20%. So, we are going to be very dependent on EV sales, and that's what's going to impact our performance. When you look at the revenues, now what revenue makes us profitable or eBITDA very given, we have to be given all the efforts we are doing, you know, we change from a functional organization to a business unit organization, and we've been doing strong efforts introducing topics, and you can see this, but we are not still seeing the full impact of all these improvements, and we will start seeing it now in this quarter.

With revenues of around 40 to 45 million euros, the company should be able to be at break-even. Once we reach the size, we are targeting. And this target size, we are targeting to be at least at the end of Q2. We should be in that target size, which it will be fully reflected in Q3. So, these are the numbers. So, there's upside potential with the EV sales.

If there's more EV sales, we will sell more, because we are able to capture this market, and I think there's opportunities to capture it even more, because the platform we have, we have the products, we have the global footprint, and you know, at the end, we are not very dependent on specific regions. You know, if Europe now grows, and U. S. maybe doesn't grow as fast, we are able to capture this growth, and we are using that in the cost to be able to at this revenue levels, be profitable and generated in the positive. Great. Now, thank you for all the details.

This is Enric. So as you are saying, I think there's two hedges or two protections we have as a company. One is obviously a big part of our revenue comes from Europe, and we want to factor in Europe. So here we are less exposed to the North American market, but obviously we're growing a lot in the North American market. No, we see enough 40 percent growth. But in North American market, we have a factory, assembly facility, in Arlington, where we manufacture the chargers, the home charges and commercial charges we sell in all North America and also some parts of South America. When I think about risk, I don't see a risk on internal supply chain for this factory because we can manage and most of our supply chain is localized.

The bigger risk I will say is in the fast charging space, where we still have part of this fast charging is being manufactured in our Barcelona factory and the part of it we ship it from Barcelona to Arlington. We are running on a planning place in case that there will be a specific tariff coming from Barcelona to the U. S. trespass more of this of this manufacturing or more of this supply chain to North America. So we can do it. We have the space. We have the CapEx invested. The fact that we are doing most of this right now in Barcelona is from an operational efficiency. There's not enough volume to justify these two separate assembly lines, but our factory now couldn't do it.

So if we see that it's necessary and at the end, it makes financial sense. We can just pass more parts of this of this manufacturing in Arlington. And also, maybe if you think about China and importing goods from there, we've been working with our suppliers to make sure we source from alternative suppliers or alternative factories they have around the world. So also it has been an ongoing effort since I would say one year ago at least. And we are well set where almost all of the materials come have multiple sources. I would pass it to Luis one moment.

Yeah, I was only going to add to William that going back to and Rick's prior point, fast charge is is a relatively non-material part of the business in the U. S. where we see upside and also linking to other comments that we've been sharing with you. That business unit has a good margin. So when you put all those things together, we see it as an incremental that we need to address, but we can manage accordingly.

Well, first of all, we are very, very proud that we can access capital markets and we have the support from our strategic and longstanding shareholders, which many of them are not only investors, they are also key customers, like Evadro and Novadro is one of the biggest utilities in the world, and also one of our biggest customers worldwide and having them keep supporting the company and investing I think is a proof point of the products, the technology and all the things, all the value we create to our customers. There's many things we have in terms of cash, which is the current cash at hand and the fundraising we've done. And at the end, what we are doing is make the company that operationally can, you know, as soon as possible be cash flow positive.

How we are doing that, we have the inventory release, you know, so we still have a lot of inventory, 70 million euros. We've been able last year to reduce it significantly, which at the end has a release, a lot of cash available every month and every quarter now. So this is an important part of how we are managing cash, also working capital. We have been optimizing and we continue leveraging all working capital and working with customers to have every payment and which suppliers to manage all of this. So all in all, what we are trying is to make sure we don't need more capital or at least the minimum capital and minimize dilution, you know.

If needed, and you know, at the end, that depends a lot on the top line, you know, the core reduction efforts are being made.

We are working on the gross margin. I think we are in an excellent job on the working capital as well. And you can see that when you do that. And also we have another thing that we haven't seen having impacted last year or we're seeing now is all this renegotiation with banks where we are not paying the principal. We are paying only interest only for 18 months, which at the end is what makes sense in a company that still is not generating cash and we hope to do that soon now. So with all these actions, we are worrying and we are trying to make sure we don't need to raise additional cash.

And it will be very dependent on the top line. And if needed, I think the company has proven that has access to capital markets, but we are trying to manage it with the current cash.