Q3 2020
Jon André Løkke Chief Executive Officer
November 5, 2020 Nel ASA Q3 2020 This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Nel ASA and Nel ASA's (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Nel's businesses, raw material prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation.
Although Nel ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Nel ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Nel ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.
This presentation was prepared in connection with the Q3 release on 5 November 2020. Information contained within will not be updated. The following slides should be read and considered in connection with the information given orally during the presentation.
The Nel shares have not been registered under the U.S. Securities Act of 1933, as amended (the "Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Act.
Agenda
Q3 highlights
Financial results and financing
Revenues
NOK 147.7 million In line with guidance, slightly down from Q3 2019 (NOK 148.9 million)
EBITDA adjusted* NOK -44.8 million Decreased from Q3 2019 (NOK -17.9 million)
Order backlog NOK 0.94 billion
Up >60% compared to same quarter last year (Q3 2019)
Cash balance NOK >2.5 billion
Supports Nel's leading position and accelerated investments in organization and technology
Operations and sales
- NOK 16 million R&D-grant from Research Council of Norway to further develop next generation alkaline electrolyser
- USD 4.4 million R&D-grant from Department of Energy to further develop next generation PEM electrolyser
Subsequent events
- PO for 1 H2Station™ by Everfuel, value EUR 1.6 million
- PO for 2 H2Station™ units by ZE PAK, value EUR 3.2 million
- PO for 1.25 MW PEM electrolyser, value USD 2 million
- Listing of Everfuel on Merkur Market
- LoI with Statkraft for a green hydrogen project of up to 50 MW
- Selected as preferred supplier for a 20 MW electrolyser plant by Iberdrola
4
Financial review
Financial highlights
| (NOK million) |
2020 Q3
Adj* |
2020 Q3 |
2019 Q3 |
2020 Q2 |
2019 |
2018 |
| Operating revenue |
131.9 |
147.7 |
148.9 |
148.6 |
569.7 |
489.0 |
| Total operating expenses |
250.9 |
264.0 |
197.3 |
220.6 |
823.3 |
685.1 |
| EBITDA |
-44.8 |
-42.1 |
-28.9 |
-48.7 |
-178.1 |
-131.6 |
| EBIT |
-69.1 |
-116.3 |
-48.4 |
-72.0 |
-253.6 |
-196.1 |
| Pre-tax income (loss)** |
-581.5 |
-628.6 |
-34.3 |
594.3 |
-277.2 |
-197.5 |
| Net income (loss) |
-579.5 |
-626.7 |
-32.4 |
596.4 |
-269.7 |
-188.8 |
| Net cash flow from operating activities |
-69.4 |
-69.4 |
-31.2 |
-54.1 |
-209.2 |
-142.8 |
| Cash balance at end of period*** |
2.543.6 |
2 543.6 |
651.0 |
2 566.1 |
526.0 |
349.7 |
Non-recurring, ramp-up and net other costs of -2,7 MNOK have been booked in the quarter. Mainly related to start-up costs for activities in new markets and ramp-up activities, counterbalanced by positive one-offs in the quarter. In addition, costs related to the group's share option program of 0.3 MNOK were booked in the quarter. EBIT has in addition been adjusted by impairments of NOK 49.8 million in the quarter. *
Includes a negative fair value adjustment of the shareholding in Nikola Corporation of NOK 513.3 million (a value of USD 20.48 per share as of September 30, 2020). A 10 USD increase/reduction in the share price of Nikola Corporation will lead to gains/losses of about MNOK 100.0 with a USD/NOK of 9.0 **
Nel raised 128 MNOK in gross proceeds in April 2020 and 1.3 BNOK in June 2020 ***
Solid backlog
Order backlog by quarter (MNOK)
Solid order backlog
- Backlog decreased by ~9% in the quarter
- Will see quarter-by-quarter fluctuations
- Order intake of NOK 45.8 million in Q3
- Includes a number of PEM electrolysers (S, H, and C-series) as well as after-sales
- Strong pipeline across segments and industries
Nel in brief
Leading pure play hydrogen technology company with a global footprint
Alkaline and PEM electrolysers
Industry leading efficiency and reliability. Converting water and electricity to hydrogen and oxygen - for industry, mobility and energy purposes
Hydrogen fueling stations
The H2Station™ from Nel is the world's most compact fueling stations, capable of fueling any kind of vehicle and simple to integrate with other fuels
PEM electrolysers
Wallingford, USA
Systems delivered: 2,700+ Nameplate capacity: ~40MW/year
Alkaline electrolysers
Notodden/Herøya, Norway
Systems delivered: 800+ Nameplate capacity: ~40MW/year $\rightarrow$ ~500 MW/year (~2GW/year)
Hydrogen refuelling stations
Herning, Denmark
Stations delivered: $80+$ Nameplate capacity: ~300 HRS/year
Key developments
Received R&D grants for development of next generation electrolysers
Grant for next gen alkaline electrolyser
- Will improve fundamental elements in the cell stack affecting efficiency and cost
- NOK 16 million grant by the Research Council of Norway
- Full scale pilot will be installed at Yara for testing and production of green ammonia
Grant for next gen PEM electrolyser
- Will develop advanced components and manufacturing methods to optimize flow and conductivity of the stack
- USD 4.4 million grant by US Department of Energy under the H2@Scale initiative
H2Station™ order from Everfuel
Purchase order for hydrogen fueling station for buses
- Value in excess of around EUR 1.6 million
- Latest generation H2Station™ module to be used for fueling of buses in the Netherlands
- To be installed and operational during 2021
First H2Station™ order in Poland
Purchase order for two H2Station™ solutions for cars buses
- Value of around EUR 3.2 million
- Latest generation H2Station™ module to be used for fueling of cars and buses in Poland
- To be installed and operational during 2021
nel·
Successful IPO/listing of Everfuel
Successful intro on the Merkur Market
- Everfuel A/S, a Nel minority owned company listed on the Merkur Market of the Oslo Stock Exchange on October 29
- Raised NOK 290 million in conjunction with the listing
- Nel participated with NOK ~9 million, leading to an ownership share of ~17%
- Frame agreement of EUR 100 million between Everfuel and Nel
Herøya capacity expansion update
Electrolyser capacity expansion at Herøya
- Fully automated and designed according to lean manufacturing principles
- Large production line improvements already identified, name plate capacity of ~500 MW/year
- Room to expand to ~2 GW/year with 4 production lines
- CapEx requirements for latest line design NOK ~250 million excluding own hours
Signed letter of intent (Lol) with Statkraft for green hydrogen project in Norway
Up to 50 MW electrolysis to support fossil free recycling steel production
- Statkraft, the largest renewable energy company in Europe partnered up with Celsa Armeringsstål (Celsa), a leading steel producer
- Facility in Mo i Rana which produces reinforced steel from recycling of scrap metal
- Current production: 700,000 tons/year (equal to two Eiffel towers per week)
- By exchanging natural gas with hydrogen, $CO2$ emissions can be reduced by >60%
- Nel and Statkraft has entered into a Lol for 40 - 50 MW of electrolyser capacity
- EU funding application sent
- Norway unable to support should apply for IPCEI
EU & rest of the world stepping up, leaving Norway behind
Nel Hydrogen
Norway still has work to do...
- EU target of 40 GW green hydrogen production by 2030
- Equal to >400x global market in 2019
- Country-specific targets so far:
- Portugal: 1 GW & EUR 7 billion
- Germany: 5 GW & EUR 9 billion
- France: 6.5 GW & EUR 7.2 billion
- Netherlands: ~3.5 GW & EUR 9 billion
- Spain: 4 GW & EUR ~9 billion
- Norway: 0 GW & EUR 0.02 billion
- Vs. CCS support of NOK ~2 billion (out of NOK 25 billion) & BEV support of NOK > 20 billion/year
- Also need to adapt the Enova mandate to enable support of renewable hydrogen projects
Light at the end of the tunnel for hydrogen efforts in Norway?
The Norwegian Prime Minister, Erna Solberg promises increased efforts
- Recognizes the strong international support for hydrogen
- Promises a national road map to follow up previously launched strategy
- On October 31st 2020, the Norwegian government announced a new ferry tender on hydrogen
- Important step to kickstart the hydrogen industry in Norway - justifies first hydrogen ferry demonstration
- The so-called Vestfjord ferry traverses one of the longest and toughest ferry routes in the Norway and the world
Summary/Outlook
Leveraging on the arising opportunities within energy storage and hydrogen fueling
Update on Covid-19 status, priorities and impact
- Nel has since February 2020 implemented and enforced strict regulations to ensure the safety for employees and partners across locations
- To date, one Covid-19 event has been recorded:
- At Notodden/Herøya early in October, close cooperation with local authorities and affected individuals were quarantined
- The global Covid-19 outbreak continues to cause disruptions in Nel´s operations and financial performance as the pandemic negatively impacts the general business environment, orders received, installations, commissioning and associated revenue recognition
- Nel reiterates the confidence in the long-term potential for the industry, supported by the "green recovery" outlined by various governmental initiatives.
- Nel holds the workforce largely intact to maintain the momentum when the situation normalizes
Safety as priority #1
Maintaining growth momentum
A green Covid-19 recovery
Reiterating strong long-term outlook
To maintain and strengthen its leading position in a growing market, Nel will accelerate investments in organisation, technology and partnerships
Nel targets to maintain its current leading position in the electrolysis sector, continuing to develop both PEM and alkaline technologies, as well as developing technology elements to support fast and reliable hydrogen fueling of heavy duty applications
Markets in which Nel operates show high activity and strong growth momentum, making it increasingly important to be a financially strong counterpart, especially for larger contracts
Ongoing growth initiatives, ramp-up costs and remaining effects of the Covid-19 outbreak will have a negative EBITDA impact into 2021
IR analytics
nel.
number one by nature
Q&A