Fusion Fuel Green PLC Q1 FY2022 Earnings Call

Hello, everyone and welcome to the Fusion Fuel Green's First Quarter 2022 Investor Update. My name is Ben Schwarz, I'm Head of Investor Relations at Fusion Fuel. I would first like to remind everyone that this call may contain forward-looking statements, including but not limited to, the company's expectations or predictions of financial and business performance which are based on numerous assumptions around sales, margins, competitive factors, industry performance and other factors which cannot be predicted. Forward-looking statements are inherently subject to risks, uncertainties and assumptions and they are not guarantees of performance. I encourage you to read the disclaimer slide in the investor presentation for a discussion of the risks that may affect our business or may cause our assumptions to prove incorrect. The Company's under no obligation and expressly disclaims any obligation to update, alter or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. So, thank you all for joining us today. I'll briefly run through our agenda for the next hour. We'll begin with an overview of our value proposition as well as some commentary around what we're seeing in the market from a macro perspective. Then the management team will share some first quarter highlights, financial results and a business update focusing on commercial progress and the latest on tech and production. We'll then close with some remarks from Fusion Fuel's Chairman and open up the floor then for a half hour or so of facilitated Q&A. As in our previous quarterly calls, questions can be submitted in the chatbox in the webcast platform at any point during the next hour. Alternatively, you can also submit your questions to the Investor Relations mailbox at [email protected]. So, let's begin with an overview of Fusion Fuel's business case. For those who are new to the name or in need of a refresher, Fusion Fuel's in the business of developing and delivering cost-effective, clean hydrogen solutions to accelerate the global energy transition. And our aspiration is to take a meaningful share of the global hydrogen opportunity which, between legacy demand and emerging applications, is already a significant market today and one that's poised to experience tremendous growth over the coming decades. At its core, Fusion Fuel's a technology company. We've developed and commercialized proprietary, integrated solar to hydrogen generation technology that unlocks grid-independent hydrogen production at a market-leading levelized cost. We're only one of a handful of companies that are producing green hydrogen today. Our demonstration plant in Portugal is moving quickly to capitalize on that early mover advantage and execute on the substantial commercial pipeline that has been built over the last 1.5 years. We believe we have the right technology and the right team at the right time to make Fusion Fuel a major player in the green hydrogen business. So before we dive into the business update and as we have in recent meetings, we want to take a step back and touch on the hydrogen market more broadly. So as has been the case for much of the last year, the economics of conventional hydrogen production remains under pressure, most acutely in Europe amidst a sustained increase in the price of natural gas. Similarly, the levelized cost of green hydrogen is extremely sensitive to electricity prices, and the pervasive volatility in both the price and availability of renewables is challenging. The economics and the viability of large-scale electrolyzers, particularly when you account for between $1 and $2 per kilogram in last-mile logistics from centralized production, are under pressure. In this market environment, our integrated, grid-independent solution is significantly advantaged. Not only can we offer known long-term certainty of cost, but we can do so at market-leading levels at small or large scale without grants. We have clear line of sight to derisk cost reductions from the ramp-up of automated production at our Benavente facility, along with the introduction of successive generations of our HEVO technology, which will help sustain our advantage even as the competition continues to drive down the cost curve. So having set that context, I'll now pass it over to Frederico, who will provide an update on the quarter.

Great. Thank you so much, Ben. So good afternoon. Thank you, everyone, for joining us today. Today is an exciting day for both me and Zach; it's the first time that we present to you as co-heads of Fusion Fuel, and we're very excited to present the latest developments of the company. Before we go into the details and show you all the great things that are going on here, we'll briefly go through some of the financials and quarter highlights. First to note is, as part of our drive to strengthen the senior levels of the company, we continue to hire key personnel, including most recently Zach but also Jason Baran, who will, together with Zach, jointly oversee Fusion U.S.A. Later in the presentation, I'll provide more details on our personnel developments overall but you'll see there's been huge advances in that department and we still expect to increase significantly the talent in the fab. In this update, we want to highlight a very important development for us. As of today, we have secured confirmed binding income for 2022 of €8.4 million, composed of both technology sales and grants income related to our projects and to Benavente. In addition, we have another six projects in late-stage developments that could generate up to €20 million of revenue potential in 2022. That is €8 million confirmed, and an additional €20 million income is in negotiations for a total potential income in 2022 of €28 million. In the first quarter, we also entered into agreements with AESA regarding projects aimed at decarbonizing the industrial sector and hydrogen mobility projects in Spain, as well as with Hive to develop an already established portfolio of projects with Fusion Fuel's technology. I will touch on some of the points here regarding Benavente and our partnership with Toshiba later on in the presentation. Regarding the financials in the first quarter, we recorded an operating loss of €3.8 million, of which €3 million are related to operating expenses. Around €1.6 million of those are related to personnel costs, the single biggest item. Overall, the costs are in line with the guidance we provided at the last update of between €2.3 million to €3 million of operating costs per quarter expected in 2022. Even as you'll see with the ramp-up later on in one of the sides of the personnel, our guidance continues to be between that, $2.3 million to $3 million of operating costs per quarter expectations in 2022. We've booked €800,000 of share-based payment expenses. These are noncash expenses and are related to restricted stock units and options awarded to Fusion Fuel personnel. This is a charge that will be recurring as it is amortized over the vesting period. We do intend to keep using securities with best enforcers as a means to attract talent, reward staff, and ensure alignment with shareholders. Therefore, a noncash expense line related to these shouldn't be expected to continue over the coming years. As mentioned in previous quarters, we need to recognize the fair value movement on outstanding warrants. With the increase in stock price in the first quarter, we need to account for the fair value movements of around €4.7 million in the warrants. This is simply an accounting recognition; this is a noncash item. With FX movements as well as movements in the value of short-term investments we hold, we booked a charge of around €0.5 million. The €115,000 charge of equity accounted investees is related to our Fusion Fuel joint venture and our share of their results. This entity that has recently started activities continues its ramp-up. As we expect, it will still continue to operate free revenues for a while, and we do expect this line to continue to show a loss for the foreseeable future as we invest in that entity. One point I'd like to mention here, and there is more information on this in our 20-F, we got the full year financials for 2021 but it's our total assets. We have around €23 million of cash and short-term investment instruments and liquidity instruments. In addition to this, we have around €23.5 million in TPE assets related to our two Evora projects, our HEVO-Sul project in Encinas, and our Benavente production facility. We have around €11 million of inventory in materials that we have prepaid to secure all their delivery, and we have around €5 million of VAT that we will be recovering through the regular process. This brings our total assets to around €68 million, of which €23 million is our cash and short instruments. It's important that everyone is aware that we have been significantly investing in the company and its assets over the last year, reflecting that total assets value. On outstanding shares and warrants, they remain unchanged from previous quarters. The 92,000 restricted stock units are related to our employee initiative plan that we've improved upon in the last couple of quarters. The increase is regarding new hires that have been made as we award them, restricted stock units, with a several-year investing period. The options granted are related to options granted to members of senior management and Board of Directors to vest over three to five years. Now I'll pass on to Zach, who will take us through some of our projects and the more exciting stuff of the presentation.

Thanks, Frederico. It's nice to meet everyone. Fusion has established ourselves as a leading player in the Iberian green hydrogen market and built a foundation for significant growth over the last year. Building out a well-rounded and experienced management team and building off of our initial projects across multiple applications, which include mobility, industrial applications, and green ammonia. Fusion's decentralized electrolyzer provides multiple solutions to our customers, which include selling turnkey technology solutions, as well as selling hydrogen through our own projects that we develop. Our unique offering provides several key advantages. First, our modular technology is viable at competitive costs even on small volumes. Usually, centralized electrolyzers are not economical below five megawatts capacity. However, Fusion can be competitive on projects as small as 25 to 50 kilowatt hours of capacity. Second, Fusion HEVO-Solar technology is grid-independent and we do not face energy cost fluctuations, unlike our competitors, which is an important feature when energy prices continue to rise. As the majority of our costs are actually CapEx related, thirdly, through our integrated solar solution, we can take advantage of existing solar investment tax credits in the U.S., as well as cash grants in Europe, which further reduce our CapEx. As Ben noted earlier, we already have quite an advantage from a levelized cost of hydrogen standpoint without grants. But with the grants and tax credits, it could further lead to an additional 10% to 30% cost reduction, which would position us at world-class pricing in the hydrogen markets. Lastly, we have a low carbon intensity, which is an attractive feature for industrial applications, in particular. Typical grid-connected power has an estimated 26 kilograms of CO2 per kilogram of hydrogen, whereas our HEVO-Solar provides a solution with almost zero emissions. This means we're not just greener, but we can also provide better netbacks on offsetting carbon taxes and tariffs for our customers, again, to further reduce their costs. Next page. Our solution, as you can tell on this page, is gaining traction globally. The pipeline has expanded substantially and now includes projects in five countries with a combined pipeline of over 170,000 metric tons per annum of green hydrogen. This pipeline represents over four times our expected capacity through the end of 2025. We have built a significant presence, as most people are probably aware, in Southern Europe, which is made up mainly of mobility and industrial application projects. In MENA, we're developing projects in Morocco, which will serve as a low-cost green ammonia export project. Finally, with Jason Baran and I joining the company, we have recently started our business development efforts in North America. We're excited that in a short period of time, we've already built early-stage opportunities totaling over 2,500 tons of green hydrogen potential. We believe the United States is about to take off, as several subsidies are already in place to help drive hydrogen development. These include the green hydrogen hubs, with over $8 billion of investments, the Department of Energy loan guarantee programs, and low carbon fuel standard credits in states such as California. These programs, combined with Fusion's unique ability to utilize the solar investment tax credit, make the U.S. market very attractive as a platform for the company. The projects we're highlighting on this page are in the advanced stages of receiving grants and/or near-term opportunities for technology sales, which represent a total of 43,000 tons of our 170,000-ton pipeline. We submitted for over €60 million in grants for these projects and have been awarded, thus far, $8 million. As noted earlier, we're already providing industry-leading cost of hydrogen without grants, but these grants just further support closing projects and building our pipeline. Over the coming months, we hope to announce that we've been awarded additional grants, which will further bolster our project pipeline. Our company is focused on several key applications: mobility, industrial applications, and green ammonia. These applications have a total addressable market potential of over 150 million tons per annum of hydrogen by 2030. Our first application I'll discuss is mobility. Fusion Fuel provides a low-cost modular scalable solution to our customers in the mobility sector. The mobility sector will grow to an estimated 12 million tons per annum by 2030. We're currently constructing our first refueling station in Madrid, which is with Exolum. This is a pioneering project and a first-of-its-kind application in Iberia. As we continue to pioneer this market in Iberia, we built a pipeline that represents over 20 projects, totaling $140 million capital costs, with $65 million in grants that have been submitted for, resulting in a net capital exposure of $75 million. These projects are a combination of technology sales and Fusion projects. Fusion's technology provides decentralized and low-cost hydrogen, which are attractive features in industrial applications as well. Our low carbon intensity, as I noted before, provides not only emissions reductions, which is important but also just as significant, it allows customers to reduce their carbon taxes and tariffs. Industrial Applications include power generation midstream assets with natural gas lending, refining, heavy industrial applications such as steel and cement manufacturing, and the oil and gas markets. The total addressable market by 2030 is an estimated 110 million tons per annum hydrogen potential worldwide. Building off our early successes with Evora and GreenGas, we've advanced our pipeline to seven projects with a total of $43 million in capital costs, with $14 million in grants submitted for or awarded, resulting in a net capital exposure of $29 million. As we build our presence in both North America and Australia, we believe our advantages in industrial applications will continue to gain traction to further build out our pipeline. Lastly, green ammonia is the most efficient way to transport hydrogen today, with an estimated market potential of about 40 million tons of hydrogen by 2030. Our technology is perfectly suited to provide low-cost hydrogen in locations with strong solar radiation and suitable plans. Morocco is an ideal first location for Fusion to develop a green ammonia export project. Fusion's role in these projects is to provide the green hydrogen in partnership with other technologies and companies to build the ammonia facility and related export infrastructure. The project targets approximately 32,000 metric tons per annum hydrogen and totals over 180,000 tons per annum of ammonia. I will now pass it off to Frederico to talk about production and technology.

Great. Thanks, Zach. I now have the pleasure of speaking to you all about the fruits of someone else's work because this is all due to the R&D team that has done a great job. We're very excited to introduce to you our second-generation HEVO that we plan to launch during the summer. Through changes in the product design, we have been able to consolidate two of our first-generation HEVOs into one HEVO for the second generation. This has not only reduced the raw materials used in the HEVO but it also reduces the complexity and the amount of hydrogen ports and networks required on the back of each HEVO-Solar, driving a lot of the cost reductions that you see. We're also already designing the third generation model to further reduce costs and we hope to be able to further this third-generation production in the first quarter of next year. So as I mentioned last time, we're fast, we're nimble and we very much want to stay at the forefront of innovation. We believe that this will keep us relevant and will also make our projects very attractive in the green hydrogen market. This is phenomenal work from the R&D and production teams. From the production team, we've also got very exciting news to share with you from Benavente. We bought the property a year ago, and we spent most of last year extensively renovating the site to house what will be one of the leading production facilities of electrolyzers in Europe. Next week, we will do our soft launch of the facility with the first production line for the HEVOs going live. It's an incredibly exciting milestone for the entire team and it also marks the first large-scale manufacturer of electrolyzers in Portugal, possibly in Iberia. It's a phenomenal step for the company. Next year, we expect to produce around 100 megawatts of electrolyzer capacity and be able to ramp that up to 500 megawatts in 2025. One thing I will note about production outlook is we aim to closely align actual output with when we can put things into the field. The projects have their own timelines regarding development, licensing, and permitting processes, so we want to avoid producing too much stock of previous generations. As you saw in the slide before, our technology is evolving quickly, so we want to ensure we produce as much of the latest generation as possible when we are putting them in the field. So the numbers I mentioned before are our production capacity. Our production output will be closely tied to the actual needs in the field. Now, I want to touch upon a press release that several of you may have already seen between ourselves and Toshiba. This was the agreement with Toshiba to study procurement, manufacturing, sales processes, and R&D partnerships together. This is a partnership between two companies with disruptive technology in the electrolyzer space. Toshiba has a new membrane production approach that fits incredibly well with our HEVO and our miniaturized PEM concept. The potential of this partnership can take hydrogen production and cost-efficient hydrogen production to the next level, which is exciting. This is a joint R&D and production partnership and agreement that we are studying together. Additionally, there is also a commercial angle to this. Both Fusion Fuel and Toshiba technologies present opportunities for commercial collaboration, which offers mutual benefits. Therefore, we are extremely excited about this partnership agreement and we will work closely together with the Toshiba team in the coming months to finalize it. As I have mentioned before, I want to highlight the team that has grown incredibly quickly. At the end of the first quarter last year, we had a total of 18, having only a few months before spun off and become an independent body. Since then, we have substantially invested significant time toward finding the right resources, talent, and experience to make our team robust and senior, positioning us to execute on our aggressive growth plans. We have been able to attract phenomenal talent with significant experience across a variety of areas, whether that’s gas management, hydrogen infrastructure, electrolyzers, and all sorts of engineering specialties, along with a world-class production team. This is keeping us at the forefront of innovation, ensuring we are well-positioned to execute an aggressive growth strategy. We will continue to hire, particularly towards the end of the year, as we expect to see substantial growth in the teams, especially in Benavente as the production line goes live. Lastly, before I pass to Jeffrey, I want to touch upon the key milestones we communicated for 2022. For those of you who have followed us for some time, we'd like to ensure we're updating you on what we said we would accomplish. On the far side, we have the goal to go live with the Benavente facility and secure grants and financing for Benavente. We will have the first, as I mentioned, soft launch next week already for Benavente, and then we'll ramp up and continue to install other production lines in the second half of 2022. We've secured grants of nearly €10 million for Benavente, which is phenomenal support also from the Portuguese government for this world-class facility. On HPA sales and grants, as we noted previously, we have an extremely large pipeline, larger than we could hope to tackle, and we are working hard to convert those into confirmed orders. As mentioned before, we have €8 million of confirmed income related to our pipeline and we noted the potential up to €28 just for 2022. So the team is working hard on closing those as well as preparing ourselves for 2023. We have submitted for large orders of grants related to projects, both of ourselves and third parties that are using our technology. We believe that will position us very well for 2023 even 2024. Regarding tech development, I mentioned now the launch of the second-generation HEVO in the summer, and our expectation is to progress to the third generation in Q1 of next year. One exciting development is that we are already working on an oxygen capture system that will allow us to capture green oxygen produced with no carbon footprint. This is something our engineering team is working on, and we hope to have a demonstrated pilot within the next 12 to 18 months. We also continue the R&D team’s focus on product innovation and new product developments. I hope to share some of that with you toward the end of the year. Project development includes the delivery of the Evora, Encinas project, HEVO-Sul, as well as the Exolum kickoff of other projects expected for implementation in 2022 or 2023. This is ongoing work, but we want to note that on safety, Zach, and I, along with the Executive Committee, are completely committed to making safety a core pillar of our company's culture. This is something we continue to push, install, and implement robust safety protocols. We are pleased to report that we have had zero serious safety incidents in the company thus far, and we hope to maintain that throughout the life of the company. This has been a very exciting start to the year, and for us personally, as we enter into our partnership, things are coming together, and we are live where others are still thinking about how to get in. With that, I will stop here but now pass to Jeffrey, our Chairman, who will share some insights.

Good morning, good afternoon to everyone. I want to add my thanks to everyone who has tuned in today for giving us the opportunity to update you on developments at Fusion Fuel. As anyone with even a passing interest in financial news has observed, it's been a challenging year for the stock market. However, as any sophisticated investor understands, the term 'stock market' is a misnomer; a more apt description would be a market of stocks. That conveys the idea that every company is different. So, I find it frustrating when people say to me that Fusion Fuel has done well compared to other SPACs. The tendency to group us as a SPAC company makes no sense to me, as we have nothing in common with the vast majority of companies that have entered the public markets through the SPAC structure. We were not the third company with a plan to develop a market for flying taxis, or the fifth company with a plan to mine the moon for rare elements, or the 19th electric vehicle company with plans to compete with Tesla, Audi, Volkswagen, Porsche, and the rest of the global auto giants. Unlike them, we did not have a valuation measured in billions or tens of billions. No, we are a real company targeting a nascent but still real market opportunity, using differentiated technology that enables us to produce green hydrogen more cheaply than our competitors while shielding ourselves from the costs associated with traditional electricity and natural gas markets. Our control of our own destiny is reflected in the fact we are about to begin producing that technology in our own factory. But don't take my word for it. I encourage you to conduct on-site due diligence in Portugal, visit our initial hydrogen farm in Evora. If you come this summer, I fully expect you'll find it in commercial operation; visit our state-of-the-art factory in Benavente. Our Head of Production would love to give you a tour. We can take you to see the progress of the construction of the hydrogen plant we're building in Spain for Exolum. See it all for yourself, make due diligence inquiries of developers who are asking manufacturers about the availability and price for centralized electrolyzers for delivery next year. Can they deliver and at what price? Fusion Fuel may be a small company but we are ready to take on all comers—not with promises of what we hope to achieve in the future, not in 2025, like some of our competitors, but today. In my 40 years as a professional investor, I've learned that if a well-run business offers a product or service that is differentiated from its competitors and serves a growing market, it can be bought at an attractive valuation relative to the size of that market opportunity, thereby generating a very high likelihood of attractive risk-adjusted returns over time. So, do your own diligence and see if you agree with me that indeed Fusion Fuel is one of the rare companies that possess those attributes. With that, I'll turn it back over to Ben and we'll open it up for Q&A.

Great. Thanks so much. As a reminder, for anyone who has questions, there are already a handful submitted into the chatbox in the webcast platform. You can submit questions there or via e-mail to the IR mailbox at [email protected]. So we'll start with a handful of questions that came in through e-mail. This is for Zach or Frederico. Can you provide a status update on what you expect in the second quarter from a grant perspective? While they sort that out, I'll take a question myself. There was a question that came into the webcast platform around our supply chain potential impacts from lockdowns in China. I was just chatting with our Head of Production, who also manages procurement, and he confirmed no impact from lockdowns in China up to this point, and the procurement team is securing buffer stocks and also has backups for nearly every component in case of a more extensive shutdown.

Ben, why don't I jump in? I had a thought while they're sorting technology; just to mention that some proposed legislation has been introduced in the EU that would require hydrogen to be deemed green hydrogen if it is produced in conjunction with newly built electric generation, specifically tied to that production. This is something that will be just an example of our advantage versus traditional centralized electrolyzers, which would not be able to use electricity from existing renewables. Rather, they will have to build new solar or wind projects. That extra CapEx is something we don't incur, as we generate our own electricity, and it will create a headwind for the sale of electrolyzers by traditional companies—playing directly to our strength.

Any other questions? It looks like they're ready in Portugal to answer.

Can you hear us now?

We can.

Great. Regarding grants, apologies for the technical difficulties. What we're expecting on grants is approximately €55 million. Our grants have been applied for; I'll go into the programs now. So C14 is a program in Portugal that's just under $10 million in grants we submitted for. We are already confirmed as eligible for the grant and we expect an award in the June, July timeframe. There's another program called C5 in Portugal, totaling $45 million in grants we submitted for. Again, we expect that would be about one or two months behind C14, so between the July and September timeframe, we hope to be awarded that grant as well. The company has done a great job filing for grants and has a good track record of securing them. We hope to update you in Q2 about new announcements regarding grants received.

So I'll just add for anyone working on the model, the way the grants work is this: you're reimbursed against invoices. There are some grants for which we have already processed the first reimbursements. Therefore, we expect to begin booking the first grant income in either Q2 or Q3. We don't control that timeline with reimbursements, but we expect somewhere between Q2 and Q3 to begin doing the first bookings for that income.

Great. Zach, you referred to the solar investment tax credit in the States. Can you give a little bit more color on that and what it might mean for Fusion and Fuel and its aspirations here in the U.S?

Sure, Ben. That's a great question. The solar industry over the last decade-plus has really taken off in the U.S., primarily funded and supported by tax subsidies. The investment tax credit used to represent about 30% of the solar CapEx for solar projects, supported through tax equity structures, which are very common. Right now, it's 26% this year and is scheduled to decrease each year thereafter, starting next year. So the HEVO-Solar would qualify for about 50% of our capital costs related to solar equipment. We believe somewhere between 10% to 12% tax credit would qualify overall for our capital cost, including bonus depreciation or additional benefits.

Aren't I right in saying that Congress is also considering potential subsidies for clean hydrogen production? You never know what comes out of Congress, but that's certainly something being discussed.

Yes. You're correct, Jeffrey. The Build Back Better plan includes potential subsidies for hydrogen production. If it passes—or a version of it—this year, the plan had up to $3 per kilogram of production tax credits for hydrogen based on carbon intensity score. With our world-class carbon intensity score, we would qualify for the full $3, whereas blue hydrogen would qualify for much less. If we were to track market share, considering hydrogen costs and factoring in $3 per kilogram of the tax credits against our levelized cost of hydrogen, it would position us as extremely competitive.

Thanks, Zach. A question here around the offtakers for some of the projects currently under development in Evora or Encinas.

As for offtake status with Evora and Encinas, we are currently in discussions with several offtakers around the refueling stations and applications, as well as selling into the power grid. Those conversations are underway. After we navigate through the licensing process on the projects, we'll commence negotiating offtake agreements. One crucial point is that if you pursue offtake too soon before the projects are licensed and ready for construction, you need to offer a sizable discount. We want to ensure that we maximize returns for the company, so we plan to execute offtakes after licensing. Specifically, for Evora, we plan to sell into the grid as it’s a hydrogen power project, and we're well along the way to do that starting in the summer.

Great. Thanks, Zach. A question around current utilization at Benavente. Is there a minimum level of activity needed, or can you ramp up or down production as sales come in?

I have an answer, but I'll let Frederico chime in first.

Sure. We expect that for 2023, we need to target around the 100 megawatt level to ensure full utilization of the lines installed. This is where we're aiming for economies of scale as much as possible. For this year, we are doing a gradual ramp-up, of course. We’re proceeding with a soft launch, and we'll add shifts as needed later in the year, depending on production requirements. This is more of a 2023 question than a concern for 2022 as Benavente continues to build out. I would say the target is between the 70 and 100 megawatt level in 2023.

Sure. I'll just add to that, in terms of near-term production at Benavente, Frederico mentioned our strategy to introduce and go live with the initial production activities on the HEVO line. As set, we are targeting a minimum of 120 HEVOs, as opposed to HEVO-Solars or HEVO micro electrolyzers per day, running at a minimum production throughput that can ramp up as needed.

There's a question around the project pipeline through 2026. The slide that Zach presented; are those figures per annum or the sum over the next four years? It's a pretty obvious one, but I'll let Zach take that.

You can take it then.

Sure, so that is an aggregate through 2026, not per annum. Once those facilities are online, then you're talking about prior production. Frederico, guidance for G&A costs following the ramp-up of hires. You alluded to this, and we expect to remain within the €2.3 million to €3 million range through the year-end. Any further color on that?

So there's around $3 million of operating costs booked in Q1. Q1, as I mentioned, includes about €1.6 million related to personnel. The personnel ramp-up that we'll see—will obviously increase that €1.6 million but not as substantially as others might expect. We still expect to remain in that $2.3 million to $3 million range in Q1 and beyond. We have a number of operating expenses booked that will not recur throughout the year.

A question on mobility. What does the CapEx represent for the platform? Will those be owned projects or tech sales? I think, Zach, you mentioned a combination of the two—any additional commentary?

It's roughly a 50-50 split between Fusion Fuel-owned projects and tech sales. The CapEx is quite similar. We're developing the HEVO-Solar systems and the balance of plant equipment for these refueling stations. Those projects differ based on the application but generally, they encompass our HEVO-Solar equipment.

I just want to interject for a moment when you mentioned mobility. One of the things Zach mentioned in his presentation was the advantage of our modular approach to producing green hydrogen over centralized electrolyzer methods. This is particularly relevant in an area like mobility, where demand is set to grow significantly over time but is currently modest. Many customers want to start with smaller investments to prepare for future growth, avoiding the large capital investment typical of centralized electrolyzer manufacturers needed to drive down costs. We can install at modest scales, adjusting our offerings as demand grows and we remain cost-competitive, even at smaller setups. This allows for co-location with hydrogen production and refueling, eliminating logistics and distribution costs. Thus, we are uniquely well-positioned to serve this mobility market both now and in the future.

One more point on that, Jeffrey. To elaborate on this, our centralized electrolyzer competitors struggle to be as competitive below five megawatts of capacity; the largest fueling station project in our pipeline is roughly 180 HEVO-Solars, equating to over four megawatts. For us to execute on projects ranging from one to four megawatts in this space is where we hold a competitive edge—especially since our competition lacks production availability today and we can fill in projects that are permitted and ready for execution.

A follow-up mobility question. Do you have a sense of the timeline concerning mobility projects? I'm sorry, I mean timing.

That timeline reflects our effort to execute projects over the next two years. It doesn't factor into our five-year plan; it's more short- to medium- term projects on our internal agenda.

And then a related question as well, more broadly around the time to market for projects. Assuming no delays in commissioning or permitting issues after the initial project, is that timeline measured in months or years? And then regarding any updates on delays in the licensing process?

Yes, it's a great question. I'll focus on Portugal, where many of our initial projects have been. We received great news about a month ago— there was an exemption passed by the Portuguese government that cut our permitting timeline by 50%. This means we can now expect our start to finish timeline from project inception to completion to take about 12 months. Thus, we are measuring timelines more in months than years for these projects.

I would add that we anticipate benefits from this exemption on our two other projects, HEVO-Sul and the Encinas project. We expect to see continued acceleration in this process.

Great. Just a question here around how much hydrogen is being produced in the pilot project in Evora.

In the pilot project, until it goes live, we can't go live with all 15 of the HEVO-Solars, so we currently continue to have two HEVO-Solars producing hydrogen and releasing it into the atmosphere for testing and measurement purposes. As soon as the full commissioning occurs, we will launch with the 15 units. Then, we're talking about roughly 15 tons per year of production. The first green hydrogen was produced in August of last year, and we have conducted continuous testing at that facility while permitting processes are finalized. However, we've been required to release it to the air without storage or capture.

Thanks, Frederico. A question here on email around capital position and whether management is considering raising additional capital soon?

As a matter of fact, we have that cash position. We anticipate continuing to invest in our projects and some material for production, impacting our overall capital. We expect inflows from technology sales and grants to support us. Until now, we've mainly operated on a cash outflow basis; we’re moving into hopefully a structure where we can book some inflows as well. What we've noted in the past is our aim to maintain optionality for our capital. We see a wealth of opportunities in the market and we want to ensure our projects can proceed without being hindered by concerns over capital. We have filed a shelf registration that is public for $75 million. This serves as preparation if needed, and we can tap into that through various means. We'll always maintain multiple options without sacrificing the tremendous growth opportunity the market is presenting to us right now.

Yes. As Zach described, the grants currently available to encourage clean hydrogen industry development can enable a low-cost producer like ourselves to enjoy high returns on projects we might undertake. If we do win some of these grants, we will need to consider how to fund our share of those projects and the match required to complement the grants. One option is to fund it with 100% of the project being owned by the company. In scenarios like that, we would need to raise capital. Alternatively, we could seek a partner interested in funding some or all of the equity needed to complement the grants. We will evaluate which option provides the best returns for our shareholders, whether that's raising capital for the company to manage those projects independently or leveraging third-party equity through some SPV project company structure for those projects. As we've previously mentioned, we have multiple levers to facilitate our growth, and certainly raising capital is one of them.

Great. So we have reached the top of the hour here. If anyone's question did not get answered, feel free to reach out to the IR mailbox, and we'll do our best to get in touch with you. Otherwise, that will conclude our first-quarter webcast. Thank you to everyone who joined, and we look forward to our next update.