Wallbox N.V. Q4 FY2024 Earnings Call

Hello, everyone, and welcome to Wallbox's Fourth Quarter and Full Year 2024 Earnings Conference Call and Webcast. My name is Charlie, and I'll be your operator for today's call. At this time, all participants' lines have been placed in listen-only mode to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Now I'd like to turn the call over to Michael Wilhelm from Wallbox 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 Wallbox'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. I am joined today by Enric Asunción, Wallbox's CEO; and Luis Boada, Wallbox's CFO. Earlier today, we issued our press release announcing results from the fourth quarter and year ended December 31, 2024. 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 Form 20-F for the fiscal year ended December 31, 2023, filed on March 21, 2024. We will be presenting unaudited financial statements in IFRS format that reflect management's best assessment of actual results. Also, please note that we use certain non-IFRS financial measures on this call and reconciliations of these measures are included in the presentation posted on the Investor section of our website. Also, a copy of these prepared remarks can be obtained from the Investor Relations website, under the Quarterly Results section, so you can more easily follow along with us today. So with that out of the way, I'll turn it over to Enric.

Thank you, Michael, and thanks everyone for joining us today. I would like to start today's call reflecting on 2024, which included exciting achievements and solid progress on the challenges we are facing. To start, 2024 has been a challenging year due to the slowdown in the EV market, which also impacted our results. If we look at the EV market in the main regions we operate in, Europe, North America and Rest of World, which are all countries excluding China, the EV market only grew 6% year-over-year. This market growth continues to be subdued compared to the initial market expectations. However, at Wallbox, we believe that we are managing this down cycle in the EV transition as one of the best in the industry. Revenue for the full year totaled €163.9 million, reflecting a 14% growth compared to last year. The main growth drivers were the full year contribution of ABL and solid growth in the North American market, up more than 40% year-over-year. We delivered more than 162,000 AC units, and close to 1,000 DC units during the year, allowing us to surpass 1 million chargers sold in the history of Wallbox. We have achieved these results with a more efficient organizational set-up 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 EBITDA by 21% year-over-year, from negative €74.2 million to negative €58.8 million. We remain confident that last year's strategic initiatives will continue to improve our adjusted EBITDA with the positive impact of these efforts becoming more visible in the upcoming quarters. The new business unit structure, introduced last quarter is allowing us to more efficiently service each target segment, home & business, fast charging and software, supported by manufacturing. In parallel, our product portfolio continues to evolve with new versions of our chargers and software solutions as we believe we remain a technology leader in the space and find opportunities to improve our margins. Examples include achieving the UL certification for our bi-directional charger, the Quasar 2, as the first one in the industry, and the launch of new Supernova and Pulsar versions, such as the Supernova UL, Supernova 220, the fastest Wallbox DC charger to date, and the Pulsar Pro Socket, which is showing strong traction in the commercial segment. We have strengthened our commercial relationships with parties such as Engie, Generac, Free2Move, Florida Power Light, Eranovum and Iberdrola and in 2024 raised an additional $45 million from 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 rightsize the organization and further secure the fundamentals to be successful in 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 EVs is going to take place, it is only a matter of when, not if. Based on different indicators such as declining battery prices, introduction 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, Luis will offer a closer look at our financial results and our key financial metrics. Q4 revenue was €37.4 million, down 14% year-over-year, and missing the guidance range we provided in our last earnings call, but did improve by 8% compared to last quarter. The main reason was slower DC fast chargers sales, which were down 34% quarter-over-quarter, as certain customers pushed out expected orders. As commented on our previous earnings call, our CPO customers have been building up inventory as their focus has shifted from highly accelerated roll-out towards profitability. This trend was more significant than expected and is impacting the whole industry. We are working closely with our CPO partners to understand their roll-out plans, including product requirements, to improve our visibility and pipeline. In parallel, we have continued to sign up new commercial partners with the most recent example Believ. This CPO, operating in the United Kingdom is expected to roll out 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 chargers, but not sufficiently to cover the gap to our guidance range. As previously 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. Gross margin 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 result were product mix, due to the lower top-line contribution of DC fast chargers and ABL. We are actively looking to unlock several gross margin expansion opportunities to reach and potentially exceed the 38% to 40% prior target range, which Luis 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 OpEx excluding R&D activation, non-cash items and one-off expenses, we achieved a year-over-year reduction of 19%. We expect further improvements in the coming quarters as we continue to find ways to optimize the organization with the further implementation of the new business unit structure. For the fourth quarter adjusted EBITDA was closer to the improvement trend we had seen earlier this year at negative €12.3 million and improved by 43% compared to last quarter. The main drivers were the bounce back in gross margin and a 10% quarter-over-quarter reduction in labor and OpEx costs. The cost improvement positions the company for the future, but was not sufficient to cover the gap to the adjusted EBITDA guidance of €7 million to €10 million negative. We monitor closely our sell-out metrics and can see that the inventory in the channel is healthy and that our sell-out performance generally outpaces or is in line 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 resizing the organizational structure and becoming profitable at current top-line levels. For the fourth quarter 2024, Europe contributed €25.7 million 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 hold our market position and we believe this will result in an uptick in sell-in in the near future. North America remained the strongest growth market in 2024 for Wallbox and in the fourth quarter contributed €10.5 million or 28% of the total revenue. This represents a 64% year-over-year growth compared to the fourth quarter of 2023, while the EV market in the region grew 12%. In the past, we mentioned the importance of the North America market and we are excited to see the progress we are making with our strategic partners such as Generac and Free2Move. It was great to see one of our Pulsar being featured in the recent Superbowl ad of Jeep. For 2025, we see an opportunity to grow in this region despite a change in the EV sentiment. AC sales of €26.9 million, including ABL, represented approximately 72% of our global consolidated revenue. Compared to the previous quarter, the AC sales grew 14% mainly due to continued momentum in North America and increase in demand in Europe for the Pulsar Family. Especially with the introduction of the new Pulsar versions such as the Pulsar Pro and the Pulsar 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 software remains a key differentiator, enabling customers to efficiently manage their chargers. The Wallbox App enhances our home EV chargers, providing features like real-time monitoring, scheduling, and remote operation via Wi-Fi or Bluetooth. Our app is recognized as one of the best in the space which gives us a clear competitive advantage. With Virtual Power Plant integration, our chargers can contribute to grid stability and enable users to participate in energy markets, further reinforcing our leadership in smart charging solutions. The attractiveness of our smart charging solutions allows us to continue to support existing partners and sign up new partnerships. Through our partnerships with the likes of Free2Move and Iberdrola, we continue to sell thousands of chargers to companies such as Jeep, Alfa Romeo, Mercedes, Volvo, Maserati and Hyundai. DC sales were €2.9 million representing 8% of sales in the fourth quarter and much lighter than expected. As mentioned before, there is inventory build-up with our CPO customers and orders have been pushed to 2025, as they slow down the roll-out of their networks as the EV fleet is not growing as fast as expected. In the U.S., we launched 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 book. In Q4, we received the Eichrecht certification to sell our Supernova in Germany and are in the process of receiving the CTEP certification to be compliant with regulations in California. Both of these certifications will expand our addressable market significantly as we continue to sign-up customers that look for the product specification, reliability and high-power-to-footprint ratio the Supernova can offer. Software, services and others contributed €7.7 million for the fourth quarter, representing 20% of our total revenue and 18% growth compared to last quarter. We're excited by this segment's rapid growth, which is already fueling a scalable competitive edge in our market. As mentioned at the start of the call, 2024 has been a challenging year for EV sales. The EV 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 World showed more promising growth, with respectively 10% and 28% year-over-year growth rates, however these markets are smaller, especially for Wallbox, and are still catching up. Looking forward, while the near-term market visibility remains low, long-term prospects point to massive growth. For 2025, leading research firms expect the EV 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 2024 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 NEVI, and will impact fuel economy 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 lobbying to keep certain EV 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 incentive 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 inflection 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 dominate 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 Wallbox, we recognize the proof points and are optimistic about the market. Nevertheless, we are very intentional about reaching profitability and cash generation independent of market growth. That's why we've realigned the organization around the key levers we can control, gross margin, OpEx, and working capital, to drive sustainable growth and ensure our long-term success. Luis, I'll turn it over to you to comment further on our financial details.

Thank you, Enric. 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, 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, DC sales were much lower than expected mainly due to inventory build-up with customers and purchase orders being dragged to 2025. With 34.6%, the gross margin is lower than expected and outside the target range we communicated before. The main reason is weaker sales of DC fast charging and ABL impacting the product mix as these are higher than the group's target margins. Looking forward, we continue to see opportunities to expand gross margin through improved bill of materials costs, increased economies of scale and the introduction of newer version of our products, with higher quality and expanded features. Q4 labor costs and OpEx landed at €28.8 million, 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 ABL entering the perimeter on November 1, 2023, and the inclusion of one-off items. On a full-year basis, labor costs and OpEx decreased 11%. If we look at our cash costs instead, which is defined as labor costs and OpEx excluding R&D capitalization, non-cash items and one-off 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 are undertaking are right-sizing the organization, removing unnecessary spend and renegotiating necessary spending. As part of the efficiency efforts, we have reduced headcount by 35% compared to the same period last year. Consolidated adjusted EBITDA loss for the quarter was €12.3 million. Softer top-line and lower than expected gross margin have been the main reasons why we did not land in our guided range. And yet these results show a leaner organization that provides an improved adjusted EBITDA margin on lower levels of revenues. This will show incremental improvement on profitability in the upcoming quarters as the top-line increases. We ended the quarter with approximately €46 million of cash, cash equivalents, and financial instruments. This is excluding the approximately $10 million private placement announced earlier this week from our trusted strategic shareholders. Loans and borrowings were approximately €198 million at the end of the quarter with approximately €91 million in long-term debt and approximately €107 million in short-term debt. In order to strengthen our balance sheet, we successfully negotiated with our main lenders, Santander and BBVA, for an interest-only period of 18 months starting in November 2024. We are now actively expanding that interest-only period to our other pool of loans to minimize loan repayments in 2025. 2024 loan repayments amounted to almost €20 million. CapEx was again light, but slightly higher than last quarter at €3.9 million. €1.5 million was invested in Property Plant and Equipment. Full year PP&E and intangibles CapEx excluding R&D capitalization was €9.9 million, below €10 million as expected. This represents 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 product 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 a total of €71.1 million. 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. Enric, 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 was a challenging year for the EV industry. However, challenging times are part of every industry, and what is most important is managing these down cycles. Especially, in a young industry that has experienced significant volatility, being agile is crucial and Wallbox has taken the opportunity to become a leaner and more efficient company that maintains a unique fit and strong propositions for the massive growth that lies ahead. 2025 will be another year of growth for the industry, but we recognize that volatility in EV sales could persist as a transition of this magnitude takes time. However, at Wallbox, we are excited about what 2025 will bring. We have made great progress in the past year and are starting to reap the benefits of these efforts, with incremental improvements expected for the upcoming quarters. The goal of Wallbox is to generate profitable growth and we are getting closer and closer to this objective. We believe that the platform we developed 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 to €37 million range, gross margin between 37% and 39%, and expecting a negative adjusted EBITDA between €8 million and €11 million negative. With that, we're 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?

Of course. Thank you. Our first question comes from Stephen Gengaro of Stifel. Stephen, your line is open. Please go ahead.

So I think two things. I think the first, just at a high level, when we think about your mix going forward, and I know you mentioned in the commentary some of the sort of regulatory changes or at least potential changes in the U.S. market. How should we think about the mix of product? Do you think it evolves much because of maybe the lack of some of the NEVI funding? How do we think about how your mix might evolve, particularly in the U.S. market?

Hi Stephen, good morning. This is Enric. So in the U.S., 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 NTEP and CTEP, which will be announced and launched soon. So at the end this increases our addressable market for fast charging in the U.S., which is a vector of growth for fast charging for us. Also the fact that we launched the product in the middle of last year, nor in Q2 last year, most of the deals and most of the accounts that we have take time to mature and in average, we are seeing that a deal for fast charging takes around 200 days to start seeing decent or big interest in revenues. At the beginning, the CPO makes a small order, tests the product, and then after that, after 200 days, you start seeing volume of orders, so these two together should make that the mix increases. And our goal in the U.S. as we look at is eventually to be 50% fast, 50% home and business. We are seeing also positive notes in terms of growth for home charging in North America; this quarter sell-out is growing nicely and as well sell-in. 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 worried that some incentives might disappear. So in the short term, we are seeing a growth for home charging but also be spectacular for fast given the fact that we launched new products increase our market and the opportunities are maturing.

Thank you. I have another question. This may be challenging to determine given all the variables, but when we consider where you could be in 12 to 18 months regarding your path to achieving EBITDA and ultimately becoming free cash flow positive, what are your thoughts on that progression? Additionally, what do you believe the market conditions or top-line performance would need to look like to reach that goal?

Over the past year, despite the challenges in the market, we have managed to succeed or maintain our sales relative to the electric vehicle market. We have either held or increased our market share in several countries. For instance, in North America, while the EV market grew about 20%, we saw our growth at 40%. This indicates we are increasing our market share and attracting new customers, which is evident from the new brands we are launching. Looking ahead to the next 12 months, we are committed to sustaining our market share, especially since we observe less competition and new partnerships on the horizon. Ultimately, our performance will largely be influenced by the overall performance of the EV market. In Europe, if emissions regulations continue as expected, there's a potential for a 20% growth, and similar sources in North America suggest a 20% increase as well. Thus, our success will heavily depend on EV sales, which will directly affect our performance. In terms of revenues, we need to focus on achieving breakeven or becoming EBITDA positive. We have transitioned from a functional organization to a business unit structure and are making substantial efforts in managing operational and capital expenditures. Although we haven't yet seen the full impact of these improvements, we expect to start seeing results in this quarter, projecting revenues between €40 million and €45 million to help us reach breakeven. Our targeted growth size is aimed to be achieved by the end of the second quarter, which we anticipate will be fully reflected in the third quarter. There is potential for upside with EV sales; as they increase, we are positioned to sell more due to our capability to tap into this market. We believe there are further opportunities for growth since we possess the necessary products and global presence. We are not overly reliant on any particular region, allowing us to adapt to growth in Europe even if the U.S. market doesn't expand as quickly. We are actively managing costs to ensure that at these revenue levels, we can achieve profitability and generate positive EBITDA.

Great. Thank you very much. My first question just wanted to touch on tariffs here. Your folks appear pretty well-positioned just given your manufacturing footprint. But could you talk about maybe some possible areas of import tariff exposure and sort of how you're positioning the company as the import tariff environment in the U.S. is evolving here?

Thank you, William. Good morning. 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 manufacture 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. Now we've seen a 40% growth. But in the North American market, we have a factory assembly facility in Arlington where we manufacture the chargers. We sell in all North America and also some parts of South America. When I think about risk, I don't see a reason in the supply chain for this factory because we can manage and most of our supply chain, it's localized. The bigger risk, I would say is in the fast charging space where we still have a big part of this fast charging being manufactured in our Barcelona factory and a big part of it we ship from Barcelona to Arlington. There we are running on a plan in place in case that there will be a specific tariff coming from Barcelona to the U.S. to transfer more of these 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 in Arlington could do it. So if we see that's necessary and at the end, it makes financial sense. We can transfer more parts of this manufacturing to Arlington. And also maybe if you think about China and importing goods from there, we've been working with our suppliers to ensure 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.

Yes. I was only going to add to that William, that going back to Enric's prior point, fast charge is 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 this as an incremental that we need to address but we can manage accordingly.

Thank you, William. This is Enric again, and I will also pass it to Luis for additional comments. First, we are extremely proud of our ability to access capital markets and the ongoing support from our long-term shareholders, many of whom are also key customers, such as Iberdrola. Iberdrola is one of the largest utilities globally and one of our biggest customers. Their continued support and investment serve as a testament to the value of our products and technology. We have various cash management strategies in place, including the significant cash reserves from our fundraising efforts, which we aim to use to make the company operational and achieve positive cash flow as soon as possible. We are managing this through inventory release, having reduced our inventory to €70 million last year, which has made substantial cash available monthly and quarterly. This is crucial for our cash management. We are also optimizing our working capital by collaborating with customers for earlier payments and with suppliers to enhance our cash flow. Overall, our goal is to minimize the need for additional capital and reduce dilution if necessary, which largely depends on our revenue. We are implementing cost reduction strategies and improving our gross margin. Additionally, we have been renegotiating with banks, choosing to pay only the interest instead of the principal for the past 18 months, which is a sensible approach for a company not yet generating cash. We hope to reach that milestone soon. With these efforts, we aim to avoid raising more cash, which will heavily rely on our revenue growth. However, if the need arises, the company has demonstrated its ability to access capital markets while managing with our current cash flow.

All right. Thanks for the time. Talk to you guys soon.

Okay. That's our last question. And thank you all for joining us today. We hope you found today's call good use of your time and let us know if we can help you in any way.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.