I will then hand over to Kevin, who will give a review of our financial performance and outlook in more detail. We remain focused on expanding and executing our commercial pipeline with a view to embed our technology and product portfolio in these key power sectors. The opening of our new facility at Hood Park in Boston represents a significant milestone achievement for Advent because this will provide a firm anchor to our business growth in North America. We also continued our capital investment program in state-of-the-art equipment that's required to complete our scale North production capacity.

We believe that the future demand for Advent's high-temperature PEM technology and related products will create a significant opportunity, and we believe Advent will be ideally positioned to capitalize on this. We look forward to growing our commercial activities and achieving long-term profitable growth. The latter is expected to deliver revenue consisting of milestone payments and royalties, which will provide the upside to our business. Furthermore, the expected system increase in power density and lifetime will highly differentiate Advent's fuel cells in the heavy-duty mobility industry.

Turning to our financials, we delivered revenue of $1 million in the first quarter and income from grants of $0.5 million, for a total of $1.5 million. The use of this equity line of credit is entirely at Advent's discretion and provides us with an effective buffer, if required, that can be used alongside other sources of capital. As we all know, however, not every opportunity in the pipeline will transpire due to factors that are beyond Advent's control. Due to the long-term contract nature of our business model, the timing of our revenue can also be difficult to predict.

What went well
  • Signed a joint development agreement with Hyundai after a successful technology assessment of Advent's high-temperature PEM MEA
  • New collaboration with Siemens Energy on a 50-500 KW maritime fuel cell solution, with an initial order of 20 methanol-powered Serene systems
  • Opened the new Hood Park facility in Boston housing R&D, production and headquarters, anchoring North American growth
  • New agreement with BASF Environmental Catalyst and Metal Solutions to build a closed-loop fuel-cell supply chain and scale up MEA production in Greece
  • Progressed the Green HiPo project by purchasing the Kozani, Greece site; CEO elected chair of the EU IPCEI Hy2Tech Facilitation Group
What went wrong
  • Net loss of $12 million ($0.23 per share) in the quarter
  • Going concern: existing cash and projected cash flows are not expected to fund planned operations for the next 12 months
  • Cash reserves fell $13.4 million in the quarter to $19.5 million, driven by opex, inventory build and CapEx
  • Green HiPo's EUR 782.1 million Greek state funding remains uncontracted, with timing outside Advent's control
  • Revenue remains constrained by relatively expensive products and a disrupted telecom pipeline after operators divested their towers

Guidance Changes

MetricPeriodCurrent guidance
2023 revenue and income-from-grants outlookFY2023Not provided on this call due to uncertainty; expected to be provided on the next earnings call
Ion Pair MEA in flagship products (Serene, Honey Badger 50)2024Expected to begin incorporating in 2024, targeting significant cost reduction and higher power density and lifetime
Honey Badger defense product production go/no-go2024Production decision expected in 2024, pending DOE approval

Performance Breakdown

MetricYoYNote
Total revenue and income from grants — $1.0M revenue plus $0.5M income from grants for $1.5M total in Q1
Total operating expenses down ~$1M $11.6M total; administrative cost reductions implemented through 2022, partially offset by higher R&D expenses
Net loss — $12M net loss, or $0.23 per share, in Q1
Unrestricted cash reserves — $19.5M at March 31, 2023, down $13.4M from year-end 2022 on opex, a $2.2M inventory increase and $1.9M of CapEx

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Green HiPo gigafactory and EU IPCEI funding—Site purchased in Kozani; working with the Greek state to sign the contract for up to EUR 782.1M in funding—
Ion Pair MEA as next-generation, cost-reducing technology—Targeting roughly 2x power density and 2x lifetime; to be embedded in products from 2024—
Strategic partnerships with industry leaders (Hyundai, Siemens Energy, BASF)—Multiple JDAs and supply agreements aimed at endorsing the technology and securing the supply chain—
Focus on core mobility and stationary power sectors—Continued consolidation of operations around these two markets—
Capital position and funding options—Finalized a $50M equity line of credit with Lincoln Park Capital in April 2023 as an optional buffer while pursuing other capital—

Q&A Summary

How important is the BASF agreement in winning fuel-cell system business, and has it opened doors?
It endorses Advent's technology and secures the supply chain, which is essential for long-term scale-up; BASF's expertise in precious-metals management enables a closed-loop process and helps drive prices down alongside partners like Hyundai and Siemens Energy.
Can you quantify the cost-reduction expectations for the Ion Pair MEA, and is a pipeline building for the 2024 rollout?
Ion Pair promises at least 2x power density and 2x lifetime (effectively a 4x better product) and should be in products in 2024; pipeline is being built across telecom tower companies, marine and automotive, and the defense Honey Badger, with detailed expectations to come on the next call.
Can you dual-track pre-planning on Green HiPo to accelerate it given funding timing is out of your control?
Yes, the project is run as if it is a go; the site in Kozani has been purchased, R&D work is scheduled, and strategic partners like BASF are being lined up, with EU-level momentum ($5.4B) suggesting funding will come relatively soon.
On the truck contract in Asia, are you the sole supplier and how will the project work out?
Advent was selected after rigorous customer testing; it is a significant initial MEA order with future orders expected, and the company anticipates being the sole supplier, noting methanol and biofuels are strategically important in Asia and other regions where liquid fuels dominate.
What are your options to raise capital as a Nasdaq-listed company (Lincoln Park)?
The Lincoln Park equity line of credit provides access to up to $50M over three years entirely at Advent's discretion; it is not required but buys time and flexibility while other sources of capital are pursued.
Are insiders selling shares, and what about management confidence?
Management and the CEO have not sold a single share in nearly 20 years; any observed sales relate only to stock-option taxation, reflecting full alignment and confidence in the company's future.
Why aren't sales higher given the strong product portfolio?
Advent does have sales but its products are relatively expensive, so it sells where both environmental benefits and total cost of ownership are favorable (often developing-world markets); the plan is to keep cutting price and scaling manufacturing to grow sales over time.
Any update on electrolysis and other applications like aviation?
Advent is excited about alkaline-membrane electrolysis as a future technology combining PEM and alkaline, has strong tech, and is in discussions on aviation and other applications with announcements to come when permitted.

More on Advent Technologies Holdings, Inc.

Reported 2023-05-15 · figures from the Advent Technologies Holdings, Inc. Q1 2023 earnings call.

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