Hello, everyone, and welcome to WallBox's Third Quarter 2022 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. [Operator Instructions] I'd now like to turn the call over to Matt Tractenberg, Wallbox's Vice President of Investor Relations. Matt, please go ahead.

Thank you, operator, and good morning, and good afternoon to everyone listening in. Thank you for joining today's webcast to discuss Wallbox’s third quarter 2022 results. This event is being broadcasted over the web and can be accessed from the Investor section of our website at investors.wallbox.com. I am joined today by Enric Asuncion, Wallbox’s CEO, Jordi Lainz, our CFO, as well as Masud Rabbani, our Chief Business Officer. Earlier today, we issued our press release announcing results from the third quarter period ended September 30, 2022, which can also be found on our website. Before we begin, I’d like to remind everyone that certain statements made on today’s call are forward-looking, that may be subject to risks and uncertainties relating 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 us are detailed in the company's most recent public filings with the U.S. Securities and Exchange Commission, including in the Post-Effective Amendment No. 3 to our Registration Statement on Form F-1 filed on September 28, 2022, which can be found on our website at investors.wallbox.com and on the SEC website at www.sec.gov. 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, Matt, and thanks everyone for joining us today. In addition to reviewing highlights from the third quarter of 2022, I will also share some thoughts on the current market we’re experiencing, and provide you with some insights into our fast charging portfolio, both Supernova and Hypernova, including detail on customers, production, and backlog. I’ll discuss a few new partnerships, then Masud will join us to offer some higher level insight into how we approach partnerships with leading CPOs and energy providers like BeCharge and EDF, and why they select Wallbox. We’ll then turn the call over to Jordi, who will provide a more detailed review of our financial results, before I return to communicate our guidance for the fourth quarter and full-year 2022. We will end by taking questions from our covering research analysts. The third quarter finished within our expected range, with strength in North America and key European markets offsetting softness elsewhere. Market share gains as defined by units sold relative to EV and PHEV deliveries, have been substantial all year, and continued to grow through the recent quarter. Our European market share goal for 2022 was approximately 15%, and we achieved 19%. That is a testament to our products and footprint. Today, Wallbox has one of the most comprehensive charging portfolios including home charging, public DC fast charging, bi-directional, and semi-public AC. This award winning offering, including proprietary software and services, is both designed and manufactured in-house. The operational capabilities are enabled by our regional manufacturing footprint, now with facilities in North America, Europe, and Asia, and give us an expected capacity of more than 1 million units as we exit 2022. Our ability to consistently deliver high-quality and innovative products, while remaining flexible to changes in the demand environment has allowed us to build…

Thanks Enric, good to be with you all today. Building strong partnerships with leading brands around the world is a key element of our go-to-market strategy. At our core, we develop very intelligent, high quality EV charging and energy management solutions for public, home, and business settings. Our partners know their core competencies, and they also know that the problem we are helping them solve is extremely complex. The issue is not simply how to charge an EV, but rather how to help the consumer manage their energy consumption in a rapidly changing world. Embracing the fact that the EV is not simply a mode of transportation, but also an energy storage asset sets us apart from our competition. That’s why we are viewed as a technology partner who focuses on innovation, reliability and contributes to the energy transition. For this reason, the strategic partnerships we have built, and continue to cultivate, are unique. Three examples of such partnerships are Uber, BeCharge, and EDF. Uber began as a U.S. partnership and quickly grew into what it is today. Their goal of electrifying their driver base by 2030 requires more than a million electric vehicles and last week we announced the expansion of the program into key European markets. This evolution is one that we’re very proud of, as it is a great example of how our broad footprint allows a local partnership to turn into a regional one, and eventually evolve into one that is global. A brand like Uber could partner with a handful of hardware vendors, and then cobble together an installation network for a few countries, but what happens when they want to enter 10 countries? 25 countries? It becomes virtually impossible to manage. That same premise applies to names like Fisker and Nissan. They want to…

Thank you, Masud. Good morning and good afternoon to everyone. Before I review the financials, I’d like to point out that our first half 2022 unaudited financial results can be found in our form 6-K, which was filed on September 29th, 2022 with the SEC. As a reminder, our intention is to provide you with key unaudited financial and operational measures as we make our way through the year, so you can remain informed of our progress. Like Enric, I’m pleased with our record quarterly results and the progress we’ve made this year. The business is executing well, and we are operating from a position of strength. For the third quarter 2022, revenue was EUR44.1 million, a 140% increase from the year-ago period, driven by strength across multiple regions and products. The seasonal pattern we saw as we moved from the second quarter to the third was similar to what we’ve experienced in past years. Now let me share with you some key highlights that drove our quarterly results. First, our regional mix, now with more than 113 countries, continues to improve upon the benefit of geographic diversification. North America accounts for 22%, up from 8% in the prior year period, and Europe now represents 71% of our revenue mix, down from 85% last year. Asia-Pacific is currently 5%, 1 point lower than last year. And Latin America is 2%. We expect this shift to North America to continue, as EV adoption accelerates and U.S. subsidies take hold. Second, gross margins continue to be resilient in the face of continued component shortages, and 41.4% is a great outcome. This consistency is something investors have come to expect from Wallbox, and we work very hard to meet our commitments. The resiliency you see in our gross margin is a result of…

Thanks Jordi. As we shared with you on our calls in May and August, we have been closely watching EV delivery data, especially in Europe. Delivery rates have lagged EV orders for some time, and as a result, most industry forecasts have been adjusted down. Many had originally expected European EV deliveries in the 3.2 million range this year. That figure was recently reduced by 20%, to 2.6 million. Depending on the source, the expected year-over-year EV delivery growth rates in Europe for the full year 2022 are now between 10% and 20%. However, our 2022 regional growth to date here is 124%. That is 8 times the rate of EVs delivered. EV deliveries on a country level paint a mixed picture. While some markets have slowed considerably, others remain resilient. But it's important to remember that while EV deliveries are softer in some of these markets, our growth, as I've pointed out, has been often several times higher. These meaningful share gains give us comfort that we’re executing well and our strategy is working. Given our revenue today is heavily weighted toward residential charging, and skewed towards Europe, it's not surprising that this should have an impact on the timing of sales. However, these headwinds are largely transitory, and in combination with our geographic and product mix shifts, are expected to be solved in time. The long-term secular growth trends that we are benefitting from remain intact and we believe we’re very well positioned to lead the transition in the coming years. Remember, only 3% of the charging infrastructure needed to keep all the EVs moving in 2030 is installed today. Because this opportunity is so big, we remain focused on building our business to meet the future needs of the market, while being disciplined in where we spend…

Welcome back everyone. To our analysts we ask that you pose one question with a follow-up if needed, then reenter the queue if there's more. This will allow each of you to ask your questions upfront and we'll get to as many additional questions as time allows. Charlie, I think that you have some instructions for our audience today.

Thank you. [Operator Instructions] We have our first question from George Gianarikas from Canaccord Genuity. George, your line is open. Please go ahead.

Hi, everyone. Thank so much for taking my question. I'd like to ask a little bit about the NEVI program. And if you could just please sort of talk a little bit more about your positioning there, what you're hearing about tightening of program awards [Technical Difficulty] and how you feel about the competition, particularly relative to the [Technical Difficulty]

[Technical Difficulty] But starting the moment of production. And as you know, today we're already producing in Texas, in Arlington, our home chargers. We will be able to achieve these requirements. Today more than 60% of our supply chain is being sourced locally and it's all being assembled in Arlington, Texas. So we have lots of room and I think we're ahead of the curve, but we started doing this factory and preparing these products more than a year ago, even before that was a requirement. We have a factory up and running, we have a supply chain deal with local suppliers, we have the employees already there. So once Hypernova is there, which is going to be at the second half of next year, we will have a product that will be fully compliant to be eligible for this program. So, again the message here is that, we are ahead of the curve to capture these subsidies and disrupt.

Yeah. And George, only thing that I would note -- sorry, it's Matt, by the way, is that, it's a bit early to put a number on it. And so, we're very optimistic about how we're going to participate in the program. We're having very constructive dialog with CTOs and with project administrators, but it's too difficult at this stage to put a number in the model. And for that reason, we're conservative in our outlook for next year. That means that, as we make our way through 2023 and we have line of sight to projects we can have those conversations in Q2 and Q3 of next year. The only other thing that I would point out is that, we like to talk about DC fast-charging and the big opportunity there, but there's equally as big an opportunity on the AC side. So there's lots of subsidies around and tax concessions on the automobile side, which we believe will drive demand on the AC side as well, which we're very well positioned to take advantage of.

Thank you.

Charlie?

Thank you. Our next question comes from Chris Snyder of UBS. Chris, your line is open. Please go ahead.

Thank you for the question. And so, much of the commentary in the prepared remarks on the softer EV production in the EU was attributed to production constraint, so I think everyone appreciates and it sounds like we’ll expect those production constraints both in Q4 and then also it sounds like the limiting factor in growth in 2023 is also the OEM's ability to produce. But I guess my question is, do you think any of the softer production rates is attributable to softer demand? Obviously, consumers are pressured with inflation, financing rates are high, and I guess what gives you confidence that the bottleneck here is really just the ability to produce maybe not be ability to buy? Thank you.

Hi, Chris. Thank you for joining. It's Enric. So here the important thing and I think it’s key that we grew 140% in this quarter and we are on track to grow more than 100% this year in a market that grew between 10% and 20% this year. And you're right on assuming that for 2023, we are already assuming constraints on the deliveries of EV. So when we are providing this 100% to 120% growth for 2023 is including our assumptions that the supply chain will not be sold and there's going to be issue with that. That said say, we 100% believe and we are seeing that the problem on the software deliveries is a problem of delivery, not a problem of demand. We are seeing today eight to 12 months of book orders to buying electric cars and proof of that is that the use hand or secondhand vehicles today are often -- when you buy an electrical car often more expensive than when you buy them new. There are reports that are showing that in the U.S. and in Europe. So we saw – not only something is happening in Europe, but also in the U.S. You want to buy used electric car, you have to pay more than [indiscernible]. So looking at the order book, looking at the delay that it takes to get the car, both looking that we are seeing that apart from car manufacturers that adding increasing prices in orders that have not been delivered and the increased price of used vehicles, we believe and we are seeing that it's a problem of supply, not a problem of demand. Demand is stronger and with order books of electric cars for more than eight to 12 months, we don't expect any issue on demand, at least for the next year.

Appreciate that. And thanks for the color. Secondly on the order backlog. And I think the point around the U.S. pricing is already interesting as well. I guess for my follow-up, maybe at Quasar, as we just see a higher more volatile energy crises really globally, but I guess particularly in the EU, has that any impact on Quasar uptake, just given the solutions that product provides? Thank you.

Yes. So, what we're seeing is much more interest from electric car manufacturers to include it as part of their offering. So, we have been selling Quasar 1 and right now the sales of our product Quasar 1 is limited by our production capacity of Quasar 1, but we discussed that Quasar 2 is coming in few months, which is the first CCS bidirectional charger for home. So it’s going to be a CCS car which will work with American cars and European cars. And what we have already is, few car manufacturers that have -- that we are working with to make sure we are compatible with their model and we will launch and we will announce soon with a specific car manufacturer that we are selling the Quasar 2 with them. So, yes, there is a demand from the public. But what's helping us more is that the OEMs and car manufactures are paying interest to bidirectional charging, because it solves -- it's a point-of-sale for them, it’s becoming a point of sale, because now you saw an electric car and you can power a home in case of a blackout. And you can charge your car when energy is cheaper and power-the-home when energy is more expensive. So, they are starting to see that with this they can sell more cars. So we have these conversations and we are -- not only conversations, we are working on preparing launches with some of these car manufacturers for the new product Quasar 2. So it's definitely accelerating the interest for Quasar 2 and soon I hope I will – I don’t I hope I will give you news soon about this.

Thanks, Chris.

Thank you, Enric. Really appreciate the color.

Thank you. Our next question comes from Ben Kallo of Baird. Ben, your line is open. Please go ahead.

Hi, good day. Thanks for taking my questions. Firstly, could you talk a little bit about SunPower, who is your partner made announcement with GM. Could you just talk about how you fit in there a little bit more if you do? And then the second, could we just because you have new product mix maybe revisit how your channels look now versus your select utilities sold direct or selling through partnerships? Thank you guys very much.

So regarding SunPower [indiscernible] GM, we are not part of this project, so we are actually part of another project with KB homes and the Department of Energy that we commented during the earnings call and the idea is that, Quasar 2 can be part of a microgrid in -- of many houses, so [indiscernible] many housing in this project and in case that there is a blackout Quasar 1 -- Quasar 2 is part of this microgrid to supply energy to the different houses. And I'm sorry, your second question, I think [indiscernible].

The second question was about your channel. As your product portfolio increases, how you see your channels going maybe next year between utilities direct and then partners or distributors?

Okay. I will let Masud to answer this one.

Yeah. In terms of channels, if you look at the overall global distribution of revenues by channel. I don't necessarily see any specific or [Technical Difficulty] is that you're going to see lots of different trials take place over the next couple of years. And you're going to see lots of different architectures and configurations. And I think that we have lots of good partnerships, a lot of very interesting successful partnerships that will play out very nicely, but it doesn't mean that SunPower is not going to participate in other trial programs with folks like GM. So we don't view that as a negative at all. We think that our position is exceptional and we have a great partnership with them. Okay.

Okay. Thank you, Matt.

Yeah. You bet. Charlie?

Of course. Our next question comes from Maheep Mandloi of Credit Suisse. Maheep, your line is open. Please go ahead.

Hey. Good day, and thanks for taking the questions. And appreciate the color on Q4 guidance and how you are thinking about '23. Maybe just on 2023 itself, could you talk about the portfolio breakout? I'm trying to see like how much growth you're expecting on fast-charging and how much backlog visibility you might have on that to the extent if you assume that home charging backlog is not that visible, right?

That's correct. Backlog on home charging is not as visible, right? These are sort of quarter out purchases. Typically what we say is, so the DC fast portfolio is different. Yes. So we have a strong pipeline of few thousand units and we already have fixed orders to be delivered during Q4 and the next year from some of the partners that Masud commented. We expect next year around 20% to 30% of the revenue to be fast-charging, most of it is going to be Supernova and small percentage of is going to be maybe 5% or a little bit more to be Hypernova. So the biggest part of the fast-charging for the next year is going to be Supernova. And the rest is going to be very similar to now, at 10% to 15% hardware and services. Sorry, software and services and the rest home products which most of them are AC products around 15% to 20%, again of Quasar bidirectional chargers. So to summarize, 20% to 30% fast-charging, 10% to 15% software and services, 10% to 15% Quasar and the rest AC home charging products.

I appreciate that. And just building on that, can you talk about like how should we think about gross margin, because for 2022 I think gross margins are more or less in line with expectations 40% though, but for ‘23 with the new capacity ramping up in the U.S. markets these lower sales impacted sort of [indiscernible] that would be helpful. Thanks.

Yes. So, we exceeded our gross margin expectation so far. We were expecting 40% and we've been always about 41%. With the acquisition of ARES we have potential upside for gross margin increase and that's something we not been able to see this quarter, because all the additional stock of raw materials we still have in our balance sheet. So we are consuming through the stuff we already have, we work with workbook chase before we acquire ARES. So that's having -- still we are not seeing the impact of ARES. So we have a very positive trend, which is the acquisition of ARES which will in fact improve our gross margin, but then you are right, we are seeing a potential impact on new products that we're launching and we are ramping up, which are Supernova and Hypernova, which will have the first six to seven months of the launch of the product a lower gross margin, given the fact that every time we launched a new product, we have lower gross margins. But we will give you more detail, but I think overall, we're in a very good position to be working on the gross margins we expected, because again thanks to ARES, thanks to improvements on cost efficiencies and design to cost and increase of volumes, we will be able to manage a potential reduction, given the fact that we are launching new products and will become an important percentage of our revenue. So I think overall, we will compensate both effects.

Got it. I appreciate the color. Thank you.

Thank you. Charlie?

Thank you. [Operator Instructions] Our next question comes from Alexander Virgo of Bank of America. Alexander, your line is open. Please go ahead.

Yes, hello. This is Marion on behalf of Alex. Thank you for taking my question. Just wanted to confirm on the Hypernova orders, could you confirm it was coming from the U.S. and you expect to start the production next year.

Yes. So, thank you. Thank you for the question. We have another that is going to be delivered next year for the U.S., few units and multiple LOI's that are adding to the pipeline of Hypernova, all of them for the US. To be clear, Hypernova is a product that we are first launching in the US, we expect to have it in the US, the second half of next year and in Europe as we finish 2023. So, we are prioritizing Hypernova in the US before Europe. In Europe with the 150 kilowatt supernova it will be more than enough to cover the market needs next year and in 2024 we will we have Hypernova in Europe. But yes, these orders are all and this LOIs are all for the U.S.

Okay. Thank you. And if I may, just could you comment on the volume ramp up in Arlington factory? Do you still expect 250,000 units for the end of this year?

That's capacity. Yes. That doesn't mean that 250,000 that will come off the production. So I think that that number is still appropriate. And remember, that's a pure AC number, but our product mix next year will be mixed between AC and DC.

And to expand and give a little bit more color about Arlington. So we have -- for the people that joined and visited the factory a couple of weeks though, we could show that the factory had -- it was half empty because we have splitted the development of the rest of the factory into parts. The reason why we did this way is to be able to increase capacity once we are [indiscernible] capacity. So -- and also to reduce -- to be able to reduce CapEx now. So we have invested enough to be able to produce 250,000 charges a year with this Phase 1. We are limiting CapEx and we are taking half of the space of this facility. And once we are at 100% of capacity, we will double our space and we will able to achieve up to 1 million of chargers a year of capacity. So I mean, we still have a lot of room to grow and we [indiscernible] to make sure we didn't invest all the CapEx now. So we are able to delay CapEx in one year or two years.

Okay. Thank you very much.

Well, Charlie, I think that's all the questions in the queue. So that's going to be the last one for today. But thank you all for joining us today. We hope you found today's call a good use of your time. Also, please note that we're going to have several upcoming investor events during the quarter. So reach out to us if you're interested in meeting with management. You can catch us at investors@wallbox.com. Let us know if we can help you in any way. Have a great day, everyone.

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