Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ITM Power PLC (ITMPF, Financial) has achieved a significant improvement in its factory acceptance test pass rate for electrolyzer stacks, increasing from below 50% to 98%, leading to substantial cost savings.
- The company has a strong sales pipeline and has raised its cash guidance substantially for the remainder of the year, indicating financial stability.
- ITM Power PLC (ITMPF) has successfully reduced its dependence on Linde as its primary market channel, with a larger share of its sales pipeline now consisting of projects without Linde involvement.
- The company has made significant strides in operational performance, with a comprehensive and competitive product portfolio tailored to customer needs, including the successful NEPTUNE V product.
- ITM Power PLC (ITMPF) has a growing contract backlog, which has increased to GBP135 million, indicating future revenue growth and a sustainable business model.
Negative Points
- Despite the growing momentum, customer final investment decisions (FIDs) are still lower than industry participants would like, leading to increased competitive pressure.
- The company's gross loss remains consistent with the prior year despite higher production, indicating challenges in achieving profitability.
- ITM Power PLC (ITMPF) faces uncertainties in the U.S. market due to political changes, which may delay material investment decisions.
- The company has experienced cash outflows, with a total cash outflow of GBP27.2 million against GBP28.8 million in the prior period, although this was partly due to a one-off exceptional item.
- Revenue recognition lags behind progress on contracts due to the completed contracts method, which may affect the perception of financial performance.
Q & A Highlights
Q: What attracted Amy Grey to ITM Power, and what are her initial impressions of the company?
A: Amy Grey, the new CFO, was attracted to ITM Power due to the exciting prospects of the green hydrogen sector and the company's strong technology and products. Her initial impressions are positive, noting significant progress and a focused, driven team since Dennis Schulz's arrival.
Q: Why has the NEPTUNE V been well received in the market?
A: Simon Bourne, CTO, explains that NEPTUNE V is a comprehensive solution offering high purity hydrogen with a small footprint, built-in redundancy, and competitive pricing. These features make it attractive and a significant part of ITM's pipeline.
Q: Why hasn't ITM increased its full-year revenue guidance despite strong first-half performance?
A: Andrew Allen, CFO, clarifies that revenue recognition is based on completed contracts, which can lag behind project progress. The first-half revenue mainly came from NEPTUNE II units, and future revenues from NEPTUNE V will be recognized in later periods.
Q: Can you provide details on the settlement with Linde and the current relationship?
A: Amy Grey states that the settlement with Linde was resolved, and the relationship remains strong, with over 350 megawatts of joint contracts. Dennis Schulz adds that Linde's involvement in projects is crucial for ITM's credibility and success.
Q: What are the key milestones and strategic initiatives for ITM to achieve consistent profitability?
A: Amy Grey outlines the focus on capital and operational discipline, delivering profitable projects, operational efficiency, and increasing sales of profitable contracts. Dennis Schulz emphasizes the importance of winning more orders and maintaining a strong track record.
Q: What is the outlook for green hydrogen projects and FIDs in Europe during 2025 and beyond?
A: Dennis Schulz expects the momentum in Europe to continue, with many FIDs in the 5 to 30 megawatt range and some larger projects. He believes 2025 could be a turning point for the green hydrogen industry, with ITM well-positioned to capture market share.
Q: Are there any shortages in ITM's supply chain?
A: Simon Bourne confirms that ITM's supply chain is in good shape, with efforts to ensure quality and scalability. The company has reduced its reliance on precious metals and made strategic insourcing decisions to secure supply and reduce material demand.
Q: What is ITM's goal for market share in the perm electrolyzer space?
A: Dennis Schulz aims for ITM to achieve a market share of 25% to 30% in real deployments and projects, reflecting satisfaction with their market performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
