Hello, and welcome to the Alfen 2021 Q3 trading update. Please note this conference is being recorded and for the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star one on your telephone keypad to register your question. I will now hand over to your host, Marco Roeleveld, CEO of Alfen, to begin today's conference. Thank you. Thank you, moderator. Good morning, and welcome to the Alfen webcast about the Q3 2022 results, in which we continue to deliver on our profitable growth ambition. This webcast, and the questions that may come forward, are handled by the management board of Alfen, being Jeroen van Rossen, CFO, Michelle Lesh, CCO, and myself, Marco Roeleveld, CEO. In this webcast, we will start with the highlights, followed by a short review per business line of the most important topics, and next we will go in a little more detail regarding our financials and outlook. Assuming you have noted the usual disclaimer, we can now go to sheet three with the highlights of the third quarter. We realized EUR 60.6 million in revenue compared to EUR 49.9 million in the same period of last year. This represents a growth of 21%. The growth margin this quarter was 36.9% and was in line with our expectations. As a percentage of revenue, the Adjusted EBITDA improved from 15.1% in the third quarter of 2020 to 16% in the same period of this year. Later on in this presentation, Jeroen van Rossen will go in more detail on the financials. With regard to the full year revenue outlook, we reconfirm the bandwidth of EUR 225 million-EUR 250 million. In the coming three slides, we will go in more detail on each of our business lines. We start on sheet four with Smart Grid Solutions, where we have realized a revenue of EUR 33.2 million, which is slightly more than in the same period of last year. The supply of transformer substations continued into our key markets, from grid operators to more project-oriented markets. Revenue growth was partly offset by some project delays in the industry segment, which has been the result of customer schedule delays, as well as grid operator planning challenges to establish grid connections. We now continue on sheet five regarding EV Charging Equipment, where we have realized a strong revenue growth of 123%. We benefited from our strong international market position as the penetration of electric vehicles in new car sales keeps growing across Europe. More and more car OEMs have committed to electrification of their portfolios and are rapidly increasing and diversifying EV supplies in the market. This, together with ongoing incentives for EVs across Europe, is driving the growing demand for EV charge points at home, at businesses, and in public locations. From a supply chain perspective, a high demand for components, especially electrical ones, continues to put pressure on the supply chain throughout the world. We continue to closely manage our supply chain, and up to this point, we've been able to mitigate the component delivery challenges. We now continue on sheet six regarding Energy Storage Systems, where we have realized EUR 2.2 million in revenue, which is 62% lower than last year. The decrease in revenues is a result of COVID-19 headwinds in 2020, combined with ongoing decision-making delays across the sector, resulting in longer lead times to secure new orders and to generate revenue. Nevertheless, at the end of the third quarter, our pipeline of qualified leads has more than tripled compared to the same period last year. We remain convinced of the long-term market opportunity for energy storage, as energy storage is an essential element in a set of solutions in the energy transition. This year, we have celebrated the tenth year anniversary of this business unit within Alfen and have dedicated the latest Alfen magazine to this with a broad set of background stories. Now, our CFO, Jeroen van Rossen, will continue on sheet seven with a more in-depth explanation of our group financials and outlook. Thank you, Marco. Let's take a look at the financials, starting with the graph on the top left-hand of the slide reflecting our revenue growth. If we look at the third quarter 2021, our revenues increased with 21% to EUR 60.6 million, compared with EUR 49.9 million in the same quarter last year. The gross margin was 36.9%. Although this was slightly lower than a 37.2% gross margin in the same period last year, it increased 50 basis points compared to the realized 36.4% in the first half year of 2021. The differences in the gross margin are related to product mix effects. As a result, our Adjusted EBITDA was EUR 9.7 million, being 16% of revenues, compared with EUR 7.5 million, being 15.1% of revenues in last year. Despite a slightly lower growth margin, the Adjusted EBITDA increased because of operational leverage. From the financials, we now go to the outlook on sheet number eight. Let's start with the supply chain. We don't see a reduction of pressure on the worldwide supply chain yet, and we still expect supply chain pressure to continue well into 2022. Therefore, we will stay on top of this and continue all the mitigating actions that we already took. However, this may result in some adverse impact as we favor the continuous delivery to our customers. From a business perspective, we anticipate strong market development for all of our business lines. As such, we will continue to invest in our organization, in our facilities, as well as in innovation for the future. From a revenue outlook perspective, we reconfirm our 2021 full year revenue guidance in the range of EUR 225 million-EUR 250 million. We are now at the end of the presentation, where I will hand over to the moderator for any questions. Moderator, could you please take over? A reminder, if you would like to ask a question or make a contribution. The next question comes from the line of Emmanuel Carlier from Kempen. Please go ahead. Yes. Hi, good morning. A couple of questions, maybe first on smart grids. I was just wondering if you could explain a little bit why the sales growth is lacking the growth in substations. What we see in the market of substations that we have, say, two market segments where we are operating in. One is for the grid operators, and the second one is, say, the elements, what we call, is more project-oriented for greenhouses, PV parks and industry. What we're seeing is that, especially in the area of grid operators, that the planning they do to improve the grids, to enhance the capacity, to connect all kind of requirements of the customers to be connected, that they have difficulty in coping with all those different elements together. In combination with the planning aspects that are influenced by what do you call them, the nitrogen elements that in permissions to make modifications in the infrastructure. We see they are under huge pressure to make the realization of that project happen. If we are more or less hit with this in two elements. One is more or less the direct business for the grid operators, and the second element, which is a bigger impact, is the one which are related to the project realization, where the grid connections are delayed. In some elements also, we see delays due to planning permissions. As a consequence of that, we see that although we have maintained our revenue, for some elements, we see that the elements of, say, what we call the percentage of completion for projects, they are delayed somewhat due to the elements we just mentioned. Yeah. Thank you for that. That's very clear. The second question is on energy storage. There you mentioned that the project pipeline is very good and that it triples, but we don't have an absolute level. Could you maybe give a bit more color on the size of that project pipeline? and how we should look at that into Q4 and probably H1 next year. What we're seeing is that the project pipeline does continue to grow at a rapid pace. The demand is certainly there in the battery energy storage market. What we are seeing is the timing of those projects and the decision-making continues to take longer than expected. Except for that, it is a nascent market, it is still in its early stages. That's why the demand gives us confidence that the market will be there in the future, and we'll continue to work each and every one of those projects to close throughout 2022 and beyond. Yeah. Okay. On the final question for now from my end is on long-term profitability. You guide for 15%-20% EBITDA margins. If you look at the last three years, you have made an impressive jump on that metric. How do you look today at the future? Yeah, do you have more confidence that you will achieve that? Or do you even believe that maybe this target is on the conservative side? Yeah, any color on that bit would be helpful. Thank you. Well, let me start by saying we look very positive towards the future. I think in 2018, we already expressed that our model is based on profitable growth, and that profitable growth should come from a combination of gradually increasing growth margins as well as having operational leverage in. Of course, at that time and looking into what you might expect, we did not have COVID-19 on our radar screen, to be honest, in 2018. There are always situations where you have to cope with, and I think that's what we are trying to do. We have a very clear strategy on growth, and internationalization and cross-selling. That is what we are pursuing. Then, looking at the trends, we see that the trend is there, so that the parameters supporting that profitable growth, they are there. Is there still room for further improvement? Yes, there is. If you look from a quarter to quarter basis, I expressed it also before, I also would like it to be a linear line, both on the top line as well as on the bottom line, because that would make the explanation very easy. In reality, in nearly all instances, it's not a linear line. From a quarter to quarter, you can see an acceleration or a bit of a slowdown. But I think the fundamental parameters underlying our business models, they are still fully there. We are preparing ourselves for further growth and we keep on investing in the organization. From a quarter to a quarter, that might show a little different on the growth margin or on the operational leverage. But we will strive for further growth and also further profitable growth. Yeah. If I may follow up on that, if I look at last five years and I try to look forward, to me, I think on sales growth, I think most people probably agree that the sales growth trends will probably be quite similar. Is there a reason to believe that the operational leverage effect will start to fade in the coming years from current levels? Because otherwise you would expect stronger profitability growth. Well, of course, to some extent, the operational leverage is of course, mostly related to indirect staffing. Because the direct staffing, of course, has a more direct relationship with growth in revenue as well. You cannot create endlessly operational leverage. There will of course be a certain point in time where already operational leverage might still be there, but it will not grow as fast as it did before. That is always what you have to look at. We also do not precisely know what growth margins will do then at that time. Again, I think for us, and that's why it's a profitable growth story. In our opinion, it doesn't make any sense to grow and not make any money. We favor the growth on the top line equally as we favor the growth on the bottom line, and that has different parameters. That's what we are focusing on in the execution of our strategy, and we'll continue doing so. Okay. Very clear. Thank you. The next question comes from the line of Peter Olofsen from Kepler Cheuvreux. Please go ahead. Good morning. I have a couple of questions. The first one is on the gross margin. It's pretty consistent, I would say, with what we have seen in recent quarters, despite the fact there has been a lot of supply chain pressure, raw material cost inflation, et cetera. Could you confirm that you have been able to compensate for raw material cost inflation by pricing and other measures, and that the mix this quarter was within the normal range? Or was there anything exceptional to the mix this quarter? Well, I would not say exceptional to the mix, but the mix did help to contribute to the gross margin. I think it's also fair to say that, you know, we are not buying components and having them on a weekly basis, so you do buy up front. There's always a bit of a time lag when price increases are also reflecting in cost pricing. In Q3, to some extent, we saw the first effects of cost price increases. That's why we also say that there might be some adverse impact in Q4, especially on the electrical component area, because we take the approach that we favor the continuous delivery to our customers. That's what we are doing. If we have to take a decision that we accept higher freight costs, based on the fact that we then safeguard the supply chain and keep on producing and delivering, then we will definitely do it. That is what you might expect. That's what we mean by that we see a continuous pressure on the supply chain. It's not only about a price increase of a raw material. It's also about the logistical chain, because we do not see transportation costs of containers going down at the moment. It's stabilizing, slightly declining, but it's not near the levels that we were used to normally. That is what we are looking at, and that's why we stay on top of this item. Safeguarding the supply chain and make sure that you cope and reduce the price increases as much as possible, that's very high on our agenda. In light of the general cost inflation, has there been a positive contribution from pricing to the revenue growth? Well, you know, we don't have automatic indexations. We have constant pricing strategy meetings in which we look at our whole portfolio and the positioning of ourselves in the market areas. You know, we have indexation clauses, for example, in the contracts with the grid operators. They start normally at the first of January. Those discussions are going on currently. That's what you will see, but it's not an automatic transfer of raw material cost increases in sales prices. Unlike some other sectors, for example, in the chemical sector, there it is a more or less direct connection. That's not the case in our segments. Okay. Then on some of the project delays that you have seen in Smart Grid Solutions, so on the project side, could you maybe shed some light on what has caused some of your clients to delay those projects? Because that was not very clear for the press release. There are several elements in those delays. We're also, in, say, the previous quarters, we have shown examples that in finalizing the permitting sequences in the Netherlands, in relationship to, say, the extra environmental elements that have to be included, like with the, what you call it, the carbonization elements. In making projects happen, we've seen some that the projects were delayed somewhat due to the fact that there had to be what you call that extra additional reports to be filed in order to get approval. In combination with the fact that we see at this moment that the grid operators are quite stretched in making grid connections or planning grid connections for, say, the relevant projects we are working on due to different reasons. Those projects are more or less many elements are combined. Of course, there is also grid improvements where projects by the grid operators themselves, and they coincide with more or less the extra connections that are being requested to accommodate the projects we are working on. That makes it in some instances, we have experienced delays to get site work physically finished. Therefore, that also has a consequence in our revenue recognition because we do revenue recognition based on the completion of the project. If there are delays, then we have to also delay our revenue recognition. That's both valid for the grid of the projects in SGS, but also we see the same elements with energy storage, where we have seen delays in decisions on projects due to different kind of reason, but also in execution of projects. In the second quarter, we indicated the project where we were awarded the contract for Vital Energi in the U.K. We have seen that in getting permission to start work on a physical location that was to be expected in the third quarter. We saw a delay due to the fact that the local permitting agency had extra questions for our customer, and therefore we could not start on site and therefore not recognize revenue on this project in the third quarter. Okay. Coming back on the project delays in Smart Grid Solutions, is it then fair to say that some of the business that was delayed from Q3 might then come in Q4, but at the same time, there is a risk that some of the business that was supposed to come in Q4 might slip into next year? It's a good assumption, Peter. There's always hard models to have an exact view on whether the delay will offset, is offset by other elements, but we see now that it is not an element that has one driver, so that will be also a straightforward solution there in a certain time. It's a combination of elements that makes it, for us, quite complicated to predict which project and on which moment will be, where we will be able, on one hand, start to work on site or finish the work on site and get then a proper project planning handling by us, in relationship to the customer requirements. Okay. Then my final question relates to the EV Charging Equipment business. Obviously very strong growth there. Could you shed some light on the growth domestically and internationally? Could you update us on the revenue share of the international sales in that segment? Yeah. In Q3, we were really proud that we had more than 60% of our EV charging revenue outside of the Netherlands. We're continuing to see growth in both spaces. But it is fair to say that outside of the Netherlands grew faster. Okay. That's helpful. Thank you. The next question comes from the line of Lotte Timmermans from ABN AMRO. Please go ahead. Good morning. First a question on the indexation classes in smart grids. Could you say on what benchmark this one is based and what kind of percentage points will you think of? Good question and no answer. The indexation is not based on indexes as such. It's a discussion that we have with the grid operators in which a couple of parameters are included and variables are included in that discussion. What kind of parameters should we think of? Is it based on raw material pricing increases or- It's price trend, obviously. It's labor pricing, it's collective labor agreements. It's a variety of elements. Okay, great. Then, a question on prepayments and stocking. In last quarter, you said that you made prepayments of, I think, off the top of my head, EUR 5.5 million among other batteries. Did you do the same this quarter? And could you secure some of the electrical components already? Yeah. We continue that path. It's one of the actions that we take to safeguard the supply chain. We continue doing that. If you look at the electrical components, we are not planning just for two weeks or four weeks ahead in time. We are already planning way into 2022. Okay, great. Another one on lead times. I know that the lead times normally in EV charging is about one to two weeks. Did you see any differences due to supply chain issues, or could you just manage to keep up with the lead times? Yeah. What we're really trying to focus on is continuing to deliver for our customers. The lead times have extended, but we're still in a very competitive position relative to the market. What we've done is modify our strategy to make sure that we're partnering with our customers to continue to deliver and ensure that we can support their business throughout Q4 and into next year. Yeah. As you know, we're never supplying directly to customers. We have a business-to-business approach. We have taken the opportunity to strengthen our relationship with our business partner in this segment, and in that way also try to maintain the good delivery performance we have always had in the past and keep doing that in this time frame. Do you know if your lead times are significantly better than your competitors or roughly similar? We're able to deliver for our customers, and we've gotten positive feedback that they're able to keep their businesses running, just like we are. Okay, great. Thanks. We have one question left on the line. If you would like to ask a question, please press star one. The next question comes from the line of Jan Richard from Berenberg. Please go ahead. Yes. Good morning, everyone. Thanks for taking my questions. I have a few of them. The first one on smart grids, where we're seeing, you know, long-term trends putting pressure, short-term on the level of activity, and we've seen these bottlenecks for some quarters now. My question is assuming that, you know, these bottlenecks on the grid are here to stay because we don't really see these easing. You know, could it put your revenue guidance at risk? Meaning that instead of having low teens annual organic expansion in smart grids, we could have, you know, mid to high single digits for the next two years. It's a good question, but complicated to answer. On the one hand, we see not only the ambitions but also the plans of the grid operators to step up in investments into the grid. We have seen announcements from grid operators, say, from this year to next year that they must show that they want to more than double the investment into the grid in the coming ten years. We are fully confident that the grid investments and therefore for us the business opportunities there are quite positive. On the other hand, we see constraints in relationship here and there in supply chain or constraints in planning elements, and it's very hard for us to predict at what moment, say, the needed extra investments can be translated to more revenue. Or that there will be, say, limitations, whether it is this quarter or next year, when those balances will be more in favor of letting our business grow. That's quite complicated model for us to judge where or when those extra investments can be translated to real business. On the other hand, say, on the short term there might be some impact, but in the long term, we are fully convinced that the investments in the grid can be or will be translated to business opportunities for Alfen. Okay. Do you believe it is a realistic scenario to assume that these bottlenecks and challenges will remain, you know, for the next two, three years? Or do you think you see a path for these to ease as the industry just copes with a significantly higher level of activity going forward? We are convinced that all partners which are busy in this segment have the ambition to make the realization, and the step up in the energy transition. You have seen, say, from 2018 onwards, that everybody is more than stepping up. At some time there will always be limitations, like this moment also, say, the economic aspects of growth in combinations with, say, the supply chain problems also hamper, all elements also in this sector. The growth will be there. It's only hard to predict when the actual growth can be shown in revenue. Okay. That's very clear. The second and final one is on energy storage. We've heard some listed U.S. storage companies talking about their supply chain, especially until when, you know, they have secured their own supply chain. Could you tell us until when on your side have you secured your supply of lithium-ion batteries? Is it Q3 next year? Is it Q4 next year? Is it Q1 2023? Any color on this would be very helpful. Yeah, I understand that, Jan. I think we will not give the exact timeframe because that's very sensitive and competitive information. You can be assured that we stay on top of the supply chain. As I said before, it's not only on the electrical components, but it's on the whole supply chain for every business unit. Also, for this unit, we are planning already way into 2022. Okay, thank you. The next question comes from the line of Emmanuel Carlier of Kempen. Please go ahead. Yes. Hi. A few questions left from me. First of all, on EV charging. The focus today is on AC. I was just wondering if you consider to expand into DC and maybe also if you believe it makes sense to add more services and move into software like some of your peers have done. If not, why don't you do that? Do you believe it does not make sense to offer, to have a broader proposition? That's the first question. I will start with answering the latest part of your question, is that in relationship to how do we enter to the market, with which type of products and services. As often we have taken a strategy that we are not in the business to consumer business on one hand. The second element is that we try to be a supply partner for a broad market segment, and also that we've taken a decision not to compete within our own customer group. If you refer to the especially, say, the services in relation to consumers, we know there are some players in the market who both supply more or less projects in general and also do services. We've taken the approach into the market not to compete with our customer base, and therefore we see also that we can have a very straightforward business relation with our customers. We can be transparent in our ambitions, and also they can be transparent in their ambitions, and we can work together to optimize the whole value chain. We see that we don't anticipate to make changes in that approach. If you see that the overall market segment, we have always said that we see the main market to be focused on AC charging at offices, at home, in public environment, and what we call then more, say, also convenient charging. When you drive an electric car, you want to charge when you're not driving your car. It can be in the office, it can be at home, it can be at a leisure center. The most convenient way to do so is that with AC charging. That doesn't say that DC charging, is of course, part of the overall ecosystem. Without DC charging, that will be on high locations, if you have a long travel that is a very convenient way to fill up your car to have a further driving step, but we are also of the opinion that the opportunities for us as a company, they are at this moment more fit with the AC charging equipment. Of course, we will continuously are more or less monitoring the market approach, and we also then will consider to include or not include as a decision to add further projects in our product portfolio, but we will do so when we think that the market is more or less fit for an approach for a company like Alfen. Okay. Thank you. How do you look at expanding into more type of recurring revenues, like software revenues? Is that something that you could consider? I know that you do that already for some parts, but it's more integrated within the current products that you have. Our approach is that we, together with our customers, we have more or less a decision on what should be included in our hardware and software portfolio. What we see is that we have more or less set of a scheme where, say, relevant software features can be added, if necessary, to our product. It's more or less for our customers that they can decide whether they want to upgrade the features or not. We see that as part of our overall business proposal, which sometimes customers at the moment of buying the charging stations are not fully aware of all the options or even the requirements of local grid operators would be load balancing activities viable in our product or not. Those can be added later on. This is, at this moment, a limited part of our business, but we make our product more or less viable to enter in those market elements in the future. Okay. The final question from me is on the EVBox. It looks like they have quite some issues. I was just wondering if this year you are maybe in one way or the other benefiting from that. What we can refer to as Alfen is that we can be clear on our strategy and our approach into the market. There are of course several marketplaces with all kinds of elements where they have more or less success into the market. For us, it is not possible to have any relationship to, say, what happens with some players into the market. We tend to never comment on our competitors and only look at ourselves, executing our profitable growth strategy. Especially within the EV charging segment, internationalization is very important and we continue on that path, and we see that we can deliver on that. That's what we are aiming for. Okay. Thank you. We have one question left on the line. If you would like to ask a question, please press start one. The next question comes from the line of Maarten Verbeek from the IDEA!. Please go ahead. Good morning. It's Maarten Verbeek of the IDEA!. Alfen signed a lease contract for a new production and location office building recently. Could you inform us about the status? Is it already operational? Did it also have an impact on your cost structure? Maybe again, because it's underutilization. Could you also inform us about the total right of use assets and also the impact on your depreciation level? Yeah. Well, hopefully you appreciate this is a trading update and not a full financial. Coming back to the first question on the lease contract, we signed that lease contract and we are currently in the discussion with the landlord on, and the architect on how the design should look like, et cetera. We expect that we will start the building of that office next year. Probably it will be finalized, let's say a year later, probably in the beginning of 2023, we will then have it operational. That's what we are looking at. Of course, with the IFRS legislation in place, it will give rise to an ROU as well as a lease commitment and liability. That's definitely there. We will have some lease payments there, but it's not there in the numbers yet. Okay. Thank you very much. We currently have no more questions on the line. If you would like to ask a question, press star one. There are no more questions on the line. I'll now hand over to your host. Okay. Thank you for all the questions. We as Management Board have been happy to answer all the questions that have come forward and appreciate the attention for our quarter results, and would like to thank everybody again and speak to you next time, next quarter for the yearly results 2021 in February. Thank you. Thank you for joining today's call. You may now disconnect.