Hello, and welcome to the NX Filtration FY 2023 Results webcast. My name is Caroline, and I'll be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen-only mode. However, you'll have an opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now hand over the call to your host, Jeroen Pynenburg, CEO of NX Filtration, to begin today's conference. Thank you.
Thank you very much for the introduction this morning, Caroline. Welcome to our full year 2023 results webcast. In the call, we also have present our founder and CTO, Erik Roesink, CFO, Marc Luttikhuis, and COO, Michiel Staatsen. We'll present today our key highlights, our strategic progress, and the full year 2023 financials and outlook. Before we move to the details of today, allow me to point your attention to the picture next to the agenda. In this picture, you see what the business of NX Filtration is really all about. This is the third water treatment plant installed in Indonesia with our technology inside. It is in the city of Bengkalis and produces fresh, potable water from a polluted river nearby. It does that in a single step with low energy consumption and no chemical dosing.
This project was a repeat order, engineered and built by our local partner, and originated from a pilot that started in 2019. Our revenues for 2023 came in at EUR 1.8 million. This is a disappointing result for our team. We experienced momentarily, together with our partners, that longer piloting time is needed to test and configure a full large-scale application. Also, lead times after the pilot phase take longer because more time is needed for final decision-making, engineering, permitting, and building. This delay was already anticipated over summer, although not to the extent we experienced that in the second part of the year, and it was further impacted by the current financing environment, and accumulating to an estimated 1.5-year delay on the execution of our business plan.
It became reality in December that several anticipated larger size orders to be received and delivered in 2023 were delayed by respective customers. It gives us confidence that these orders are still part of our pipeline for delivery in 2024, and that our pipeline is getting bigger and stronger. We see great continued trust by our customers who experience the value of our technology, and this is supported by the sustained strong gross margin of 59.6%. Underlying business drivers continue to develop in a very favorable direction. We made great steps forward with key partners and OEMs like Veolia, SUEZ, Nijhuis Saur, Ekopak, Envirogen, and Aqualia, who placed several new and repeat orders and also continue to embrace our technology. The global water challenges are all around us. Drought and pollutions are pushing regulations and stimulate investment schemes.
Companies and municipalities face the imminent risk of water shortage for processed water and drinking water for their residents. This, because water companies all over the world restrict usages from the net and increasingly refuse new connections. Water is hot, and our innovation solution can help us mitigate the risk of shortages. We are confident this will drive the volume of our membrane modules with breakthrough hollow fiber nanofiltration technology inside. A volume for which we need the new factory we are currently building in Hengelo, the progress of which is fully on track. As you know, we operate in two main business lines, clean municipal water and sustainable industrial water. In the municipal business line, we are offering drinking water companies a green solution to remove micropollutants like PFAS and a wide, wide variety of organic molecules of small size, while keeping minerals and creating a healthy, drinkable water.
The need to remove these substances is increasing all over the world, driven by regulation and increased consciousness on the effects it does to our health. In Asia, we are already implementing various municipal projects with clear appetite for solutions to their imminent water challenges. In Europe, we made big steps with larger OEMs and water companies such as Veolia and Saur, who have tested our technology extensively and are now moving into the next phase of using our technology in large projects. In industrial, we provide companies and industry with technology to secure operations by enabling water reuse for processes. This reduces their water footprint or even secure continued operation during periods of drought. We see a strong revenue coming from Europe, and we are business developing heavily in other places. From here, I will hand it over to Erik, who will further elaborate.
Thank you, Jeroen. As you can see on this slide, we meanwhile have our own sales offices in the U.S., China, and India. While we are represented also in the Southeast Asia, the Middle East, Belgium, France, Spain, South Africa, Turkey. With this strong global, local presence, we can effectively support our customers and their pilot programs. Yes, we see strong interest in all these countries for our nanofiltration technology. I'm more than happy to highlight that 18 full-scale projects have started in 2023, of which 11 come from customers who have been working with us before, such as PepsiCo, with whom we have realized projects in three continents now already. We see this as a great testimony for the success of our technology, and Michiel will later elaborate more on successful pilot program in this presentation.
ESG is strongly embedded in our entire organization. In fact, ESG was driving the foundation of NX Filtration in 2016, with the aim to develop a sustainable solution for the production of safe drinking water all over the world. It is important to add that we can substantiate these burning ambitions. Our IPO in 2021 was the first dark green IPO worldwide. 95% of our business was labeled dark green, based on our innovative, sustainable, hollow fiber nanofiltration membrane technology, and we continue to further professionalize our ESG profile. This slide is about ESG and, above all, about making impact, and I'm very proud of the achievement of our team in 2023. This is exactly why I founded NX Filtration, and this was only eight years ago.
Now, already, with this very positive global impact and contributing so strongly to the global water transition. Already now, in more than 13 countries, we are producing high-quality water from river water or from industrial or municipal wastewater. We all see still continuously the dramatic effects of the global water crisis caused by climate change. The rivers are drying up, groundwater levels are lower as never before, and that means that we need to hurry up with the water transition. Water transition is dealing with water scarcity and water pollution, and it forces us to fully focus on water reuse and the use of other water sources than groundwater, like wastewater and, if available, surface water.
But next to a water crisis, we do have an energy crisis, so that to minimize the CO2 footprint, we do need green, energy-friendly technology, and that is exactly what NX Filtration offers its customers. With the membrane module sales in 2023, we enabled our customers to produce 215 billion liters of water, saving almost 100 GWh on energy and more than 4,000 tons of CO2 compared to existing, more traditional membrane technology. Together with OEM partners, we realized the enormous impact, as discussed on the former slide. And this slide proves that our technology now is also strongly recognized by leading industry expert organization, and this makes me very proud as the CTO of NX Filtration.
In May last year, we received, via Global Water Intelligence, distinction awards for Water Technology Company of the Year and for the Water Project of the Year, where our technology is applied in a large-scale drinking water plant in Dumai, Indonesia.
Thank you, Erik. The next slide will show that the drivers to implement real solutions are getting stronger across the world, that we are experiencing delays in our commercialization process, but that we're successful in demonstrating the power of our technology through our commercial rollout model across markets and geographies. This picture on the slide is a great representation for this. This is our Mexpert XL pilot unit, which has just concluded a successful six-month demonstration for a wastewater reuse project in the Netherlands. This opportunity started with a pilot in 2021, followed by this demo project, and now is entering the final phase of engineering and tendering for the full-scale solution.
Here we see an array of concrete examples of measures being taken by policymakers around the globe to address water-related challenges, either related to limit values for PFAS in drinking water in Germany and the U.S., or about rapidly approaching deadlines for the European Water Directive. In France, President Macron himself is driving the water transition with concrete targets and funding for wastewater reuse to fight water shortage in the dry season. But the strongest driver remains the increasing need for clean and affordable water, water as a license to operate. Altogether, these measures and trends will drive the water transition and the need for real solutions, for which we offer the superior energy and chemical low membrane technology. And as you know, we take our customers through the technology adoption phase by demonstrating the technology through pilot projects.
On the left, we see the number of pilot projects initiated over the years. We started 209 new pilot trajectories last year, a 25.5% step-up compared to 2022, and therewith planting the seeds for future growth, both in the industrial and municipal markets. To support the traction with our pilot program, we've invested in further building out our fleet towards 119 systems today. On the chart on the right, we see the numbers of these pilot systems, and we have a pilot fleet varying from small lab-scale Mexplorer pilot units for proof of concept, up to fully automated, containerized, full-scale pilots to generate detailed and representative performance data, not only on water quality, but also on energy use and chemical consumption in practice. Data required for the next phase, engineering and design of the full-scale system.
These pilots are being deployed all over the world. We will remain focused on effective deployment of this pilot fleet, together with our customers and partners, with even greater emphasis on larger Mexpert pilots and improved upfront qualification process. We believe we are well-equipped with this pilot fleet to address our pilot needs going forward, especially because our repeat customers are step-by-step taking over piloting from us with their own pilots. And because we expect to benefit more and more from learning from the past, from conducted pilots and running full-scale projects, from our advanced online projection tool, which will result in shorter or even no piloting in sweet spot applications. Here we provide more insight, insight in traction and progress of the pilot program, driving for conversion to full-scale projects. Let me take you through the graph.
Since 2020, we have initiated 490 pilots, both large and small. 60% of those have already successfully led to full-scale or demo projects, and these are the stepping stones towards repeat and larger projects with our customers. The majority, 59% of those pilots projects, are still ongoing. Either the pilot is still running or has been extended into a more extensive, larger pilot project, or has been completed successfully and is still in the follow-up conversion process, in the process of decision-making, financing, permitting, and engineering. Let me give an example to illustrate this. Last year, we concluded a successful multi-year pilot with Aqualia on Tenerife, for a full-scale solution that is now in the engineering phase for realization in the coming years.
S imultaneously, we are together with Aqualia, investigating other opportunities based on these pilot results. And we have taken major steps towards with our pilot programs, with our key OEMs, such as Veolia and Saur. And less than 25% of the initiated pilot projects is no longer associated with a potential future project. And this relates mostly for smaller Mexplorer-based pilots, and is mostly caused because the project is either no longer pursued by the customer, and in a limited number of cases, our technology was not selected as the preferred option. And here we see pictures of our new factory in Hengelo, where we are adding an initial 50,000 module capacity in 2024, and created the space and infrastructure to expand to more than 120,000 modules per year in the future.
We are fully on track with the construction and reconfirm that we expect to complete construction in Q1 2024, and start up the factory in H1 2024, within the anticipated CapEx budget. And also here, practice what you preach. ESG is on the top of our minds with our factory. With production and reuse of process water with our own in-house water treatment system, extensive reuse of energy with heat recovery systems, solar panels on the roof, and a novel heat exchange with a neighboring data center, leading to significantly improved energy footprint for both parties involved. In the second half of 2024, we plan to move our entire operations and teams in the Netherlands into these new facilities, enabling further efficiencies and optimizations. And now I would like to hand over to Marc.
Thank you, Michiel. In the next two slides, I will take you through the financials of 2023. I will start the financials with the profit and loss. The full year revenue of 2023 is EUR 8.1 million, a 4% decline compared to the EUR 8.4 million revenue in 2022. The delay in revenue growth is caused by longer lead times to convert pilot projects into full-scale projects, and the current financing environment that negatively impacts end customers' CapEx plans, and the willingness of OEMs to build up or maintain stock levels in anticipating of upcoming projects. We are pleased to see that our gross margin increased from 57.2% in 2022 to 59.6% in 2023, underpinning the strong technology position of our DNF products in the market.
Our growth margin was positively impacted by continuous focusing, focus to improve our productivity and our successful multiple sourcing strategy with suppliers. The EBITDA loss was EUR 11.9 million in 2023, compared to EUR 8.5 million last year. The loss is mainly driven by ahead-of-the-curve investments in our organization to facilitate future growth of our business. We've attracted 31 FTE in the last 12 months. Key additions were mainly made in our application team and production department. In the context of mentioned delays, we have taken cost control measures without impacting our medium and long-term growth ambitions. We are focused on making our ahead-of-the-curve investments more effective. The capital expenditure in 2023 amounted to EUR 43.9 million, compared to EUR 12.7 million in 2022.
The CapEx mostly relates to the ongoing construction of our new factory in Hengelo, and further additions to our pilots fleet with a total of 190 pilot systems, adding 28 systems in 2023. The net cash position at 2023 amount to EUR 49.9 million. We expect our current cash position to be sufficient to fully finance the construction of our new factory and our operations in 2024.... To implement our growth strategy for the longer term, we are exploring a range of possibilities to increase our financial flexibility, among others, asset-based financing on our growing asset base. I would now like to hand over to Jeroen, who will lead you through the final part of this webcast.
Thank you very much, Mark. So we hope we have been able to provide you with a picture of our developments. Water is hot, and we have strong building blocks in place to support our growth journey. Our commercial rollout strategy remains our top priority, and we are redoubling our efforts to increase the effectiveness of our global commercial team and are driving conversions of leads and pilots. Our goal will remain to develop long-lasting relationships with our partners, and we will make the entire NX Filtration team available for our customers' success. The team is working hard to demonstrate the value of our technology for the water challenges in the future. During the Capital Market Day that we will host for you, mid-2024, we will provide you with the update of our market developments and the rollout of our business plan.
Our growth will be driven by the stronger than ever, ever market trends, major steps forward with our key OEMs, and a rapidly growing pipeline of commercial opportunities. Based on all we share today, it is with confidence that we are ready for the future, and we expect to double our business in 2024 with a revenue of over EUR 60 million. We will be happy to answer your questions now. Back to you, Caroline.
Sure. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question from line, Fernand de Boer from Degroof Petercam. The line is open now. Please go ahead.
Yes, good morning. It's Fernand de Boer from Degroof Petercam. Thank you for taking my questions. I have a number of financial questions, actually, but also in the prepared remark, I think it was Mark who actually said on the customers.
That it's quite successful and that they even can sometimes take over pilots and do their own pilots. What does that mean for your business model? Because if they start to do their own pilots, how does that work? How are you going to get paid? That's my first question. I'm not sure, do you want to do them one by one, or?
Yeah, let's take them one by one, Fernand. It's Michiel. Yeah, so we see more and more customers of ours who are actually commercializing solutions with our technology in there through their own pilot. So that for ourselves, that's, as we always mentioned, we ask a rental fee for pilots, but it's not the business model as such. That's more for a commitment from our customers. So, that will not affect our business model. Our own pilots, we're still deploying over the world, and we actually see this as a very positive sign, where our customers are really committed to our technology.
Then, the second question about your remark, having sufficient resources for, let's say, budgeting 2024, so the EUR 50 million. But your remark of sufficient resources, does that include the kind of assumption that you will be refinancing part of your asset base? Or is that excluding and should refinance your asset base by sale-leaseback, give you more room to maneuver?
The latter one. So, what we said also in the press release and also confirmed in the webcast is that we have currently sufficient with the EUR 49.9 million, let's say, on the balance sheet at the start of 2024. We have sufficient funds available to, let's say, complete the factory in Hengelo and to finance the full operations of 2024.
So refinance comes on top of that? Yeah, okay. And then, you also are-- you moved into kind of more cost-conscious focus, cost-saving measures. If, if I look at that, how much would that bring in of reduce that in cost, in 2024, compared, let's say, you had operating cost of EUR 7.3 million, I think, in 2023. So how much of that, yeah, what is that going to look like in 2024?
What we see in 2024, I think it's also at. We are having, of course, a cost-focused view, but that's also what we had always. So, but what we did say during 2023 was that we would consolidate the current, let's say, logistics centers we have, the current production facilities we have in Enschede, the offices we have in Enschede, into one location in Hengelo. And as you can imagine, you will save some management attention, some indirects, but also the rent, housing expenses, all these kind of things. That's one of the steps we take in order to be cost-conscious and have a good control on the cost and OpEx.
Of course, we have the same on the investments and the capital expenditures.
Then, you mentioned this one and a half-year delay. How can we, as analyst community, be quite sure that that is indeed the case, and that's not going to be two and a half years delay? And also here, what is a little bit strange to me, if I look at your sales breakdown, I think that municipalities are actually performing relatively better than the industry, where I would say, normally speaking, industry is a faster decision maker than the municipality. So, yeah, could you elaborate on that one?
Yeah, Fernand. So you're completely right. Industry is quicker at decision-making and implementing new technologies. But compared to municipalities, projects are also smaller. So that's one part of the answer. On the delay on the one and a half year, what we see is that when we look at our pipeline and we're working with our customers, and we're entering now the phase where we're scaling up in the size of the projects, that the converting these pilot findings into a full-scale project takes longer. And in our experience, that's on roughly one and a half years. That's one part of the story.
There are also some external factors with the interest rates, et cetera, that, for instance, in the food and beverage sector, slowed down CapEx investments. So those kind of elements also have an effect on the mix between our businesses.
Okay. Yeah, for the time being, I'll leave it like here. Maybe I come back with later more questions.
Thank you. We will take the next question from line, Usama Tariq from ABN AMRO. The line is open now. Please go ahead.
Hi, good morning. Thank you for your time. I have two small questions, if I may ask. On slide number 12, you indicate that less than 25% of the commercial projects were not longer converted into full-scale projects. So if I see it as churn, could you maybe comment on how do you see it in historical perspective of one or two years? And do you see this kind of a churn continuing into future? Or am I just reading something completely off, and you think that this is a healthy level of churn with regards to pilots not converted? And my second question, if I may, would be if you could just give any indication of CapEx for the next year. Thank you.
Well, I will start with the first part of the question, then Marc will take over on the CapEx. So this chart is a representation of where we are today, and with the learnings we've had over the years, et cetera, we're trying to improve on this picture. So we're working very hard now on this group of the 59% that's still in progress, to make sure that the conversion ratios of there outperform where we are today. Partly because we have improved our upfront screening of projects together with our customers, based on the learnings we had over the years. And also partly because our customers are aware more and more of the advantages of our technologies and where to apply.
So this is the picture today, and our goals, together with the engineering and sales teams, are to improve on this.
Osama, yes, so on the CapEx, as you, the construction and the finalization of the construction in Hengelo is the main capital expenditure for 2024. As also mentioned in the webcast, we are nearing the medium-term objective of the pilot systems with 190 systems today. So we will more or less, all, most of the investments will relate to the construction. And also mentioned, we have always set a range of 60%-75%, or EUR 75 million will be the full CapEx for the construction of the factory in Hengelo.
We will be in budget, and as you can see also in our annual accounts, we spent EUR 44 million, roughly, on CapEx this year in 2023, and also there, a large part was on the construction.
Thank you. That will be from my side. Thank you.
Thank you. We will take the next question from line, Kristof Samoy from KBC Securities. The line is open now, please go ahead.
Hello. Good morning. I'm Christoph Samoy, KBC. Just a question. Can you give us some more insight into the breakdown of your sales level? Rough indication, how much of your sales are direct nanofiltration modules that you're selling and how much are OEM or the other modules, to start with? Then secondly, at the time of the IPO, you gave an indication of the total cost of ownership advantage your product has. Has that been updated? And can you share it with us? Third question, you referred to as one of the causes for the delay in the rollout of the business plan due to engineering issues. In the past, you also mentioned accreditation problems.
Can you detail a little bit more on this, especially with accreditation, in what countries are you facing a delay in the accreditation process right now? Those are my first questions. Thank you.
Those were quite a few questions, so we're gonna try to answer them. If we forget one, please remind us, Christoph. Thank you for your question. Good morning to you as well. Yeah, on the first question on the how much of our module sales were related to the direct nanofiltration product, that's over half. That's roughly 54% of total module. And-
Okay.
Yeah. The second question was on the TCO update, Michiel, there.
Yeah.
Of course, the benefits of our product is still completely the same, and we are implementing the systems into pilots and into demos and full scales with our customers, and we are experiencing the TCO levels as we have seen them before and as we have introduced them before, really coming, coming to work. Especially now that we are doing some more greater projects, or larger projects, I need to say, you'll see that these benefits are very diverse on the application, and we are investigating that in more detail in order to to get our sweet spot applications, of course, sold to the market, and they absolutely show those same TCO levels.
Can you quantify that TCO advantage in terms of percentages?
Yes. Not in a general number, because it's very much differs over applications over where you are in the world. So in the picture in the beginning of the presentation that Jeroen showed on this drinking water plant in Indonesia, you're talking about $0.20 per cubic meter of water produced TCO, which is extremely low compared to more traditional technologies. That's including CapEx, depreciation, OpEx, the whole story. For other applications-
Sorry, Michiel, EUR 0.20 per cubic meter?
Yes.
That's the advantage.
No, that's the total cost of ownership of our technology-
Okay.
In that application, in that part of the world, where more traditional technologies would be much higher, varying from EUR 0.25-EUR 0.50 per cubic meter. So there's a big advantage in the cost sweet spot application where we are. In other parts of the world, the cost structure might look a bit different. So in Europe, for instance, you would get closer maybe to EUR 0.30 or EUR 0.40 per cubic meter. So it's very difficult to give a general number on that, but the sweet spot applications where we're aiming for today, I would say anywhere between 10%-50% lower TCO.
Okay.
In answer to your-
So, you said, s orry, sorry, sorry, Michiel, you said, was it 15 or 50? Between 10-15?
I would say between 10 and 50, 50. 10% and 50%.
Okay. Thank you.
Then we can move to your third question, I guess, or there was a third question on accreditation, I believe.
Yeah, accreditation and, and engineering issues. Yeah.
Yeah, on the accreditation side, we have the—especially on the drinking water side, it is all about the different accreditations like NSF in the U.S. and KIWA here in Europe. We are completely accredited for the bigger standards. We have some ongoing projects for accreditation in Germany, and that is mainly driven by the fact that the drinking water accreditation in Germany is at the moment uncertain, and we are working on the same thing for the accreditation in the U.K. at the DWI. And that is the two accreditations where we're still working on. For the rest, we can cover our world.
Sorry, if I may step in. These accreditations in Europe, I mean, there's no such thing as if you have an accreditation in one, for instance, one EU member state, that, I mean, you are accredited throughout the entire European Union. It does not work like this?
In Europe, it's largely that scale, but there is specific local adaptations to the regulation.
It's a dream for us to have that regulation, but let's stick to that.
Okay. So but then the U.S. is okay. I mean, in Europe, you mentioned that you're working on the German and the U.K. accreditation. Do you have a timeline when this will be all said and done?
As soon as we have it, we can communicate that.
Mm-hmm. Okay. Thank you.
Thank you. We will take the next question from line, Christoph Greulich from Berenberg. The line is open now, please go ahead.
Good morning, everyone. Yeah, thank you for taking my questions. It's three for my side, please. First one would be yeah, a follow-up on the financing point. So you flagged in the press release in January, and then today again, that you're exploring possibilities to yeah, increase the financial flexibility. So just wondering, how close are you to making a final decision there? So when can we expect some more news flow on this? And then also, what are the main criteria which you are taking into account yeah, in order to make that decision, which type of financing you will choose?
Yeah, Christoph, as mentioned also in the press release. We still have sufficient cash to finalize the construction of our factory and to fully finance the operations of 2024. So we are now exploring the opportunities. We have set our mind, but we're not there in a hurry. Of course, we see that we require for the medium term additional funding, but we are exploring the possibilities, and one of them is asset-based financing. Because we are still a debt-free company, and we have invested a large part of our IPO proceeds into assets. So it's not like we are financing only losses. We have created assets, and that's for us, of course, the obvious one to start with.
Okay, now that's very clear. The second question would be regarding the guidance that you have provided for this year. Just in the context of yeah, the evolution in 2023, that you had to adjust your guidance two times. Like, what would you say gives you confidence that this will not be the case again this year? Are there any points that you can flag?
Yeah, I think, I think that confidence is, is mainly given by the, the enormous amount of attention that the water industry and the dynamics currently you see everywhere. We see, for companies, we see, water connections to be, being refused all over the world. We see shortages, we see drought periods, and it is, it is exactly there where the technology is being recognized. And it's also exactly there where our OEMs see that they have businesses to, to gain together with us. And, and I think, you know, the intensity of the relationship, the intensity of the discussions with end customers, that is exactly giving us that confidence. And so we, we, we double our business compared to last year, based on, on, on these, you know, real positive developments all, all over the world.
Third, the second repeat order in Indonesia, working with PepsiCo on three continents, having very solid discussions with our customer base. Being present with our sales and commercial and application team, actually covering that world and, and gaining a lot of effectiveness there, because we know where our sweet spots are at the moment, and we're going to harvest them.
Last question from my side would be a quick follow-up on the CapEx question. I think that that was raised already. If you could just remind me of the amount of recurring maintenance CapEx once the new factory is fully up and running. I don't know if it makes more sense in euro or as a percentage of sale.
Well, I think if you look at, let's say, the CapEx related to maintenance or to expand, we have completed the full factory to the full extent. So we built the factory to the maximum capacity of 120,000 modules. We are putting in place four lines already with an initial capacity of 50,000. Those are brand-new machines. Of course, a small part of that will be, let's say, maintenance CapEx, spare parts. But again, we've also learned from the first spinning line that was put into place here as a blueprint for new spinning lines in the new factory, and we see that it's a fairly limited amount.
Okay. Yeah. Thank you very much.
Thank you. We will take the next question from line, Chase Koslin from Vintella. The line is open now, please go ahead.
Hi, good morning, all. Thank you for taking my question. Just one quick one from me this morning. So as you just mentioned now, the initial machine capacity will be around 50,000 membranes per year from the new four spinning lines. And I know you plan to build up to 120,000 or upwards of 120,000. But could you give a little bit more of a breakdown as to, yeah, what speed you expect to build that up by? And then potentially any sort of, yeah, potential utilization rates, even on the current 50,000 that you expect in this year or the next? Just a bit more color there, please.
The initial capacity, let's say, was put there to be flexible, and to be flexible and ready and prepare ourselves for the growth ahead of us. I think scalability and really having building blocks available is part of our strategy as well. So we are able to really not only ramp up the machines we have, so we start with four and can easily ramp up to, let's say, the 10 lines or even more, because the whole infrastructure is there. But it's also possible that we can speed up, let's say, slow down or speed up the machines when required. And so that's the reason why we're quite flexible on, let's say, scaling up, and also to optimize the occupation rate when required. So we will...
I say, that's more or less what I can give you as a guidance on that one.
Okay. Yeah. Thank you.
Thank you. We will take the next question from line, Fernand de Boer from Degroof Petercam. The line is open now, please go ahead.
Yes, and thank you. Coming back on the CapEx, if you take this EUR 60 million- EUR 75 million and see what has been spent, then I think, okay, in 2024 it is another EUR 10-30 million. But then if I look at your working capital, I think in the trade payables, I think also more than EUR 10 million is, is- stand for this plan, so you have to pay that back probably in 2024. So could you elaborate a little bit on that one? And what I don't really understand is you have lease liabilities of EUR 1.5 million, but in your finance expense, the lease liabilities does cost you EUR 1.9 million. Looks to me an excessive amount.
Let me just first answer, let's say, the question. Let's say you're right with the trade payables. A large part of the trade payables, they do relate, let's say, to the investments we made with the factory.
Oh, if you still have to spend EUR 30 million of CapEx on top of that, there will be the cash outflow for the working capital.
I think, if you look at the 60-75 range, we're well in that range. So, from that perspective, we see and still conclude that the current cash available is sufficient to finalize the construction of the factory and to fully finance the operations of 2024.
Okay, thank you.
And the last question, I think I will come back to you on that one, Fernand, in a later stage.
Okay.
See if we can. Yeah.
Very good. Thank you very much.
Thank you. We will take the next follow-up question from Kristof Samoy from KBC Securities. The line is open now, please go ahead.
Okay. Thank you for taking my follow-up questions. Just regarding the financial flexibility, you're looking among others at asset-backed financing solutions, but I presume if you say among others, it could also be some kind of refinancing in a hybrid form, combination of an equity raise with that financing? First question. Then secondly, last week I went through the transcripts of the AGM, and I read there that back then early 2023 you stated that the new plant would be fully dedicated to nanofiltration.
But based on the answer to my question earlier in this call that yeah, over 40% of your sales is not linked to direct nanofiltration, I presume you will still produce other modules in the new plant. And then secondly, the sales team you have, you are at 42 full-time equivalents. Can you just give us a little bit an indication how it's organized geographically in terms of business segments? And when you're stating that the commercial rollout of the strategy is priority, does that also mean that we will see extra hirings in the commercial capacity of your employees? Thank you.
Let me answer, let's say, looking for financial flexibility. As mentioned, let's say, we have still sufficient cash for 2024. So, and we are invested in assets, and the assets is the first logical route to see where finance flexibility can be found. But there are also other instruments available if required. If you go ahead to, let's say, the question on the FTEs.
So the growth in the commercial organization?
Yeah.
Yeah, so we expect that we have the organization, the number of people in place that we need to roll out our business further. Of course, when we see an excellent opportunity to get a talent on board, we'll seriously look at it, but we don't expect that we need to grow that organization really. And there was also your question on the other membrane types.
You already mentioned.
What we meant with moving all the facilities and locations we have in the area quicker and, by the end of this year, to one location, that indeed implicates that's also the production capacity for the ultrafiltration and microfiltration membranes.
Okay, thank you. But regarding the organization of the sales team, can you elaborate a little bit how it's structured? Is it structured regionally, then divided per business segment? Yeah, how is it organized?
Yeah. Now we are growing our coverage, of course, from the headquarters, where all the specialists are on the application team and also sales support. But we have regional teams in Asia, dedicated in China, dedicated in India, in America, USA and Canada, mainly located, but also covering from Spain, we are covering South America. That's how we are currently doing that. In the regions, there is no differentiation so much between the business segments, municipal and industrial, because it's really a business development stage we're in. We're building up relationship with local OEMs, which we are doing quite heavily now in Vietnam, in China. We do that very closely in Indonesia.
So we have really local people developing those relationships and bringing the technology and the value it brings to end customers to the local teams. So we have pure salespeople there in those regions who are being doubled or twinned with application team people who are bringing that or carrying that technology from headquarters to the local regions. And that's the constitution of the total 42 people that you have been reading. I think it is a little bit over half outside the Netherlands that we have in all these regions present and running around selling the technology.
Hmm. Okay.
Thank you. It appears no further question at this time. I'll hand it back over to your host.
Thank you very much, Caroline. Many thanks for all of you for your presence and attention. We look forward to brief you again on our progress and results, and especially we hope to see you on our Capital Markets Day this year. Have a fantastic day for the rest of the day.
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