Hello and welcome to the NX Filtration 2024 full year results. My name is Laura, and I will 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 will have the 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 question. If you require assistance at any point, please press star zero, and you will be connected to an operator. I will now hand you over to your host, Floris Jan Cuypers, the CEO of NX Filtration, to begin today's conference. Thank you.
Thank you very much for your introduction, and welcome to our full year 2024 results webcast. In the call, we also have present my colleagues, CFO Jan Feie Zwiers and COO Michiel Staatsen. I will go to slide two. We will present our key highlights, our strategic progress, and the full year 2024 financials and outlook. Before that, I would like to mention that after having joined NX Filtration a little over four months ago, I am very impressed about NX Filtration's products, people, and the partnerships that we are building with OEMs to successfully deploy our membrane modules across the world to clean water. The business of NX Filtration is to enable delivery of clean water at a lower energy footprint and with little to no chemicals.
I have seen personally our hollow fiber nanofiltration, ultrafiltration, and microfiltration deployed in full-scale projects and sizable pilots when I traveled to Indonesia, Spain, Belgium, and the Netherlands the last few months. Also, personally meeting with our OEM partners across the world to solidify and deepen these OEM partnerships enabled me to help further sharpen our commercial execution cadence. We are strengthening our sales teams globally, including replacements with good people, with veterans from the industry, an excellent focus and spirit, with more fundamentals in place for success, particularly clarity and performance focus. I go now to the next slide, over to the highlights of full year 2024. Our revenues came in at EUR 11.1 million. This is up 38% compared to 2023. This was driven by repeat projects with existing clients and also successful onboarding of various new OEMs.
We see that the value of our technology is reflected in a continued strong gross margin of 61.0%, all in all resulting in a strong ESG impact by enabling clean water while avoiding 4,300 tons of CO2 emissions. In 2024, we also put in place further building blocks, setting us up for the growth journey ahead of us. To mention, we secured new funding in March 2024. Second, we have further built out and strengthened our leadership team on the commercial side and across the company. Last but not least, we reached the important milestone of successfully starting up our new large-scale factory in the Netherlands, and we're already benefiting from that, for instance, in delivering at scale our ultrafiltration 55 square meter with a reputable global OEM in India.
This enables our teams for 2025 this year to fully focus on further developing our OEM partnerships and converting project opportunities into orders. We expect revenue growth for full year 2025 to be in the range of 50%-70%, and we keep working on enhancing the pipeline of OEMs. I go to the next slide. We grew both our business lines, clean municipal water and sustainable industrial water. To start with the municipal business line, we are offering water companies a sustainable solution to remove micropollutants such as PFAS, chemicals, and medicine residues from polluted water sources. Not only did we realize a 43% year-on-year growth, but also we showed continued strong progress with global blue chip OEMs such as Veolia, Aqualia, Nijhuis Saur, and others, working with these OEMs on multiple pilot projects and full-scale projects, which gives us confidence about the traction.
We are particularly proud of the water reuse project in Sapal, Mexico. Not only will this be the largest hollow fiber nanofiltration system in the world, the application is water reuse for drinking water in a region that suffers from severe droughts during the summer, a very important application in the water transition. In the industrial business line, we enabled sustainable water treatment for water reuse and processed water and showed 38% year-on-year growth. To note, with our OEM partner HydroFlux in Australia, we secured a large-scale order for hollow fiber nanofiltration wastewater treatment in the building materials industry. In food and beverage, we continued our work with PepsiCo, to whom we have now supplied nanofiltration membranes in three continents. I hand over to my colleague Michiel.
Thank you, Floris Jan. Now to a true global footprint. As you can see on the world map, we're now represented in Southeast Asia, the Middle East, Belgium, Germany, France, Spain, and we have our own sales offices in the U.S., China, and India. With this strong global local presence, we can effectively support our customers in their search for sustainable water treatment solutions. In the graph, you can see that we generate revenues in all these major water technology markets. Furthermore, we started another 207 pilots in 2024, sold modules for 14 full-scale projects, larger in size again, including seven repeat orders, and also received six replacement orders related to projects we supplied in the past years. This is an essential part of our rollout and growth strategy.
We see this as a great testimony for the success of our technology and confirmation that the drivers to implement real solutions are getting stronger across the world, that we are successful in demonstrating the power of our technology through our commercial rollout model across markets and geographies. Let me here start by reminding you that NX Filtration has a clear mission, and that is to enable the production of clean and affordable water to a global market. With our innovative membrane technology, we help our customers to treat water from alternative sources such as surface water or even wastewater without the use of chemicals and with minimal energy consumption, and thus a lower CO2 footprint. As you know, we have committed to the Science Based Targets Initiative, and we've been rated by Sustainalytics.
In 2024, we became the first listed company in Amsterdam that was B Corp certified, further underlining our very strong overall ESG profile. On the next slide, you see that we are translating these ambitions into making real impact. In this light, I'm very proud of the achievements of our team in 2024. Let me give you some numbers. Our membranes enable efficient production of high-quality water from alternative sources from polluted rivers, industrial municipal wastewater across already 38 different countries. With the membrane modules we sold in 2024 alone, you can produce 475 billion liters of water while saving 98 gigawatts on energy and 8 million kilograms of chemicals with a CO2 equivalent of 4,300 tons compared to existing traditional technologies. Now to strategic progress.
In this picture, you see the HFNF modules, our hollow fiber nanofiltration modules at work in Medang Kampai, our largest running drinking water plant in Indonesia to date. As you know, the water transition is about water scarcity and water pollution, and those are the key drivers in the water markets. This is meanwhile on almost all political agendas and is focusing on protecting water bodies for further pollution, or as, for example, very strict regulations for PFAS discharge, but also stimulating and enabling the reuse from, for example, biologically treated municipal or industrial wastewater. This is, in our opinion, a very important trend and an important instrument to tackle water scarcity. It is an important new source for high-quality water for industrial or agricultural or even drinking water applications.
As you know, we are taking our customers through the technology selection phase by demonstrating the power of our technology through pilots and demonstration projects. On the left side of the slide, we see the numbers of pilot projects initiated over the years. We started over 200 new pilot trajectories in 2024, planting the seeds for further growth, both in the industrial and municipal markets. We believe that the level of 200 pilots per year that we set out as an objective during the IPO formed a basis to add new OEMs and system integrators to our customer base, a basis that we continue to broaden and deepen and build on by converting those pilots into first orders for small and medium full-sized projects, and then keep working with these customers on new and larger repeat projects.
On the chart on the right, we see the development of our fleet of pilot systems in time. As you know, we have different types of pilot systems varying from small lab-scale MeXplore pilots for technology acceptance up to containerized, fully automated Mexper pilots for proof of concept. These do not only provide water quality parameters, but also provide valuable insights on energy use and chemical consumption, which are important differentiators for our technology, and as such, valuable inputs for the next phase, engineering and design of a full-scale system. These pilots are being deployed all over the world, and we will remain focused on effective deployment of our pilot fleet together with our customers.
As such, we believe we're well equipped with this pilot fleet to address our pilot needs going forward, especially because our repeat customers are slowly taking over piloting from us with their own pilots, and because we expect to benefit more and more from learnings from the past, from conducted pilots, and from running full-scales. Last but not least, we'll also benefit more and more from our advanced online projection tool, which will ultimately result in shorter or even no piloting in sweet spot applications. Switching to slide 11. We're very proud about successfully starting up a new factory in 2024, where we have added an initial 50,000 module production capacity and created the space and infrastructure to expand to more than 120,000 modules per year in the future. We have finalized the construction in time and within the CapEx budget.
We have successfully started that membrane spinning module production and our own in-house water treatment based on polluted surface water. With extensive reuse of energy, with heat recovery systems, with solar panels on the roof, a novel heat exchange with a neighboring data center, our advanced setup will lead to significantly improved energy footprint. We have moved our entire module production operations to Hengelo last year as well. In the coming months, we plan to install and start up our former membrane production lines from the previous location in Enschede. These original lines will be dedicated to the production of ultrafiltration and microfiltration membranes. Now I hand over to Jan Feie.
Thank you, Michiel. In the next two slides, I will take you through the financials of 2024. I will start with the summary of the profit and loss. Total revenues grew by 38% from EUR 8.1 million in 2023 to EUR 11.1 million in 2024. This was driven by successful conversion of pilots into large full-scale projects, repri projects with existing clients, and successful onboarding of various new OEMs across all regions. Gross margin remained strong with 61% in 2024 compared to 59.6% in 2023, reflecting our strong technology position. EBITDA loss was EUR 15.7 million in 2024 compared to a loss of EUR 11.9 million. The increase in EBITDA loss is mainly driven by additional investments in the organization ahead of the curve to facilitate future business, as well as specific costs related to the startup of the new factory and the transfer from our previous facilities to the new factory.
Total FTE slightly increased from 166 to 169 in December 2024. We are able to benefit from efficiencies resulting from our larger scale operations, and we continue shaping our global organization to position as well for the growth ahead of us. Now to the balance sheet. Capex amounted to EUR 25.9 million compared to EUR 43.9 million in 2023. Capex mostly relates to the construction of our new factory, which was completed in 2024. Additionally, NX Filtration capitalized EUR 1.1 million of development cost, which demonstrates our continued efforts to invest in innovations for the future. Working capital amounted to EUR 14.5 million versus EUR 9 million in December 2023. This was driven by lower trade payables, reflecting the impact of outstanding capex payables at the end of 2023.
Higher inventory levels to support the transfer of the UF and MF membrane production to the new factory in Hengelo in Q1 2025 and to meet anticipated growth in 2024, anticipated growth in demand for 2025, partially offset by a reduction in receivables. Cash position at the end of 2024 amounted to EUR 53.4 million compared to a cash position of EUR 49.9 million at December 2023. The cash position was positively influenced by NX Filtration's newly secured combined equity and debt package of approximately EUR 15 million in March 2024. We expect our cash position to be sufficient to fund our growth ambitions well into the future. The final part of the webcast will be presented by Floris Jan.
Thank you, Jan Feie. Sustaining and accelerating adoption of our breakthrough technology through our commercial rollout strategy remains top priority. We will further intensify our existing approach in working with OEM partners to rollout pilot projects and convert these pilots into demo and full-scale projects. We focus on realizing more and larger repeat projects with OEMs and therewith expanding our installed base for future replacement sales. Concerning our new factory, after the successful startup of our new factory in the Netherlands, we will continue to move all our existing operations into this one new facility to enable further efficiencies. The additional capacity from our new factory will enable us to supply larger projects from our growing overall pipeline of opportunities for the medium term.
Together with the board and our professional and focused colleagues around the world, we are fully committed to keep increasing impact based on our mission, clean and affordable water for all. On April 8th this year, we will host a Capital Markets Day in which we look forward to talk you through the highlights of our industry and updates on our exciting business. Herewith, I hand over to the moderator for Q&A.
Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. We'll pause just a moment while waiting for them to queue for questions. Thank you. We will now take our first question from Chase Coppelin of Van Lanschot Kempen. Your line is open. Please go ahead.
Hi, good morning all, and thank you for taking my questions. I just have two to start off regarding the 2025 sales growth guidance, the 50-70%. Could you provide a bit more color on sort of the building blocks you see that give you comfort in that range? For example, what might have to happen for it to be either at the higher or lower end of that range? Any more granularity on that, please?
Yes, thank you, Chase. We confirm our outlook for 2025 growth of 50-70%, which is a very decent strong growth. The components underlying that are obviously our viewpoint on the pipeline of our OEM partners. We see OEMs that do repeat projects, such as we mentioned, Delco in Canada, Equazur in Mexico. We are confident that we are bringing more of our OEMs to that stage of doing repeat orders and at the same time onboard new OEMs. That counts both for our breakthrough hollow fiber nanofiltration projects, which are, of course, our breakthrough technology, where we see more adoption knowledge with our OEMs and end customers and the comfort to go to large-scale projects.
We will, in due time, see that happening on multiple continents so that the OEMs and end customers are also close to those full-scales and can see it with their own eyes. Next to that, we also have a very competitive portfolio in ultrafiltration and also in our food and beverage microfiltration portfolio. We see comfort in our pipeline, and we are, of course, working very hard all across the world on executing this in a timely manner.
Okay, perfect, very clear. Just one more question on the FTEs. You expanded the FTEs to 169, up from 166 at the end of last year. I'm curious on what should we expect for 2025? Do you think you have ample employee capacity to, for example, achieve this 50-70% growth, or should we also see an uptick in FTE this year? Any more color on that?
That will remain at the same level. That is also in what we call the direct labor force. We are able, let's say, to maintain efficiencies with the new factory. Within, let's say, the total number, we don't expect, let's say, that we have to increase further.
No, and maybe to add on that, Jan Feie, we as a board also really drive, of course, one of our main culture values is about performance drive and efficiency. We want to increase productivity, obviously, both on the operational side too. That may also bring comfort into the execution of that side. It is productivity and performance increase on the base.
Okay, perfect. Thank you very much, gentlemen.
Thank you.
Thank you. We will now take our next question from Usama Tariq of ABN AMRO- ODDO BHF. Your line is open. Please go ahead.
Hi, good morning, team. Thank you for the opportunity. I just have two sets of questions. Number one on gross margin. I do understand that you do not provide guidance, but do you think the 61% going forward in terms of modeling, do you think it is sustainable for 2025, 2026 going forward? Second question would be, would you comment a bit on the legislation or on the upcoming regulations in the EU and whether you do see it as supportive going forward for any potential new orders coming out from Europe? We have had orders from Saudi Arabia, Mexico. Do you think we can expect something from Europe too for this year? Thank you.
Maybe starting with the first question about in terms of looking forward in terms of margin developments, that highly depends on the mix. So in which type of products we will be successful. That is one. The other dimension is higher that we expect that in terms of size, the projects will become higher, and they are highly certain the pricing will be more competitive. In general, also next to the NF, we expect for the UF and for the MF that we are focusing on unique initiatives, that those margins will be at a relatively high level.
Yes, so that's the answer on the first question. The second question is about the regional. As we learn, we call that our sweet spots in terms of product applications and regions. We, of course, see very good traction across the world, but more notable for these drinking water or hollow fiber nanofiltration projects. We've seen that in Asia, in India, in Southeast Asia, but also in Mexico. Also in Europe, we see that more and more. As you know, I've traveled in the last few months to Spain, France, Indonesia, and across the globe. What I see is that in our conversations with our strategic OEMs that do pilots with us, the global OEMs are there, companies like Axiona, Suez, Aqualia, Veolia, and also the local strong ones in Asia and in the Americas.
I would expect also indeed that in the coming time, we have also large-scale nanofiltration projects across all the big three continents, including Europe. Yes.
Okay, thank you very much. Just one little extra question with regards to OpEx. The sales guidance is from, I believe, 50-70% top-line growth. Could you comment in general on the OpEx growth? I assume it would be less than 50 or 70. If you could also just add a comment on one-offs, I believe due to the new factory, there are some one-offs in 2024. Do you expect them to be fully gone in 2025 in terms of OpEx? Thank you.
In terms of OpEx, with regards to the growth for this year, that will be moderate. There will be limited growth in terms of OpEx. That is one. With regards to the one-off elements, what we explained in terms of guidance, that in the first quarter, we have, let's say, the transfer of the membrane production from Enschede to the new factory that has some slight impact, let's say, on some additional cost for this year. All in all, let's say, in terms of OpEx, there will be limited growth in terms of OpEx cost.
Thank you. That will be all. Thank you very much.
Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We will now move on to our next question from Thomas Martin of BNP Paribas. Your line is open. Please go ahead.
Hi, just a couple of clarifications, please. I think inventories were about EUR 18 million at year-end. I think you had some orders delayed into 2025 from 2024. You obviously had the factory moved, and maybe that impacted things, and you're intending to grow the top line. I was wondering if you could give us some insight as to whether or not that EUR 18 million inventory position is likely to need to grow in absolute terms. Could it fall and still support your growth? Could you give some insight there on the working capital movements? The second question, just on the CapEx outlook, you've obviously finished construction of the new facility. What are we looking at for 2025 as a sort of sensible CapEx estimate for the business to keep everything, I guess, is mainly maintenance, keep everything maintained? Thanks.
Indeed. I think you already really good described, let's say, the main reasons why we have this high level of inventory around that EUR 8 million. Working capital is a focus area for us in 2025 as well, next to cost and delivering sales. Certainly, inventory is one of the elements which we want to optimize going forward. That means, let's say, for this year, that we want to reduce the inventory level.
Okay. I guess, are you willing to go any further in terms of giving your daily coverage range or anything like that, or amounts by which you might be able to justify within the growth or chance myself?
Yeah, I think, Florian, the point is that maybe as a board, we, of course, want to have a double-edged sword, both on the growth side, profitable, but also on the OpEx and CapEx, will be as lean as mean as we can. We'll indeed decrease the inventory level in line with where we want the financial to move in the coming years, but we don't give an exact number for 2025.
Fair enough. On the CapEx, are you able to give us a bit more refinement as to where you expect to be post the rolloff of this? First of all, is there anything else still significant to spend or to come through in 2025 related to the expansion and then ongoing maintenance now?
It is mainly, let's say, the additional CapEx, which we have for 2025, is mainly related to the transfer of the membrane production from Enschede to Hengelo. That is the main additional CapEx which we have for this year.
Okay. I've never moved a membrane facility, but single-digit millions, is it that sort of level?
It is low.
Yeah, low single digits?
Single-digit millions. Single-digit millions.
Yeah, fine. Okay, okay. Right, thank you.
Thank you. We'll now take our next question from Ferdinand De Beur of Degroof Petercam. Please go ahead.
Yes, good morning. Ferdinand De Beur of Degroof Petercam. Thank you for taking my questions. Also on the one on working capital, on payables, is there still an amount included for the plant, for the factory which still has to be paid, or is that all paid? That's the first question.
No, at year-end.
At year-end, yeah. Yeah.
At year-end December 2024, there was still an amount related to the investment of the new factory was still included.
Okay. Of the EUR 9 million, is it one of EUR 2 million, or is it the other liability of EUR 3 million? What could you give an idea?
It's a significant part of that.
Okay. If I look at the breakdown of your sales, and I look at the rest of the world, it feels that the rest of the world in the second half has been negative versus the first half. Can you, maybe it's a detailed question, but I just noticed it. The sales in the second half in the rest of the world was negative. What happened there?
In the first half of the year, of course, we had a big order in Mexico, where that's a phase one of a project, and we're working on winning the second phase of that project. In the size where we are as a company, these kind of orders give a fluctuation. That's, I think, the major explanation for that.
Okay.
Yeah. We will get back to you on that.
No, I understand this explanation. I'd like to come back on the working capital because on the one hand, you also mentioned that your cash position, your liquidity position, is sufficient to fund the growth for well into the future. We, of course, do not know what well into the future means. One of the things for this is, okay, your CapEx plans for this year already give some indication. As a percentage of sales, what would be a kind of normal working capital situation for a company like you? You are now, of course, in a kind of low sales levels, but normally speaking, if sales increase by 50-70%, and then maybe the year thereafter by 30%, etc., how do we then as working capital, as percent of sales, because that is also something we can learn how to.
Let me comment on that, Ferdinand, and you can chip in, Jan Feie. Yeah. In essence, the double-edged sword here is driving profitable growth through commercial execution cadence, which is quite focused and really on the ball. The other side of the sword is operational efficiency 2.0, as we call it. Driving down efficiencies in terms of productivity and OpEx, but also the CapEx levels and working capital. In that sense, if you have a new factory building here, which we are continuously optimizing our flows, process flows, both here from the factory towards also the distribution to OEMs, you will see steps in getting to lower inventory levels as a percentage of sales, of course.
We don't put out exact numbers on that, but you can imagine that if you have a new factory, then in the year one, two, three, you will drive down the increase efficiencies and drive down the inventory levels.
In percentage of sales.
Yeah. You also have, of course, the receivables, and municipalities, governments are not known as being a quick payer in general. How should we look at that line?
OEMs are our customers. So the OEMs pay us. And of course, also there, we as a board are pretty strict to, again, manage the net working capital, which includes also receivables. So it's not that we are very loose on that.
Okay. Thank you very much.
Thanks.
Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We will now take our next question from Christoph Greulich of Berenberg. Please go ahead.
Good morning. Thanks for taking my question. Yeah, it's actually just one from my side, please. You gave an overview of the supportive regulatory dynamics, I think it was on slide nine of your presentation. What would you say is the most powerful regulation to drive additional demand for your products? Which one really creates pressure to act for municipalities or industrial companies?
Yeah, thank you, Christoph. Yeah, generally speaking, and this is not new, but I'm going to start there anyway. Of course, water scarcity is the most important driver for action. The second most important one is then the regulation. We see now throughout the globe, but let's start with Europe, for instance, there's more and more regulation on water reuse, on the quality of water reuse. On the wastewater side, it's more on PFAS discharge or preventing PFAS altogether. These types of regulations are next to scarcity very important for our future developments. You see this all around the globe. You see this. It's a bit different, of course, where you are. Even now, you see that happening, for instance, in the Middle East.
It was a region that's completely reliant on desalination, where they're also discovering that there are disadvantages to being dependent on one source of water. Water reuse is becoming an agenda point there as well, driven by regulation and driven by water prices. We see this all over the world, a bit depending where you are in the world, what the emphasis is, if it's drinking water or wastewater discharge or the environment. These were some examples of what's happening around us. We believe that's very important for us to keep developing the water market.
Okay, great. Thanks a lot.
Thank you. There are no further questions in queue. I will now hand it back to Floris for closing remarks. Thank you.
Thank you so much. Thank you for your attention. I must say that we as a board are confident that we are active in a super exciting and growing market in water. NX Filtration, in my opinion, is positioned to be a leader in the space. I've seen really excellent products and innovations in our hollow fiber nanofiltration, but also our ultrafiltration and microfiltration portfolio. We have dedicated people that continuously work better every day for their commercial execution cadence, and we bring focus on delivery of our objectives. We thank you for your attention and look forward to speaking to you in the future. I want to remind you that on April 8th this year, we have our Capital Markets Day in the Netherlands, for which you're welcome. Thank you.
Thank you. This concludes today's call. Thank you for your participation. Have a good year ahead. You may now disconnect.