Good morning, ladies and gentlemen, thank you for standing by. Welcome everyone to Aeris earnings call to discuss results relative to Q1, 2023. Here with us today, we have Mr. Alexandre Negrão, the company's CEO, Bruno Lolli, the company's planning and IRO. We'd like to inform you that this event is being recorded, during the company's presentation, all participants will be connected in listen-only mode and watch the results. After that, we'll start the Q&A session when further instructions will be provided. If you need assistance during the call, please send a message using the chat box, which can be found on the right-hand side of the screen. Before moving on, we'd like to say that forward-looking statements made during this call concerning the company's business outlook, operating financial projections are based on beliefs and assumptions on the part of the company's management.
Future statements are no guarantee of performance. They involve risks and uncertainties as they refer to future events and therefore depend on circumstances that may or may not materialize. General economic conditions, industry conditions, and other operating factors might affect the future results of the company, and thus lead to numbers that will differ considerably from those expressed in these forward-looking statements. I'd like to turn the conference over now to Mr. Alexandre Negrão , who will start the presentation. Please, Mr. Negrão , you may carry on.
Thank you, Lais. Good morning, everyone. It is a pleasure for me to be here with you all today, once again, actually, for our earnings call. I'd like to start off by guiding you or directing you to slide number two, where we have the highlights for Q1, 2023.
Speaking a bit about the recovery in global demand, what we have seen based on reports issued at the end of the quarter is that the world, even though we have installed a lower number in 2023, lower than what installed in 2021 and 2020, we are now predicting a growth which will be considerable for the coming years, 2023 and especially for 2024 and forward. 2024, 2025, through 2030. That's where we have projections for. We expect to see considerable growth. All those reports, they vary a little bit in terms of global numbers, depending on the report you look at. Looking at the event on average, we should expect to move from 80 gigs a year, which was installed in 2023, to something around 150 gigs to 200 gigs.
That's the forecast for 2030. That of course, including the whole world. When we talk about the Western world, excluding China, we saw that 2022, we have 40 gigs installed. That number should take a leap to 80 gigs. That's important to notice that the production capacity today for blades around the world sits around 50 gigs. Today, there is idle capacity in place in the world of about 10 gigs. Based on the current projections, that capacity, which is now idle, will change course in about two years. By 2025, if there is no substantial investment in the industry will not be able to meet the projected demand. That's a positive interpretation of the numbers that we see.
Now we see that the world is driving demand up, and we can also feel that when we talk to our customers, we see growing demand, not only in the number of blades and increase in productivity. We are quite confident that throughout 2024 and 2025, we shall see a growth in terms of investment to be able to meet this growing demand. At the same time, what we could also identify, looking at the numbers, reports, results from other companies for Q1, based on reports, what we can see now is that the industry is now going back to operating at a profit level. We see a more economic balance, be it because there is equipment maturity or because there's an increase in prices.
That's also very good, very healthy, based on the numbers that we had in 2021, 2022. In our opinion, those numbers were not healthy. There were several factors driving that. More importantly is that the industry now is now being able to strike a balance and become more robust in order to start making more investments. It's not different with Aeris. We see our numbers for Q1. We were able to have higher volume, higher productivity with our more mature lines, at the same time, more efficiency. We can see when we look at the indicators, when we're able to scale up or to gain scale, we are able to mitigate costs, and that makes a world of difference. That's very important to emphasize.
In addition to that, we also saw an improvement in our inventory turnaround, improving our economics overall. We see, as we talked before, when we are able to reach maturity across the lines, that really boosts our indicators economically wise. Those were the highlights for Q1. Moving on to slide number three, we have some numbers. We had a net loss of BRL 22.2 million in Q1. A net revenue of BRL 821 million, BRL 2.7 billion in last twelve months year to date. Investments, BRL 28 million, and EBITDA close to BRL 95 million, and BRL 307 million year to date with twelve months, and a re-return on invested capital 13.8% in annualized terms. Those are the financial highlights.
I'll be back at the end of the presentation for the Q&A session and also my closing remarks. I now turn the floor over to Bruno Lolli. Thank you. Over to you, Bruno.
Thank you, Alexandre. Good morning, everyone. I'll start on slide number four, if you will. We have different columns. On the left, we have average invested capital, and on the right-hand side, we have the NOPAT year to date for the last 12 months. We can see, go looking back, actually, as of 2020 and 2021 especially, we expanded considerably our production, our CapEx. Along with that, we saw a strong depreciation of the BRL vis-à-vis the US dollar. Our working capital is tied to the U.S. dollar. This was an important moment for us in terms of invested capital.
In 21, 2022, we had this huge transition process of production lines, especially in the H1 of 2022. In the second half of 2022, there was a lot of turbulence in production in some of our mature lines. Projects were changed, new suppliers came on board, and that affected the results. Now for Q1, we already see an important growth in NOPAT that's quite linked to what Alexandre has just mentioned in terms of stabilizing production. In Q1, we have delivered slightly above what we had planned in terms of production. Delivering the production plan allows us to resume our need, lower need for working capital. It is not there yet because there is a non-recurring effect which unfolded throughout last year's second half as we had made advanced payments in this first few quarter.
We built several blades that had already been paid, were paid last year, late last year. We had a strong reduction in inventory levels. That's a main highlight for Q1, a drop in inventory levels. Throughout the year, we will continue to reduce inventory levels at a lower level in terms of net clients. That cash burn that we had in the first quarter is a one-off. It will be contained and limited to Q1. Moving on to slide number five. As of Q4, we talked about this discontinuity in terms of average power and product mix. Some of those 5.2 megawatts average that we delivered in Q4 2022 are now back to 4.9 in Q1 2023.
The presentation, I will show you the evolution of our potential of orders covered by long-term contracts. It's the same number, 4.9, as average power for those contracts. That means that for the first quarter, we delivered a more balanced number, a more balanced mix, which we should continue to deliver under the contracts we already have in place. Those contracts vary in term, but they are projected on average to close throughout 2024 and 2025 without considering possible extensions and additional orders. In summary, that mix we had in the first quarter of 2023, it's a mix that tends to continue throughout the year. Moving on to slide number six. Now we have no pre-operating line. We have also closed the non-mature phase of the operating lines.
We can see that most of the capital is allocated on lines which are mature. The return, when we look at the return for Q1 and analyze it, we reach numbers close to 20% for that mature phase of contracts, considering adjustment both in terms of results and in terms of operating margins and in terms of need for working capital. When they go back to optimal numbers, those return levels go above 20%, and they can even go above 25% at the mature phase. There is a gap to be captured, to be achieved, both in terms of operating results and in terms of working capital needs. When we look at services that may have seen as a surprise, a negative number, which is not that normal, it's worth exploring that negative number.
Services have a seasonality to it, especially in the U.S. That seasonality is quite important. It's only natural that in Q1 we have lower revenue than the rest of the year on average. When you look at the revenue for Q1 2023 and Q1 2022, we doubled that. We are experiencing a very high growth rate, and we expect to increase that throughout the year. In terms of results, Q1, we also had relevant expenses to restructure our services division to accommodate that fast growth. Much of what we spent in Q1 is to prepare to accommodate extraordinary revenue we'll have in Q2 and over. We'll reverse that number very soon and have a much better result throughout the rest of the year. Alexandre will comment on that closer to the end of presentation.
We are quite optimistic, in terms of growing and in terms of the contribution that the services division can bring to the company. Moving on to slide number seven. Alexandre has already mentioned we see a growth, in terms of production of volume for blades and consequently in revenue. 27% growth in revenue when we compare to the previous quarter makes us have a higher invoicing, internally. We are now delivering something close to 1 gigawatt per quarter. This will be exceeded throughout the year. In terms of export, we once again, just as in last quarter, we did not export. That dynamic of concentrating deliveries for the domestic market could prevail throughout 2023. All our blade production capacity is dedicated to the internal domestic market. There is a very high demand internally, and this should remain so until mid-next year.
Starting in mid-2024, we expect the company to resume export volumes to previous levels, maybe even higher than we had historically. Moving on to slide number eight, the pass-through of direct material costs. You can see a stabilizing line in terms of material costs per megawatt and a slightly higher volatility in terms of prices. Let's go back to Q4 2022, when we had some special non-recurring effects in terms of pass-through, especially for some clients. The average price in Q4 2022 is a one-off, non-recurring. The price for the Q1 2023 is a price that comes closer to what we project as an average price for the year. Of course, starting in Q2, there is this potential of a slight increase driven by negotiations that the company has concluded throughout Q1 2023. Moving on to slide number 9.
We see on the left-hand side an evolution of the EBITDA for 12 months. The company moved from BRL 267 million last year to BRL 307.6 million last 12 months. In terms of the quarter, we see a jump of 17.5% when compared to EBITDA numbers for the last quarter of last year. When we compare the first Q1 2023 and Q1 2022, the growth is 75%, quite considerable. That growth is driven by the growth in volume. Any relevant growth in volume for us translates as a dilution of fixed costs, which contributes positively with the margins. Labor costs and other costs, except for raw materials, they tend to be stable throughout the year, whereas volume tends to grow, which leads to a reduction in fixed costs and an increase in margins.
Moving on to slide number 10, about our investments. In Q4, we saw a drop in the available investments. Some were pushed to Q1. This growth in Q1 is associated to the completions of improvement works we did in our finishing facilities to increase our production capacity and reduce inventory levels. Throughout the year, we should not have relevant investments on that front. We had a long and large investment cycle starting 2020 and moving through 2021 to expand capacity. This year, we are not expecting to have capacity expansion, considering the current contracts, of course. Investments should be in line with those seen in Q1. Moving on to slide number 11, I'd like to emphasize what Alexandre just said. We saw an improvement in performance. You can see here the three curves on the chart.
The number of revenue days we have in inventory and you can see raw material finished and products being prepared. The reduction in product being prepared was about BRL 60 million in Q1, which should continue to be so throughout the year in a very consistent manner. We closed 2022 at a very nice products being prepared position, and we already are able to deliver, which exceeds the capacity, the first phase of the process of preparation. That allows us to reduce our products being produced inventory. In terms of raw materials, saw a drop of BRL 100 million in the first quarter. We resumed a turnaround, which was closer to what we had historically. It's important to remember that historically, that number was negatively affected by the pandemic, of course. That effect is dwindling now.
For the next periods, we expect an improvement in the raw material turnaround, so that we'll start having a lower need of global working capital, thus leading to higher returns. Moving on to slide number 12, what I mentioned earlier in my presentation. Throughout the H2 of 2022, we saw a relevant growth in customer advance position. Most of those variations have already been addressed in Q1, and we will maintain a net position for advances and not in receivables. The cash consumption associated to that throughout the next quarters will be lower than what we had in Q1. Moving to slide number 13. Because of that reduction of something close to BRL 450 million in customer advance position, the company consumed cash in Q1.
Still, we have a very robust position, BRL 838.9 million in cash. Short-term obligations, about BRL 255 million in the middle of the chart. Starting 2024, we start to have the amortization, especially linked to the anchors. Moving on to slide number 14. We see a drop in the potential orders covered by long-term contracts. This is quite associated with the execution of the contracts. For the past quarters, we did not have any renewal of contract and no new contract was signed. As a consequence, we have been executing the contracts and reducing those numbers. Alexandre will touch upon that in a moment. We are now negotiating with all clients today to discuss demands starting in 2024. We are discussing also with new clients.
The expectation is that within the year, we'll be able to resume growth for those numbers, the potential orders covered. Alessandro has already mentioned that we have a gap between supply and demand for the next five years, especially in the Americas. It's only natural that when we have more clarity about new investments, incentive plans for different countries, that demand will emerge. Our clients will be contracted to execute that demand, then we'll be able to be contracted to supply the blades. Moving on to slide number 15, the final slide of our presentation. The evolution of our production lines. As you can see, 100% of the production lines are in a mature phase. It will stay so for several quarters to come.
Most negotiations in progress now are aimed at extending the term for the same products, both for domestic markets, for export market. We are quite confident that the levels of returns we have had can be resumed, given that lines are mature and the performance overall continues to improve at an important rate. With that, I close my presentation, and I turn the floor back over to Lais. Lais, over to you.
Ladies and gentlemen, we now start the Q&A session. To ask a question, please send your question on the chat box, which can be found on the right-hand side of the screen. If you want to ask your question via audio, please require a link also via the chat box. Our first question comes from Mr. Lucas Esteves via chat from Santander.
Could you explain the dynamics of the backlog? Why does it reduce more than quarterly deliveries? How are the negotiations for new contracts going?
Hello, Lucas. Good morning. Thank you for your question. Well, the backlog dynamics works like this. When we have the contract. As our productivity is not 100%, it evolves according to the end of the contract. We have produced in the quarter the equivalent of 950 megawatts, which is about 63%. The backlog decreased by 1.5 gigawatts, which is what we would be producing if we were running at 100%. I do not expect to produce 100%, because that's not the way the industry works.
For negotiations for new contracts, right now, we are renegotiating with all our clients in terms of demand, negotiating both contract extensions for blades and also new blade models as well. We should be communicating that throughout the next two quarters, Q2 and Q3. We will finalize those contract extensions and also conclude potential contracts with new clients. For 2024 and onwards, thus increasing our client base.
Next question from Fernanda Urbano from XP. We see a significant improvement in the production level and use capacity in Q1. We'd like to understand what's your expectation looking forward. If you could give us an idea of the use expected for the next quarters and how that would relate with the margin.
Well, in line with what Alexandre just said, we have something about 1.5 gigs per quarter in terms of expected capacity of new contracts. What we understand as a potential use for the next quarters is to reach something about 1.2 gigs per quarter. How does that link with margin? That's a straight relationship. Today, we have a structure in place for costs. Costs except for raw material, which is variable, as you know. All the other costs can be seen as fixed costs. The company today is in a position which is quite close in terms of recurring costs, very close to what we plan to have throughout the year. We should see an important dilution of fixed costs and as a consequence, an improvement in margin. Along with that, as I mentioned before, we have some price review happening as of Q2.
The combination of those two things will probably result in a better average margin for the rest of the year when compared to the margins filed in the first quarter.
Next question from Kyle. Could you comment on this trend on the leverage level, Net Debt/EBITDA, and the risk of violating the covenant in 2023?
Good morning, Kyle. In terms of covenant, just to ensure, the company has two debentures totaling BRL 1.3 billion, and the covenants for those operations are those that will maintain our ratio below 3.5 x Net Debt/EBITDA. We moved from 2.8 in Q4 to 3.2 x as we close Q1. Looking forward, we have an operation which is going back to profit now, good profit. We have CapEx levels which are relatively low going forward.
What we had in Q1 was a reduction in advances for clients, which is non-recurring, at least not in that intensity. We should, throughout the year, reduce inventory position, not only increase the turnaround as we grow revenue, but also reduce the nominal position of inventories. All of that supersedes debt. We'll start having cash generation. Once we have cash generation, as we also grow EBITDA year to date, we should see a consistent reduction of the leverage level throughout the year 2020. There is no risk of breaking the covenants as is. To ask a question, please send them using our chat box on the right-hand side of the slide or require a link to use the audio channel.
Next question from Gabrielle from Itaú. Good morning. How does the company see the current amortization schedule, and what's the strategy for the debt rollout for next year?
We have the first tranche of L11, the first debenture issue, BRL 200 million maturing early next year. We are quite comfortable with the evolution of the cash generation to settle that operation. In terms of capital structure, we always look ahead. What investment plan the company has in place, how is it moving forward in terms of negotiation with clients, and how do we see results being generated going forward? The decision to roll out or not roll out the debt and what cash level will you maintain, it's always discussed at our financial committee level throughout the quarters. We always make that decision way beforehand.
Our strategy when we look at this 2024 operation, reduce gross debt and maintain that debt and maybe start operating at a cash position slightly below the current one. We understand that the current cash position is quite comfortable. We had a strategy to increase our cash position through an increase in gross debt in previous quarters. Because of the risk we identified coming from different sources, those risks today are much more under control. The likelihood of them materializing is much lower, we can be comfortable for next period of working at a lower cash position. Considering that the operation will generate more cash and we'll be able to reduce the company's gross debt.
This question from Edward, can we see the, on the slides, the terms of the existing contracts?
Yes. On slide number 15, we have the timeline for the contracts broken down per production line. Today, you see in the dotted line, we have today's date. We have 15 production lines in mature phases. We see six lines closing at mid-2024, four lines in 2023, two in May 2024, and three in mid-2025. Throughout the time, we have been renegotiating with clients. We may extend the end of those contracts, and then we sign new contracts. When we sign a contract, those lines are treated as pre-operating lines. They go into operation. They stay there for about a year as non-mature, and then they reach maturity. In the final slide of the presentation or this 15 slide, production line, we see the evolution of all the contracts of the company per production line.
We now close the Q&A session. I'd like to turn the floor back over to Mr. Negrão, the company CEO, for his final remarks. Over to you, Mr. Negrão.
Thank you, Lais. Thank you, Lolli. Thank you all for participating in our earnings call today. I'd like to close by saying that just as we started the presentation, we are now seeing demand pick up once again, especially in the Americas. We, in 2022, we had about 18.5% in terms of market share across the Americas. We intend to remain between 23% and 25% and 30% in market share for the Americas, up to 30%.
When we talk about what we project in terms of increase of demand for this market, where we consider ourselves to be very competitive in terms of exports, if we maintain that number between 25%-30% by 2030 in terms of market share, we'll be talking about a growth level which will be considerable for the company. In addition to that, as Lolli mentioned, we are investing heavily in the services area because there is high demand, a high turnover, and also, we see more consistency in the margins for services. We are quite confident that the services division will gain a lot of scale and increase margins in the coming years. That's very important to mention. We will continue paying attention to the incentives which were offered by some countries. How will this be translated into higher demand?
We can already realize that those incentives in some countries, even though they are not yet reflected in the current numbers, we do believe that this will have an impact in the coming years. We can already feel that with some of our customers. Once again, thank you so much. We continue to work hard throughout 2023 to further improve our operating efficiency levels. It's a year of stabilized production. We continue to work hard, as I said, to increase our backlog, extending contracts for the current blades, and also to acquire new contracts for new blades, which will be operational in the coming years. That's what we had today. I wish you all a nice weekend and a happy Mother's Day on Sunday. Thank you. See you next time.
Thank you, Alexandre. Aeris earnings call is now over. Thank you all for your participation.