Hi, and welcome to Hexagon Pieris' Q1 2021 Presentation. My name is Eva Giri, and I am the VP Investor Relations in Hxagon, and I will be moderating today. I'm joined by company CEO, Morten Hollen from the Dury in Oslo and by Dilip Warrior, company CFO from his office in California. Today's presentation will include highlights of the quarter, the financials HEX and Outlook followed by a Q and A session at the end. The Q and A option on your screen is open, So please feel free to enter your questions there or you can also send your questions to irhexagonpures.com.
Without further ado, I'll hand over the word to you, Morten.
Thank you very much, Iva, and good morning, everyone. The highlights for the Q1 are centered around 3 main themes. The first, the overall momentum for 0 emission mobility solutions Continue to strengthen across the world. Number 2, we've reached several important commercial milestones in the quarter. And 3, we are accelerating our internal efforts to scale up the business.
Hekke. The events over the past 12 months have really been remarkable. We've seen a tremendous acceleration of activities across the hydrogen value chain globally. A significant number of countries representing more than 70% of global GDP have announced hydrogen strategies and roadmaps. And a significant number of hydrogen projects have been initiated, both on the production side and on the consumption side, And many more are in the making.
It's encouraging to see the growing consensus that hydrogen can play an important role in the race towards Hekkels. And it increases our comfort on the future market projections. And things are now Really starting to happen on a larger scale also for us. A few weeks ago, we were selected by Nikola to supply hydrogen storage cylinders for the Nikola Tre, which is planned to go into serial production in 2023 in North America. This is a sizable contract for us.
The estimated sales value exceeds EUR 200,000,000 and it's the 1st large serial production contract that has been awarded in the heavy duty space. We're, of course, very happy to partner with Nikola and help get these hydrogen powered trucks out on the road. Hekke. Another important commercial milestone was the agreement on the joint venture with CIMC Enric for China and Southeast Asia. China is expected to become the largest market in the world for hydrogen and 0 emission mobility by the end of this decade.
And we have formed a great industrial partnership with CIMC Enriq. With our combined and complementary strengths, We will be a competitive force, and we aim for no less than to become the largest provider of hydrogen storage systems for fuel cell electric vehicles and distribution solutions in China and Southeast Asia. We're now in the process of preparing the joint venture formation Hekke. The distribution segment as one of the expected revenue drivers for this year. And we saw clear signs of higher activity in that segment Hextech this quarter.
We announced 3 new contracts, one with Sartarus in the U. S, one with Vustra for France and Germany And the third one with leading European gas distributors also for the European market. These modules, some of them which are capable of carrying more than a tonne of hydrogen, are ideal to transport hydrogen from the source of production to the point of consumption. Hekke. We expect that the demand for distribution modules will continue to grow in the coming years as the demand for hydrogen increases, both for mobility purposes and for industrial purposes.
We are now gearing up our internal efforts to accelerate the scale up of the organization, And we expect to add approximately 100 new team members in 2021. The increase is mainly within functions like engineering, We need to prepare the organization to handle a significant increase in volume that we expect in the coming years. One of the areas that we have high focus on right now, of course, is to build up the organization in China along with the supporting engineering functions on the European side. Like many others, we noticed the effects of the pandemic. We've had 6 team members that have been infected this year, all of them which have thankfully recovered.
All of our facilities remained open during the quarter, and we have so far not seen much of a negative impact on output. We do see that the global supply chains have become more unstable. Lead times have increased for many key components, Hekka. Battery cells being one example. And we also see rising costs for certain input factors.
Although This has had only a limited direct impact on us so far. The situation is becoming somewhat more unpredictable, which of course is a concern. So we'll continue to follow the developments closely and take appropriate measures where needed. So with that, Hekke. I will hand the word over to Dylip to take us through the financials.
Thank you, Morten. So revenue for Q1 of 2021 came in at NOK 57,000,000. That was a healthy 19% growth year over year, and more importantly, up 75% sequentially. The year over year increase in revenue was driven by stronger contribution from hydrogen distribution and Transit Bus Customers. If you look at EBITDA, as I've stated before, we are in the investment phase of Hekke.
And with the relatively lower revenue base, this impacts EBITDA. EBITDA loss during the quarter was NOK 62,000,000 And was in part driven by increased corporate expenses associated with being a publicly traded company with increased overhead. Hekhar. That was an impact of NOK 25,000,000 year over year in the quarter. Next slide, please, Morton.
Thank you. So this shows a revenue breakdown in the quarter. As you can see, in the prior year period, Hecke. Revenue was driven quite heavily by heavy duty truck activity, and that was related to an OEM battery electric program Next slide. Going over to the balance sheet, remains strong.
We have Hekka. 1,100,000,000 of cash, very small amount of debt. Receivables and inventory are up slightly from December, Next slide. On the cash flow, not a whole lot here to highlight. Operating cash flow included roughly NOK 40 HEXX.
4,000,000 of increase in working capital. We only had a modest amount of CapEx in this quarter. I would expect that CapEx number to increase in over the course of the year. And then the discontinued CNG LDB business was the use of cash to the tune of NOK 24,000,000. Hekke.
So with that, why don't I turn it back to you, Morten.
Thank you, Dylip. Hekke. Now let's spend a few moments on the outlook. With the continued strong momentum in the clean mobility space, We keep adding new projects into the pipeline. We have now a project portfolio of around 80 live projects across different geographies and different mobility applications.
And we see a strong and united Global commitment to confront climate change. We now also see the willingness from the leaders of the world to act, Hecht. To put the necessary strategies, programs and policy changes in motion to properly address the challenge. Transitioning the mobility sector away from carbon based fuels and into 0 emission vehicles is part of the solution, And it represents an incredible market opportunity. We expect the market for hydrogen storage onboard vehicles will grow To SEK7 billion or SEK60 billion by 2,030.
And as one of the leading companies in this space, we are positioning ourselves to capture a meaningful share of that market. So we're investing to expand product development To increase production capacity and to scale up the overall organization to meet the higher demand from the market in the future. This will expand our cost base, and it comes ahead of the revenue curve and will thus result in higher negative earnings in the early stages, but But it will also enable us to capture the higher volumes when the market demand increases towards the middle of the decade. Our financial targets remain unchanged. For this year, we are targeting to increase revenue year over year Hekka.
And we target to have revenue of NOK 45,000,000,000 in 2025. Hekke. So this concludes then our presentation this morning. We are happy with the developments that we have seen. We are exactly where we HEXX.
And I look forward to also an exciting future. So let's
HEX. So we do have some questions from the audience. HEX. And I'll start with the first one from Anders Rosenlund. The JV with Enric, how much CapEx is he asking for?
If you We could give a number. And when Hexagon Pieris' equity contribution, order backlog in the JV at et al. And when do we expect revenues? So a bunch of China related questions.
Formally, which has taken some time in China, as people know. And then we are detailing out all of the investment plans Hekkels. And preparing the overall production footprint. I think it's going to be a little while until we can be specific. Hekke.
But what we have said so far that we expect the investments towards the middle of the decade to be in the yes, Hekke. Roughly around $100,000,000 I think that's right, Dylip.
Yes.
Yes. So $100,000,000 precisely when things get started, that's also a bit difficult to say at the moment. With starting the plant construction as we plan to do this year, we should probably expect revenues Hechtel to start coming in, in 2023. And there is a potential also to then get some revenue from Hekka. Type 3 products already, yes, in 6 to 9 months' time.
Was did I capture all of those?
I believe you did. Yes. Yes.
All right.
Thanks. We have a question for Mikael from Carnegie Hecht related to Nicolas. And if you could elaborate on the counterparty risk that we've considered before signing with Nicolas.
So there has been a lot of discussions around Nicolas. And we have had, as I've said several times before, when being asked by journalists, We spend a lot of time evaluating, of course, Nicolas. It is one of the disruptors of the industry, one of the early companies that targets HECTOR. Have hydrogen vehicles out on the road. They raised quite a bit of money.
And then there was some uncertainties around What their focus area really should be, we believe that the Hekke. All the actions that Nicolas has taken for the past 6 months makes a lot of sense to us. They're focusing, zooming in on those core parts of their business. We see a very professional counterparty, and we both hope and expect that Nikola will succeed. So we have, of course, evaluated this.
Thank you, Martin. So back Hekta China. Just a question on the relationship with CMC Enriq and the development, if there is anything you could Comment on there?
No, I think that we are now working ourselves even closer. We spent a lot of time with CIMC Henrik part of the negotiation period. Now we're down into the real practicalities, working ourselves together. The discussions and the planning is going great. We have now starting to put our own team also in place in
Is there any area geographical area beyond China that you see as most interesting?
Hekke. Now what we have focused on so far is the areas where we are present Hekke. And the area which we are now establishing ourselves. So China, I think, is it is going to be one of the largest Hekke. Clean Mobility Markets in the world.
And it's a really exciting geography, so that's naturally a focus area. And then we have a good presence in North America. We have a good presence in Europe. I think with All of the investments and all of the programs that are being put in place in Europe, that's going to be a large and exciting market. And with the change in administration in the U.
S, we also see that a change in tempo and a change in mindset around Hekke. Climate change, which we think is positive. So for now, these are our core three areas, which we will continue to focus on. Now in the future, there might be other geographies as well that we might target.
Thank you. So I have a question for you, Dylip. What's the source of the NOK, the NOK 36,000,000 in financial cost you had in Q1.
Yes. Look, these are primarily related to intercompany positions between the operating subsidiaries and The parent company. So you've got intercompany positions denominated in U. S. Dollars or euros.
Essentially, they eliminate out at the group level, but because they are denominated in foreign currency and We are a company that reports in Norwegian krone. You do have to bring the FX related changes to those positions HEXX. So the P
and L.
Okay, noncash.
Thank you, Dilip. We have another question from Mikael from Carnegie. With the new BVs claiming 10 mile range on 10 minute charging, Do you still believe that FCV make a mark in the LDV Passenger Car segment?
Yes. So we think that on the light duty side of things, Hecht. The majority of vehicles will likely be battery electric. It is For already the technology today is already at the stage where it fits a large majority of the use cases. But we do see certain other rationales for fuel cell electric passenger vehicles as well, Particularly the heavier side of the light duty, so SUVs, pickup trucks or those that have Continuous use cases where taxi fleets and others that might not have An opportunity to charge.
So yes, the majority will likely be battery electric, I think, but we Hechtel. So think that a certain segment will be fuel cell electric. And remember, it's a humongous market. So even a small percentage Hechtel of that market will result, of course, in a big chunk of revenue opportunity for us.
Hekke. Thank you, Martin. Back again to Enric and just a follow-up. Hecht. The $100,000,000 you mentioned in the Grass Investment, is that your share?
And what does that translate into in terms of equity investment by Hexagon Piers?
So when we say $100,000,000 That is the totality of the investment, so it's not our share. We have 51% ownership in this Cylinder producing joint venture. So roughly half of that then is what we will need to invest.
Thank you. Hekke. A question from Anne Suresa. Could you comment on the current competitive landscape?
Yes. So it is on the Cylinder side, we have 2 types of players being competitors. 1 are specialist cylinder companies Hekke. And the other one are Tier 1 players to the automotive industry. And we see competitors Hekke.
That we know well in both of those classes. And it's, of course, a very large market Hechtuniti here. And it's natural that there are several companies that are targeting to enter this market. From our side of things, we are not concerned by the competition. We will need competitors.
We want competitors, and we want good competitors. And we think with the size that this market is taking on, it's going to need Everybody in order for this industry to succeed.
And on that note, you say that Hecht. The addressable market is NOK 60,000,000,000 sorry, NOK 60,000,000,000 for hydrogen cylinders and cylinder systems. What share of this market do you forecast? And who is your greatest competitor in that space? And you already Hecht.
Touched upon that, but could
you Yes. So it's hard to be very specific On where we think we will end up. But just to give some idea, we have a couple of competitors that have been very Specific on where they want to be, the Tier 1 couple of Tier 1 players for HCL Plastic Omnium, which have targeted to have a 20% market share, which of course is a sizable share of this market. As leaders in this business. We don't think that we should have we should be materially worse off in terms of competitiveness Hekke.
Then these newcomers, so we do believe that we say a meaningful share of the market, which for us translates to Hekke. Above the 20% mark.
Thank you, Martin. We have a question from Thomas Dowling Ness from Hamburg N. Do you have a rough estimate of how much CapEx is required to reach the NOK 4,000,000,000 to NOK 5,000,000,000 revenue target that you've set.
Yes. Maybe, Dylip, this is something that you could address.
Yes. Let me take that. So Thomas, I think what we have said in the past is Hekta. Our plan is to invest roughly NOK 500,000,000 of CapEx over the next 2 years. That would generate revenue capacity of about NOK 1,500,000,000 to NOK 2,000,000,000.
That did not include any plans for China. Separately, you've heard about our total CapEx plans in China, roughly US100 $1,000,000 in totality, along with our JV partner over the course of the next 4 to 5 years. Hekka. So I think that should give you a good sense of the kinds of capital expenditures that we're going to need to undertake over the next few years to get to that NOK 4,000,000,000 to NOK 5,000,000,000 aspiration by the middle of the decade. Hekke.
Thank you, Dylip. And finally, a question on CMC EnRig. How much revenue do you expect Hecht from the CMC Enriq JV at completion. Morten?
Yes. I'm not sure how Hekke. To interpret completion, but again referring back to what we've discussed earlier, what we say is Roughly $100,000,000 investments towards the middle of the decade. And at that point, these sort of investments will give us Hektra. A revenue capacity on the cylinder side between NOK 2,500,000,000 to NOK 2,500,000,000.
Hekke. And yes.
Thank you, Martin. And that basically covers Hekke. All the questions. So if you have any further questions, later you can always send your questions to irtexagompurist. Hektaqam, and we will answer your e mails your we will answer you via e mail.
We thank you for spending time with us this morning, and we wish you a rest of a very nice day. Thank you.
Thanks for listening. Bye bye.