Good morning from Oslo. Welcome to Nel's first quarter 2026 results presentation. My name is Håkon Volldal. I am the CEO. With me today I have our CFO, Kjell Christian Bjørnsen, and our Head of IR, Marketing, Communications, and Miscellaneous Functions, Wilhelm Flinder. We have the following agenda. I'll skip the Nel in brief and jump straight to the highlights for Q1. We have a short commercial update covering the most important commercial events in the first quarter and one subsequent event. A short technology update, and then we will, as usual, end with the questions and answers. Quarterly highlights. Revenues came in at NOK 148 million. We had a negative EBITDA of NOK 100 million. Order intake at NOK 85 million. Order backlog ended at NOK 1.1 billion, and our cash balance ended at NOK 1.4 billion. A pretty quiet start to the year.
First quarter is always a bit slow. What we are focusing on is the launch of the new pressurized alkaline platform. That will happen at Herøya on May 6th this year. In connection with that, we have been busy in the first quarter testing out new pressurized alkaline production line technology that is progressing according to plan. We also opened Korea's first off-grid green hydrogen production facility. That was commissioned in late March. In April, we received a $7 million purchase order for Containerized PEM equipment. Looking at more detailed numbers, revenue from contracts with customers down 5% year-over-year. Revenues from alkaline division increased by 6%, but we had a decline in the PEM division of 14%. The NOK 100 million negative EBITDA was a NOK 15 million improvement year-over-year.
It's of course driven by the fact that we continue to invest in next-generation technologies, and we need higher revenues in order to become profitable. Solid cash balance at the end of the quarter. That does not include EUR 11 million in the EU grant linked to our pressurized alkaline industrialization, which we expect to receive in the next quarter or in this quarter, second quarter 2026. Alkaline financials. Limited revenue recognition in the quarter. Despite that, revenue was up 6% year-over-year. EBITDA improved by NOK 35 million versus corresponding quarter last year due to positive impact of project deliveries. We have adjusted our cost base and capacity utilization to reflect lower market demand, but lower fixed costs will continue to negatively influence results until volumes pick up. As you can see from the chart, we do generate profits when we have good revenues.
Jumping to PEM. Revenue down 14% year-over-year due to limited megawatt project deliveries in the quarter, and mostly sales of industrial products. EBITDA was down NOK 16 million year-over-year, largely driven by delayed or canceled research grants in the U.S. We have historically received money from the U.S. Department of Energy to fund several research programs, and that has been under review, and parts of the grants have not been paid out since late last year, and that reflects performance so far this year. We have a good hope that the grants will be reinstated and that money will continue to be paid out or they will resume paying money to Nel, but can't say exactly when that will happen again.
We are also, in the PEM division, spending money on product development for a next generation PEM electrolyzer with significantly lower levelized cost of hydrogen, and that development is progressing well. Order intake was NOK 85 million, was down year-on-year versus a strong quarter in 2025. We expect order intake to improve and have already booked the first order in the second quarter of roughly NOK 70 million. The first quarter you see here did not reflect any big project wins, just, I would say, normal course of business related to aftersales and some industrial products. The order backlog at the end of the quarter ended at NOK 1.1 billion. Due to a declining order backlog and limited demand over the past few quarters, we have reduced our employee base. We tried to adjust our cost to changed market expectations.
We are down in terms of number of employees 26% versus the peak, and 19% versus the end of first quarter 2025. We can see that this also then translates into a 21% reduction in personnel expenses in the first quarter of 2026. We have done these adjustments to make sure that we spend our money responsibly, but it has largely affected our ability to manufacture at scale and deliver projects at scale. That variable or that muscle has been reduced. We have kept more or less our R&D organization to make sure that we can progress and deliver the new technology needed to bring additional volumes back. Once we get new orders and we see that the market is coming back, we can add back the manufacturing and project execution capacity. For now, we have reduced our staffing down to roughly 300 employees.
On the commercial side, we do want to highlight this. Korea's first off-grid green hydrogen production facility has been commissioned, happened in late March. It's a 10 MW alkaline system from Nel, supplied by a solar power plant, as you can see on the picture. There is no reliance on the power grid. This project more or less validates large-scale off-grid hydrogen production as a model for future domestic and international projects. It's been a very interesting project together with Samsung C&T, where, of course, Samsung C&T acted as the EPC and Nel provided electrolyzers and gas separation modules. In April, we received another order for Containerized PEM equipment from Messer process. It's the second purchase order from this client, and we're quite proud to see that whenever we get an order now, very often we can say that it's a repeat purchase.
That means the quality we deliver is solid. Customers have good experience with the first products they have purchased, and they come back for more when they need it. This equipment will supply hydrogen for refueling stations and industrial applications. I think it sort of confirms the story that the MC platform, the Containerized PEM solutions, has strong momentum across a wide range of applications. It's a fully modular design, and that enables rapid project execution. It's also a good way to build out capacity over time. You can add more modules if you need more capacity. That also fits nicely with the market perspective. We continue to see several of these promising smaller projects, 2.5 MW, 10 MW projects that are ideal for a Containerized PEM. We also see some larger projects in the 50 MW-150 MW range.
These are expected to take Final Investment Decisions over the next quarters. Containerized PEM has strong momentum, as I said, and to elaborate a little bit on that. The reason is that projects have become smaller than we saw a couple of years ago. Then customers spoke about 100 MW, 200 MW, 300 MW, 400 MW. They now plan for something smaller, at least initially. They want a gradual approach to this, where they build out capacity over time when offtake materializes. If they start with the first step, that's usually in the 10 MW-50 MW range, and that fits nicely with Nel's Containerized PEM systems. Multiple Containerized PEM systems offer a proven, efficient, and standardized alternative to customized and tailored solutions.
We have achieved significant CapEx reductions over the past few years, both on the stack itself and on the system design, and combined with the growing list of references that we have around the world, this has increased Nel's competitiveness in this market segment. Europe is currently the most active and promising region, but we also have projects and deliveries in North America and interesting prospects in the Middle East and Asia. I want to end the quarter with a comment on the energy resilience. We continue to see fossil energy shocks, and we continue to see that we repeatedly subsidize fossil energy to manage these shocks while investments into renewables face higher skepticism. Renewable energy can reduce exposure to certain price spikes and definitely help mitigate geopolitical dependency and vulnerabilities. The intermittency that we see from wind and solar, the wind doesn't blow all the time.
The radiation from the sun is not constant, and that is a known challenge with the renewable energy systems. Electrolytic hydrogen enables long-term energy storage and system flexibility beyond what batteries can provide. As one example, a 200-MW plant in the United States has larger capacity than all the batteries currently linked to the electric grid in the United States, including the batteries from Tesla. Hydrogen is at another level when it comes to the amounts of energy that we can store. Investing in renewable energy and green hydrogen is cheaper than repeat short-term subsidy programs for fossil energy. It also, by the way, reduces emissions. When we have debates about energy resilience and the security of supply, I think hydrogen should increasingly be part of that.
We see an increasing interest among defense contractors and politicians to look at the role that hydrogen can play in distributed energy supply. To give you one example of how hydrogen can help basically flatten out the demand curve for electricity, we have a 20-MW Nel plant in Denmark. It's run and owned by Everfuel. They run this plant when there is excess energy in the system. Instead of then bringing prices down to a very low level, Everfuel will help prices stay more or less stable because they can also shut down the equipment when demand for electrons is high. This facility, the 20-MW facility, helps balance out these peaks and low points that we see in electricity demand.
Implementing this on a larger scale will, of course, help avoid periods where operators and generators get absolutely nothing for the electricity they produce, but also help consumers avoid periods when demand is high and electricity prices go through the roof. It basically helps flatten out the price curve for electricity. Shortly on the technology update. We have shown this slide before. I just want to remind you that when we talk about pressurized alkaline in Nel, it's not that we haven't looked at that before. We used to have pressurized alkaline technology 20 years ago, but it did nothing that the atmospheric alkaline didn't do. We do, however, see benefits of having pressurized gas, and that's why we started back in 2018 to sort of reinvent our pressurized alkaline technology. In 2026, after years of testing this new technology, we are ready to commercialize it.
It has taken eight years, but now we're getting ready for the commercial launch. It will happen on May 6th. We have invited customers, potential customers, partners, employees, and a lot of people that might find this interesting to Herøya to take a look at a real physical installation, proving that this concept is more than a PowerPoint concept. It actually works. It's a physical thing, and talk about the benefits that this solution brings to the world of hydrogen. We are truly excited to show the world what this technology can do. We will offer market perspectives by external speakers and, of course, also dissect the solution and talk about the value proposition that we believe this solution has. Therefore, we will not go into a lot of details today on the technology. We will share our presentations with the public on May 6th.
Just want to give you a sneak peek of what is happening in parallel because we are truly proud of the solution that we have. Of course, we have to be able to deliver it at scale. That's why we in December decided to invest in a production line for pressurized alkaline manufacturing capacity at Herøya. This is funded by the European Union. As I mentioned, the first milestone payment will happen shortly. CapEx per megawatt is significantly lower for this concept compared to the atmospheric alkaline or PEM. Ongoing tests confirm product quality and exceed prototype production results. We have clear improvements in yield and fewer critical defects, and cycle times are coming down to support increased annual capacity and improved efficiency.
We have a strong process understanding already, piggybacking on a century of experience producing alkaline systems, but there are new processes and new techniques that have to be mastered, and we're well into that. The goal is to have the first 500 MW of production capacity installed by the end of 2026, and that's why we commercially launch it now to have time to build the order backlog and for customers to understand the benefits of the concept and together with Nel start to work out the exact concrete and specific projects where we can apply this beautiful technology. That brings me to the final page. This has been our value proposition for quite some time. I think Nel has an unrivaled track record. We have a century of experience.
We have sold more than 7,000 electrolyzers globally, and we have a ton of prestigious references. To stay a leader in this industry, you have to demonstrate technology leadership. We do that by having multiple technology platforms. We have both PEM and alkaline. We have proven solutions for today, but we need new solutions for tomorrow. We need solutions that can bring the total cost of hydrogen down, and we don't develop that only here in Nel. We do it through a big network of world-class partners. What we will show in May is an example of cost and scale leadership. This concept will be an enabler for customers to realize projects that they could not previously realize because costs were too high. Nel is a frontrunner in cost reductions.
We make big leaps in terms of innovation and how we look at cost down opportunities, and we combine that with market-leading production capabilities. We will revert in May with more information about the new technology. Bear in mind, a couple of years later, we will have the next generation PEM platform also available. That concludes the presentation, and I will be joined by our CFO, Kjell Christian Bjørnsen, to answer questions that you might have.
Very good. Thank you, Håkon. Before we start the Q&A session, just a few practical points here. If you'd like to ask a question, please use the raise hand function here in Teams. I see already there's a couple of questions coming in. We will call your name and unmute your microphone, but please make sure to unmute yourself on your end as well. If you don't get to your question, feel free to reach out to us at ir@nelhydrogen.com. As a reminder, we will not comment on outlook-specific targets, detailed terms and conditions for individual contracts, or questions about specific markets. Modeling questions are also best handled offline. With that, I think we can get started. First question comes from Martin Creamer. Please go ahead.
Thanks. I've just unmuted. Sorry, it took me a bit of time. I'd just like you to give me some explanation of how long you can store the hydrogen for and what method you're using to store this? When it is released, do you turn it back into electricity through the use of fuel cells?
Yes, that's correct. There are different ways of storing hydrogen. You can store it in a buffer tank for large quantities of energy to be stored. You can even use a pipeline, or you can use salt caverns, so there are different examples of how to do that. There are salt caverns used in Sweden for storage. There are pipelines being used with compressed hydrogen. You can liquefy it and store it in a tank. There are different ways of storing the energy. You're right, if you want to turn it back into electricity, you have to run the hydrogen through a fuel cell again to generate that electricity, which you can use on-site, or you can send it back to the grid.
Just before I let you go, how long can you store that hydrogen for? The normal storage at the moment with electricity, you can't store it for that long. Are you able to store it for a longer period, and what is the advantage of that?
Yes. That's the big thing about hydrogen. You turn it into a molecule that you can store for a very long period of time. We're talking years if necessary. There is always a little bit of a loss, what we call a boil-off, but that's a Mickey Mouse figure compared to the total amount of energy that you store. Whereas batteries can help you smoothen out short-term swings. It's very difficult with batteries to store large amounts of energy and use that to sort of, let's say you need more energy during the winter. Then it's difficult to store that in the summer and release it in the winter. Hydrogen, you can do that, and you can even use it for long-term storage for multiple years.
That's where batteries and hydrogen serve different purposes, but I think both are needed to have an energy system that we can depend on.
Quickly, can you use the existing infrastructure, existing tanks, or do you have to get special new tanks?
It depends on where you are. In some places, you have infrastructure in place that you can leverage. In other places, you have to build that storage capacity.
Thank you.
Thank you, Martin. Next question comes from Elliott Geoffrey Peter Jones from Danske Bank. Please go ahead.
Yeah. Thanks for taking my question. I think just more on the macro side, just thinking about obviously the escalations in the Middle East and what's happened to, like you mentioned, energy prices. We're seeing metals prices go through the roof as well. Are you seeing or hearing any change in customer activity with regards to the potential for another bout of cost inflation when it comes to projects? Or have you not really seen any change in attitude from customers? Any color on that would be very helpful.
What we do see is that some of the projects that are in the Middle East are delayed or that further execution of those are somewhat hindered by the current circumstances. We do see some material price movement, but it's too early to see if that is a sustained movement or not. I would say the beauty of what we are launching with the next-generation technology and also the next-generation PEM platform that we're working on, is that we take down the labor cost on site. We take down the engineering hours. We take down a lot of these cost adders that would typically be influenced heavily by inflation.
We reduce our dependence on platinum group metals significantly.
That's a good point. No, that's helpful. Then just to follow up on that quickly, just kind of putting it all together, looking at last year versus this year, obviously we've talked about this year a lot, the pipeline being more kind of sensible and real. If you add on the Middle East escalation, would you say the current market is more tricky than where you were last year? Would you say, given the maturity of the customers you're working with, actually you're still expecting more activity this year than last year?
I think we expect to see more FIDs this year than we saw in 2025. In the healthy market, there will be projects that are canceled and projects that are added, and I think that's what we see now. We don't see a big jump in our pipeline capacity. It's fairly constant, which I think is a good thing, because then all the dreamers are gone, and projects that don't make sense are stopped before we get too deep into the execution phase. I would say we are slightly more optimistic about 2026 than 2025. We believe momentum will continue to build into 2027 and 2028. We talk internally about a turning point that we've been down in the valley and slowly starting to climb back up the ladder.
Got it. Helpful. Thank you very much.
Thank you, Elliott. Next question comes from Arthur Sitbon. Please go ahead.
Yes. Thank you. Thank you for the presentation. I have two questions. The first one is, we've seen some of your competitors announce large framework agreements with the defense sector. I was wondering, you refer a bit more to energy security, the need of energy resilience in your presentation today. I was wondering if you're working on such type of framework agreements with that sector, and if we could see anything meaningful announced on that in 2026. The second question is just on the sequence of events for coming quarters and coming years. Your backlog has been coming down. I was wondering, how fast do you need to see orders come through in order to kind of bridge the gap between where your backlog is, and maybe where consensus expectations are for revenues in 2027?
Always with the idea that, while I know you have that cash balance at the moment at a given level, I imagine that covers you for 2026. For 2027, I suspect you need orders at a certain level for the cash to be enough. Any color on that would be helpful.
Yeah. I can take the first and maybe you will take the second question, Kjell Christian. We have a number of collaborations also with companies in the defense sector, but we don't announce these partnerships publicly. Because what we have been told is that the capital markets only appreciate hard purchase orders and anything else, whether it's a FEED study or a frame agreement or this and that, just creates noise. I do see there's a lot of noise out in the market. A lot of agreements are presented as firm commitments, but they're not. We are in the same type of discussions and with the same companies as you have seen announced recently, if that answers the question.
Yeah. Then just to add to that, we've been for years having grants from U.S. Department of Defense in the U.S. to work on hydrogen as part of an energy resilient infrastructure. We're a defense subcontractor in the U.S. Yes, defense and resilience is definitely on the agenda. On the outlook, when Håkon talks about us seeing momentum in the market, it's obvious that with that, we see order intake coming there in time. Currently, we do not have enough to really fill meaningful utilization in 2027. We have good reasons to believe that we will see order intake this year that will help us have meaningful activity levels in 2027. When it comes to cash balance, and we touched upon this in the presentation, we have taken quite some actions.
In addition to the personnel expansions that we talked about, we have worked a lot on other external spending. I do believe that we can stretch that cash balance fairly long, if it takes even longer to get orders. We're not stressed with the size of our cash balance.
I think you also said that the momentum for Containerized PEM solutions is picking up. The good thing about that solution is that we have a fairly short delivery time on that. We can deliver systems in less than 12 months. The order we booked in April will be delivered in 2027. If we get orders now until year-end, I think we have an opportunity to deliver all of those or close to all of those in 2027. We are hopeful that we can book more Containerized PEM solutions, and that will keep us afloat until we get the larger alkaline orders.
Thank you very much.
Thank you, Arthur. I see we have a follow-up question from Martin Creamer. After that, I see no more questions in the queue. As a reminder, if anyone wants to ask a question, please use the raise hand function now. Martin, please go ahead.
My question is just when do you expect to launch the next generation PEM? When is that likely? And what advantages will it bring?
If I could give you an exact date, I would. If there's one thing we have learned, it's that technology development is uncertain. It takes time. Look at pressurized alkaline. We've worked on that for eight years. You have a pretty good idea what you want to do, and then there are always tricky things that you need to overcome. Could be pertaining to the concept design itself, could be pertaining to availability of materials, or you end up with a cost that you don't like, so you have to re-engineer it. With PEM, we have the ambition to build a full prototype stack this year. That has to be tested, and then we need to spend some time to get partners to help us industrialize it. It will take, as I said, a couple of years.
Whether that means we can launch it end of 2028 or mid-2028, or if we will launch it late 2028 or in 2029, I'm not able to say at the moment. When it comes to the benefits, the benefits of the new PEM platform is that our goal is to take the cost down by 70% on a stack level. In a PEM system, the stack is the most expensive component. That means we can significantly reduce CapEx. It will be a low CapEx, low OpEx solution. That's the sort of the holy grail. You get the cake, and you can eat it. Compared to pressurized alkaline, it might have even better energy efficiency, and it could have a smaller footprint at a lower cost. The response is, as always with PEM, fantastic. It's more dynamic than pressurized alkaline.
Even though I have to say, for larger pressurized alkaline systems, you also have fantastic dynamic capabilities. We believe that this is something that will be even more competitive than what we will launch now in May, and that's why we continue to work on it. If it's not, we will not launch it.
I'm from South Africa, so I always promote platinum with platinum. Will it also contain platinum? Do I read PEM equals PGM?
Yeah, the iridium loading and the platinum loading is very limited. To all those who want to sell all of that platinum and iridium, I have to disappoint you because the reason we can get the cost down is because we will utilize much less iridium and platinum. It's on a very different level compared to what we see today.
I'm very happy with that. Just go for volume. We don't worry about value. Give us volume.
Okay.
Thank you, Martin. It seems we're out of questions, so we'll end the Q&A session here. If anything comes up after the call, you're always welcome to reach us at ir@nelhydrogen.com, and I'll hand the word back to management for any final remarks.
No further comments. I think we look forward to the launch event on May 6th. As I said, we will release some material on May 6th that I think explains the new solution and the benefits that we see with that solution in more detai. Than what we have presented to the market so far. I hope you take a good look at that material in just a couple of weeks. Thank you for watching.