Good morning and welcome to Heramba Electric plc's investor webcast, 2023 financial results and 2024 operational updates. I'd like to begin by reading the company's safe harbor statement. Certain statements included in this call that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding the plans and objectives of management for future operations, business strategy, anticipated growth, and market opportunity. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by any investor as a guarantee, an assumption, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions.
These forward-looking statements are subject to a number of risks and uncertainties discussed under the heading Risk Factors and the definitive proxy statement Prospectus filed on March 19th, 2024, by Heramba Electric and other documents filed or to be filed by Heramba Electric with the U.S. Securities and Exchange Commission. Now I will turn the call over to Michele Molinari, CEO.
Thank you very much for this introduction. Ladies and gentlemen, good morning. Welcome to the very first Heramba Electric management update on business and on CapEx on fiscal year 2023. Please allow me to go forward on our slide deck. We start, of course, with some statements and disclaimers, and we will go straight away to a short overview of what we will be talking about. Together with me here on the call are Peter Muemmler and Alex Ketterl. I will introduce them shortly. Then we will speak about the business combination of Heramba and PERAC. Our strategy, I will then introduce, so we will introduce, Kiepe to you, the figures of 2023 and where we are in 2024, plus some about the key wins in 2023, and we will then end with the Q&A session. First of all, we would like to introduce ourselves.
My name is Michele Molinari. I'm Swiss. I'm more than 30 years in this mobility and railway and bus business. I've been working and living internationally to implement projects in railways, in buses, et cetera. I'm very excited to be the CEO of Heramba Electric. At the same time, I'm also the managing director of Kiepe Electric USA. We will discuss this further down the road. Next, Peter, may I hand you over to you, please?
Hello. I'm Peter Muemmler. I'm the CFO of Heramba Electric and CFO of Kiepe Electric. I started with Kiepe Electric in May this year. I'm happy to take the CFO position over Heramba Electric. My background is I'm leading different companies globally in the U.S., in Europe, Germany, China. Work in different industries as a CFO, and I'm pretty good familiar with different business models like project or product business or service and software business. Happy to be here.
Thank you, Peter. Alex, please.
Yeah, hello everybody. This is Alexander Ketterl. I'm the CEO of Kiepe Electric, and I'm more than 20 years in this transportation business for road and rail, and I was working in different senior management positions for companies like Siemens, Deutsche Bahn, and Bombardier. I'm four years with Kiepe, and I'm very happy for today's meeting.
Thank you very much, Alex. As you can see, ladies and gentlemen on the call, we are experienced people, engineers, managers with a long experience and track record in the mobility industry. And for us, it's not only a job, it's a passion, and this is what drives us forward every day. Let me go forward and a little bit into the history since it's the first time Heramba Electric is presenting itself, where we come from. Heramba Electric acquired Kiepe Electric in February 2024. Kiepe Electric is a German and U.S.-based technology company focused on the decarbonization of commercial and public transportation vehicles and charging solutions, et cetera.
This continued then in April as we started the business combination with PERAC, SPAC, and with this, Heramba began to take a new life, a new setup, which led then at the end of July 2024 to the listing, to the public listing of Heramba Electric on NASDAQ with the symbol PITA, P-I-T-A. So this was, of course, for all of us and the whole team who made this possible, a big moment. We are at the beginning of this journey, and there is much more to come, and we are excited to go forward. Now, who are we and what do we do? Heramba Electric is focused on the acceleration of the decarbonization in commercial and public transportation. All of us, we know we want to achieve some goals with regard to reduction of carbon emissions, et cetera, and there are 2050 goals, et cetera.
Everybody talks about the transition towards this to reach these goals, and we are specialists in this, and this drives us forward. How do we do this? We do this by, if I say it with my simple words, we go off the beaten path. We look for hidden champions in the respective industry who have experience, a track record, and the future in commercial and public e-mobility. We invest in sustainable, clean energy technology companies, and we want to make a dent into the universe to do that and to make a strong contribution in this going forward. The market in which we are active is the global market in the first place with two strong centers, accessible centers for us, let's say Europe and North America.
The market for commercial electric vehicles, and this does not only include electric buses for urban transportation, but everything, trucks, off-highway trucks, commercial vehicles, construction vehicles, et cetera. This is a very fast-growing market segment. According to Roland Berger, you see here some figures, where the estimated market in 2023 was about $11 billion, and it's expected to grow until 2026 to $34 billion. This is a fast, very fast-growing market, and we want to be part of it, and we are part of it. You will see that later on. Another fast-growing business is the high-power charging business for electric buses to recharge batteries. We speak of battery electric buses and vehicles for urban transportation, for commercial use, et cetera, which is also in a very strong growth. As you see here, what Roland Berger estimates from $1.4 billion-$2.8 billion. This is growing fast.
Here, the key point is to be there in the key markets and to have a strong foothold. The other more older market is, of course, the rail vehicle market, which is, depending on where and which geography, more electric-driven or more diesel-driven, but the urban rail vehicle market is usually electric. This in the same timeframe from 2023 to 2026, growing from $33 billion-$36 billion. And we are present, and you will see now shortly how we are present in this almost more than $70 billion global market. As mentioned before, Heramba Electric acquired Kiepe Electric in February 2024, and the rationale for doing this is simple and clear. Kiepe Electric is a renowned global leader in the electrification of rail and road transportation, and since 2022, also in the high-power charging solutions business, and has a history of more than 100 years.
This is a strong legacy, a strong base on which we can build on. Kiepe is a specialist in system design, system integration, manufacturing, and implementation of power electronics, power drives, vehicle control, hardware, and software. Kiepe is not only designing it in-house, but also producing it in-house here in Düsseldorf, sorry, Germany. This knowledge is in-house, and I think this is a very strong point, which makes Kiepe shine out in this market. Kiepe also is very strong on software, has always been, and has always been pushing in full-fledged solutions for the customers, end-to-end solutions in everything for the vehicles, rail, buses, and also with charging stations. The very important smart fleet management solution is being enhanced with AI-based features specialized to optimize battery life for the operators, which see new challenges with the battery electric vehicles.
This altogether is a very good proven business, and this shows that Heramba is not a startup, but a company together with Kiepe, which has a long track record, real customers, and real revenues. On the next slide, you see the key figures, business highlights of Kiepe, more than 500 employees, more than 500, 5,000, sorry, 5,000 globally installed vehicles. As I said before, more than 100 years old, founded 1906 by Mr. Kiepe himself with the global presence today for sales and after-sales support. And two key features today, as I said before, is the high-power charging business and innovations Kiepe has introduced, just starting in 2022 in Paris, Île-de-France, which is Paris, with very interesting leading-edge solutions for the charging of battery electric buses.
Other point is, which is very important in today's industry, everything that has to do with control, the controls in the mobility industry is cybersecurity. Kiepe Electric has updated its complete product line in the vehicle control line for buses and rail vehicles, and new product features with regard to cybersecurity have been implemented and rolled out and successfully rolled out, I must say. As here you see the standard, the ISO 26262. At the same time, it's compliant with the new European directive on cybersecurity. The three business segments Kiepe Electric is in, as I already said a little bit, I go more a little bit into the details, are the bus electric vehicle systems, which represent nowadays or represented in 2023 about 7% of the order intake. The goal is to have this grow fast and steadily for the future.
The second business segment is rail vehicle systems, which represented in 2023 58% of the order intake, and the lifecycle support, modernization, and other kinds of business and revenues, which represented 35% of the order intake in 2023. For the sake of time, I just pick out a few key points here of what is key and special with Kiepe. I already spoke about high-power charging systems, but what Kiepe is known and famous for, and what customers like OEMs, public operators, and others appreciate is that Kiepe designs and delivers standardized or tailor-made power electronics solutions, electric drive solutions and components, and vehicle control systems for buses, trams, trains, locomotives.
The customers can decide if they want to buy the components and do it themselves, or if Kiepe acts as a system integrator and not only delivers the components, but also does the full system design, the software, the implementation into the vehicle, commissioning, and after-sales support. This has been a very successful part of the business for Kiepe, and the idea is to expand and make it more stronger by widening the customer base also more on the product side, but we will speak later on about this. Another important part is the lifecycle support for the customers. Other people call it service. We call it lifecycle support because the vehicles Kiepe is supporting have a lifecycle, a lifespan of 30+ years.
So this gives the opportunity to Kiepe for a very long exposure to the client, to keep track of their own products, and to be there for when the customer wants to upgrade the systems or new features shall be implemented. On the next slide, you see the different solutions which are provided today and the future market solutions which are anticipated. On the left-hand side, you see the value chain of Kiepe from design, integration, hardware and software, down to lifecycle support and fleet management. We all see that the future business will be over-the-air. We are not flying, but this means to access on a two-way stream, vehicles, buses, railway vehicles, et cetera, not only to download data, but also to upload data and programs and differents. And also the business-as-a-service solutions, we see there more to come.
In the commercial vehicles, you see transit, buses, trolleybuses, et cetera, and the future or already starting markets for commercial mining, construction vehicles as of electric vehicles, coaches, school buses, and trucks where Kiepe has very good and proven solutions. Then we have the charging infrastructure, either for the depot or en route from a small power, let's say small power ratings to ultra high power ratings. Kiepe is one of the leading in this field with already rolling out the 800 kW solutions. And of course, Kiepe is working on the megawatt charging solution as well. Last but not least, we have the rail vehicles where everything from light rail vehicles to metro, electric multiple units, and locomotives are being served, and Kiepe products are being installed all over the world in a wide variety of operators. As I said before, Kiepe has a real and long track record.
This is why you see the countries where Kiepe is all in. Of course, the headquarters is in Germany, Düsseldorf, where we are sitting right now, with subsidiaries in Austria, Switzerland, and Italy, as well as in North America with Alpharetta in Georgia and Vancouver in Canada. This is a very strong base for the future growth. We are with this in the key markets for the future business and to be there to serve the customers. So this was the rationale why Heramba invested in Kiepe, and to show you the base of this company, and why we decided to take it on and to lead it into a new future and expansion on a global level. Next will be, of course, the American, the expansion in North America, where you will see that already good progress has been made.
I would now turn over to Peter for that he guides us through the 2023 highlights.
Hello everybody. Just giving a broad overview about the 2023 financial highlights. Keep in mind that 2022 and 2023, Kiepe Electric was a part of Knorr-Bremse and got outsourced on 2024 and got independent. The revenue, what you see with a significant growth in 2023, you see it on the right side, but approximately 30%. The revenue share is still dominating in Germany. This is the home market of Kiepe Electric, roughly close to 50%. And Europe, this is the countries around Germany, I would say, with 39%, but we have a share in the U.S. of 12% of the revenue today. I think the most important information about the growth is where we have the growth.
And there you can see one of the strategies we are growing in North America by close to 60%. And this shows and mirrors the activities we are pushing right now to really get a key player in the American market, in the North American market, that we are gaining the growth, and it's one of our focus markets too because we see a significant potential there. But nevertheless, we grow in Europe about 25%. When you go down to the net profit for 2022, we had a significant loss in 2022. This was really a one-time impact in a project, double-digit million impact. What was it? It was a reassessment in the project, and we needed to refurbish more or less a complete fleet. And this was a significant impact, but it was a one-time impact. You cannot push it to all over.
2023, we have a pretty good risk management in our project. And when you come to the end of project, and we had a couple of good projects where we mitigated risk, and therefore we had positive impact, and we can turn risk business to more likely in a positive range in 2023, what was a significant improvement. One of the assets of Kiepe, I must say, is really the order backlog. When you see on the order backlog on the right side, we have an order backlog of EUR 621 million. What is reaching out till 2032? This is more likely when you have long-term modernization project or service project contract, this going roughly over 10 years sometimes. Therefore, you have this long-term information here for the main core business, what Michele mentioned already.
The knowledge of Kiepe is the system integrator business, and this is dominating in the order backlog today, goes up to 80%. The other businesses are the maintenance, 20% of the order backlog. We left Knorr-Bremse, which you see down with no debts on the balance sheet and a cash equivalent of $35 million, $0.4 million. There are some positive impacts in there. What's not operational, what's mainly driven by leaving a cash pool, there are impacts in there, but pretty positive. When we go to the next page where we're going for the market, the outlook 2024, we had market challenges. This year, we have significant pressure on our revenue and profitability. The actual situation, one, I mentioned this already, we have a tailwind in North America market, new projects.
This is still a market where we see the growing and really increasing the share from 12% today to a much bigger share in the Kiepe revenue. This is still working. But on the other side, we have Europe and the OEMs, what our mainly partners are in the system integrator business. They have critical performance areas, and this impacts our revenues by delaying projects, by failing on projects in the OEM, and we are somewhere with them together in the boat. And I think as the whole industry still faces global supply chain, it's not stable. Delay of deliveries, need to manage the firefighting. The costs are still increasing. It's still a huge pressure on our business due to the long-term projects we have in there. And then we have a price pressure on the bus and rail markets. This has an impact of gross margins.
Actions to improve profitability. I mentioned this. There's one really topic we are pushing very strongly. This is push component service and modernization business. Why are we doing this? This is, first of all, a higher margin business, and we're reducing the significant project risk in our business, what gives us certain volatility in profitability in the market. And we want to really go to a different share. I mentioned the backlog share, 80% system integrator business. The target must be that we are around in the range of 50%-60% in our revenues in system integrator business. It's still our core business, and the rest will be really divided by component service and modernization business to get stable. Diversity from the customer base with new OEMs. We have more OEMs that we share the impact. Very important.
We're working on new OEMs, on new partnerships for the whole strategy, supply chain, secure second sources in the supply chain to really have a low-cost and a secure delivery areas to reduce risk. The one thing is what we initiated at the cost down program to improve competitiveness and profitability. We need to reduce costs with different measures, levers, low-cost countries, reducing admin and supply chain costs. This is initiated, and we're working right now hard on this program. The outlook, what I mentioned, North America grow, win a couple of projects in the pipeline. Strong push components, what I mentioned, is reducing the midterm, the risk profile. Getting independence, more and more independence, a bright share of the business. This is what I mentioned with reducing the system integrator volume down to 50%-60%.
And yeah, improving profitability with cost out and the net cash position about this business. This is the outlook.
Thank you very much, Peter, for guiding us through these slides. Next, I will hand over to Alex, who will introduce us to the key wins in 2023 and 2024. Please.
Yeah, hello everybody. Here I want to highlight some major project wins for 2023. This slide should give you a better overview and flavor of our business. So first, I want to highlight the smart hybrid Vossloh win, which is a shunting loco, and here we equipped the shunting loco with a traction system, and the specialty is with a battery container to serve zero emission operations for the last mile. So this was a significant milestone for Kiepe and the customer in our component business, as well as towards our innovation competence into the market.
Second highlight was the first charging stations. We have one in 2023 for the city of St. Gallen in Switzerland. So you see we are international business. Here the customer trust into the new technology and innovation of Kiepe. Here we are using existing power supply, the public grid, and the catenary. So this helps the customer to avoid and to limit investments for charging stations and infrastructure. The third very important highlight is what we have won last year is the traction platform for BMC. BMC, it's a Turkish bus OEM, British Motor Company. Here Kiepe was awarded to equip the bus with a traction system, or we also call it the whole drive train, which contains the traction container, the motor, and the battery system, as well as the traction control and energy control.
So hopefully we will finalize the homologation this year, and we will start serial delivery next year in 2025. So in 2024, we have similar major wins, and here I want to start with the really top one. It's the modernization project for CTA in Chicago. Here we will equip nearly 400 coaches for Metro with the new traction and auxiliary power supply. This shows the competence of Kiepe extending the life of a vehicle and also what Peter said. So we are in the core business of lifecycle support and lifecycle management. And the next one is, again, BMC, they trusted in our technology, and we were awarded to design and implement the technology for their 18-m bus. So it means for the British Motor Company, Kiepe is able to deliver the whole e-mobility equipment for their whole product offerings.
The third one is a smaller project, but it could come very fast to European railway operators. It's an ultralight vehicle, Draisy, for the French market. So there's a huge market potential to equip very small railway vehicles with traction equipment based on road technology. So easier, not so heavy, and therefore cheaper for railway solutions. And here Kiepe is in the business, what you can see, not only in new projects, but the characteristic of our business is also extended scope of existing projects, getting more options of the same. So this will drive our profitability and also, of course, a lot of service and modernization business, which drives our revenue. So for the next slide, beyond the road, of course, what is not in our plan and what we anticipate to accelerate our growth and profitability.
First of all, what we also mentioned is the new business opportunities in charging solutions with existing power supply infrastructure. So we use public grid as well as catenary. So that means we are using existing infrastructure. So that means finally the cost for setting up such charging stations will be lower compared to other solutions. Second is, of course, the North American e-bus market will grow heavily. There are not many OEMs, and so we want to support OEMs and with our technology and also partner with new OEMs, which will occur in the U.S. market. Third one is to provide a one-stop shop for e-mobility solutions in North America. That means next to the bus and next to the e-mobility equipment, you need also charging solutions and service maintenance solutions. A fourth pillar of our growth strategy is, of course, software. This is very important.
So we want to add additional functionalities in our smart fleet management tools and to use also AI and to serve better operation for Kiepe and also non-Kiepe fleets. This could be important for us. Finally, what has also made the trend and driver is the hybridization for existing rail, diesel multiple units for rail and also bus. So this could be also a major driver for Kiepe.
Thank you, Alex. What I want to mention here, especially on number five on the hybridization, maybe you saw it on one of the pictures in the slide before. Kiepe is also supplying into hydrogen vehicles, the electric drive train. So we are covering all markets, not only the electric, the battery side, but also the hydrogen market.
Exactly.
Exactly.
Yeah. Very good.
I think this is also very exciting and very good and will help us all to expand further into the markets. With this, we have almost reached the end. I want to make you aware of the upcoming events where Heramba Electric and Kiepe Electric will be present. First of all is the InnoTrans show in Berlin, the biggest globally biggest show for the rail market from September 24 to 28. Kiepe has a long presence there since many, many years. And so we will be present with the big stand. Then the next in North America will be at the APTA conference in Anaheim, California, right the week after the InnoTrans in September, from September 29 to October 2.
And in November, we will be present in Toronto, Canada, at the CUTA exposition and present there also for the very important Canadian market, where Kiepe is also present with the known subsidiary. So in the next in September, October, November, we have important shows, which gives us the possibility to show our customers, existing and future customers, etc., what we are doing and why they should buy with Kiepe and Heramba Electric. So far, we have reached almost the end of our slides and what we have prepared. We are now open for a Q&A session, and we are happy to hear your questions, and we hope, of course, to answer them right away. Please, who would like to start?
Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is star one to ask a question. One moment, please, while we poll for questions. As a reminder, if you would like to ask a question, please press star one. We have reached the end of the question-and-answer session, and I will now turn the call over to Michele for closing remarks.
Thank you very much. My closing remark is, I hope we were able to show you what Heramba is doing, where Heramba is invested, and where we are going to. Just to make it short, I think we were able to show you that we are no startup.
We are a real company established with a strong customer base worldwide, especially in Europe, but also very much in the United States. This drives our revenues, real revenues, and will drive the further growth in this business. We are very proud that every day with our solutions, we impact already tomorrow. This is the goal and the mission of Kiepe and Heramba Electric, and this is what drives us forward every day. I thank you for using these services with Kiepe products on board. We are looking forward to our upcoming calls in the near future to provide more information and insights on Heramba Electric. Thank you very much, ladies and gentlemen. We will now close this session, and we are looking forward to our next call. Thank you very much.
Thank you.
Thank you.
This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.