Wallbox N.V. (WBX) Earnings Call Transcript

Hello, everyone, and welcome to Wallbox's Second Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions] I would now like to turn the call over to Michael Wilhelm from Wallbox.

Thank you, and good morning, and good afternoon to everyone listening in. Thank you for joining today's webcast to discuss Wallbox's Second Quarter 2026 results. This event is being broadcast over the web and can be accessed from the Investors section of our website at investors.wallbox.com. I'm joined today by Enric Asunción, Wallbox' CEO; and Isabel Trujillo, Wallbox's CFO. Earlier today, we issued our press release announcing results from the second quarter ended June 30, 2026, which can also be found on our website. Before we begin, I'd like to remind everyone that certain statements made on today's call are forward-looking that may be subject to risks and uncertainties relating to future events and/or future financial performance of the company. Actual results could differ materially from those currently anticipated. The risk factors that may affect results are detailed in the company's most recent public filings with the SEC, including annual report on Form 20-F for the fiscal year ended December 31, 2025, filed on April 9, 2026. We will be presenting unaudited financial statements in IFRS format that reflect management's best assessment of actual results. Also, please note that we use certain non-IFRS financial measures on this call and reconciliations of these measures are included in the presentation posted on the Investors section of our website. Also, a copy of these prepared remarks can be obtained from the Investor Relations website under the Quarterly Results section, so you can more easily follow along with us today. So with that out of the way, I'll turn it over to Enric.

Thank you, Michael, and thanks, everyone, for joining us today. We will start today's call with an overview of our second quarter 2026 results, provide our perspective on order intake and backlog and spend time discussing operational improvements. Isabelle will offer a closer look at our financial results, key financial metrics and our current financial position after the completion of the refinancing, including the new capital raise in the quarter. After, I will close the conversation to highlight what we are focused on for the upcoming quarters. Q2 revenue came in below our guided range at EUR 23.9 million, down 19% compared to the previous quarter. During the quarter, we delivered approximately 22,900 AC units and 46 DC units. Important to mention here is that this is not a demand problem as order intake for our AC and DC products was up 11% compared to the first quarter, reflecting solid sequential momentum. In fact, as order intake exceeded revenue, we have been building a backlog rather than losing business, resulting in close to EUR 12 million of total backlog. The gap between what we book and what we invoice is the result of operational constraints related to the final stages of our restructuring process in which we have been negotiating new terms with our vendors. This limited our ability to convert that improved order intake into shipments this quarter. The positive impact of building a backlog and part of our plan is enhanced visibility related to our supply needs and the possibility for more efficient, more reliable operations. Gross margin for the quarter was approximately 38%, a low enough, but essentially in line with our guided range of 38% to 40%. The sequential improvement of 70 basis points in gross margin was a good outcome given the softer top line and a sign that our product mix and cost discipline held up even as volumes were constrained. Variable cost and operating expenses landed at EUR 17.3 million, approximately flat compared to last quarter, but improving 29% year-over-year. The progress on the cost base reduction is flattening out as we continue to invest selectively in sales and service capacity to support the backlog build while holding the line on our broader cost base. In addition, as mentioned in the last earnings call, we continue to see options to reduce costs by improving processes and systems, reduce complexity in our operations and centralized activities. Adjusted EBITDA loss for the second quarter of 2026 was EUR 7.8 million, outside of our guidance range and wider than the EUR 6 million loss in the first quarter, but approximately flat compared to the same period last year. This was driven by the loss of operating leverage on lower revenue, as just discussed and not by [ aberration ] in unit economics. Gross margin held up, but with EUR 23.9 million of revenue instead of the EUR 33 million to EUR 36 million we guided to, we did not generate enough gross profit to absorb our cost base as planned. As the backlog converts into shipments in the coming quarters, we expect this operating leverage to work back in our favor. Although we did not achieve all our expectations in the second quarter, we have seen growth momentum in order intake, secure the longevity of the company with the completion of the refinancing process, including new capital and improve the operations for near-term profitability improvement. The main driver to break through the profitability barrier is improved revenue levels, which are within reach as proven by the momentum increase investment in sales and services are starting to show results. Europe or EMEA contributed EUR 17.7 million of consolidated revenue or approximately 74% of total top line. This reflects a 22% decrease compared to last quarter, again, a reflection of the invoicing gap rather than weaker demand. Regarding AC and DC charger order intake, EMEA was a real bright spot, growing 14% sequentially. We also strengthened our commercial reach in the region this quarter. In May, we announced a partnership with -- by Leap to support tax electrification across Germany, France, the U.K., Ireland and Spain, giving fleet operators and individual driver access to Pulsar Max, Pulsar Pro and eM4 charging solutions depending on their needs. We see this kind of channel partnership as an important way to convert our growing backlog into durable recurring demand. In addition, we are also seeing our Net Promoter Score improve and our response times on spare parts get faster. We are not yet where we want to be on this, but we're making progress, and we are dedicating additional resources to our priority markets, which are Spain, France, Benelux and Germany alongside North America. North America contributed EUR 5.6 million or approximately 23% of total revenue, reflecting a decrease of 16% compared to last quarter and approximately 50% compared to the same period last year. The slowdown can partly be attributed to the softer North American EV market, which is down 22% compared to the same period last year. Order intake of AC and DC products in the region was approximately flat versus the first quarter, essentially stable and consistent with normal seasonality. We are increasingly reliant on a small number of large key accounts with a stable smaller base of long-tail customers. We expect a stronger contribution from large accounts in the second half of the year. LatAm was a revenue highlight this quarter, growing 64% sequentially, although from a small base, landing at EUR 615,000 or approximately 3%. APAC sales continue to be almost negligible, similar to last quarter. While regions remains [indiscernible] at this moment, but the strong improvement in LatAm shows how effectively selected distribution partners can contribute to sales growth. AC sales, including ABL and quasar totaled EUR 15.8 million or approximately 66% of global consolidated revenue, down 25% versus last quarter. However, order intake for AC overall was EUR 22.6 million, up 6% sequentially, with AC Europe and Rest of World, the clear driver as order intake there was up 26% quarter-over-quarter, while AC North America order intake declined modestly. As discussed, the revenue decline reflects the timing gap between that order intake and our ability to ship and invoice against it this quarter rather than a change in underlying demand. We also launched the new Pulsar Pro across the European Union this quarter, purpose built to simplify EV charging reimbursement for drivers, employers, fleets and property managers through integrated MID-certified energy metering. Corporate vehicles account for around 60% of new car registrations across the EU, and we believe Pulsar Pro is well positioned to capture this workplace and shared charging opportunity. DC sales landed at EUR 1.6 million or approximately 7% of revenue, down 37% versus last quarter, again, largely a function of the same supply side timing constraints. The right side is the DC order, which grew 80% sequentially to EUR 3 million with DC Europe and rest of the world more than doubling versus the first quarter. Our DC customer base is also diversifying as we are seeing more orders from smaller customers and becoming less dependent on a handful of large charge point operators like we were in the past. We also completed the first real a deployment of our Supernova powertrain architecture in Europe this quarter, installing a shared fast charging system at. The product is capable of delivering up to 400 kilowatts to a single vehicle with a shared system capacity of up to 720 kilowatts. Given the order intake trend, we are optimistic about the contribution Powertrain can make to DC growth as we move through the second half of the year. Software, services and other generated EUR 6.5 million or approximately 27% of total revenue, up 8% versus last quarter. Electromaps continue to be a standout, growing strongly again both sequentially and year-over-year. And this category overall give us growing high-margin base of recurring revenue that is largely insulated from the hardware supply dynamics affecting AC and DC this quarter. In our addressable market, which we define as all regions except China, approximately 2.5 million EVs were sold during the second quarter, up 20% sequentially and up 30% year-over-year. Europe, our largest market, sold approximately 1.36 million EVs in the quarter, up 18% sequentially and up 28% year-over-year. The continued strong growth in the underlying market is consistent with the 14% sequential growth we saw in our EMEA order intake this quarter. North America sold approximately 373,000 EVs, up 12% sequentially, though still down 22% year-over-year as the market continues to digest the removal of incentives and tax credits discussed on prior calls. The sequential improvement is an encouraging signal that the market might be stabilizing. Rest of World, which includes APAC and LatAm was again the strongest growth pocket in our addressable market, up 65% sequentially and up over 150% year-over-year, though it remains a small part of our current business given our deliberate decision to prioritize resources elsewhere. Overall, the EV transition continues to progress, and the market backdrop this quarter has been supportive. This positive market trend provides Wallbox with plenty of opportunity to reaccelerate growth as investments in sales and service and improved operations are starting to pay off. Isabelle, over to you.

Thank you, Enric. Good morning and good afternoon to everyone. Second quarter revenue was EUR 23.9 million, outside our guided range and down 19% sequentially. As Enric explained, the shortfall versus guidance was not the main driver. Order intake was up 11% versus last quarter with stronger sequential gains in AC Europe and DC Europe and Rest of World. The gap reflects operational constraints during the final stages of our restructuring as final negotiations with vendors limited how much of that order intake we could convert into shipments and invoicing within the quarter, resulting in a backlog of close to EUR 12 million. Although we rather convert orders directly into revenue, we are focused on building a backlog as it will allow us to streamline our operations, improve predictability and unlock cost efficiencies. Gross margin for the second quarter was approximately 38%, at the lower end of, but essentially in line with our guided range of 38% to 40%. This tells us the revenue shortfall was a volume story, not a mix or pricing story. In addition, as part of our financial strategy, we are having closer control of margins by shifting our priority to high gross margin deals. Q2 labor costs and operating expenses totaled EUR 17.3 million, down approximately 29% compared to the same period last year and approximately flat sequentially, reflecting continued target investment in sales and service capacity even as we held our broader cost base flat. We remain focused on cost control, but additional efficiencies will result from the implementation of better processes and systems. This is high priority as we work across the organization to identify opportunities to streamline processes, enhance flexibility and reduce fixed costs. Consolidated adjusted EBITDA loss for the quarter was EUR 7.8 million versus our guided range of EUR 5 million to EUR 3 million and versus EUR 6 million loss last quarter. To be clear on the drivers, this was a function of lower operating leverage on the softer top line, not a deterioration in gross margin or in our underlying cost discipline. As our backlog converts into revenue and we can accelerate sales momentum in the coming quarters, we expect the same cost base to support a meaningfully better adjusted EBITDA outcome. Now moving to key financial items. We continue to progress on key milestones that materially strengthen our financial position. In May, the Commercial Court of Barcelona approved our comprehensive financial restructuring plan and following the expiration of the applicable objection and appeal periods without any challenges being filed. That court approval is now final and nonappealable. Followwing the effectiveness of the renewed capital structure, total loans and borrowings landed at EUR 191.3 million, up from EUR 168.2 million last quarter. The increase is related to the reclassification of trade payables to long-term debt. Approximately EUR 13 million worth of payables was included in the restructuring, additional working capital facility provided by our banking partners and several other items related to the refinancing. In addition, the majority of our debt has now been reclassified as long term with long-term debt increasing to EUR 140.1 million from EUR 44 million and short-term debt representing working capital lines decreased to EUR 51.1 million from EUR 124.2 million, reflecting maturities that have largely been pushed out towards 2030. Subsequent to quarter end, we completed the approximately EUR 11.8 million equity raise contemplated under the plan, which includes the previously announced EUR 5 million investment from the Generalitat de Catalunya through IFEM together with the capitalization of accrued interest on the April bridge loan. In addition, separate from the intended fundraising related to the refinancing, we secured a separate EUR 4 million investment from FOCUS on -- next Frontier, the investment vehicle of Rafael Ruiz, who joined us as a new shareholder. In addition, we received approximately EUR 10.5 million through Canada's Clean Fuel credit framework for 2025. generated by eligible EV charging activity across our connected AC charger base in Canada. In line with program requirements, these funds will be reinvested in the region to support and accelerate EV adoption, but they are also a good proof point that our connected installed base can create value well beyond the initial hardware sale. Taken together with continued disciplined management of working capital, we believe these items support our strong liquidity position. We end the period with approximately EUR 25.1 million in cash, cash equivalents and financial investments, a significant improvement compared to the EUR 7.6 million we held at the end of the first quarter. CapEx was minimal again this quarter, essentially 0 versus EUR 0.3 million in the first quarter, consistent with our continued discipline on capital expenditure as we prioritize leveraging our existing asset base. Inventory landed at EUR 38.8 million, a reduction of 4% to last quarter and down 32% compared to the same period last year. As discussed, we are building a backlog this quarter as the priority right now is to establish a more robust, predictable operating rhythm with our suppliers. This includes better terms, more stable shipping schedules and more resilient supply chain overall. We view this as the necessary middle step between the cost discipline of the past several quarters and the reacceleration of profitable growth. Separately, in early July, we received confirmation that the New York Stock Exchange has accepted our plan to regain compliance with its continuous listed standards following the notice we received in February regarding average global market capitalization and total stockholders' equity. This gives us an 18-month cure period with semiannual reviews from the New York Stock Exchange to restore stockholders' equity or average market capitalization to at least $50 million over a consecutive 30 trading day period. Importantly, this does not affect our normal course of business, and our Class A shares have continued to be listed and trade on the New York Stock Exchange throughout. Overall, between the finalization of the restructuring, the new capital from FOCUS and IFEM, the carbon credit proceeds and the New York Stock Exchange acceptance of our compliance plan, Gogo's financial position and long-term stability have improved significantly since our last earnings call, even before accounting for the commercial momentum we are seeing in the business. Enric, I'll turn it back to you to provide some closing commentary.

Thank you, Isabelle. Our second quarter results do not fully reflect the positive underlying momentum we are seeing. Although revenue was lower, order intake grew 11% sequentially, outpacing our ability to supply due to final vendor negotiations related to our refinancing plan. Demand for our products remains healthy, and we continue to build our backlog. This is the initial proof point that our renewed customer focus supported by investments in our sales and service organization is starting to pay off. In addition, we are focused on utilizing the opportunity of the backlog buildup to streamline the supply chain and improve the efficiency of our operations. We can improve our profitability by converting our growing backlog into more robust, predictable operations, better terms with our suppliers, steadier shipping and supply chain that is in line with the demand we are generating. As we enter the second half of 2026, we are operating from a position of renewed strength. With the financial restructuring finalized, our balance sheet strengthened and our listing compliance plan accepted by the MIS. We have effectively removed the over that define our first cost. Our priority for the third quarter is clear, execution. We are now pivoting from rebuilding our foundation to converting our healthy order backlog into revenue. We have already addressed the operational bottlenecks caused by vendor negotiations. And with the new capital providing us with the necessary runway, our focus is on improving our throughput and delivering on the demand we are generating. While it will take time for this full operational efficiency to be reflected in our margins and adjusted EBITDA, the building blocks for our return to growth are now in place. With that momentum behind us, I would like to turn to our expectations for the third quarter. Revenue in the EUR 29 million to EUR 31 million range, gross margin between 38% and 40% and negative adjusted EBITDA between EUR 6.5 million and EUR 4.5 million. Thank you for your time.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.