ReFuels N.V. (REFL) Earnings Call Transcript

Good morning, and a warm welcome to ReFuel's Q2 2026 results representing the period July to September 2025. Joining me today to present the results, we have in studio, CEO, Philip Fjeld. And with us online, we have CFO and Managing Director, Baden Gowrie-Smith. So we will first have a presentation. And as usual, we will have a Q&A session afterwards, and you can submit your written questions during the webcast. So without further ado, I'll hand the word over to Philip.

Thank you very much, Alan, and good morning to everyone online. As Alan said, we're here to present our second quarter results for the period July to September 2025. Baden and I will go through the slides. And as Alan said, if you have any questions, please post them in the chat so that we can go through those in a bit. Okay. So a bit of an overview first. We run biomethane refueling stations in the U.K., we own 40% or ReFuel owns 40% of CNG fuels. And what we supply to our customers is 100% biomethane or bio as we call it, with typical greenhouse gas emission reductions of about 85% to 90%. And there is also a cost saving for our customers. In calendar year 2024, we supplied more than 50% of all the biomethane that went into trucks in the U.K. And we're not only focused on the station side, which you see on the map here, but we also source biomethane and generate RTFCs. As of today, we've got north of 2,100 trucks going through our network for our customers. We saved more than GBP 50 million in fuel costs. And very proud of the fact that we saved last year more than 220,000 tonnes of greenhouse gas emissions for our widespread customer base. This is not a solution anymore that is only being adopted by a couple of fleets. We have north of 165 customers. So this is just an example of one of our stations, a bit of a different one than we usually show. And I think there are a couple of takeaways from this one. This is Warrington as the M62 motorway you see on the upside there, which is the motorway that goes between Liverpool and Manchester, one of the busiest in the U.K. This station currently refuels north of 500 trucks a day. About 700,000 kilograms of biomethane goes through this network into customers monthly. We have a broad customer base that uses it, because of the location it is in. A couple of maybe takeaways from this, a lot of people don't always think about is that when we come in and build stations such as Warrington, it's not only about the fuel that we put into trucks, it's also about the type of development we do. As an example, when we acquired Warrington back in 2019, the land and we were to just look at the land value that we've added to it by developing what we've done. We have basically 4X factor of what we acquired it for back 6 or 7 years ago. So here are some of the highlights for the last quarter. The growth in dispensed volume to our customers is 16% growth year-on-year. That's acceptable growth, not great. We expect as the 6x2 trucks really start to become adopted. We will hopefully do better than a 16% year-on-year growth. We are currently -- we announced that quite recently that we're currently have taken a debt facility that has put us in a position to build another 3 stations, and we announced the construction of the first one of those, Magor, about a month ago. If you look at our EBITDA, we are up 190% quarter-on-quarter. And today, we're very pleased and happy to announce that we are raising our guidance for the financial year from previously GBP 8 million to GBP 10 million to GBP 10 million to GBP 12 million. And finally, Baden will probably provide some more clarity on this later on. We are considering either uplisting at the Oslo Børs or potentially also listing at a different exchange sometime next year. So where have we come from and where are we going? On the left-hand side there, you see we've got north of 2,100 trucks currently going through our network. You have to remember that when we founded the company back in 2014, we had 0. So we had 0 dedicated trucks. Now we are at 2,100. And given the customer order book that we are aware of or that we have visibility of, we expect this time next year, we should be around about 3,000 trucks on the road. If you look on the right-hand side, you'll see that the majority of that volume comes from our grid-connected stations, where Warrington, as you saw previously, is one example of those. But we also have so-called mobile refueling stations. You can see that in the dark green here, now it's an important supplement to what we do because it's not all customers that necessarily can use our grid connected public access network. And as such, the MRS solution we've got, which is a very popular one, and which we are now rolling out increasingly -- sorry, in increasing volumes to customers going forward. One of the key metrics for customers when they move away from diesel is what does the so-called total cost of ownership of moving away from diesel and adopting, let's say, a CNG truck. So how does bioCNG stack up against regular diesel or HVO, which is 100% biodiesel. Here, you see that we're currently seeing a 25% to 30% savings versus regular diesel, and we're currently seeing north of 40% savings versus HVO. Biodiesel for those of you who have been following us for a while, biodiesel markets, we've been talking quite a lot about those. What we're currently seeing is the effect of sustainable aviation fuel mandates. A lot of SAF or sustained aviation fuel is made from the same feedstocks as HVO as biodiesel. And on the right-hand side graph here, you can see that we are currently seeing an increasingly tightened market not only for HVO and biodiesel, but also for sustainable aviation fuel. A couple of months ago, both Tesco and Co-op announced large moves, if you want, into the CNG space. As of today, 8 out of the 10 largest supermarket chains in the U.K. are customers of ours. Why is that? Because they have to decarbonize and as of today, the really only mass adoptable solution available to them is using biomethane. And these are just 2 examples. We've got a lot more large customers joining us next year as the 6x2 increasingly starts to become adopted. Speaking of the 6X2, we've now got about 130 of them in operation which is compared to the so-called 4x2 market we've got is almost negligible. There are about 144,000 diesel, 6x2s on the road in the U.K. Currently, with only 130 of those running on CNG, it is basically a 0% market share. If you look at where we are currently with a 4x2 market share, about 10% of all 4x2 in the U.K. today run on CNG through our network. If we can start to replicate that also in the 6x2 market, a 6x2 larger market, then of course, we're not going to be looking at a 0-point market share, market share, but something a lot greater. So why is the 6x2 lagging? Because it took many, many years for the truck manufacturers to launch 6x2 models. They did last year and the year prior. And now we are finally starting to see fleets mass adopt these because, of course, they want to trial them first, and now they are coming into the ordering and taking delivery of them, which is one example on the right-hand side. We also announced 6 weeks ago, whenever it was, that we have done our first so-called fixed price, biomethane or bioCNG contract with one of our larger customers. Why is that noteworthy? One, it is important for our customer, of course, because it gives the price certainty so that they can sleep well at night and disregard what visibility -- lack of visibility, if that or price volatility there might be. So that's a multiyear rolling contract. We expect to do more of these in the future. And it's also good for us because it gives us then also visibility with regards to volume certainty from certain customers. We announced back in October that we have secured a GBP 25 million debt facility that is currently being deployed as we speak into building stations. Our first one, Magor, which is in South Wales, went in to build some weeks ago. And we are planning to have another 2 funded by that facility. Our ambition by the end of 2028 is to pretty much double our refueling capacity both through grid connected stations but also through increasing the number of mobile refueling stations that we've got, taking our grid-connected station number up to 25, and a mobile refueling station number up to about 30. So pretty much tripling them from where we are today. We opened Livingstone in Scotland, which is the most recent one that we opened back in May. Here, you can see Magor, which went into construction, and there's a lot of solid progress being made there. Swindon is the next cab off the rank, which we expect to start building early in the new year. And then we have another third facility, which we'll be announcing probably sometime in Q1 when we will decide which site that will be. And as I say, all of these are being funded through the GBP 25 million debt facility that we closed recently. Here's just an example. Once again, Magor, a lot of people look at our stations and they say, well, hang on, you just need to pour some concrete and install some compressors and dispensers and a gas grid connection. Well, there's a lot more that goes into it than that. And often, the lead time between searching for land, negotiating the land, getting all of the permits in place, the planning approvals, et cetera, can take many, many years. Magor as an example, we started constructing that in October, but it has taken us basically 18 to 24 months to get to what we call shovel-ready. And having that capability to move these sites through this process to get into shovel ready is one of the core competencies we've got. And the track record we've got in delivering this does put us in a very strong competitive position. Previously, we've talked a lot about the biofuel markets and how various factors within those biofuel markets affect the pricing of RTFCs. What we're now seeing is that there is a lot more stability in the biofuel market, and there has been -- than there was over the last couple of years. And we're now starting to see RTFC prices, which are now trading above the historical average. That also, of course, is reflected in our earnings, but it is important here to understand that we aren't sitting on RTFCs and are trying to play the spot market. We take a much longer-term view. And as such, we are looking to lock in margins when we can. But it is important, I think, for you to understand that the underlying factors that determine the price of RTFCs, they are tightening. I showed you the HVO graph previously and what we're they're seeing is an increasingly tighter market. So we wouldn't be surprised if over the next couple of years, we will actually start to see RTFC prices trend up even further. And with that, I'll hand over to Baden.

Thank you very much, Philip. So just to let remind everyone what you're seeing here. We are presenting the results of the CNG fuels business primarily, which, of course, ReFuels owns their 40% share in. If you want to see ReFuels stand-alone results, they are available both in the presentation and in the report so that you can have look at those. But obviously, the principal asset of ReFuels, of course, is the CNG fuels business, and it's important to understand the performance of that business to understand the value and refills. So very pleased to obviously show to say we are increasing our guidance by 20% for this financial year. We're comfortable doing this. Obviously, on the basis we're only end of Q2 results now. But on the basis that we have continued to see the favorable market conditions and growth in our volumes as we had hoped. We have improved visibility on EBITDA. That is the -- we have -- we are active, obviously, within the biomethane and RTFC space and have the RTFC team within the business have been doing an excellent job of forward selling RTFCs prior periods against the biomethane sourced, giving us really good clarity on earnings certainly over the next couple of quarters. Likewise, the station business, which is clearly -- which is fundamentally driven by the volumes that come through it. We understand how those convert into earnings well. And so with those together, we're comfortable raising our guidance to the GBP 10 million to GBP 12 million range. On that -- with the biomethane certificates, we do biomethane RTFCs, we do report in 2 different ways on the margins on those. Gross profit margin on -- simply on a sold basis, it was just under 30%, which, of course, is -- which is the margin we have seen as a sort of historical average. So trading very close to that. And then on accounting accrual basis, given we -- given the delivery against forwards from RTFC sold in prior periods and when the RTFC price was lower a year ago, we see a 22% margin on those ones. But overall, solid growth in revenue, up 20% from the same period last year. And you can see here the EBITDA growth of more than 300% so quadrupling of EBITDA for the same period as last year, which obviously we're very pleased with. So you can see our revenues driven by dispense volumes coming through and the RTFCs that are generated from the sale of biomethane into vehicles from the kilos we dispense. Gross profit split has changed a bit from last quarter, and we'll continue to, obviously, on a quarter-to-quarter basis, depending on the biomethane we match with our volumes. In this period, we had a gross profit split of roughly 1/3 CNG fuels business station business and 2/3 to the RTFC -- RTFS business, which sell at is biomethane and sells the RTFC. Contributions for the 2 parts, a very healthy GBP 3.5 million contribution in the quarter from the RTFS business and a negative GBP 650,000 from the station business, which is now consolidated as both the stations themselves as well as the operating overhead and all future station development, research and development, et cetera, within the CNG fuels business. We're pleased to say is that our business is continuing towards the profitability on a stand-alone basis, ignoring the biomethane side of the business, and we anticipate a breakeven in the first half of the next financial year on the basis of just a very conservative number of the existing confirmed orders we have in our vehicle order book from customers arriving. So at that point, we'll have 2 separate revenue streams both profitable that are really only linked together and correlated by the fact that they're both driven by the volume volumes underlying the business. So 2 separate revenue streams that can help grow the company that both have just one common driver. And of course, we are seeing adoption continue as it has for many years now at a healthy rate. So that, of course, is very encouraging for the company. One point of note in this quarter is that we have quite a large profit after tax. This has been because we've been able to recognize prior losses and capital allowances. They're within the business that we were unable to be used prior to the formation of a group. These losses are now able to be recognized as an asset because there is based on the likelihood and the high likelihood of future profitability, and therefore, we can now recognize these and can use them, obviously, against profits in the periods ahead. Lastly, I'll just mention overheads and efficiencies. We've been very cost focused, really trying to control the cost line on the business and actually use the resources we have whilst running a nationwide network. And for the first time, we now have -- are able to -- you have shown both the CNG stations as well as the overhead of the CNG fuels business together to show an overhead number, and the improvements we've made over the last 12 months or so. So we've decreased overhead on a per kilo basis from 26p per kilo in the first half of last year down to 21.5p this year. And obviously, we continue to grow volumes whilst maintaining a fairly steady overhead base. So we can anticipate that, that should come to continue to come down further. Finally, a very positive reason and one of the main drivers of the transaction we completed in April of this year was to make -- was to bring the group together to have multiple revenue streams that will be profitable -- both profitable revenue streams shortly and also to take the assets of the CNG station business and bring them on to the balance sheet. So essentially, we have a very healthy asset-backed earnings base. As you can see here, we've got GBP 105 million now of assets sitting on the balance sheet. And we -- and of course, we've just signed this GBP 25 million facility with the Foresight Group to build 3 additional stations. Once those are built, we'll have GBP 30 million worth of assets on the balance sheet and just GBP 25 million of debt. So a conservative about 20% gearing ratio. That, of course, is -- will be well supported by the earnings of the business and has the capacity to be grown as well as when we need to look at the development of future stations after that. So again, with GBP 12.5, the GBP 12.5 million of cash on the balance sheet at the end of the period, healthy cash balance, low leverage and a solid asset base now to continue the growth from. Thank you.

Thanks, Baden. So I will summarize briefly, and then we will take some Q&A. And once again, if you have any questions, please feel free to send those through. So if you look at where we are today, we've previously given a target, if you want out to 2030, of what we want to achieve between now and 2030. That is basically an average of 25% growth between now and then taking us up to about 8,000 trucks by the end of 2030. We sometimes get the question well, you're at 2,000 a bit today. Isn't that quite ambitious. It's like, no, not really. When you look at the number of 6x2, diesel 6x2 is 144,000 in the country, the number of CNG, which is negligible. As we start to penetrate that market, we do feel the 8,000 trucks in 4 or 5 years from now is absolutely doable. On the middle graph here, gives you a good illustration of what our EBITDA will then look like. Given the assumptions that we will get to 8,000 trucks by the end of 2030, where we are today, actually slots in really nicely with on that graph. And as such, we are pleased to say that from where we stand, we feel that we are on track to delivering on this. And then finally, just a quick snapshot of what's been going on, but also looking a bit into the future. We are seeing month-on-month growth when it comes to the volume that goes through our network. That's not something we expect to stop. That's something we expect to continue. We're very pleased to raise our guidance from to GBP 10 million to GBP 10 million to GBP 12 million. As Baden mentioned, a function of favorable market conditions, but more importantly, on the volume growth. Now we've got 16 operational stations today, grid connected stations today. We've got an ambition to get to 25. We need more stations, more stations will give us further growth and further profitability. And as such, that GBP 25 million debt facility was really important. And finally, we are considering whether we should either uplift or dual list the company during 2026. No decision has been taken there, but that is something we are looking into and we'll, of course, update our shareholders when we have something more to report on that. And with that, we will go to some questions.

Thank you, Philip. So we have received a couple of questions. And to start off with. The first one is on EBITDA guidance. What is the main reason for uplift in guidance? Do you see this guidance on the conservative side?

I'll take that one, and Baden, you can jump in if you want, Baden. So we've increased the guidance clearly because we have visibility until the end of the year, and we feel it was prudent to do so. Whether it's conservative or not, we've upped the guidance because we feel that is a prudent thing to do. Tune in again at the end of February and we'll give a give a bit more of an update then. But no, we are getting increasingly good visibility on earnings for next quarters. That's why we felt it was prudent to do so. And then we'll provide, of course, another update at the end of February. Anything you want to add there, Baden?

No, not particularly. Clearly, we've given a range to enable flexibility coming into the end of the financial year as well. So for the time being, we felt the last guidance was no longer going to be -- yes, it was no longer prudent to leave investors with. So we're very comfortable in the new range for the time being.

Good. Next question is on competition. So you touched briefly on your competitive advantage in station development. Would you be able to just update on the wider competitive landscape? And how do you see that developing as you continue to grow?

Okay. Probably many ways one can answer that, but I'll give a couple of perspectives on that. First of all, if you look at the overall penetration of biomethane, both CNG and LNG, biomethane as a truck fuel for the typically articulated trucks, which are the big tractor and trailer combinations. There's about 2.5% of those vehicles in the U.K. today that run on CNG or LNG. There are more CNG vehicles on the road than LNG, but there is a meaningful amount of LNG vehicles on the road as well. So there's 97.5% the run on diesel. So there's a lot of space for us in the CNG world and also the LNG world to grow into that 97.5%. So as such, I don't think we're going to see anything that even looks like saturation or market maturity there for potentially decades to come. Then you can look at the other perspective, which is, well, what are we actually competing against? If we're not competing against LNG, which we really aren't in LNG, to some extent, is really competing at CNG, both of us are really competing against either fossil diesel or biodiesel. And fossil diesel for many fleets now is no longer an option. They have to move off it for various reasons, not various reasons, but for very -- a long various time frames. Some of them want to be 50% up or 2030, 100% off by 2035. So then we're really competing against HVO. And what we've seen there is that if you go back 6 months, 12 months, the price spread between biometer and HVO was much narrower than it is today. I showed previously that we're now looking at 40% plus price cost advantage of CNG or bio CNG over by methane. So that's really the one to look out for. And then finally, electrification. We are not seeing any signs in the market of mass adoption of electric trucks in the heavy end of the spectrum. Yes, there are certain electric trucks that go in and out of city centers, the rigid ones, the small kind of box trucks. But for the long-haul segment, we're not seeing electrification move into that sector now. So our competition today is really around fossil diesel and around HVO.

Good. Next question is on your customer base. So a number of customers has decreased from 173 million in Q1 to 168 million in Q2. Why is this?

Yes, you shouldn't read too much into that. We have quite a few customers who have one truck or one vehicle. Some of them might get rid of that truck or might have gone out of business. or they've parked it up for a certain period of time. So yes, you shouldn't read too much into that. We do provide those numbers just so that you can track this over time. You will see a bit of volatility up or down, 5 customers here, 5 customers there. That does not mean that the overall market is contracting. That is just one-off customers that may or may not have gotten rid of that truck gone out of business or just park it up for a period of time.

And the next question on ownership. So your ownership in CNG fuels can increase to 55% if certain goals are met, how does a GBP 25 million loan from Foresight affect this?

You want to take that one, Baden?