Alfen (ALFEN) Trading Update summary

2024 outlook and financial guidance

• Revenue guidance for 2024 lowered to €485–520 million, down from previous €590–660 million, due to slower market growth and postponed energy system deals now expected to contribute in 2025.

• Adjusted EBITDA margin revised to mid-single-digit percentage, with reported EBITDA likely around zero after accounting for one-off expenses.

• Revenue for energy storage expected to decline by approximately 20% compared to 2023, as large deals are delayed to 2025.

• Smart Grid Solutions faces supply constraints, limiting 2024 revenue growth to about 5%, with Q2 lower than Q1.

• EV Charging revenue expected to grow 5–10% in 2024, despite slower-than-expected BEV sales in Europe.

Operational and cost challenges

• Two one-off costs totaling €11.1 million: over €7 million for warranty/substation moisture provisions and the remainder for obsolete charging station inventory.

• Additional costs incurred in smart grid solutions, including a provision increase of over €7 million for warranty issues.

• Over 30% of workforce on contracts less than a year; about 20% are temporary workers.

• Free cash flow for 2024 is expected to be negative but improved compared to 2023.

• Management will implement cost base adjustments and conduct an organizational effectiveness assessment in H2 2024.

Financing and covenant status

• Total debt facility is €150 million, with €100 million RCF and €50 million long-term debt; €28 million currently drawn from RCF.

• Covenant based on reported EBITDA (not adjusted), including one-time items, leading to a Q2 covenant breach.

• Constructive discussions ongoing with banks to obtain a waiver for the covenant breach; no material penalty expected.

• CapEx facility for Almere building dissolved earlier in the year and not relevant to current financing.

• Lower revenues are expected to negatively impact adjusted EBITDA margin, with a need to reassess external debt to stay within bank covenants.