Good morning or good afternoon, and welcome to the Wallbox Second Quarter 2024 Earnings Call. My name is Adam, and I'll be your operator for today. [Operator Instructions] I will now hand the floor to Michael Wilhelm to begin. So Michael, please go ahead when you're ready.

Thank you, Adam, and good morning, and good afternoon to everyone listening in. Thank you for joining today's webcast to discuss Wallbox's second quarter 2024 results. This event is being broadcast over the web and can be accessed from the Investor section of our website at investors.wallbox.com. I am joined today by Enric Asuncion, Wallbox's CEO; and Luis Boada, Wallbox's CFO. Earlier today, we issued our press release announcing results from the second quarter ended June 30, 2024, which can also be found on our website. Before we begin, I would like to remind everyone that certain statements made on today's call are forward-looking that may be subjected to risks and uncertainties relating to future events and/or the future financial performance of the company. Actual results could differ materially from those anticipated. The risk factors that may affect results are detailed in the company's most recent public filings with the SEC, including in the Annual Report on Form 20-F for the fiscal year ended December 31, 2023 filed March 21, 2024. 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 Investor 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 will turn it over to Enric.

Thank you, Michael, and thanks everyone for joining us today. Before we go into the highlights of Q2 2024, as announced yesterday, I would like to comment on the $45 million strategic investment from a number of current shareholders, including $35 million from Generac as the main investor in this round. This capital raising was needed to ensure the company's balance sheet strength and support our strong growth. We are extremely pleased with the continued trust and follow-up investment allowing us to continue building a leading company in EV charging and energy management solutions. Out of the competition, Generac chose Wallbox's award-winning products and solutions to lead their efforts in the EV charging space. In conjunction with this investment, we have also finalized the warrant agreement which was an undertaking of Generac's initial minority investment in December 2023. Through this agreement, Generac has the right to buy an additional 5% of the company at $3.05 per share price set during their initial investment. In Q2 we saw the excellent initial results of our 10-year worldwide agreement with the sale of several thousand Pulsar Plus to Generac in North America and the first order of Supernovas to Pramac in Europe. Customers can purchase the chargers through Generac-certified dealers, online, and through a growing number of retail and wholesale distributors nationwide. We expect plentiful growth from these strategic moves, which will now be strengthened with additional products including Supernova 180 North America, Pulsar Pro, and the portfolio of AC commercial products globally. At the same time, we have signed a strategic battery storage system initiative whereby Wallbox will buy batteries from Generac. Battery integrated charging solutions will open up a vast array of opportunities towards smart energy management and added reliability to circumvent grid's limitations. For example, to expand power capacity for…

Thank you, Enric. Good morning and good afternoon to everyone. Our second quarter results showed significant 48% year-over-year growth but came in lighter than expected with EUR 48.8 million. This was driven by a strong performance in AC sales in the U.S. and global DC fast charger sales, offset by softer market growth in other regions. With 39.1% for the quarter, gross margin showed a phenomenal year-on-year 936 basis points increase, continuing with Q1's trend, thanks to our margin improvement programs. Product quality improvements in AC and the transition to the new generation of the Supernova product were the biggest contributors. Our reported gross margin was impacted by an excess inventory provision. When we exclude this impact, the margin is almost 200 basis points higher. So we are pleased with how we are tracking on gross margin, and we see significant momentum for future improvement. We continue to make progress in managing our cost base. Q2 labor costs and OpEx were down quarter-on-quarter and decreased 11% year-on-year. Consolidated adjusted EBITDA loss for the quarter was EUR 11.2 million, representing a 47% year-over-year improvement. The path to profitability remains our main priority as an initial milestone to generating net cash and with it, long term capital appreciation. June was the strongest month in the quarter and our strongest month ever. In June we were already adjusted EBITDA positive. So our financials show solid proof points towards achieving our profitability and cash generation goals. This slide shows our 3 main focus metrics: revenue, cash costs, and adjusted EBITDA. We present cash costs in this slide, which is the EUR 32.3 million of labor costs and other operating expenditures plus capitalized R&D minus severance one-offs and non-cash items. Overall, we have seen flat cash costs compared to last quarter despite the significant revenue…

Thank you, Luis. As I look back at the first half of the year, we have been executing well in a difficult market. In this environment, we achieved milestones on all fronts ranging from revenue growth, award-winning-product introductions, securing strategic partnerships for added growth, margin improvement, as well as cost and inventory reduction. And I think all of this improves our competitive position as the entire industry is trying to navigate the current cycle towards mass adoption. We have the products, we have the technology, we have the production facilities, we have the funding, we have the best people, and we have the competitive position to benefit long-term. With that, we're ready to take questions from our analysts.

Welcome back, everyone. [Operator Instructions] Adam, I think you have some instructions for our analysts.

[Operator Instructions] Our first question comes from Leanne Hayden from Canaccord Genuity.

Congrats on the progress this quarter. First, I just want to ask, do you still plan to be positive EBITDA in the fourth quarter of this year? And if not, then when do you expect to reach that milestone?

Thanks for the question. I couldn't hear all that clear, but I think you were referring us to being positive EBITDA in the year to go?

Yes.

All right. Thank you so much. So we are continuing to improve as we presented, and it remains our top priority as we're saying, to turn profitable and generating cash. And what we said is that, in June alone, with higher levels of shipments, we were already positive. So our financials already show those proof points towards that profitability. And meanwhile, we are bringing our cost base down and we are expanding our margins. So the reality is that we've experienced a market that, as we all know, has been slower than anticipated. And that is kind of bringing that challenge to the profitability, but we will continue to aim for that positive adjusted EBITDA in this year, as I said, as we continue to manage our margins and our costs. So we're going to do our best to achieve that feature by the year-end.

Understood. Okay. Just one more from me. You've raised $45 million yesterday. Can you please discuss any additional capital needs or provide us a bridge to free cash flow positive, please?

Leanne, thank you for the question. So we decided to strengthening our balance sheet to make sure we were able to, one, continue financing our growth. We -- although the growth was not as we expected, it has -- it's at great growth levels. We are growing almost 50% year-over-year and also to be able to navigate the current cycle towards mass adoption. So this funding, as Luis was saying, does not impact our -- or slow down our efforts to reach profitability. We're actually committed to -- by this year to be profitable. And at the end, we believe that we have a very comfortable balance sheet position, as we've commented, until we start generating cash. So we don't expect additional funding until the company generates positive cash flow.

Our next question comes from Alec Scheibelhoffer from Stifel.

So just to kick us off here, you alluded to, during the call, some of the softness in terms of the pace of EV sales growth in North America as well as all your core markets. However, your AC unit sales kind of -- they posted a solid quarter. So I was just wondering if you could kind of just break out some of the puts and takes of the drivers of that and how you're thinking about volumes for the back half of the year?

Thank you, Alec. So I understand the question is regarding the growth in -- and which are the main drivers for our growth in AC. So just in the U.S., obviously, we have all these great strategic agreements we have been announcing and now are starting to create a lot of value. We spoke about the Free2Move deal, which is part of the Stellantis group. This is -- as car manufacturers continue growing, we get advantage through these programs because at the end, there's a huge investment between EV sales with car manufacturers and these products we have. We have this program with Stellantis. We have this program with Nissan, also the Generac agreement, we expanded yesterday. So we closed a deal with them earlier this year and already brought several thousands of AC units in North America as an initial second recurrent order. And at the end, Generac is a great partner to have. They have almost 9,000 installers nationwide. And the idea is that many of them take advantage of our products and our products become part of their ecosystem. So right now in North America, the huge expansion in our AC sales come from strategic agreements. Also, there's an additional thing, which is the expansion of our product portfolio. We used to have Pulsar Plus in North America, but now also, additionally, we have Pulsar Pro. And this is a commercial product. It's more focused on parking companies. So, we have a product that attacks a different segment in the North American market. And finally, we are really happy with our team and how well everyone is performing. If we go to Europe, ABL, when we acquired the company last year, apart from bringing strength in a key market, which is Germany, to give you an idea, now, Germany is our second biggest country in the world after North America. More important than that, we -- it brought a new product, which is the eM4, that now we are selling in all Wallbox channels in Europe. And at the end, we have done this integration, it's going very well, the integration, and we can sell all these products everywhere. So, at the end, it brings additional products we can sell in the European market.

Great. And then, just as a follow-up to that, just -- you made some reference to the solid margin progression you made. I was just curious, from a mix standpoint, how you're thinking about how margins on the DC side kind of shape up in the back half of the year with the integration of the 180 and the new 220 Supernova?

We see a lot of potential of improvement. We are very comfortable the way our DC margin is improving. We are already in the third generation of our Supernova products, and they are very cost-optimized, and we are still seeing lots of opportunities to improve the margin. So our goal is to get them closer to the 50s, the DC fast-charging margins, from the close to high 40s it is today. When we look at AC, there's a mix here because, as you've seen, we are reducing our inventory. So our focus for AC products, where we have EUR 84 million in total of inventories, to reduce the inventory, so, we cannot really, in some of those models, optimize gross margin -- the margin as we would like. But for the new models, like Pulsar Pro, Pulsar Max, margins are also quite high. So, taking advantage of the reduction of inventory, and in the process where we don't have inventory, we already have strong margins. We also see an improvement above the 40% as we go into the next year. And finally, ABL, there's a lot of synergies. And taking advantage of the vertical integration of Wallbox, we have the RS in our group, which is an electronics PCB manufacturer in our group. So, these are things that we are sharing, our vertical integration, we are sharing strategic sourcing. So, all these synergies, these are programs that are in place, and we expect to start seeing them as we start the next year.

Adam, do we have any additional questions?

[Operator Instructions] No further questions.

Okay. Then I would like to thank you all for joining us today. We hope you found today's call good use of your time. Let us know if we can help you in any way.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.