Advent Technologies Holdings Inc (ADN) 2021 Q4 法說會逐字稿

Good morning, everyone. I will be your conference operator today. At this time, I would like to welcome everyone to Advent Technologies' fourth-quarter earnings conference call. (Operator Instructions) On the call today, we are joined by Dr. Vasilis Gregoriou, Advent's Chairman and CEO; and Kevin Brackman, Advent's CFO.

Before we begin the prepared remarks, we would like to remind you that Advent issued a press release announcing its fourth-quarter 2021 financial results shortly before market opened today. You may access the materials on the Investor Relations section of ir.advent.energy.

I'd also like to remind everyone that during the course of this conference call, Advent's management will discuss forecasts, targets, and other forward-looking statements regarding the company's future, customers' orders, and the company's business outlook that are intended to be covered by the Safe Harbor provisions of the Private Security Litigation Reform Act of 1995 for forward-looking statements.

While these statements represent management's current expectations and projections about the future results and performance as of today, Advent's actual results are subject to many risks and uncertainties that could cause actual results to differ materially from those expectations.

In addition to any risks highlighted during this call, important factors that may affect Advent's future results are described in its foremost recent SEC report filed with the Securities and Exchange Commission, including today's earnings press release. Except as required by applicable law, the company undertakes no obligation to update any of these forward-looking statements for any reason after the date of this call.

Lastly, information discussed on this call concerning the company's industry competitive position in the market which it operates is based on information from independent industry and research organizations. Other third-party sources are management estimates.

Management estimates are delivered -- are derived from publicly available information released by independent industry analysis, other third-party resources, as well as data from the company's internal research and are based on assumptions made upon reviewing such data in this experience and in knowledge of such industry and markets, which we believe to be reasonable.

These assumptions are subject to uncertainties and risks which could cause results to differ materially from those expressed in the estimates. Please note, this call is being recorded. Kicking off the call will be Dr. Vasilis Gregoriou. So, Dr. Gregoriou, I will now turn it over to you.

Thank you, operator. Good morning to everyone listening in and thank you for joining us on Advent's fourth-quarter 2021 earnings call. I'm joined today by Advent's CFO, Kevin Brackman.

On today's call, I will provide comments regarding our fourth-quarter results, followed by an update on the business. I will then hand over to Kevin, who will give a review of our financial performance and outlook in more detail.

2021 was a very significant year of change and progress for us. From February 2021, after a successful listing on NASDAQ, Advent has grown from a headcount of around 50 to nearly 200 people in December 2021 and now has additional offices and manufacturing facilities in Denmark, Germany, Silicon Valley, and the Philippines. We now have a global structure of integrated manufacturing and [sales force].

Prior to 2021, Advent has grown organically into an advanced fuel cell materials manufacturer with a target of moving across the value chain to both lightweight and stationary advanced fuel cell system. During 2021, the acquisitions of UltraCell, SerEnergy, SerEnergy Philippines, and fischer eco solutions enabled Advent to lead product ahead by years, which effectively accelerated our development and growth plan.

The acquisitions have brought together some of the leading expertise in the high-temperature fuel cell space and have expanded Advent's platform to meet the increasing demand for clean energy worldwide. We now hold [more than 100 issued and pending] patents worldwide for our fuel cell technology and have 38 R&D programs, allowing us to offer a spectrum of products to the fuel cell market from advanced material to final system.

After the acquisitions, UltraCell, SerEnergy, SerEnergy Philippines, and fischer eco solutions were consolidated and integrated under one structure and one brand name. This consolidation to maximize efficiencies of scale began in earnest in 2021 and will continue throughout 2022.

The activities throughout our global reach can now be summarized as follows. We are headquartered in Boston, Massachusetts. We're building state-of-the-art membrane electrode manufacturing facilities in Charleston, Massachusetts. In Livermore, California, we design and manufacture lightweight system with former UltraCell staff.

Denmark and Germany, sales development and assembly responsibility for Advent's 5 kilowatts to 15 kilowatts of energy systems. In the Philippines, we service the telecom market through our sales service and site preparation.

And in Greece, which have expanded our MEA production in polymer synthesis capacity, including polymer for the next-generation Advent MEA. We are now rolling out complete hydrogen fuel cell systems, and our global sales force has expanded our reach across North America, Continental Europe, the Middle East, and Asia.

The business focus is on the production of advanced fuel cell materials leading to direct sales, and the development of advanced fuel cell systems in collaboration with OEMs will enable us to enter into long-term licensing agreements.

In the fourth quarter, we delivered USD2.9 million revenue, up 714% from the prior year, driven by strong customer demand for advanced high-temperature MEAs, fuel cell systems, and flow battery materials. We also collected $3 million from SerEnergy customers during the fourth quarter related to pre-acquisition revenue. For the full year, we generated $7.1 million of revenue.

On a pro forma basis, though, as SerEnergy and fischer eco solutions have been acquired at the beginning of the year, our revenue would have been $16 million. We continue to have strong cash reserves totaling $79.8 million at year end. Overall, our performance this quarter and for the year leaves us confident about the long-term growth and earnings potential of the company.

Our last quarter validates our business model, and I will now give an overview of the selection of our key achievements. In October, we announced that the new order has been placed for Advent's SereneU system for the rollout in the Asian market. The new fuel cell stacks and reformers and intended to support internal testing setups to evaluate performance and to showcase results with Thai telecom operators.

Our business in Denmark has been a partner with Thai-based Alright Combination Centric since 2017, which is a product distributor and service provider to Thailand's information and communications technology industry. The 5-kilowatt fuel cell will address the multimillion-dollar telecom sector in Thailand.

Advent's SereneU fuel cells are fourth-generation fuel cells, and this generation introduced advantages, including longer lifetime, less service and maintenance fees, and improved total cost of ownership. The product upgrade places Advent's fuel cells in a pivotal position to respond to an increase in global demand for sustainable energy.

Also in October, Advent announced that with its partner, Smart Communications, we have successfully completed the first installation of the HG 5000 fuel cell system across the Philippines. The delivery agreement was made early in 2021 with Smart Communications, and these partnerships follows the commitment to the United Nations Race to Zero campaign.

The movement of the global industry of mobile network operators highlights a broad-based commitment to zero emissions from all stakeholders. Smart's shift to green energy follows the announcement of the Philippines' Department of Energy that the government would no longer accept proposals to build new coal power plants.

This significant policy shifts support the development of clean energy sources to help ensure a more sustainable growth for the company. In December, Advent and BASF signed an MoU to develop and increase the manufacturing scale of advanced fuel cell membranes designed for long-term operations under extreme conditions.

Under this agreement, we will explore the implementation of high-volume manufacturing for Celtec membranes, utilize Advent's fuel cell stack and system testing facilities to assess and qualify the new Celtec membrane for our SereneU product for telecom power, M-ZERØ product for methane emission reduction, and Honey Badger product to portable power.

In addition, the BASF supports our realization of the White Dragon and Green HiPo projects, which are pending EU approval through materials for power generation, hydrogen generation, and power storage. BASF will also evaluate the product's producibility of the ion-pair membrane developed in collaboration between Advent and the US Department of Energy.

Advent is working to increase the performance and scope of its products, satisfy the requirements of its customers, and to address new applications by development of next-generation fuel cell materials. Also in December, Advent announced that its fuel cell unit for the marine sector, developed within the framework of the RiverCell Consortium, has passed safety testing as well as safety assessment completed by DNV, one of the world's leading classification societies.

The RiverCell project is dedicated to the design and development of a fuel cell hybrid system for inland vessels. In addition to cutting greenhouse gas emissions, the hybrid concept demonstrated an increase in both safety and efficiency in [shipping].

As part of demonstration, the prototype of Advent's SereneU marine fuel cell unit were successfully integrated into a modern hybrid DC electric energy grid, which was equipped with all relevant ship systems, including battery storage.

During the fourth quarter, we have continued to progress the White Dragon and Green HiPo project in Southeastern Europe. The goal of the two projects as submitted by Advent and the White Dragon consortium of companies is to replace Greece's largest coal-fired power plants with a renewable solar energy part, which will be supported by CO2-free hydrogen production of 4.65 gigawatts capacity and fuel cell heat and power production of 400 megawatts capacity.

Through Green HiPo, Advent will use renewable electricity to produce green hydrogen [bioelectricity]. This green hydrogen is converted to clean electricity, green energy, and heat through Advent's high-temperature PEM fuel cells. The projects are part of the hydrogen technologies by IPCEI with the European Union.

While the approval timeline is not within our control, we're expected formal notification from the EU during Q2 or Q3 this year with final ratification by the EU shortly thereafter. In parallel, Advent has started to put in place an operational structure that will deliver on these significant power projects, with Advent being ideally poised to commence immediately upon final ratification.

We're pleased to be the technology partner for such a large and important environmental project in Europe. And we have received approval from the Greek government. We look forward to being able to provide more information on our EU approval and the final scope of the project over the coming months.

Advent remains well positioned to take advantage of the growing focus on clean energy and where the current government, businesses, and societies will work together to address the climate crisis. We believe that clean energy technology and the hydrogen economy will play a key role in power decarbonization. With that, I would like to hand over to our CFO, Kevin Brackman.

Thank you, Vasilis, and good morning, everyone. Turning to our financials, as Vasilis noted earlier, we delivered revenue of $2.9 million in the fourth quarter, a 714% increase from the prior year. The increase was driven by growing customer demand for Advent's MEAs, fuel cell systems, and other advanced material products. We also collected $3 million from SerEnergy customers during the fourth quarter related to pre-acquisition revenue.

For the full year, we generated $7.1 million of revenue. On a pro forma basis as if SerEnergy and fischer eco solutions had been acquired at the beginning of the year, our revenue would have been $16 million. Cost of revenues increased $2.6 million year over year in the fourth quarter.

The increase was directly related to revenue growth over the last year and the requirement for increased production of MEAs and fuel cell systems to satisfy customer demand.

R&D expenses were $2 million in the fourth quarter, primarily related to our cooperative research and development agreement with the Department of Energy as well as the R&D costs of SerEnergy and fischer eco solutions.

Administrative and selling expenses were $14.3 million in the fourth quarter, a year-over-year increase of $12.4 million, primarily due to increased staffing and costs resulting from the acquisitions of SerEnergy and fischer eco solutions and the cost to operate as a public company and to incentive and stock-based compensation expenses.

Net loss totaled $9 million in the quarter, and adjusted net loss was $15.9 million. I should note that our adjusted net loss excludes a $6.9 million gain from the change in the fair value of outstanding warrants. Our net loss per share was $0.18 in the fourth quarter, and that remains well capitalized with $79.8 million in cash reserves on the balance sheet at year end, which provides us with the flexibility to be agile in executing on our strategic and operational priorities.

This is a decrease of $12.7 million from September 30 of 2021, driven by the increased level of R&D and administrative and selling expenses. Our existing cash reserves and projected cash flows are anticipated to be sufficient to support our planned operations for the next 12 months.

I will now turn to our outlook. Advent has developed significantly during 2021, and we have entered 2022 with a more advanced product range, a dedicated technical sales team focused on key sectors and geographies, and potentially large infrastructure projects. We therefore have a strong pipeline.

As we all know, however, not every opportunity in the pipeline will transpire due to factors that may be beyond Advent's control. Opportunities may not materialize or could be delayed. Advent will use its expertise and resources to bring opportunities to fruition, which will translate into revenue. Due to the long-term contract nature of our business model, the timing of our revenue can also be difficult to predict.

Having said that, we anticipate revenue and income from our grants for 2022 to total approximately $23 million, which will be heavily weighted towards the second half of the year. This estimate does not include a significant contribution from the White Dragon and Green HiPo projects in Southeastern Europe due to the uncertainty around timing and approval of the project.

In closing, we believe that Advent is well positioned to be the provider of clean energy solutions across a variety of end markets. The company has built a solid foundation for the business and continues to grow and execute on its strategic initiatives.

With that, I will hand back to Vasilis for closing remarks.

Thank you, Kevin. It is clear that the hydrogen economy is now in the commercialization phase, and Advent has a massive opportunity for its advanced materials and fuel cell system products. The repercussions from climate change, coupled with an impetus for decarbonization, are quite simply factors that can no longer be ignored, and this requires creative solution as a positive change to address disease.

I would like to conclude by saying that Advent has the technology and products now to create a cleaner decarbonized world. Advent's offerings are economically feasible in the face of an increased global demand for energy. I would like to thank you all for joining us today, and we're now ready to answer questions. Thank you very much.

(Operator Instructions) Laurence Alexander, Jefferies.

Sure. Thank you. Good morning, everyone. This is actually Kevin Estok on for Laurence Alexander. Thank you for taking my questions. Mine is actually just more broader general question. I guess you talked a little bit about it on the call, but I was wondering if you had any more detail or anything that you didn't touch on like the new project pipeline.

Given some recent business wins, maybe any update on timing or potential milestones or just anything that you didn't touch on the call would be helpful. Thank you.

Yes, Kevin, I can put a little bit color to this, as you say. First of all, as you know, we are trying to replace the diesel generator. So our basic approach is to go after the off-grid backup power and the portable. But with the new tech that we're developing, we made an announcement. So very recently, with a new-generation MEA that we co-developed with Los Alamos, that's a game changer.

We're talking about automotive and marine also in 2022. So the whole idea here is that to be able to get the sales we project, as Kevin said, $23 million without the big projects. I'll spend a little bit time on that. And that will be basically driven, as I said, about the existing revenue stream that we project, off-grid backup power, and then the [JTAs] for the new for the new tech we're developing.

Because keep in mind that Advent here has two major pillars, if you will. One is a fuel cell company, right now, 2022 -- more than 200 people, the patents, the manufacturing capability, the inventory, the almost 1,000 SereneU systems in the field.

So we're not the company that we were before. Now we're a fuel cell company. So I think the sector also has changed for us. We are with this particular group. People -- and the set of companies [that trade with the] US and Canada, in the UK, Sweden, [so we need to be looked at that]. And I think, as I said, 2022 will be a big year for us.

Now the other potentially big thing -- and I say that because we announced that on September 7, where we actually got two of the five approved out of the 20 submitted projects for IPCEI from the Greek government. And one is the White Dragon, and the other is the Green HiPo.

The Green HiPo is ours. The White Dragon is a consortium with the largest energy companies. But what we know there is that, at least for the Green HiPo, is that we have gone through the second set of questions, and I think in the next few months, as I said before, either Q2 or Q3, we expect they're going to go. And there, we will know.

Now, are we optimistic or pessimistic? I will say we're very optimistic. The reason being that there are two things that are happening. One is the geopolitical aspect of it. I think it's very obvious that Europe will put a lot of effort on renewables for energy independence, and hydrogen will be a big part of the start-ups because right now, the renewables don't have a very good start.

[Batteries] are not good enough and hydrogen is coming up now. But take our word for it, hydrogen will be a big part. So it's not going to be only in a gaseous form or liquefied form. We'll find out what it is, and all of them are there. But we also believe, as you know, in methanol fuels or use hydrogen to produce fertilizers.

The fact of the matter is the geopolitical thing. It was, before, strong and now has become much, much stronger because of the war. And the other is the geoeconomical part of it. Keep in mind that all the other things have become very expensive also. Liquefied natural gas is also expensive, bringing it to Europe. You need to make terminals as well.

So -- and also the fact that we do it in Greece -- and it's not an accident that the other big project also is in the south of Europe, in Spain, because there's a lot of sun here. So you can imagine, you have 2.5 times the sun in the south that we have, let's say, an [outpour]. Then we produce hydrogen 2.5 times cheaper.

So the -- even though we haven't gotten the approval for the White Dragon or Green HiPo, we're still confident that -- an optimist, but I cannot say that we got or not. But all the things go there. Having said that, and I think Kevin said it again, and I would say we project $23 billion for this year without any significant contributions.

And I know it's a tough year. We have COVID. We have supply chain issues manufacturing companies are not very much in favor. But for us, traded at [$2.38] right now, we believe we're vastly grossly undervalued because if you take a look at the sector, and I mentioned the companies before, take a look at their valuations.

Take a look at the revenue, the total revenue as it's defined, how much everybody spent in order to make this revenue. If there is any debt or not, you will see that we're in the wrong side. So I think I'm optimistic that in 2022, we'll get our fair share. Thank you.

Thank you.

Lacie Midgley, Panmure Gordon.

Hi Vasilis. Can you hear me okay?

Yes, Lacie. How are you?

Yes. Hi Vasilis. Hi Kevin. Firstly, congratulations on the results and thanks for the presentation. A couple of questions, probably two for Kevin, I'll say. You've given the revenues and guidance. So how -- I mean, how should we think about that in terms of MEA sales, stack sales, and system sales going forward? Is there any dramatic split for this year there and perhaps for next year and the year after? I'll let you take that first.

Yes. After the acquisition of SerEnergy, I think, moving forward, probably over half our revenue will be fuel cell systems, the full system with the remainder being split between MEAs and engineering fees. Depending on the year, I don't know exactly which of those two pieces will be more significant, MEAs or engineering fees. So a little over half from systems and then the remainder, MEAs and engineering fees.

Thank you. Helpful. And then, just thinking of costs, particularly for your CapEx, R&D costs over the, well, I guess, 12 months for a start. Is that focused on one -- I mean, firstly, some guidance there, if you can, would be helpful. And how should we think about that in a similar vein? Is that focused on one particular area, MEA, stacks, or system or all three? Any color there would be helpful.

Yes, let me let me go down the individual lines on the P&L and provide a little bit of guidance on each.

So let me start with research and development expenses. It was $2 million in the fourth quarter. I think that's a reasonable number moving forward on a quarterly basis, the $2 million that we had in the fourth quarter. So I think that's a -- and that's mostly cash. The administrative and selling expenses, that was $14 million in the fourth quarter, which included some accruals for incentive compensation and other items.

So I think that number was a little bit high in the fourth quarter. I think, moving forward on a quarterly basis, that SG&A number will be more like $10 million to $12 million, which includes, let's say, roughly $3.5 million of stock-based compensation expenses, which are non-cash. So that's the SG&A line.

And then CapEx, I think we had, I believe it's around $1.5 million in the -- $1.6 million, something like that in the fourth quarter. I think that's probably a reasonable run rate again on a quarterly basis. And so, on a cash basis, when you add those three lines up, let's say $11 million from SG&A, but $3 million of that is non-cash.

So let's say $8 million of cash for SG&A, $2 million for R&D, and $1 million to $2 million per quarter from CapEx gives you a run rate of about $11 million to $12 million of cash use for our costs.

Thank you. That's really helpful. I appreciate that. And then, I guess, well, probably more [of the silly] questions, but when White Dragon and Green HiPo projects -- if and when they're approved, will Advent service that demand from which of your sites? And do you need extra capacity coming onstream to meet the demands of those? I guess you will, given the size, but just your thoughts on that would be good.

Yes, absolutely. As we said, we have separated the two: the existing business, which is very strong and growing. And this will be a colossal project. Again, obviously, as you very well pointed out, capacity is the question. It's not the finance and engineering project. For a project like that, we know how to negotiate and get the final numbers. The thing is, how you do actually fulfill the demand?

And then, we have already -- announcements, we have the announcement with BASF, and we're talking to other very big players, okay? So the thing is that we're preparing very diligently as if this is a [call because the return] is humongous.

The most important thing, less than you probably know it, is the access to cheap renewable energy. That's the key. And the minute we have with it, we do have it there in Western Macedonia, then the rest can be built. So we're prepared and we're ready, and hopefully we'll be successful.

Thanks, Vasilis.

Thank you.

Thank you. One last one from me, sorry. The largest stacks for the heavy-duty applications you are developing, what's the next milestone? Last time, I think you said prototypes in this financial year, expected. Are you still on track for that? And when should we be thinking of expecting first sales on that side? Thank you.

I'm sorry, I think I missed the first part of the question. What's the question again?

Sorry, Vasilis. The development of your largest stacks for the heavy-duty applications, just trying to think the next milestone there. Is it still prototypes this year, and when we should expect the first sales on those?

For the very, very big one, we're trying to do a [JDA]. You understand that, right? So it is -- even a project of that nature, again, it's very intense, both in labor and the costs. So we'll building things either organically from the SereneU 5-kilowatt module. We can go up. We know how high can we go in order for this to be economical.

We have a couple of demonstrations. You see the board demonstration, 90 kilo. But the other one, which is a very different concept, we built it in smaller modules, to be honest, because we haven't figured out internally either if you want to go with many services, if you will, with [1 mega]. But the concept is there, our patents are there, and the group is working very good.

But there, in our opinion -- and we should see [more one of them]. There is a lot of interest in the community and the people to understand about doing a JDA with us because they have seen the announcement. And the game changer is the MEA coupled with the, obviously, the new study design for the bigger systems.

So I expect things to go there, but we need the catalyst, if you will. And the catalyst will be the JDA with the manufacturing company.

Understood. Thank you. Thanks for answering my question.

Okay, thank you.

(Operator Instructions) Adam Forsyth, Longspur Capital.

Morning, Vasilis. Morning, Kevin. Two questions from me. Firstly, around supply chain issues, which a lot of companies are seeing issues with. One of the first things I noticed in the numbers was actually your inventory level. It almost looks like you've got one year's worth of inventory sitting on the balance sheet.

Is that right, or are there one-offs in that? And if it is right, does that give you protection against supply issues going forward? And we should we expect that almost 360-odd stock days, should -- would we expect that to unwind going forward?

Yes, that's a good question. So to your point, we're seeing the same cost pressures that every other company has seen. And so, we strategically bought inventory and materials really starting late last year. We strategically increased our inventory levels to help mitigate some of the impact of the cost pressure. So you're right, we have built out the inventories to a higher level than you would normally expect to have.

That was a strategic decision we made, and yes, as we go through the course of the year, I would expect that to wind down [a little].

That makes a lot of sense. And second question, a bit more general, but it's almost on things we're not seeing. I just wonder, have you seen much business on the gas sensor side, and then perhaps less likely anything around electrolysis? I'm seeing quite a number of offerings, particularly from solid oxide solutions in the electrolysis space.

I wonder if that's been an area where you would seem to have an advantage with your technology. I just wonder if you're seeing anything around that.

Yes. I mean, we do have the sensor going. And we do -- as Kevin said, we have actually turned the corner. We are a fuel cell company now. So in that respect, the fuel cell company here is more effort than -- and we put a lot of our effort in the engineering and how to reduce the costs, how to sell these things. That doesn't mean that we don't operate the others, the materials, but they're not, in our opinion, as important as it used to be. At the end of the day, the sales combination [is all that].

Now about electrolysis, we have excellent materials and excellent stack there. And you will see the investments come in and the nice collaboration with Northeastern University for that as well. But time is of the [issue], right? You know that.

If we go to a Green HiPo situation there, we have to collaborate with existing people. We have to use existing technologies with whatever the power density is and trials to make it better. But we can win the battle with what we have. I think that's the message I want to bring out to the group, okay? The economics now have changed to our advantage, okay?

Everything else has become expensive. Therefore, we're not that expensive. Second, the government, as I said, want to bid the bigger projects because we have a bigger project. By the nature of scaling up, the cost goes down and goes down dramatically. And therefore, you might not have to invent every day a new MEA or something. That's what's important about electrolysis piece now because we know there are also issues.

So I would say that we'd put them together at Investor Day, not only for the investors and toward sales, but also to showcase our products, our results, our technologies. That will happen in the next couple of months, I will say. And I think that will be an excellent opportunity for people to come and ask questions: What do we have in materials in membranes and electrodes, which are our strength?

But also, I think, people were very impressed with the progress that the Danish people and the German people have done, and actually have created another type of fuel cell, a high-temperature PEM fuel cell based on our materials. But the engineering also is there. And now, I think we can offer hundreds of them.

And if you take a look around, there are not that many companies in the fuel cell business that can do that. That you can put a big order -- and I'm talking about larger companies because larger companies, especially in this thing, the barrier is very significant to enter in the industry.

In the end of the day, you have to go back to the standard actors, if you will, right? I mean, the people who have the low-temperature PEM technologies, the solid oxide, as you mentioned. And now we run the high-temperature PEM, so I think we should concentrate a little bit of that and showcase it and not traded like a [SPAC]. I have to make a comment about that as well.

We came in with a SPAC transaction. It has its own idiosyncrasies, we know that. But I want for us to start thinking outside of that because the pipe is out. We had the unlocking on February 5, a very substantial volume in the last couple of months. So basically, we decoupled ourselves from that.

And I think it's very unfair to us to trade at a SPAC [at $2.38] a share, 2 times cash and maybe 3 times sales if you take away the catalyst there. And actually, try to see us as a fuel cell company with a global reach, listed in the US now, but we compete not only with US companies -- the companies are there, listed in other places.

And if you see there, I think that you will agree with us that the company has a lot of value, and it's poised for a very good growth in 2022. Thank you.

Great. Thank you.

(Operator Instructions) Sanjay Jha, Panmure Gordon.

Hi gentlemen, I just wanted to ask a couple of questions, if I may. How -- if I look at your revenue profile this year and for coming up here, how important is Philippines and Thailand to your business? And I just wanted to get [the head around]. Is your high-temperature product line -- is that more suitable to those countries? I just wanted to get my head around those kinds of issues.

Yes, you're right, it is very important. I think we're ideally suited for this part of the world. And that's where we will put a lot of effort and a lot of technical sales effort to educate the people there and use the very nice examples that we have in the Philippines as a showcase there. So this this region is very important to us, and it couples very well to the product offering.

And how developed is the hydrogen? Presumably, you need high-quality hydrogen. So is that infrastructure --

No. There, we use methanol. And actually, we use renewable methanol, which means it's carbon-neutral fuel. So the hydrogen --

Okay.

The methanol is the hydrogen carrier. So it's very ideal. You bring up the [example] where you have the installation, where you have the towers, you bring liquid fuel, which -- it's, think about it, liquid hydrogen in a way, right, because of the fact that we take the hydrogen from the methanol. So it's very much -- every new product has its own, how can I say, the same standard problems, okay?

It's more expensive, but people will want it. It lasts a little bit less than they want, and that's what we're trying to address. Again, make the product cheaper, make them last longer, learn how to make many thousands of them, many hundred thousands of them.

But this region over there, to come back to your original question, it is ideal. And we will put a lot of effort there.

And just one final thing for me. I mean, I know there's been lots of talk about the increases in costs, on material costs and things. Could you remind us what is your -- two or three things, which are your biggest expenses in your product line? Raw material expenses.

As you know, the platinum is expensive. But for the stationary things, the plan is to recycle. So basically, we take it out of the equation. And now, all the supply chain has gone up, the electronics, things like that, because there's a shortage.

And we would like to address -- as we said, we're trying to be smart even before when we got the money from the stock market with the big inventory because we know that it's better to have -- how can I say it -- your things before -- I forgot the word -- you get the supplies in line.

And in that respect, we have pressure now from these external factors. But eventually, if you look at long way and you take the platinum out because the platinum is the issue with the fuel cells, okay? So the technology really works well with platinum -- and platinum -- even though we always try to reduce that. So for the for the backup off grid, we almost neutralized that problem.

Okay, that's good. Okay. So you're well covered for -- at least given your inventory levels. Thank you for answering my questions.

You're very welcome.

(Operator Instructions) We have had no questions registered at this time. So I'd like to hand it back to the management team.

I would like to thank everybody for being on the call, and we're looking forward to a very good 2022. Thank you very much.

Thank you. This does conclude today's call. Thank you for joining. You may now disconnect your lines.