Fusion Fuel Green PLC (HTOO) 2025 Q2 法說會逐字稿

Good morning, good afternoon, good evening, everyone, depending on where you are joining us from in the world. We thank you for joining this Fusion Fuel Investor Update today, where we will update you on our results for the first half of 2025 as well as some of our subsequent events and progress. My name is John-Paul Backwell, CEO of Fusion Fuel, which trades on the Nasdaq under the ticker, HTOO. And I'm also joined today by our CFO, Frederico de Chaves.

So before we begin, let me draw your attention to the forward-looking statement disclaimer. As with any company operating in the dynamic global markets, some of what I will share with you today or what we will share with you today concerns our expectations, our plans and projections for the future. These statements do involve risks and uncertainties, but they also highlight the extraordinary growth opportunity that lies ahead for Fusion Fuel.

I encourage each of you to review the disclaimer in detail. But for now, let me add that our strategy is built not on speculation. It is built on tangible contracts, on operational execution, and a platform that is designed for sustainable growth, some of which we will be discussing today.

So with that said, here's what we will cover today. First, a reminder of who we are in our growth strategy before I summarize some of our key highlights of our performance thus far in 2025. And following this, Frederico will give an update on our financial performance. And then, we will both give a business update that dives into our subsidiaries and our growth engines, Al Shola Gas and BrightHy Solutions or Bright Hydrogen Solutions, respectively, before we give an update on our M&A pipeline. And finally, we'll discuss some of our milestones and the path forward for the company.

So by the end of this presentation, I believe you will see that Fusion Fuel is executing a true transformation, one that positions us not only to survive but also to thrive as one of the more innovative companies or energy companies on the Nasdaq.

So for those less familiar with our company, I'll provide you with an introduction. We are an integrated energy platform that specializes in designing and engineering energy systems and solutions as well as supplying energy to homes and businesses.

Currently, we're focused on green hydrogen and gas. But as you will see, we rapidly are expanding into the broader energy sector worldwide. So our vision is quite simple, yet powerful, driving sustainable growth in tomorrow's energy market by fully leveraging the opportunities available in today's energy market.

So energy for us is not a distant theme. It is the foundation of every economy of every business and every home. And with that in mind, our mission is to be an owner and operator of fast-growing profitable businesses in the energy and utility sectors. This means that we're not limiting ourselves to one technology or to one vertical. Instead, we're deliberately building a platform that captures today's immediate energy needs like gas supply and engineering while simultaneously developing tomorrow's clean energy solutions, such as hydrogen. This dual approach allows us to deliver revenue and profit now, today, while also positioning ourselves at the heart of the global energy transition.

So next slide. Fusion Fuel is more than a single product or a single solution company. We're building an integrated energy platform, as I mentioned, that spans from conventional LPG and gas engineering to innovative hydrogen and renewable solutions. So today, we supply energy for heating, cooling, cooking, transportation and the many other essentials of modern life. Tomorrow, through our hydrogen and clean energy initiatives, we will be supplying the solutions that global industries, that cities and governments demand as they decarbonize.

So this combination of present-day cash flow with future-orientated innovation is rare. It means we are resilient in today's market without needing government incentives or constant dilutive capital investments like so many renewable energy companies need just to survive, yet we're also unlocking exponential growth potential in the years ahead.

So if you've been following our company over the last six months, you'll have noticed that our operating businesses are growing organically with multiple new contracts awarded. But that said, we've also been very busy pursuing profitable acquisition targets, which we believe will certainly scale up our business internationally. And then alongside this, we've also been working on innovative deals that are intended to further boost shareholder value, which we anticipate discussing further in the coming weeks.

So before I hand over to Frederico, I'll run through some of our key highlights of the year so far. Now it has to be said that we did enter 2025 facing an uphill battle, just being transparent about that. And I'm sure many will have recognized that. We did recognize that we needed to stabilize and transform the company while positioning it for significant growth.

Now towards the end of 2024, the company was at serious risk of being delisted from the Nasdaq, and it couldn't continue its operations without a significant restructuring. So the rest of our core team and myself took on this challenge knowing that in all likelihood, we may not succeed.

Now banks, analysts, and many others have completely written us off, but we did bring in a profitable gas business. We dramatically reduced our expenses, as you will see, and dramatically really is an understatement. And then we began the painful process of rebuilding the business.

So we worked hard through Christmas, managing to raise just enough capital to get some momentum at the start of the new year. And then that momentum grew as we overcame each of the several obstacles that we faced as a company.

Most significantly, we restored our Nasdaq compliance and our results show that. Our revenue has surged while our operating costs have been substantially reduced. This marks a major turnaround for the company, in my opinion, at least.

Revenue is up 70% and costs are down 54%. In July, we successfully raised capital on favorable terms, and we largely cleaned up our cap table. Our balance sheet has also improved. Our stockholders' equity is healthy for a micro-cap. Our operating businesses are growing, indeed thriving. And of course, we're executing, I would say, an aggressive M&A growth plan, where we've made substantial progress over the last month.

So I can confidently say that 2025 has been the most important period in our company's history so far. We've achieved the turnaround that was needed, and we're quickly moving towards profitable, scalable growth across the energy sector.

But with that said, to show you the details of this, I'll turn it over now to Frederico, who will walk you through some of the key events of 2025 so far and also discuss the recently published financial results. Thanks, Fred.

Thank you, JP, and thanks, everyone, for watching our updates. As noted, we have had a truly transformative first half and also two defining months with all the developments in both July and August.

As JP mentioned, we've been able to address the three Nasdaq delisting issues we had, mainly shareholders' equity, minimum share price, and also the holding of our AGM. As part of this effort, we executed a 1-for-35 reverse split of our Class A ordinary shares.

In addition, we raised over $8 million this year, which allowed us to strengthen our balance sheet, simplify our cap table and also invest significantly into growth activities in both Al Shola Gas and Bright Hydrogen Solutions.

Al Shola Gas continued to show strong and sustainable business growth, having secured engineering contracts for the next 18 months and also more than $1 million worth of recurring annual fuel sales.

In Bright Hydrogen Solutions, the team has secured agent agreements with two globally leading hydrogen equipment providers and has already won several tender offers, which are now in the contracting process. In addition, the team is advancing towards the closing of the nonbinding term sheet secured for a EUR30 million commitment for its new hydrogen investment vehicle.

We expect further growth activities to take place before year-end. And in particular, we are working towards the closure of the M&A activities that we've announced, such as the UK-based fuel distribution company and the South African steam power generation joint venture, which JP will elaborate more later in this presentation.

Now on to our first half financials. The company recorded EUR6.9 million in revenues for the first half, effectively all from Al Shola Gas, of which 55% came from recurring fuel distribution sales and 45% from engineering and maintenance contracts. Historically, the fourth quarter has the highest fuel sales for the year, and therefore, we expect continued growth from this channel this year.

Our operating costs came in at just under EUR3 million, a decrease of around 60% when comparing to the first half of last year. This reflects the substantial and fundamental changes the company has made to its business composition as we work to ensure long-term sustainability and move towards profitability. Some of these costs are tied to capital raises and SEC and Nasdaq-related activities, and we expect to further reduce these costs in the future.

In the first half, we saw around EUR1.5 million of one-off expenses driven by historic QIND personnel expenses, transaction-related expenses and also taxes. As we've done with each result presentation, we continue to have noncash share-based expenses related to equity-linked compensation and changes in underlying value of our outstanding warrants and convertible notes. I will note that as of end of August, nearly all of the convertible notes outstanding for Fusion Fuel have been converted and are no longer on the cap table or accruing interest.

The EUR490,000 adjustment shown in the presentation is a bridge between QIND's total annual loss and the portion that is actually attributable to Fusion Fuel. As Fusion Fuel owns 54% of QIND, only that share of the loss is recorded by Fusion Fuel while the remaining 46% is allocated to minority shareholders.

Including the minority shareholder adjustment, the group's total expenses for the year were about EUR2.8 million. And adjusting for one-off costs and noncash items, the loss comes down to roughly EUR900,000. This really highlights the difference between where the company was and where it is today. And while some of the one-off items are expected -- while some other one-off items are expected in the second half of the year, the path towards breakeven is now clear, and we're very much pointed towards sustainable profitability in the near future.

Our balance sheet has continued to strengthen, although this is not yet reflected in the figures here, given that most of the improvements occurred in July and August. During this two-month period, EUR4.3 million of total liabilities were removed from the balance sheet through a combination of note conversions and repayments of outstanding liabilities, reducing the value of the notes outstanding to approximately EUR1.5 million today.

We fully expect to show a substantially improved balance sheet by year-end, reflecting the actions already taken during this third quarter. We expect to deliver substantial revenue growth in 2025, up 70% from the adjusted revenue figures in 2024.

In 2024, Fusion Fuel posted modest revenues as it could only formally consolidate one month of the QIND transaction. However, when we take into consideration the full QIND results for 2024, the revenues would have been around EUR10 million versus our expected year-end revenues of EUR17.4 million.

Our revenue figures, although impressive, have been impacted by the weakening of the US dollar against the euro. In US dollars, our growth would have been even more pronounced, closer to a full doubling of the revenues posted.

In addition, BrightHy that operates in an industry with long lead times has secured substantial first half revenues -- sorry, first year revenues and is in the process of closing contract negotiations for several million euros of business volume.

Equally as impressive has been the cost reduction efforts that we've been executing. Our operating expenses have reduced by more than 50%. In particular, the difficult and painful decision to close our loss-making and capital-intensive activities in Portugal has contributed significantly towards establishing a leaner, healthier cost base from which we can operate and grow sustainably.

Our cost run rate is much lower than before. And with much of the first half impacted by one-off costs, we expect the operating expenses to continue to improve relative to our growing top line, both in the second half of 2025 as well as into 2026.

Now I'll turn to our business update section of the presentation, starting with Bright Hydrogen Solutions or BrightHy as we like to refer to it. For those who have followed Fusion Fuel for several years, you'll be acutely aware of the extensive hydrogen expertise that the group has developed from being one of the first companies to install multiple hydrogen projects in Southern Europe.

We've taken that deep engineering expertise and hydrogen-focused experience and created BrightHy, a company able to deliver best-in-class hydrogen solutions tailored to clients' needs. We've already developed key strategic relationships with some of the companies that we recognize as being industry leaders in the hydrogen equipment space.

In addition, we have long established relationships with players in the hydrogen industry from our five years of operations in the field, providing a healthy pipeline for the business. As we've recently announced, BrightHy has won various tenders for hydrogen projects in the past weeks.

It's important to note that in the hydrogen project decision process, there is first the competitive tender process and only after being selected as the provider for the project, do we move forward to a one-on-one contract negotiation to finalize certain terms such as payment conditions and warranty requirements.

The three projects that are in closing phase are a 2-megawatt project to support decarbonization efforts of a cement company in Iberia; a 0.6-megawatt project in Iberia, where BrightHy will act as the procurement adviser, helping to identify the right equipment for the client, followed by integration and commissioning processes and services for that equipment as well as a 15-megawatt engineering services contract for a plant in Iberia, where BrightHy is responsible to deliver the full FEED engineering services.

In addition to these projects, BrightHy is in the final tender round for several projects ranging from full project delivery and installation to specific equipment sales and engineering provisions. With this pipeline and ongoing projects underway, BrightHy is on track to achieve breakeven within its first 12 to 15 months and targets revenues of up to EUR5 million by 2026.

Once again, BrightHy's unique experience in the space and its strategic partnerships continue to put it ahead of our competitors throughout these tender processes. BrightHy has a privileged position of having first access to many hydrogen projects. And we've seen a particular market opportunity to create an investment vehicle to invest in projects that we identify as extremely compelling and that have a strong investment case.

Therefore, we decided to create Bright Hydrogen Holding Company, which is focused on identifying hydrogen plants in the EUR2 million to EUR5 million range ideally that have attractive IRR and investment-grade offtake counterparts.

The target is to gather investors to fund this investment vehicle that will be fully managed by BrightHy in exchange for a management and performance fee. With a capital base secured, BrightHy can support attractive projects by providing not only the hydrogen solution for the build-out, but also the necessary project funding.

For example, the project with a cement company, which will be the first hydrogen plant of the investment vehicle is one where BrightHy can provide the client with a leasing-based financing solution. This allows the client to avoid the substantial upfront CapEx while delivering to the investment vehicle a project with an investment-grade counterparts and very attractive returns.

BrightHy has already secured a term sheet for a EUR30 million capital commitment for this investment vehicle, and the company and the investor are currently working together on the investment contract, governance documents and responsibilities. This marks a truly strategic move by the company, securing its position in the Southern European market and also helping us to be not only enablers of the hydrogen industry, but also key drivers of it.

Now I'll pass you to JP, who will provide an update on Al Shola Gas and on the M&A activities that we are working on. Thank you.

Thanks, Frederico. Right. So I will start with a quick refresher on Al Shola Gas. The company has been operating since 1980. And today, it remains one of the most trusted gas engineering and supply companies in Dubai, where it's headquartered.

So for those who don't know, and I suspect many don't, the Dubai market is extraordinary. Dubai is one of the world's fastest-growing economies with construction and infrastructure development driving sustained demand for energy, which has in turn been driving our growth. It's one of the fastest-growing populations on the planet at the moment. So that's very important for our growth.

And then it's also very important to note that our majority-owned subsidiary, Quality Industrial Corp., or QIND, as it's known, has invested over $1 million in Al Shola Gas this year. And based on the results so far, the business is on track to exceed its year-over-year growth average of 30%. So we're very pleased with the progress we've been making in Al Shola Gas.

In the first half of the year alone, Al Shola Gas secured approximately $6.7 million in new engineering and installation contracts. Additionally, the company is expected to generate approximately $1.7 million in annual recurring revenue from new gas supply agreements that has been awarded. And today, we're certainly proud to say that Al Shola Gas services nearly 38,000 end customers in the region where it operates. And both our vehicle fleet and our operational team are rapidly expanding to meet ever-growing demand in the region.

Looking at some key comparative metrics for the first half of 2025 versus the entire year of 2024, we can see that we're on track to surpass sales and deliveries in our main areas. In the first six months, we're ahead of schedule for both new customers and new engineering contracts, and we're on pace to exceed the LPG sales from last year.

Next slide. So firstly, looking at the engineering and installation side of our gas business. We have an experienced team that designs and engineers central gas systems, and you can see pictures of some of the work or the installations that take place.

Additionally, we have a large and also experienced team that is out there in the heat of Dubai, six days a week on construction sites, installing central gas systems for our customers. And our customers are largely the region's main real estate developers and property management companies.

Next slide. So we install and commission every part of each central gas system, and we're very proud of our safety record in the region. We're also widely recognized by property developers and contractors in our region for the high quality and the reliability of our installations.

Next slide. So just summarizing that progress on engineering and installation, we secured $4.5 million in new central gas system projects so far this year. What that means is we now have an 18-month backlog that provides us with clear visibility into reliable revenues through 2026.

We're also expanding our team of engineering and installation experts so that we are ensuring that we can deliver new contracts efficiently. At the same time, we've also been growing our sales team. We can't be complacent, and we're doing that in order to increase our market share as we look to expand into neighboring Emirates and across the Middle East.

And then on the bulk supply side, next slide. We deliver gas to customers in both bulk formats, as you can see on the left with bobtail trucks and cylinder formats, as you can see on the right. Our fleet of vehicles includes both bobtail trucks for the bulk gas delivery and standard trucks, which are converted to transport gas cylinders safely to our customers. And those include sort of hundreds of restaurants, commercial facilities and residential customers.

Next slide. As mentioned earlier, we obtained new contracts for bulk supply to the tune of approximately $1.7 million, and that amounts to recurring revenue, which is all important for Al Shola Gas. We also received over $0.5 million in existing contract renewals. So that's from existing bulk supply contract customers.

Our trucks are on the road up to 16 hours a day for bulk supply that is. That's six days a week. They're filling and refilling bulk LPG tanks at customer sites across Dubai. Very importantly on that bulk supply side is that we're achieving margins of over 40% on that supply side of our business. And that's a testament to the efficiency and the strength of our business in that area.

And then to cater for the growth we're experiencing, we've also ordered two new bobtail trucks costing approximately $185,000 each with the chassis and superstructures being imported from Europe. Now we expect to add these new trucks to our fleet within the next three to four months. Each new bobtail truck generates 6-figure roughly revenue monthly, approximately $100,000 to $130,000 per bobtail truck in revenue that we're able to generate. So that's an example -- a powerful example, I'd say, of how capital deployed into Al Shola Gas translates into rapid payback and sustainable growth across our business.

So that's it regarding Al Shola Gas. I think simply put, Al Shola Gas is the backbone of Fusion Fuel's present-day drive towards consolidated profitability and a growth engine in its own right.

But of course, let's move on to our all-important M&A growth strategy. And I would say that our M&A growth strategy certainly extends well beyond our organic performance. We're actively pursuing strategic acquisitions to enhance and diversify our energy platform.

So the UK fuel distribution company, as you can see on the top right, is a deal that we are negotiating, and it's a perfect example of a profitable cash-generating business that complements our operations and significantly increases our scale. The business generates over $50 million in annual revenue and more than $12 million in net income annually.

And importantly, we're advancing the acquisition without using dilutive capital. So far, the acquisition terms and structure have been agreed upon, and we've made solid progress on the debt financing, bringing us closer to finalizing the transaction.

And then beyond this, we've also signed a binding heads of terms agreement to establish a joint venture with a South African company called Alien Energy that was recently publicized in a press release. And in that joint venture, we will be holding a 51% stake. That joint venture will develop a large-scale biomass-powered steam energy project at a large dairy processing facility in South Africa. That facility is owned by a global multinational food and beverage company. And we would expect that after our investment in the joint venture, we will generate approximately $700,000 in annual returns starting in 2026.

Very importantly, we're also exploring additional projects with Alien Energy considering the innovation and the reliability of their steam energy solutions as well as the potential carbon credit benefits off the back end.

And then for now, we have paused on the acquisition of a US -- a United States solar panel distribution company, which delivers quite significant revenue. However, we've been assessing the impacts of the recent renewable energy policies in the US, and we'll make a decision as time goes on during the remainder of this year. That said, we are still exploring several other US acquisition opportunities.

And then just to say regarding new acquisitions, we are disciplined, and we are targeting those that expand our customer base that diversify our revenues and provide immediate accretion to our earnings. We believe that beyond our existing organic growth, this is how we will accelerate our growth curve as a company while also protecting value for our shareholders.

And then finally, it's also important for me to update QIND shareholders on the transaction after Fusion Fuel acquired 69% of QIND in late November 2024. So the first step was to restore Nasdaq compliance. Within which, we've been successful. We've also invested heavily in Al Shola Gas, something which QIND as an OTC company could not have done alone. There's just no way that it would have been possible. And we're now in discussions with Nasdaq about how to treat the acquisition.

So based on that, several steps may or may not remain. And depending on the feedback from Nasdaq, we will proceed accordingly. Of course, we will update QIND shareholders as soon as we have definitive information. In the meantime, we're continuing to invest in the business and significantly expand it.

And then next slide. So just as we begin to wrap up this update, I think it's quite clear that 2025 is already a year of transformation for Fusion Fuel. We are generating solid revenues and scaling up our businesses while moving quickly towards sustainable profitability.

So far this year, we've raised capital on favorable terms, and we strengthened our balance sheet quite significantly. And having, I would say, stabilized the company and achieved growth in our businesses, we are now focused on securing suitable debt finance for our next acquisition.

We've worked very hard to address our Nasdaq compliance deficiencies, and we've achieved compliance in all areas. And then as mentioned, we are delivering organic growth, but we are also fully aware that we cannot become complacent. Therefore, as I mentioned, we are expanding our LPG vehicle fleet. We're adding new members to our operational teams, and we are continuously pushing into new markets in that area.

We've also successfully launched Bright Hydrogen Solutions as our hydrogen subsidiary. And that's led by, as Frederico said, a renowned team that has directed some of the most prominent projects in the European green hydrogen sector. We're working on our first projects and the results from the team's efforts are certainly expected to be seen by the end of this year and gaining substantial momentum into 2026. For me, that's very exciting. We're also in the process of launching our EUR30 million infrastructure investment vehicle, which we expect to go live next year, also very exciting.

And then, of course, on the M&A front, as we've harped on about a fair bit, but it's very important to our growth strategy. We're in negotiations, and we are progressing on strategic acquisition targets as we aim to drive revenue well beyond EUR75 million in 2026 and achieve double-digit profitability with those acquisitions, of course. Yes, I know it's ambitious, but then we've already made strong progress towards our goals this year. What remains now is to close our current transactions and kick off the acquisition and integration.

So I guess, in conclusion, our trajectory is clear. Fusion Fuel is evolving from a development stage company into a profitable, diversified and scalable energy platform. We are delivering significant revenue growth along with recurring revenues while we are also very aggressively pursuing growth through both organic expansion and strategic acquisitions.

We aim to increase the regions in which we operate around the world and position ourselves eventually as a leader in both today's energy market as well as tomorrow's clean energy future. So I think with that, I would trust or we trust that you found today's update informative. Should you have any questions and some of you may, please feel free to e-mail us at ir@fusion-fuel.eu. I'll just repeat that for you. It's IR for Investor Relations, so ir@fusion-fuel.eu, and we'll endeavor to respond to anything non-spam related as soon as possible.

So thanks again for your time. We really appreciate your support, and we look forward to updating you again soon. So bye for now.