Nel (NEL) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached NOK 366 million, up 21% year-over-year, driven by strong alkaline segment performance, while PEM segment revenues declined 40% year-over-year due to project timing and low shipments.

• EBITDA was NOK -90 million, down from NOK -60 million to -62 million last year, as positive alkaline contribution was offset by negative PEM performance; management expects a significantly better Q4 due to licensing revenue and improved segment performance.

• Order intake was NOK 161 million, down 52% year-over-year, with order backlog at NOK 1,872–1,900 million, reflecting delayed FIDs and market softness.

• Cash reserves remain strong at NOK 1,941 million, with no need for additional funding as CapEx is set to decrease by 50% in 2025.

• Cavendish Hydrogen ASA was spun off and separately listed in June 2024, with prior period figures restated to reflect discontinued operations.

Financial highlights

• Alkaline segment revenues grew 37% quarter-on-quarter and 54% year-over-year, with positive EBITDA driven by higher volumes and improved cost structure.

• PEM segment revenues fell 40% year-over-year, with low cost absorption and EBITDA, but performance is expected to improve as the 500 MW production line nears completion.

• EBITDA margin was -24% in Q3 2024, down from -20% in Q3 2023, mainly due to weaker PEM division results.

• Net loss for Q3 2024 was NOK -115 million, compared to NOK -167 million in Q3 2023.

• Net cash flow from operating activities improved to NOK -47 million from NOK -136 million in Q3 2023.

Outlook and guidance

• Management anticipates a much stronger Q4, supported by licensing revenue from Reliance and improved segment performance.

• CapEx will be reduced by 50% in 2025, with focus on next-generation technology development and cash conservation.

• Market is showing early signs of recovery, with high-quality projects expected to reach FID in coming quarters as regulatory clarity improves in the EU and US.

• Production output and staffing will be aligned with real market demand.

• Top-20 alkaline and PEM prospects represent over 6 GW of potential capacity.