Nel ASA

Good morning from Oslo. Welcome to Nel's First Quarter 2026 Results Presentation.

My name is Hakon Volldal, I am the CEO. With me today, I have our CFO, Kjell Christian Bjornsen; and our Head of IR, Marketing, Communications and Miscellaneous functions, Wilhelm Flinder.

We have the following agenda. I'll skip the Nel in brief and jump straight to the highlights for Q1.

We have a short commercial update covering the most important commercial events in the first quarter and one subsequent event, a short technology update and then we will, as usual, end with questions and answers. Quarterly highlights.

Revenues came in at NOK 148 million. We had a negative EBITDA of NOK 100 million.

Order intake at NOK 85 million. Order backlog ended at NOK 1.1 billion, and our cash balance ended at NOK 1.4 billion.

A pretty quiet start to the year. First quarter is always a bit slow.

What we are focusing on is the launch of the new pressurized alkaline platform that will happen at Heroya on May 6 this year. In connection with that, we have been busy in the first quarter testing out new pressurized alkaline production line technology that is progressing according to plan.

We also opened Korea's first off-grid green hydrogen production facility. That was commissioned in late March.

And in April, we received a $7 million purchase order for containerized PEM equipment. Looking at more detailed numbers.

Revenue from contracts with customers down 5% year-on-year. Revenues from alkaline division increased by 6%, but we had a decline in the PEM division of 14%.

The NOK 100 million negative EBITDA was a NOK 15 million improvement year-on-year, and it's, of course, driven by the fact that we continue to invest in next-generation technologies, and we need higher revenues in order to become profitable. Solid cash balance at the end of the quarter, and that does not include EUR 11 million in the EU grant linked to our pressurized alkaline industrialization, which we expect to receive in the next quarter or in this quarter, second quarter '26.

Alkaline financials limited revenue recognition in the quarter. Despite that, revenue was up 6% year-on-year.

EBITDA improved by NOK 35 million versus corresponding quarter last year due to positive impact of project deliveries. We have adjusted our cost base and capacity utilization to reflect lower market demand, but lower fixed costs will continue to negatively influence results until volumes pick up.

As you can see from the chart, we do generate profits when we have good revenues. Turning to PEM.

Revenue were down 14% year-on-year due to limited megawatt project deliveries in the quarter. We had mostly sales of industrial products.

EBITDA was down NOK 16 million year-on-year, largely driven by delayed or canceled research grants in the U.S. We have historically received money from the Department of Energy to fund several research programs, and that has been under review and parts of the grants have not been paid out since late last year, and that reflects performance so far this year.

We have a good hope that the grants will be reinstated and that money will continue to be paid out or resume -- we will resume paying money to Nel, but can't say exactly when that will happen again. We are also in the PEM division spending money on product development for next-generation PEM electrolyser with significantly lower levelized cost of hydrogen, and that development is progressing well.

Order intake was NOK 85 million, was down year-on-year versus a strong quarter in '25. We expect the order intake to improve and have already booked the first order in the second quarter of roughly NOK 70 million.

So the first quarter you see here did not reflect any big project wins, just, I would say, normal course of business related to aftersales and some industrial products. The order backlog at the end of the quarter ended at NOK 1.1 billion.

Due to a declining order backlog and limited demand over the past few quarters, we have reduced our employee base. We will try to adjust our cost to change market expectations.

We are down in terms of number of employees by 26% versus the peak and 19% versus the end of first quarter 2025. And we can see that this also then translates into a 21% reduction in personnel expenses in the first quarter of '26.

We have done these adjustments to make sure that we spend our money responsibly, but it has largely affected our ability to manufacture at scale and deliver projects at scale. So that variable or that muscle has been reduced.

We have kept more or less our R&D organization to make sure that we can progress and deliver the new technology needed to bring additional volumes back. And once we get new orders and we see that the market is coming back, we can add back the manufacturing and project execution capacity.

But for now, we have reduced our staffing down to roughly 300 employees. On the commercial side, we do want to highlight this.

Korea's first off-grid green hydrogen production facility has been commissioned, happened in late March. It's a 10-megawatt alkaline system from Nel supplied by a solar power plant, as you can see on the picture.

There is no reliance on the power grid. And this project more or less validates large-scale off-grid hydrogen production as a model for future domestic and international projects.

It's been a very interesting project together with Samsung C&T, where, of course, Samsung C&T acted as the EPC and Nel provided electrolysers and gas separation modules. In April, we received another order from -- for containerized PEM equipment from Measure Process.

It's a second purchase order from this client. And we're quite proud to see that whenever we get an order now, very often, we can say that it's a repeat purchase.

That means the quality we deliver is solid. Customers have good experience with the first products they have purchased and they come back for more when they need it.

This equipment will supply hydrogen for refueling stations and industrial applications. And I think it's sort of confirms the story that the MC platform, the containerized PEM solutions, has strong momentum across a wide range of applications.

It's a fully modular design and that enables rapid project execution. It's also a good way to build out capacity over time.

You could add more modules if you need more capacity. That also fits nicely with the market perspective.

We continue to see several of these promising smaller projects, 2.5 megawatt, 5 megawatt, 10 megawatt projects that are ideal for containerized PEM, but we also see some larger projects in the 50 megawatt to 150 megawatt range, and these are expected to take final investment decisions over the next quarters. Containerized PEM has strong momentum, as I said, and to elaborate a little bit on that.

The reason is that projects have become smaller than we saw a couple of years ago than customers spoke about 100 megawatt, 200 megawatt, 300 megawatt, 400 megawatt. They now plan for something smaller, at least initially.

They want a gradual approach to this where they build out capacity over time when an offtake materializes. If they start with the first step, that's usually in the 10 megawatt to 50-megawatt range, and that fits nicely with Nel's containerized PEM systems.

Multiple containerized PEM systems offer a proven, efficient and standardized alternative to customized and tailored solutions. We have achieved significant CapEx reductions over the past few years, both on the stack itself and on the system design.

And combined with the growing list of references that we have around the world, this has increased Nel's competitiveness in this market segment. Europe is currently the most active and promising region, but we also have projects and deliveries in North America and interesting prospects in the Middle East and Asia.

Then I want to end the quarter with a comment on the energy resilience. We continue to see fossil energy shocks and we continue to see that we repeatedly subsidize fossil energy to manage these shocks, while investments into renewables face higher scepticism.

Renewable energy can reduce exposure to certain price spikes and definitely help mitigate geopolitical dependency and vulnerabilities. The intermittency that we see from wind and solar, the wind doesn't blow all the time.

The radiation from the sun is not constant, and that is a known challenge with the renewable energy systems. But electrolytic hydrogen enables long-term energy storage and system flexibility beyond what batteries can provide.

As one example, a 200-megawatt plant in the United States has larger capacity than all the batteries currently linked to the electric grids in the United States, including the batteries from Tesla. So hydrogen is at another level when it comes to what kind of -- how the amounts of energy that we can store.

Investing in renewable energy and green hydrogen is cheaper than repeat short-term subsidy programs for fossil energy. And it also, by the way, reduces emissions.

So when we have debate about energy resilience and security of supply, I think hydrogen should increasingly be part of that. And we see an increasing interest among defense contractors and politicians to look at the role that hydrogen can play in distributed energy supply.

To give you one example of how hydrogen can help basically flatten out the demand curve for electricity, we have a 20-megawatt Nel plant in Denmark. It's run and owned by Everfuel.

They run this plant when there is excess energy in the system. So instead of then bringing prices down to a very low level, Everfuel will help prices stay more or less stable because they can also shut down the equipment when demand for electrodes is high.

So this facility, the 20-megawatt facility helps balance out these peaks and low points that we see in electricity demand. Implementing this on a larger scale will, of course, help avoid periods where operators and generators get absolutely nothing for the electricity they produce, but also help consumers avoid periods when demand is high and electricity prices go through the roof.

It basically helps flatten out the price curve for electricity. Shortly on the technology update.

We have shown this slide before. And I just want to remind you that when we talk about pressurized alkaline in Nel, it's not that we haven't looked at that before.

We used to have pressurized alkaline technology 20 years ago, but it did nothing that the atmospheric solution didn't do. We do, however, see benefits of having pressurized gas.

And that's why we started back in 2018 to sort of reinvent our pressurized alkaline technology. In 2026, after years of testing this new technology, we are ready to commercialize it.

It has taken 8 years. But now we're getting ready for the commercial launch.

It will happen on May 6. We have invited customers, potential customers, partners, employees and a lot of people that might find this interesting to Heroya to take a look at a real physical installation, proving that this concept is more than a PowerPoint concept.

It actually works. It's a physical thing and talk about the benefits that this solution brings to the world of hydrogen.

We are truly excited to show the world what this technology can do. We will offer market perspectives by external speakers and of course, also dissect the solution and talk about the value proposition that we believe this solution has.

Therefore, we will not go into a lot of details today on the technology. We will share our presentations with the public on May 6.

Just want to give you a sneak peek of what is happening in parallel because we are truly proud of the solution that we have. And of course, we have to be able to deliver it at scale.

And that's why we, in December, decided to invest in a production line for pressurized alkaline manufacturing capacity at Heroya. This is funded by the European Union.

As I mentioned, the first milestone payment will happen shortly. CapEx per megawatt is significantly lower for this concept compared to the atmospheric alkaline or PEM.

Ongoing tests confirm product quality and exceed prototype production results. We have clear improvements in yield and fewer critical defects and cycle times are coming down to support increased annual capacity and improved efficiency.

We have a strong process understanding already, piggybacking on a century of experience producing alkaline systems, but there are new processes and new techniques that have to be mastered, and we're well into that. The goal is to have the first 500 megawatts of production capacity installed by the end of 2026.

And that's why we commercially launched it now to have time to build the order backlog and for customers to understand the benefits of the concept and together with Nel start to work out the exact concrete and specific projects where we can apply this beautiful technology. And that brings me to the final page.

This has been our value proposition for quite some time. I think Nel has an unrivaled track record.

We have a century of experience. We have sold more than 7,000 electrolyzers globally, and we have a tonne of prestigious references.

But to stay a leader in this industry, you have to demonstrate technology leadership. We do that by having multiple technology platforms.

We have both PEM and alkaline. We have proven solutions for today, but we need new solutions for tomorrow.

We need solutions that can bring the total cost of hydrogen down, and we don't develop that only here in Nel. We do it through a big network of world-class partners.

What we will show in May is an example of cost and scale leadership. This concept will be an enabler for customers to realize projects that they could not previously realize because costs were too high.

But Nel is a frontrunner in cost reductions. We take -- we make big leaps in terms of innovation and how we look at cost down opportunities and we combine that with market-leading production capabilities.

So we will revert in May with more information about the new technology. And bear in mind, couple of years later, we will have the next-generation PEM platform also available.

That concludes the presentation, and I will be joined by our CFO, Kjell Christian Bjornsen, to answer questions that you might have.

Very good. Thank you, Hakon.

Before we start the Q&A session, just a few practical points here. [Operator Instructions ].

If we don't get your questions, feel free to reach out to us at [email protected] And as a reminder, we will not comment on outlook-specific targets, detailed terms and conditions for individual contracts, or questions about specific markets. Modeling questions are also best handled offline.

And with that, I think we can get started.

First question comes from [ Martin Klebert ].

I'd just like you to give us some explanation of how long you can store the hydrogen for and what method you're using to store this? And then when it is released, do you turn it back into electricity through the use of fuel cells?

Yes. that's correct.

There are different ways of storing hydrogen. You can store it in a buffer tank for large quantities of energy to be stored.

You can even use a pipeline or you can use salt caverns. So there are different examples of how to do that.

There are salt caverns used in Sweden for storage, there are pipelines being used with compressed hydrogen. You can liquefy it and store it in a tank.

So there are different ways of storing the energy. And you're right, if you want to turn it back into electricity, you have to run the hydrogen through a fuel cell again to generate that electricity, which you can use on site or you can send it back to the grid.

And just before I let you go, how long can you store that hydrogen for? You have the normal storage at the moment of electricity, you can't store it for that long.

Are you able to store it for a longer period? And what is the advantage of that?

Yes. So that's the big thing about hydrogen.

You turn it into a molecule that you can store for a very long period of time, we're talking years, if necessary. There is always a little bit of a loss, what we call a boiloff, but that's a mickey mouse figure compared to the total amount of energy that you store.

So whereas batteries can help you smoothen out short-term swings, it's very difficult with batteries to store large amounts of energy and use that to sort of, let's say, you need more energy during the winter, then it's difficult to store that in the summer and release it in the winter. Hydrogen, you can do that and you can even use it for long-term storage for multiple years.

So that's where batteries and hydrogen serve different purposes, but I think both are needed to have an energy system that we can depend on.

And quickly, can you use existing infrastructure, existing tanks or do you have to get special new tanks?

So it depends on where you are. In some places, you have the infrastructure in place that you can leverage.

In other places, you have to build that storage capacity.

Next question comes from Elliott Geoffrey Peter Jones, [indiscernible].

Just -- I think just more on the macro side, just thinking about the -- obviously, the escalations in the Middle East and what's happened to like you mentioned, energy prices, we're seeing metals prices go through the roof as well. Are you seeing or hearing kind of any change in customer activity with regards to the potential for another bout of cost inflation when it comes to projects?

Or have you not really seen any change in attitude from customers? Any color on that would be very helpful.

So what we do see is that some of the projects that are in the Middle East are delayed or that further execution of those are somewhat hindered by the current circumstances. We do see some material price movements, but it's too early to see if that is a sustained movement or not.

I would say with the beauty of what we are launching with the next-generation technology and also the next-generation PEM platform that we're working on is that we take down the labor cost on site, we take out down the engineering hours. So we take down a lot of these cost adders that would typically be influenced heavily by inflation.

And we reduce our dependence on platinum group metals significantly.

That's a good point. That's helpful.

And then just kind of follow up on that quickly. Just kind of putting it all together, looking at last year versus this year, obviously, we've talked about this year a lot of the pipeline being more kind of sensible and real.

If you kind of add on the Middle East escalation, would you say the current market is more tricky than where you were last year? Or would you say given the maturity of the customers you're working with, actually, it's still -- you're still expecting more activity this year than last year?

I think we expect to see more FIDs this year than we saw in 2025. And then in a healthy market, there will be projects that are canceled and projects that are added.

And I think that's what we see now. We don't see a big jump in our pipeline capacity.

It's fairly constant, which I think is a good thing because then all the dreamers are gone and projects that don't make sense are stopped before we get too deep into the execution phase. So I would say we are slightly more optimistic about '26 than '25.

And then we believe momentum will continue to build into '27 and '28. But we talk internally about a turning point that we've been down in the valley and slowly starting to climb back up the ladder.

Next question comes from Arthur Sitbon.

So I have two questions. The first one is we've seen some of your competitors announce large framework agreements with the defense sector.

I was wondering -- I mean, you refer a bit more to energy security, the need of energy resilience in your presentation today. I was wondering if you're working on such type of framework agreements with that sector.

And if we could see anything announced, anything meaningful announced on that in 2026? The second question, is just on the sequence of events for coming quarters and coming years.

Your backlog is -- has been coming down. I was wondering how fast do you need order -- do you need to see orders come through in order to kind of bridge the gap between where your backlog is and maybe where consensus expectations are for revenues in 2027 and always with the idea that, well, I know you have that cash balance at the moment at a given level.

I imagine that covers you for 2026. But for 2027, I suspect you need orders at a certain level for the cash to be enough.

So any color on that would be helpful?

If I can take the first and maybe you will take the second question, Christian? We have a number of collaborations also with companies in the defense sector, but we don't announce these partnerships publicly because what we have been told is that the capital markets only appreciate hard purchase orders.

And anything else, whether it's a FEED study or a frame agreement or this and that just creates noise. So I do see there's a lot of noise out in the market.

A lot of agreements are presented as firm commitments, but they're not. So we are in the same type of discussions and with the same companies as you have seen announced recently, if that answers your question.

Yes. And then just to add to that, we've been for years having grants from Department of Defense in the U.S.

to work on hydrogen as part of an energy resilient infrastructure, and we're a defense subcontractor in the U.S. So yes, defense and resilience is definitely on the agenda.

On the outlook, when Hakon talks about us seeing momentum in the market, it's obvious that with that, we see order intake coming near in time. And currently, we do not have enough to really fill meaningful utilization in 2027.

But we have good reasons to believe that we will see order intake this year that will help us have meaningful activity levels in 2027. When it comes to cash balance, and we touched upon this in the presentation, we have taken quite some actions in addition to the personnel expenses that we talked about.

We have worked a lot on other external spending. And I do believe that we can stretch that cash balance fairly long if it takes even longer to get orders.

So we're not stressed with the size of our cash balance.

And I think we also said that the momentum for containerized PEM solutions is picking up. And the good thing about that solution is that we have a fairly short delivery time on that.

We can deliver systems in less than 12 months. The order we booked in April will be delivered in '27.

If we get orders now until year-end, I think we have an opportunity to deliver all of those or close to all of those in '27. So we are hopeful that we can book more containerized PEM solutions, and that will keep us float until we get the larger alkaline orders.

I see we have a follow-up question from [ Martin ]. After that, I see no more questions in the queue.

[Operator Instructions].

My question is just when do you expect to launch the next-generation PEM? When is that likely?

And what advantages will it bring?

If I could give you an exact date, I would. But if there's one thing we have learned is that technology development is uncertain.

It takes time. I mean look at pressurized alkaline, we have worked on that for 8 years.

The one -- you have a pretty good idea of what you want to do, and then there are always tricky things that you need to overcome. It could be pertaining to the concept design itself, could be pertaining to availability of materials or you end up with a cost that you don't like.

So you have to reengineer it. With PEM, we have the ambition to build a full prototype stack this year.

Then that has to be tested, and then we need to spend some time to get partners to help us industrialize it. So it will take, as I said, a couple of years.

Whether that means we can launch it end of or mid-'28 or if we will launch it late '28 or in '29, I'm not able to say at the moment. When it comes to the benefits, the benefits of the new PEM platform is that our goal is to take the cost down by 70% on a stack level.

And in the PEM system, the stack is the most expensive component. So that means we can significantly reduce CapEx.

It will be a low CapEx, low OpEx solution. So that's the sort of the holy grail.

You get the cake and you can eat it. It's compared to pressurized alkaline, it might have even better energy efficiency, and it has -- could have a smaller footprint at a lower cost.

So it's -- and the response is, as always, with PEM, fantastic. So it's more dynamic than pressurized alkaline.

Even though I have to say for larger pressurized alkaline systems, we also have a fantastic dynamic capabilities. But we believe that this is something that will be even more competitive than what we will launch now in May.

And that's why we continue to work on it. If it's not, we will not launch it.

I'm from South Africa, I always promote platinum, platinum, platinum of platinum, but will it also contain platinum to read PEM equals PGM?

Yes, but it's the iridium loading and the platinum loading is very limited. So to all those who want to sell all of that platinum and iridium, I have to disappoint you because the reason we can get the prices or the cost down is because we will utilize much less iridium and platinum.

It's on a very different level compared to what we see today.

I'm very happy with that, just go for volume. We don't worry about value, give us volume.

Thank you, [ Martin]. It seems we're out of questions.

So we'll end the Q&A session here. If anything comes up after the call, you're always welcome to reach us at [email protected] and I'll hand the word back to management for any final remarks.

And no further comments. I think we look forward to the launch event on May 6.

And as I said, we will release some material on May 6 that I think explains the new solution and the benefits that we see with that solution in more detail than what we have presented to the market so far. So I hope you take a good look at that material in just a couple of weeks.

Thank you for voting.