McPhy: First-Half Year 2024 Results Growth in Electrolyzer Revenue

• Half-year revenue up +35% to €9.5 million, driven by growth in the electrolyzer business (+120%), despite a market that remains far from expected levels
• Total Backlog¹ of €27.7 million, including €21.6 million for electrolyzer alone
• EBITDA of €(24.7) million reflecting the difficult execution of legacy projects and a still insufficient level of activity
• Successful execution of the funding plan and cash position of €57.6 million as of June 30, 2024
• Signature of an agreement with Larsen & Toubro extending the technology transfer and exclusive license to McPhy XL (4 MW)
• Estimated full year 2024 revenue between €18 million and €22 million

Simplified Profit & Loss Statement²

2024 half-year revenue up +35%, +120% for electrolyzers alone

In the first half of 2024, McPhy reported total revenue of €9.5 million, up +35% on the first half of 2023. This growth is mainly due to the ongoing execution of major projects in the Electrolyzers business, achievieng revenue in the first half of 2024 of €9.1 million, up +120%. The station business, whose sale has now been finalized, made a small contribution of €0.3 million over the period.

The Group benefited primarily from the contribution of three significant projects which have now started up to supply:

• A 4 MW McLyzer 800-30 electrolyzer with Swedish company AAK, a major global player in the edible oil processing industry, to produce low-carbon hydrogen as a process gas;
• Two electrolyzers (2 & 4 MW) and two Dual Pressure stations as part of its partnership with Hype;
• A 4 MW McLyzer 800-30 electrolyzer as part of a "green metal” project with the Plansee Group at the Reutte site in Austria.

• The low-carbon steel project with ArcelorMittal and VEO, which involves the construction of an electrolysis pilot plant in Eisenhüttenstadt, Germany, in collaboration with Brandenburg Technical University. McPhy supplied two McLyzer electrolyzers, each rated at 1 MW, and a Dual Pressure station, and will provide a five-year service contract;
• Sales of the Piel range of small and medium capacity electrolyzers, mainly dedicated to applications in jewelry and small-scale industry, amounting to €1.2 million;
• The re-launch of the CEOG project, which involves the production of hydrogen using a high-powered electrolyzer, the Augmented McLyzer 16 MW, supplied by McPhy, linked to a photovoltaic solar farm, coupled with a hydrogen storage unit and high-powered fuel cells to reduce the carbon footprint associated with supplying electricity to 10,000 homes in French Guiana.

Update on current business

• The signature of a firm contract for the supply of a McLyzer 800-30 4 MW electrolyzer and related spare parts with the Swedish company AAK, a major global player in the edible oil processing industry;
• McPhy's commitment to a large-scale project, "Rouen Vallée Hydrogène (RVH₂)”, to support the energy transition in Normandy. Selected by the VALOREM Group, McPhy will supply a 1 MW electrolyzer and a McFilling 350 station (subcontracted to Atawey as part of the sale of the station business).

The two projects below are not included in the firm order intake:

• The 20 MW Djewels green hydrogen project for which McPhy has signed a contract for the supply of Augmented McLyzer electrolyzers at the Delfzijl site in the Netherlands, with the final investment decision expected at the end of 2024; and
• The 16 MW HMS phase I green hydrogen pipeline project, for which McPhy has signed a contract to supply a McLyzer 3200-30, with a final investment decision expected in 2025.

The completion of legacy projects remains difficult, leading to a deterioration in margin due to higher equipment purchase and installation costs. Purchases almost doubled to €10.3 million from €5.2 million as of June 30, 2023.

During the first half of 2024, the Group pursued its development and structuring, resulting in an increase in current expenses linked to:

• Innovation and R&D expenditure related to the optimization of current products and the development of the new XL electrolyzer range;
• Structuring and strengthening of the organization.

Personnel costs rose by €2.3 million in the first half of 2024, due to the recruitment of 28 employees (vs. 70 over the past 12 months), and stood at €13.5 million, bringing the number of employees to 258 (before the sale of the station business)⁴.

Other external expenses fell by 15% to €11.0 million. They mainly represent the purchase of subcontracting services and technical studies required to pursue the Group's industrial, engineering and R&D development.

EBITDA, which includes the IPCEI⁵ grants of €1.4 million share of eligible expenses over the period, came to €(24.7) million on June 30, 2024, compared with €(21.6) million for the first half of 2023.

Operating income, including depreciation and amortization of €2.6 million, came to €(27.3) million on June 30, 2024.

Net income for the period came to €(32.0) million, penalized by the €0.8 million impairment of goodwill and the €4.2 million impairment of fixed assets and inventories held for sale. The fair value of assets held for sale (i.e. those included in the sale of the station business), net of disposal costs, was determined considering only the fixed portion of the sale price (i.e. €12 million).

Cash position

Net cash consumption was €(5.4) million in the first half of 2024, including:

• Cash flow from operating activities of €(35.1) million, (excluding the IPCEI subsidy), due to the change in EBITDA and an 11.0 million euros increase in working capital requirements, explained mainly by the increase in inventories due to the start-up of new projects;
• The second instalment of IPCEI public aid, amounting to €7.2 million, less the €1.4 million share included in EBITDA, resulting from the successful achievement of the project's first milestone;
• Capital expenditure of €(8.2) million, two-thirds of which was dedicated to the Gigafactory, to support the Group's continued industrial scale-up;
• Financing flows of €30.5 million, following the issue of bonds convertible into new ordinary shares and/or exchangeable for existing ordinary shares (OCEANEs) to EDF Pulse Holding and EPIC Bpifrance for a nominal amount of €30 million.

• Projects to be implemented on schedule and at the cost estimated at the end of September 2024;
• The €16 million Gigafactory financing lease (see "Post-closing events” below);
• The payment in cash of the fixed price of €12 million, of which the balance of €11 million to be paid over the next 14 months, following the sale to Atawey of its station business (excluding any earn-out payable in cash and conditional on future orders relating to the scope of the business sold (see "Post-closing events” below); and
• The use of the equity financing line set up with Vester Finance on December 19, 2023 (subject to market conditions and compliance with exercise conditions).

Post-closing events

McPhy pursued its funding plan by completing two transactions in July 2024:

• The completion, on July 11, of its financing lease for the Gigafactory for an amount of €16 million;
• The completion, on July 16, 2024, of the sale of its hydrogen station business to Atawey. The final amount of the sale was set at €12 million⁶, to be paid in instalments up to December 31, 2025, with the possibility of an earn-out based on future orders relating to the scope of the business concerned by the transaction. More than 40 employees joined the Atawey team, enabling the company to consolidate its know-how, cross-fertilize the experience of historical players in the hydrogen sector, and consolidate its expertise.

Finally, effective August 9, 2024, McPhy shares have been transferred from Euronext Paris to Euronext Growth, and the Company's headquarters were transferred to Foussemagne, where the Gigafactory will be located⁸.

Outlook

Given its order book, and despite a backlog sell-out rate lengthened by the longer duration of electrolyzer projects, McPhy is targeting revenue between €18 million and €22 million for the full year 2024 on its new scope, which would be close to or higher than the previous year's revenue.

In the medium term, with its industrial facilities now fully operational, the Group will step up its commercial efforts, focusing on the industrial sector, where the potential of hydrogen is expected to materialize most rapidly.

Half-year financial report availability

The half-yearly financial report is available on the Company's website(www.mcphy-finance.com), in the "Investors” > "Financial publications” > "Financial reports” section, in accordance with legal requirements.

ABOUT MCPHY

Specialized in hydrogen production equipment, McPhy is contributing to the global deployment of low-carbon hydrogen as a solution for energy transition. With its complete range of products dedicated to the industrial, mobility and energy sectors, McPhy offers its customers turnkey solutions adapted to their applications in industrial raw material supply, recharging of fuel cell electric vehicles or storage and recovery of electricity surplus based on renewable sources. As designer, manufacturer and integrator of hydrogen equipment since 2008, McPhy has three development, engineering and production centers in Europe (France, Italy, Germany). Its international subsidiaries provide broad commercial coverage for its innovative hydrogen solutions. McPhy Energy is listed on Euronext Growth Paris (ISIN code: FR0011742329, ticker: ALMCP).

CONTACTS

   @McPhyEnergy           

APPENDICES

Cash-Flow Statement

Balance Sheet

¹ Firm orders not yet accounted for in Revenue.

² Interim consolidated financial statements not subject to a limited review by the Statutory Auditors.

³ Firm orders not yet accounted for in Revenue.

⁴ Post-cession, the Group has 214 employees.

⁵ IPCEI - Important Project of Common European Interest

⁶ An initial payment of €1 million was received on completion of the sale. The balance of €11 million, plus interest, will be paid as and when Atawey completes its funding plan for the combined business or, failing that, in Atawey shares.

⁷ As a reminder, in 2023 the L&T and McPhy signed an exclusive technology licensing and assistance agreement for the Company's electrolyzer technology, covering the following territories to date: India and the countries of the South Asian Association for Regional Cooperation (Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives) and those of the Gulf Cooperation Council (Saudi Arabia, United Arab Emirates, Oman, Qatar, Kuwait, Bahrain).

⁸ Following a decision by the Board of Directors, which will be submitted for ratification to the next General Meeting of the Company's shareholders.

Attachment

• PR_McPhy_Results H1 2024_EN