ADS-TEC Energy — Serving the energy transition

ADS-TEC Energy (NASDAQ: ADSE)

Last close As at 22/05/2024

USD10.75

0.12 (1.13%)

Market capitalisation

USD556m

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Research: Industrials

ADS-TEC Energy — Serving the energy transition

ADS-TEC Energy operates in an emerging market serving the changing grid and power management requirements of an electrifying world. Its key market at present is for battery-buffered ultra-fast charging systems for electric vehicles (EVs). This is starting to produce tangible positive results, with the business EBITDA positive in Q423. Hence, ADS-TEC offers a de-risking investment into the electrification of the energy system, including the growth of EVs through the associated charging infrastructure.

David Larkam

Written by

David Larkam

Analyst, Industrials

Industrials

ADS-TEC Energy

Serving the energy transition

Initiation of coverage

Alternative energy

9 April 2024

Price

US$10.20

Market cap

US$516m

$1.09/€

Gross cash (€m) at 31 December 2023

29.1

Shares in issue

50.6m

Free float

65.1%

Code

ADSE

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.9)

44.7

332.2

Rel (local)

(8.3)

32.5

241.0

52-week high/low

US$11.17

US$1.96

Business description

ADS-TEC Energy makes battery storage-based energy platforms. These buffer systems enable consistent, high-power delivery for systems such as EV charging.

Next event

Full year financials

Late April 2024

Analyst

David Larkam

+44 (0)20 3077 5700

ADS-TEC Energy is a research client of Edison Investment Research Limited

ADS-TEC Energy operates in an emerging market serving the changing grid and power management requirements of an electrifying world. Its key market at present is for battery-buffered ultra-fast charging systems for electric vehicles (EVs). This is starting to produce tangible positive results, with the business EBITDA positive in Q423. Hence, ADS-TEC offers a de-risking investment into the electrification of the energy system, including the growth of EVs through the associated charging infrastructure.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/22

26.4

(13.6)

(33.1)

0.0

N/A

N/A

12/23e

107

(26.9)

(56.5)

0.0

N/A

N/A

12/24e

200

(0.3)

(2.6)

0.0

N/A

N/A

12/25e

311

22.5

28.6

0.0

35.7

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Serving a specialist market in an electric world

ADS-TEC has developed specialist power platforms to address shortcomings in the energy infrastructure – primarily the power grid – from an increasingly electric world. Its buffering capabilities and control systems, which enable the delivery of high-level consistent power in areas where the grid has insufficient capacity, are key. The company is targeting three markets: EV charging, commercial and residential. At present, the key market is for ultra-fast charging of EVs, with the buffering capabilities enabling systems to be installed in areas where the grid has insufficient capacity. Commercial and residential provide opportunities to manage power at a time of increasing generation instability due to the growth of renewables (solar and wind). Its key territory is Europe, with expansion planned in North America.

Financials starting to substantiate the opportunity

FY23 revenue grew by more than 300% to €107.4m (including Q4 sales of €50m), with management forecasting 85% growth to €200m in revenue in FY24. Volume growth is starting to leverage the P&L positively, with the group EBITDA positive in Q423 at €4.9m, supporting our expectation for ADS-TEC to be EBITDA positive in FY24 and EBIT positive in FY25. The assembly model and infrastructure already in situ suggest limited fixed capital investment will be required, although working capital will inevitably be needed to support the top-line expansion. The group had €29m in gross cash at the year-end (full financials to be released late April). Our forecasts suggest a further €10m-€20m in finance may be required. This gap could be financed by outstanding warrants, working capital finance or additional equity, and we note the $10m raise from a single new investor in December 2023.

Valuation

Our discounted cash flow (DCF) based valuation, assuming a 12% cost of capital and a terminal growth rate of 2%, comes to $12.80/share. ADS-TEC Energy’s key peers are part of larger international groups (eg Elli is owned by VW) limiting any meaningful comparative valuation.

Investment summary

Company description: Specialist battery storage systems

ADS-TEC develops, manufactures and markets intelligent battery storage-based energy platforms and associated services. These enable the provision of high-quality power (voltage and consistency), which is an increasing challenge due to rising demands on the ageing grid infrastructure at the same time as an increasing use of intermittent renewables such as wind and solar. The primary use at present is for buffered fast charging systems for EVs for the specialist element of the commercial charging infrastructure sector, rather than the commodity domestic charging segment. The secondary market is the commercial sector for power storage to provide continuity and price arbitrage. ADS-TEC operates an assembly model, with hardware sales also offering service, maintenance and software opportunities. The primary market is Europe, to be followed by the US, supported by a new assembly facility in Alabama which is under construction. Management estimates that the total addressable market for Europe and the US is worth €80bn for more than 725,000 units for the group’s EV charging units alone.

Financials: Forecast EDITDA positive in FY24

The company has provided summary FY23 numbers. Q423 was encouraging, with revenue of €50.3m and EBITDA of €4.9m. This underpins our expectation for the group to be EBITDA positive in FY24 (as per management guidance) and EBIT positive in FY25 (small EBIT loss in FY24).

The group had €29m in gross cash at end FY23 (full financials and balance sheet will be available with the detailed SEC filing expected to be released in late April). The company is in the ramp-up stage (management’s expectation is for sales to increase from €107m in FY23 to €200m in FY24), which may require additional working capital. Our view is that the company may need c €10m-€20m in additional capital, which could come from working capital finance, further promissory notes or additional equity as interest appears positive, and we note the €9m raised from a single new investor in December 2023.

Valuation

Our DCF, assuming a cost of capital of 12% and a terminal growth rate of 2%, comes to $12.80 per share. ADS-TEC Energy’s key peers are part of larger international groups (eg Elli owned by VW) limiting any meaningful comparative valuation. The sector is also in ramp-up mode providing mixed financial results. Alfen being one of the more advanced companies demonstrates the growth and profitability potential of the sector.

Sensitivities: EV adoption rate key delta

The key market at present is for buffered EV charging. Key therefore is the speed of adoption of EVs and establishing charging infrastructure in the company’s key European and US markets. To a degree this is a ‘chicken-and-egg’ situation, hence the number of companies, including the likes of Shell, investing in EV charging networks. The speed of roll-out of these companies, including the availability of finance, will be critical. Alongside this is the potential for government regulation and funding, along with the potential for technical standards to emerge. The grid storage side of the business will depend on the rate of adoption of renewables and the grid’s ability to handle the higher demands and increased variability of power supply. The key internal sensitivity is likely to be the company’s ability to ramp-up production. As an assembler, with the primary facility established and in production, the supply chain perhaps provides the greatest risk to deliveries.

Company overview: Key building block for the decentralised energy systems of the future

The green agenda will see significant growth in demand for electricity (see our battery energy storage report), while sectors such as transport will require a completely new support (recharging) infrastructure. At the same time, electricity generation will shift to renewables, which tend to be more geographically dispersed and bring greater fluctuation in output. Both of these will put significant demands on the grid, beyond current capabilities. ADS-TEC is looking to the commercial opportunities that this dislocation of the grid will offer, in particular in vehicle charging as a leading protagonist in the new electrification world. The political agenda, with ambitious carbon reduction targets, is providing increasing legislation and financing to ensure capabilities, including infrastructure, are developed to deliver on these promises.

ADS-TEC develops, manufactures and markets intelligent battery storage-based energy platforms, which are positioned to play a key part in the decentralised energy networks of the future. These platforms provide the power storage or buffer systems to enable high power to be delivered to the requisite applications (eg EV fast charging) from a low-power grid. The storage capacity also assists in managing the variability in supply from solar and wind sources, while the flexibility and scalability is suited to the increasing geographical dispersion of such power generation. The systems use battery modules developed and built by ADS-TEC including integration technology and power management with internally developed inverter technology. While elements of this are patented, the key is arguably more in know-how than pure technology.

ADS-TEC’s platforms are designed to be integrated into decentralised energy networks created by customers that could be operators of charging infrastructure, energy suppliers or infrastructure providers. The platforms incorporate hardware, services and software, both proprietary and third party (eg grid management payments for EV charging). ADS-TEC is a key enabler for its customers, offering them standard or customised platform solutions for secure, cost-effective and efficient implementation of their business models.

ADS-TEC Energy was formed around 2010 as part of the ADS-TEC Group, a long-established family business in southern Germany. In 2018, Bosch acquired a stake in ADS-TEC Energy with the business subsequently listed on Nasdaq through a merger with European Sustainable Growth Acquisition Corp, a special purpose acquisition company, in 2021. There has been a further fund-raising, with Norwegian group Svelland Capital investing $10m for a c 3% stake in December 2023. Key shareholders are ADS-TEC Group with 34.9% and Robert Bosch with 20.7% (further details of major holders available on page 21).

ADS-TEC Energy is incorporated in Ireland and has research and administration operations near Stuttgart, Germany. The group has a major production facility near Dresden and is currently developing a production facility in Auburn, Alabama to serve the US market.

Electrification opportunities

Governments have set clear commitments to decarbonise their energy systems, including the electricity grid and transportation sector:

The US plans to reduce greenhouse gas emissions to 50–52% below 2005 levels by 2030 and achieve a net-zero emissions economy by 2050, and in the power sector to achieve 100% carbon pollution-free electricity by 2035. In the transport sector, the Environmental Protection Agency (EPA) is proposing a 56% reduction in projected fleet average emissions, which is expected to lead to 60% penetration of the market by EVs by 2030.

The EU has a target of reducing net greenhouse gas emissions by at least 55% by 2030 from 1990 levels and to achieve climate neutrality by 2050. In the power sector, the EU aims to increase the share of renewables to 70–90% by 2030 and 85–95% by 2040. In the transportation sector, it aims for all new cars and vans to be zero emission by 2035 (note this permits internal combustion engine (ICE) powered vehicles that only run on zero emission fuels).

These targets require significant changes and upgrades to the supporting infrastructure:

The power grid will not only require significantly increased capacity, but must also be able to deal with the complexities that renewables bring as a result of their location and buffering requirements. A recent National Renewable Energy Laboratory (NREL) report, Examining supply-side options to achieve 100% clean electricity by 2035, suggests that ‘doubling or tripling the transmission system’ will be required in the US to achieve the 2035 clean energy target.

The move to EVs requires a completely different charging/fuelling infrastructure from the current fossil fuel system. The NREL report, The 2030 national charging network, suggests that a national network in 2030 could be composed of 26–35 million ports requiring capital investment of $53–127bn in charging infrastructure. Similarly, the EU has adopted a law to install fast chargers every 60km along designated road networks (c 106,000km) for passenger cars and every 100km for heavy-duty vehicles by 2030.

Along with the hardware investment are the additional software and services required to manage a smarter grid network.

Addressing a rapidly growing market

Platform technology

ADS-TEC Energy’s platform technology combines hardware, software, services and in-house developed features, so can be used to create solutions for a range of applications. The platform also assists in monitoring, maintenance and utilisation of the equipment, while also assisting the company in offering extended warranty contracts including performance guarantees. ADS-TEC is targeting two markets: direct current (DC) based ultra-fast charging for EVs on power-limited grids and energy storage and management solutions for commercial and industrial applications.

DC-based ultra-fast charging for EVs on power-limited grids

EV drivers have long suffered from range anxiety, ie how far a vehicle can travel. Arguably, this has been addressed by improved battery technology and efficiencies to the point where the range differential between EVs and ICEs has been significantly reduced. However, range anxiety is being replaced by recharge anxiety due to the limited availability of public chargers and the queuing ritual brought about by long recharging times.

Why ultra-fast charging?

Recharging EVs requires a diverse national infrastructure. Traditional ‘at-home’ chargers running off the domestic low-power alternating current (AC) grid offer limited power and hence lengthy recharge times, providing a perfect ‘overnight charging’ solution. At the other end of the scale, on longer journeys, drivers want a fast charge as they have been accustomed to the relatively speedy refuelling associated with ICE cars. This requires ultra-fast chargers using direct current (DC) and higher power capabilities. Exhibit 1 highlights the categories of charging and their speed of charge.

Exhibit 1: Charging speeds

Maximum power output

Charge time (100 miles)

Slow AC recharging

P < 7.4 kW

More than 20 hours

Medium-speed AC recharging

7.4 kW ≤ P ≤ 22 kW

2–5 hours

Fast AC recharging

P > 22 kW

Slow DC recharging point

P < 50 kW

30–60 minutes

Fast DC recharging point

50 kW ≤ P < 150 kW

High power charging 150kW+

150 kW ≤ P < 350 kW

Less than 10 minutes

High power charging 350kW+

P ≥ 350 kW

Source: European Commission, Edison Investment Research

Why battery-buffered solutions are required

Ultra-fast charging requires a high charging power of around 300kW. The local electricity grid may not have the capacity to deliver this level of power and will therefore require upgrading. Attaining such an upgrade from the local utility can be costly (up to $1m per MW) and time consuming. The alternative is to deploy a battery-buffered charging point. The battery storage system charges slowly from the low grid power available and stores the energy. When an EV is being charged, the power available from the local grid is supplemented with power from the energy storage system to achieve the maximum charging power needed to fully charge the EV in a few minutes. A second reason to use battery buffering is economic. The system can be charged at off-peak times and then utilised at peak hours, providing a direct price arbitrage.

Market opportunity

Europe

Exhibit 2 highlights the growth in public charging points expected in Europe. Forecasts inevitably vary. A 2020 report by the European Federation for Transport & Environment forecast 2.9m public charging points by 2030, while a 2022 McKinsey report suggests that even in the most conservative scenario, the EU-27 would need at least 3.4m public charging points by 2030. On the other hand, ChargeUp Europe, an EV charging industry body, forecast 1.8m units by 2030.

Exhibit 2: EU publicly accessible light-duty vehicle charging points

Source: IEA, European Federation for Transport & Environment (Recharge EU)

The fundamentals are clearly positive. From a legal perspective, 2023 witnessed significant strides, with the EU having adopted legislation requiring that electric charging points for cars with a minimum 400kW output will have to be deployed at least every 60km along core Trans-European Transport Network routes (c 106,000km) by 2026, with the network’s power output increasing to 600kW by 2028. For trucks and buses, charging stations are to be every 120km by 2030, with up to 3,600kW capacity. These stations must include super-fast chargers (more than 150kW). The charging network will clearly also develop beyond the primary network. Supporting this, the European Automobile Manufacturers’ Association (ACEA) reported EV growth of 37% in 2023 to 1.5m units, a market share of 14.6%, which it forecasts will increase to c 20% in 2024, suggesting around 2m units.

United States

President Biden has committed to building a national network of at least 500,000 public chargers by 2030. Rather than legislation, the approach to date has been through funding. Key to this has been the Infrastructure Investment and Jobs Act in 2021, which allocated $7.5bn funding to support the build-out of a national public EV charging network, $5bn of which is for building a ‘backbone’ of high-speed chargers spaced no less than every 50 miles along America’s major roads, freeways and interstates. Note that the funding requires the manufacture of equipment in the US.

A recent report by the NREL, which is part of the US Department of Energy, suggests a significantly greater market including, of particular note for ADS-TEC, 182,000 fast charging points. Note that the Department of Energy stated that there were 170,000 public EV charging points at the end of 2023.

Exhibit 3: US EV charging point 2030 mid-adoption scenario

Number of ports

Capital required ($bn)

Privately accessible Level 1 and Level 2

26.8m

22–72

Publicly accessible Level 2 charging ports

1m

5–11

Publicly accessible fast charging ports

182k

27–44

Source: National Renewable Energy Laboratory

Importantly the market for EVs continues to grow strongly, with US battery EV sales of 1.2m in 2023, growth of c 30%, accounting for 7.7% of the market, up from 6.7% in 2022.

International comparison

Clearly, strong growth is anticipated in both Europe and the US. It is worth noting the current situation in China, the world leader in EVs with c 58% of global car parc. In 2022, China had 1.8m public charge points and 10.7m battery electric vehicles (BEVs), plus a further 3.1m hybrids. As part of its Sustainable and Smart Mobility Strategy, the European Commission envisages 30m zero-emission cars on the roads by 2030. Similarly, a report by the Edison Electric Institute in the US forecasts 26.4m EVs on the road in the US by 2030. Assuming a rate of one public charge point per 10 BEVs on the road, below the current situation in China, which is also the most advanced large market, would translate to three public charge points in Europe or, assuming 20% of these are fast charging, 600,000 fast charging points compared to 70,000 in situ in 2022. Clearly, this would require an acceleration in current installation rates of c 25,000 a year. It also worth noting the higher proportion of fast chargers in China, supplied exclusively by local manufacturers, which suggests that this market is likely to outgrow the overall charging market.

Exhibit 4: BEV and public charge point 2022

BEV (m)

Public charge points (k)

Public charge points per BEV

Fast chargers as % of total public charge points

China

10.7

1760

0.164

43%

Europe

4.4

497

0.113

13%

US

2.1

128

0.061

22%

Japan

0.21

29

0.140

29%

ROW

1.1

280

0.255

14%

Source: IEA

EV growth rates

Clearly there is a ‘chicken-and-egg’ relationship between EVs and the charging infrastructure. The growth in EVs is critical to the long-term financial returns from investing in the charging infrastructure, hence EV sales rates can be expected to have an impact on the investment approach to infrastructure. In the 11 months to end November 2023, BEV sales increased 48.2% to 1.4m vehicles, accounting for 14.2% of the market, up from 11.1% in 2022 (source: ACEA), albeit there has been a reduction in growth rates recently, providing some concerns over the growth rates in 2024. S&P Global Mobility projects battery electric passenger vehicles of 13.3m units worldwide in 2024, growth of 28%.

Management view

Management’s review in the recent capital markets presentation identified a total addressable market (TAM) of $80bn for ChargeBox and ChargePost (ie ultra-fast storage with battery buffering) in the US and Europe. Our analysis would support these estimates purely from public charge station infrastructure expectations.

ADS-TEC’s products for fast-charging

Exhibit 5: ChargeBox installation at BP site in Germany

Exhibit 6: ChargePost installation in Limburg, Germany

Source: ADS-TEC Energy

Source: ADS-TEC Energy

Exhibit 5: ChargeBox installation at BP site in Germany

Source: ADS-TEC Energy

Exhibit 6: ChargePost installation in Limburg, Germany

Source: ADS-TEC Energy

ChargeBox

ChargeBox is ADS-TEC’s flagship product. It can dispense 320kW of power from a single dispenser or 160kW from two dispensers and is certified for use in mainland Europe and the US. It can dispense sufficient charge for a typical EV to travel more than 100km (60 miles) in the time it takes to fill the petrol tank of a conventional car. ChargeBox is designed for installation with limited space as the footprint of the storage unit is only 1.3 x 1.3m and the charge dispensers have a footprint of 0.4 x 0.4m. Importantly, the charge dispensers, one or two per storage unit, can be located up to 100m from the charge storage unit, giving additional flexibility for use in smaller spaces. The product is almost silent, making it suitable for installations in residential areas and therefore attractive to facilities managers of apartment blocks. Servicing and maintenance are carried out remotely by ADS-TEC via its Big-LinX Energy cloud-based energy management system. Big-LinX also monitors the charging process, alerting the operator of any issues, and enables new charging stations to be brought into operation quickly. ChargeBox is targeted at service stations, operators of vehicle fleets, logistics companies and public transport operators.

ChargePost

ChargePost was launched in December 2022. It is currently available in Europe and will be available in the US H125. Like ChargeBox, one charge storage unit can supply one or two charge dispensers. It can dispense 300kW of power from a single dispenser or 150kW from two and the footprint of the charge storage unit is 1.3 x 1.5m. The most obvious difference is that ChargePost charge storage units are offered with the option of one or two 75-inch ultra-HD displays, which enable customers to generate an additional revenue stream from advertising. Also, the associated energy management system means that ChargePost not only stores energy, which may have been generated on site from renewable sources, but can also feed energy back into the grid, thus supporting grid services like frequency management. The ability to return stored energy bidirectionally to the grid opens up entirely new business models for charging point operators.

Competition

ADS-TEC does not compete in the provision of domestic charging units for EVs. It is firmly positioned in the in-transit, grid-connected charging market, focused on the lower power connectivity segment where battery-buffered solutions are becoming the commercial solution of choice. As highlighted in Exhibit 7, this is the lowest volume but highest value end of the market. It also offers differential through software, integration and services as opposed to a simple ‘buy-and-fit’ system for domestic chargers.

Exhibit 7: EV charger market hierarchy

Source: Edison Investment Research

Other battery-buffered, grid-connected fast and ultrafast chargers

Competitors include Elli, which is owned by the Volkswagen Group, FreeWire Technologies (US private equity backed), mtu (part of Rolls-Royce Group) and Powerstar (UK based, acquired by SCF Partners in 2023). The bias towards Europe highlights the state of the market, with Europe developing ahead of the US. Elli is the most interesting competitor in terms of funding and market presence which its parent provided, albeit ADS-TEC has a partnership with Porsche, another Volkswagen subsidiary.

Non-battery buffered, grid-connected fast and ultrafast chargers

Companies offering non-battery buffered fast charge equipment include large industrial groups specialising in power management, including ABB (ABBN.SW), EV-Box (part of Engie, ENGIE.PA), and Schneider Electric (SU.PA) along with Tesla (TSLA.US) as part of its network strategy. There are also a number of focused start-ups such as Pod Point (PODP.LN), Beam Global, Tritium and Zaptec. Non-battery buffered ultra-fast chargers are more economic than battery-buffered ones at locations where the local grid can provide sufficient power. They may also be more economic at locations like central charge parks or motorway service stations if the number of drivers paying for fast charges throughout the day is sufficient to cover the cost of a grid upgrade. ADS-TEC believes there is a significant opportunity in providing ultra-fast charge points in locations such as commercial and industrial premises, delivery fleet depots, car dealerships and apartment blocks, where high charge rates are not required continuously.

Level 1 and 2 chargers

These are more basic charge units operating at lower voltage and power applications. Companies offering EV charging points for commercial and residential use include Alfen, Wallbox EV-Box and Pod Point, although there are many other companies in the market, for example lighting specialist Luceco acquired Sync EV in 2022, reflecting the lower technology hurdle yet volume scale of the opportunity.

Stationary storage

Why is stationary storage required?

The electricity grid has to deal with fluctuations in demand through both a normal daily cycle and seasonally through the year. Traditional sources of power like coal-fired stations are relatively inflexible, operating best at high load factors 24 hours, seven days a week. Hence, there was a requirement for storage capacity to regulate power into the grid to match demand. The move towards gas increased the flexibility of production and reduced the requirement for storage. The move to renewables, with low and unpredictable output, along with the reduction in fast-response, gas-fired power stations as the power sector decarbonises, is once more increasing the importance of storage to manage and balance power availability in the grid.

Market opportunity

As discussed in our thematic report, energy storage systems based on batteries are key to governments across the world realising their commitments to reaching a net-zero grid by 2050. The European Commission expects renewables to account for 69% of electricity production in 2030, up from 40% in 2022. Fossil fuels remain the largest source of electricity generation, albeit on a par with renewables in Europe and the UK.

Exhibit 8: Electricity generation by source

Source: IEA, European Commission, National Grid, Edison Investment Research

The shift to renewables will see a significant reduction in fossil fuels, including phasing out coal. For example, the National Grid expects gas usage in the UK power sector to not exceed 2% by 2035, while wind and solar will provide 78% of electricity output. Renewables bring significant balancing issues to managing the grid. For instance, in 2021 the capacity factor in the US was 24.4% for photovoltaic solar and 34.4% for wind, with no correlation between load factor and demand patterns. At present, this misalignment is largely managed through gas-fired power plants which can be quickly brought on stream. The alternative is storage, which will have to perform this task as fossil fuels are phased out. There are numerous options including pumped hydro, compressed air, flywheels, batteries and thermal energy storage, as well as new technologies under development. At the moment, pumped hydro is the dominant technology followed by batteries, as highlighted by US storage capacity in 2022: hydro 70.0%, batteries 28.2% and other 1.8%. Batteries are seen as the preferred technology for numerous reasons. First, they are quicker to install, requiring less permitting and construction, and second, they are more flexible and can be deployed in multiple sizes in different locations and therefore closer to the power source, which is important in the increasingly geographically dispersed generation market.

The market for grid batteries has been growing rapidly, as shown in Exhibit 9. A report by the International Energy Agency( IEA) calculates that installed grid-scale battery storage capacity will need to expand to 680GW by 2030, with installations averaging more than 80GW per year over 2022–30 compared to the 11.2GW added in 2022.

Exhibit 9: Annual grid-scale battery storage additions

Source: IEA

Governments are introducing legislation to support investment in battery energy storage capabilities and projects. In the US, the Bipartisan Infrastructure Law has introduced the $10.5bn Grid Resilience and Innovation Partnerships programme to enhance grid flexibility and improve the resilience of the power system against the growing threats of extreme weather and climate change. The 2022 Inflation Reduction Act included investment tax credits for standalone energy storage for the first time, promoting 'hybrid' wind projects coupled with batteries and standalone batteries with separate grid connection points. In May 2022, the EU launched REPowerEU, which set out pathways to reduce dependence on Russian gas. The report acknowledged that battery energy storage systems (BESS) will be required, and the EU has since made recommendations at a national level, although there is no overarching legislation for financial subsidies available.

In addition to the grid requirements are private non-grid opportunities. These systems are used for storing self-generated renewable power, for instance from a solar array, or simply to acquire power at lower-priced, off-peak times to use during more expensive tariffed peak hours. They offer greater security of power, particularly in areas where grid connectivity is poor, as well as a measurable financial return on capital.

ADS-TEC’s product range for stationary storage

ADS-TEC’s PowerBooster product series is a cloud-connected battery storage solution with an integrated inverter and energy management system (EMS). It is designed for use outdoors and can store up to 643.5kWh. PowerBooster is targeted at users in the commercial, industrial, agricultural and photovoltaic power generation sectors, particularly those who consume more than 100,000kWh of energy over more than 2,500 hours. ADS-TEC units range from 85kWh to 129kWh of capacity operating at 75kW of power and can be upgraded through multiple units operating in series. The PowerBooster can be used as an emergency or back-up power supply, for charging EVs, to store surplus electricity generated on site from photovoltaic cells for use later on site and for peak shaving, where an enterprise can purchase lower-rate electricity and store it for use later in the day when the price of electricity is higher. Customers can also store energy when their demand is low (load shifting), saving it so that the amount they need to draw from the grid at times of peak demand is lower, thus avoiding the higher rates associated with consumption spiking into an expensive high-usage tariff. Similar to the ChargeBox and ChargePost products, servicing, ADS-TEC carries out maintenance and monitoring remotely by via its Big-LinX Energy cloud-based EMS. ADS-TEC provides customised interfaces connecting between the PowerBooster’s EMS and a customer’s own EMSs, potentially supporting additional applications like grid frequency regulation.

Exhibit 10: PowerBooster as part of microgrid in remote part of Lithuania

Exhibit 11: 1.5MW storage power plant, Germany

Source: ADS-TEC Energy

Source: ADS-TEC Energy

Exhibit 10: PowerBooster as part of microgrid in remote part of Lithuania

Source: ADS-TEC Energy

Exhibit 11: 1.5MW storage power plant, Germany

Source: ADS-TEC Energy

Competitive environment

There are numerous companies offering BESSs for commercial and industrial applications. These include ABB, Afren, Eguana Technologies, Fluence (a Siemens subsidiary), Invinity Energy Systems, Largo Clean Energy, Powin Energy, Tesla and Varta. NeoVolta is focused on the residential market, Entech Smart Energies on storage for micro-grids and Mitsubishi Power on grid-scale applications. ADS-TEC is focusing on those applications in which it believes it has a competitive advantage because of the overall platform integration accompanied by digital and physical services. There are other start-ups such as Connected Energy.

Strategy

Flexible go-to-market strategy

ADS-TEC serves the charging market through direct sales channels, building partnership-style relationships with key customers that value input as they build out their networks, or through resellers. The customers are engaged at different points in the EV charge network supply chain: project developers, charge point operators, installation and infrastructure service providers, energy companies and site owners. Recent sales partnerships and key announcements include:

March 2024: further expansion in the Netherlands. Through partnership with NXT 50five, the joint venture between 50five and NXT Mobility (as part of the GP Groot initiative) has won the MRA-Electric tender to install and operate public rapid charging stations supplied by ADS-TEC Energy. Over a period of four years, the joint venture will equip up to 200 locations.

March 2024: partnership agreement with Caverion Group for Norway, a global pioneer in emobility, as an entry point to the Nordic region. ADS-TEC Energy will supply ChargePost, ChargeBox and C&I energy storage systems. Caverion, an internationally active maintenance company, will be the system integrator including commissioning and maintenance of the company’s fast-charging products.

October 2023: PowerGo placed an order for ADS-TEC’s first 20 ChargeBox systems, predominantly for public charging stations but also for fleet operators from the transport and logistics sectors. PowerGo also stated that it plans to place further orders for fast charging systems from ADS-TEC Energy, with order volumes in the tens of millions.

August 2023: strategic partnership with eliso, part of VINCI Concessions, for ultra-fast charging systems; more than 1,000 charging points are to be installed by 2025. The company wants to equip and operate, among others, the electrical retail chain EURONICS Deutschland with several hundred storage-based fast-charging systems from ADS-TEC Energy.

June 2023: the US General Services Administration has selected ChargeBox as one of the emerging and sustainable technologies to be evaluated in collaboration with the US Department of Energy as part of its expanded Green Proving Ground programme.

May 2023: extension of longstanding collaboration with JOLT Energy to deploy ultra-fast charging stations in major cities in Europe and the US. JOLT has already ordered a high double-digit number of systems for 2023, and more orders are expected in support of its roll-out plan.

December 2022: announcement of a master agreement with charging project management specialist amperio. Amperio will initially install 101 ChargePost systems in Germany starting in 2023. It has already implemented more than 2,000 charging points for customers such as Volvo, Groupe PSA, Tesla and FastNed and the cities of Düren, Bad Ems and Ludwigshafen.

December 2022: announcement of a strategic partnership with sustainable mobility solutions company GP JOULE CONNECT, which will deploy 30 ChargePost and 10 ChargeBox systems in 2023. The company plans, installs and operates EV charging parks, as well as offering charging and energy management services to the real estate industry, charging parks, service stations, truck and bus depots, energy suppliers and infrastructure companies, with a focus on Germany, Austria and Switzerland. It is also heavily involved in infrastructure solutions for fleets and the automotive sector through a joint venture with Renault Group.

North America expansion

ADS-TEC has been focused on the European market (more than 99% of sales in FY22), reflecting its home market, partnerships and the more advanced nature of the market than other developed regions. The other key open market for advanced EV charging is North America. As part of its strategy to develop its presence and comply with the ‘Made in America’ requirements of the Inflation Reduction Act, which is essential for customers to access this key funding programme, ADS-TEC is investing US$8m to establish its first dedicated facility in Auburn, Alabama. The new site will house the assembly, warehousing, sales and service functions. Management expects the new site to be fully functional during 2024.


Management

Founder and CEO Thomas Speidel joined the family-owned ADS-TEC Group after completing his studies in electronic engineering at the University of Stuttgart. He took over from his father as CEO in 1998. His father had founded ADS-TEC in 1980. Thomas founded ADS-TEC Energy in 2010, initially as part of the ADS-TEC Group. He is also president of the German Energy Storage Systems Association (BVES Bundesverband Energiespeicher Systeme) in Berlin and a member of the Fraunhofer ISE Board of Trustees.

CFO Wolfgang Breme has held his position since July 2022. He has extensive international experience in the financial management of technology-oriented mechanical and plant engineering companies, working as CFO at AIXTRON (AIXA.FSE) for almost a decade. He also held CFO positions at technotrans (TTR1.XETRA), AVENTICS (formerly Bosch Rexroth Pneumatics, now part of Emerson) and the Skeleton Technologies Group, which is involved in graphene-based supercapacitor and battery energy storage.

Risks and sensitivities

The key sensitivities as we see them are:

The regulatory environment relating to EVs: as noted above, the US government has allocated $7.5bn in funding to support the build-out of a national public EV charging network. However, governments may introduce legislation to reduce greenhouse gas emissions, which encourages consumers to choose fuel cell-powered cars or to use fuel containing a significant proportion of biofuel rather than purchasing battery-powered EVs.

Changes to industry standards relating to EV charging: there are currently four different fast charging standards, all of which are largely incompatible with each other. Japanese car makers including Nissan, Mitsubishi and Toyota have adopted CHAdeMO. German manufacturers including BMW, Volkswagen and Audi, as well as Ford, have adopted the Combined Charging System. Tesla has its own proprietary system, Supercharger. China has its own charging standard, GB/T. There are currently no industry standards for EV high-power charging (c 1MW) and battery storage system management so utilities, solar installation companies and other large organisations are creating proprietary standards, with which ADS-TEC’s products may not conform. If industry standards are agreed, certain patents which ADS-TEC holds in the EV and battery storage space may come to be considered ‘essential standards’ and it will be required to license the associated technology on ‘fair, reasonable and non-discriminatory’ terms.

Tesla supercharger network: Tesla owns and operates more than 40,000 Superchargers globally, which allow Tesla owners to charge their car up to 200 miles in 15 minutes. In 2023, Tesla launched a pilot programme allowing other brands of EVs to use Supercharger stations. If this is rolled out more widely, it could reduce overall demand for EV charging at other sites.

EV adoption rates: clearly, this is a key driver for companies to invest in charging networks. 2023 saw EV sales in Europe grow by 37% to 1.5m units and 30% in the US to 1.2m units. However, there has been evidence of a reduction in growth rates in recent months, with a range of factors cited from reduction in incentives to fulfilment of the ‘early adopter’ market. Charging networks are being constructed in anticipation of EV adoption, but will inevitably be flexed downwards if the trajectory of adoption slows.

Supply chain disruption: some of the components, for example semiconductor switches which convert AC to DC, are made by a very small number of manufacturers, making ADS-TEC vulnerable to any supply chain disruption.

Chinese competition: there are currently no Chinese suppliers in Europe or the US for battery-buffered fast charge equipment. With a large domestic market such companies already have scale advantages and could enter Western markets, as is being seen with EVs.

Customer concentration: one customer accounted for 56% of revenues in 2021 and 27% in 2022. This partially reflects the strong early partnerships which ADS-TEC forged. The 2023 number will be available when the full financial results are released.

Shareholder concentration: as of 1 January 2024, two shareholders, the private family-controlled group ADS-TEC Holdings and Robert Bosch, owned c 55% of the outstanding ordinary shares. We note this is not unusual for a technology company at this stage of its development and the business carries only a single class of equity, ie the founders have no voting benefits.

Capital requirements: ADS-TEC is maturing as a business but is still in the rapid growth phase, which requires investment in working capital and infrastructure (sales, marketing, admin and service), although the main manufacturing plant still has significant capacity. This is likely to require additional capital. The timing and relative position of the group will determine whether this will be equity or debt in nature.

Periods of energy oversupply: occasionally, some grid networks may choose to consume low-priced commodities and run relatively high emission power generation, as has recently been the case in the UK, where older gas-fired power generators have temporarily interrupted the market for BESS. This is only a risk factor for industrial BESSs, rather than EV charging infrastructure.

Financial position and financing requirements

FY23 results

The company released preliminary figures for FY23 on 8 February, with full results due to be released in late April. The headlines numbers are as follows:

Full-year revenue of c €107.4m, with an adjusted EBITDA loss of c €16.6m.

Q423 revenue of c €50.3m and adjusted EBITDA of c €4.9m, pre warrants, share-based payments, etc. This was clearly the group’s best quarter ever, with an EBITDA margin of 9.7% suggesting excellent overhead recovery, albeit quarterly numbers can be volatile.

Year-end gross cash was €29.1m. The company had c €12m in promissory notes outstanding and a small amount of lease financing (c €3m). Further details will be available with the full results in late April.

Exhibit 12 provides our analysis of progress through the year.

Exhibit 12: FY23

€m

H123

Q323

Q423

H223

FY23

Sales

38.3

18.8

50.3

69.1

107.4

Underlying EBITDA

(17.6)

(3.9)

4.9

1.0

(16.6)

Source: Company, Edison Investment Research

Management’s outlook for FY24 was maintained at €200m in sales ‘underpinned by strong order intake in early 2024’.

Capital requirements

The group operates an assembly model rather than being a vertically integrated manufacturer. This limits the equipment requirements and hence capex needed to expand production capacity. In addition, the group has a substantial production facility in Germany, 8,500 square metres, which management believes offers sufficient capacity to support group revenue of €1bn (we estimate 6,000–7,000 units). Investment in the small US assembly facility has been estimated at €8m, which will continue through FY24. Overall, we expect capex to be relatively limited though the ramp-up stage.

We therefore expect working capital to be the main determinant of cash requirements. Our review of larger European engineers/electrical groups suggests a working capital to sales ratio of 0.22. Smaller companies are unlikely to be afforded the same credit terms, hence, we assume a ratio of 0.3 reducing to 0.25 as the business becomes more established. This suggests a working capital requirement of €25m per €100m of additional revenues. In the short term, the group has excess inventory to utilise and short payment terms with key customers, which will fund much of the expected growth.

Our cash flow forecast suggests €26m in cash outflow in FY24 before the group becomes cash positive in FY25. With gross cash of €29m but obviously requiring some cash on hand, this would suggest a further c €10m-€20m may be required. At this stage of ADS-TEC’s development, traditional bank finance is unlikely to be available. We see a number of avenues to bridge this relatively small funding gap.

Execution of warrants

Exhibit 13 highlights the warrants currently outstanding. The most significant tranche, the December 2026 warrants, are currently out of the money. However, the four smaller tranches are in positive territory, hence could provide €33.8m of additional financing if fully converted.

Exhibit 13: Outstanding warrants

Expire

Number

Price ($)

Notional proceeds (€m)

28-Jun-24

714,285

7.00

4.6

28-Dec-24

625,000

8.00

4.6

5-May-25

1,716,667

3.00

4.7

18-Aug-25

3,500,001

6.20

19.9

22-Dec-26

11,662,486

11.50

123.0

Source: ADS-TEC

Equity raise

ADS-TEC raised $10m in December 2023 via a share placing with Svelland Capital at $7/share. Other significant equity holders or partners such as Bosch might also be interested in such financing. This suggests that the company could access additional equity if required.

Debt finance

ADS-TEC’s current operating performance is unlikely to prove sufficiently robust to satisfy the covenants required for traditional bank debt. The group raised $12.875m in promissory notes in May 2023, with a coupon of 10% plus associated discounted warrants. The primary investors were Lucerne Capital and entities affiliated with UFO Holdings, a Norway-based family office.

Working capital finance

As previously discussed, the key demand for financing is expected to come from working capital to support sales growth. Purchase order financing or invoice discounting may be available. To an extent, this may depend on the strength of the customer base, with many EV grid companies also in the start-up phase.

Overall

Our forecasts suggest a €26m outflow in FY24 before becoming cash positive in FY25, leaving little headroom from the current €29m of cash. However, as a fast-growing company, ADS-TEC inevitably requires capital to expand and an acceleration of the top line or increased expansion/infrastructure in the US could require additional funds. We see a number of avenues open to management including equity and note the December raise from a new investor, suggesting there may be interest in any equity issue, which would bring only limited dilution to holders.

Forecasts

Key assumptions

Volume growth

We expect the EV charging business to be the key driver of growth in the short term, supported in the medium term by the commercial business, while residential remains small as it is not a key focus of the business, generally lower capacity and therefore less suited to ADS-TEC’s products. The market is expected to grow at a CAGR of 25% in Europe. We have factored in faster growth than this in the short term, 85% in FY24 (in line with management guidance for €200m in revenue), falling to 56% in FY25, 43% in FY26 followed by market CAGR of 25%.

Service revenue reflects the increasing installed base of equipment. Equipment is normally sold with a maintenance and service package worth 3–4% of the overall purchase price.

Exhibit 14: ADS-TEC revenue forecast by application (€m)

Source: Company, Edson Investment Research forecasts

Gross margin

Management’s target is for a gross margin of 35%, compared with the 33% projection for FY25 included in the original prospectus. This is relatively low for a manufacturing business but reflects the model of an assembler rather than a vertically integrated manufacturer, hence higher COGS and lower gross margin. We note that such a strategy requires significantly less capital investment, while permitting ‘best-of-breed’ components to be used. As sales increase and products mature, pricing may come under pressure (we have modelled flat pricing, ie sub-inflationary pricing), but we expect this to be offset by the volume benefits assisting both operational gearing and improved component purchasing terms. Exhibit 15 highlights the gross margin of peers. We note the spread in gross margin being reported. Three of the largest peers, with the exception of Tritium, reported a gross margin of more than 30%, which provides support for management’s target as ADS-TEC reaches scale.

Exhibit 15: Peer gross margin (last reported)

Source: Company information

SG&A

As is typical for a fast-growing manufacturing company, we expect central function costs to rise more slowly than sales, providing leverage at the operating level. This is highlighted by the growth in personnel we are forecasting within SG&A functions relative to the manufacturing side (see Exhibit 16) and the decline in SG&A relative to sales which we expect over time (see Exhibit 17).

EBITDA margin

We expect the volume growth to leverage both the gross margin and SG&A, generating a steady improvement in EBITDA margin. Note that we do not expect the Q423 9.7% to represent a run rate for FY24, but assume a lower yet positive result. In the medium term, we see the EBITDA margin trending to the mid-teens. We believe this is supported by Alfen, which reported an EBITDA margin of 18.0% in FY22, albeit it declined to 11.3% in FY23 due to destocking.

Exhibit 16: Employee numbers by key function

Exhibit 17: SG&A costs to sales

Source: Edison Investment Research

Source: Edison Investment Research

Exhibit 16: Employee numbers by key function

Source: Edison Investment Research

Exhibit 17: SG&A costs to sales

Source: Edison Investment Research

Exhibit 18: P&L forecast

€m

2022

2023e

2024e

2025e

2026e

Revenues

Charging

19.506

85.500

162.000

252.000

360.000

Commercial & Industry

4.463

15.000

22.500

30.000

35.000

Residential

0.287

0.400

1.000

3.000

6.000

Service & Other

2.174

6.456

14.056

25.856

42.656

Total

26.430

107.356

199.556

310.856

443.656

COGS

(30.904)

(97.339)

(152.927)

(227.443)

(317.050)

Total gross profit

(4.474)

10.017

46.629

83.413

126.606

Total gross margin

-16.9%

9.3%

23.4%

26.8%

28.5%

R&D

(1.701)

(2.500)

(3.000)

(4.000)

(5.025)

Selling and general administrative

(31.319)

(34.537)

(43.275)

(52.617)

(63.283)

Impairment losses on trade receivables and contract assets

(0.228)

(1.074)

(1.497)

(2.331)

(3.327)

Other income/expenses

1,299

1.000

1.000

EBIT

(36.423)

(27.094)

(0.143)

25.0

55.7

EBIT margin

-137.8%

-25.2%

-0.1%

8.0%

12.5%

EBITDA

(29.3)

(16.6)

10.0

36.4

66.3

EBITDA margin

-110.9%

-15.5%

5.0%

11.7%

14.9%

Source: Edison Investment Research

Further detailed forecasts including balance sheet and cash flow available in Exhibit 24.

Exhibit 19: Summary P&L forecast

Exhibit 20: Summary cash flow forecast (€m)

Source: Edison Investment Research

Source: Edison Investment Research

Exhibit 19: Summary P&L forecast

Source: Edison Investment Research

Exhibit 20: Summary cash flow forecast (€m)

Source: Edison Investment Research

Valuation

DCF-based valuation

Exhibit 21 provides a summary of our DCF valuation based on the discount factor and terminal growth rate.

Exhibit 21: DCF valuation ($/share)

Discount rate

Growth rate

10.0%

11.0%

12.0%

13.0%

14.0%

0.0%

13.9

12.3

10.9

9.8

8.8

1.0%

15.2

13.3

11.7

10.4

9.3

2.0%

16.8

14.5

12.8

11.2

10.0

3.0%

18.9

16.1

13.9

12.1

10.7

4.0%

21.7

18.1

15.4

13.3

11.6

Source: Edison Investment Research

Given the stage of the group’s development, we would expect a high beta (we use 1.75), an equity risk premium of 5.0% and risk free rate of 3.0% (10-year eurozone government bond) suggesting a cost of equity of 11.75%. Using a 12.0% discount rate (rounding up) and long-term growth rate of 2% provides a valuation of $12.80 per share. As the company develops and its risk profile reduces, so the cost of capital should reduce, promoting the valuation. This does not take into account any potential additional funding mechanisms which may be required, albeit our expected requirement of €10m would be expected to lead to limited dilution.

Peer-based comparison

Larger industrial competitors like ABB or Volkswagen (Elli’s parent) offer little assistance from a valuation perspective given the limited importance of their charging businesses. The peer table is split by activity. Infrastructure plays, including those which manufacture their own hardware, provide an interesting comparison but have a different business model. The recharging hardware and battery storage companies are arguably the closest peers but they are generally focused on the more commodity domestic market. In addition, the quoted peer group is largely in ‘ramp-up’ mode and profitability is therefore somewhat mixed. Hence, Exhibit 22 is interesting but arguably more of a sense check than valuation tool.

Exhibit 22: Sector forecasts and valuations

Share price

Reporting currency

Market cap

EBIT

EBITDA

EV/EBIT

EV/EBITDA

Local

£m

2024

2025

2026

2024

2025

2026

2024

2025

2026

2024

2025

2026

Charging network operators

Allego

1.2

$

257

(59.4)

57.9

113.3

34.6

85.5

145.5

N/A

14.0

7.3

20.5

9.5

5.9

ChargePoint

1.83

$

613

(204.6)

(104.9)

(41.1)

(121.0)

(22.1)

62.6

N/A

N/A

N/A

N/A

N/A

8.3

EVgo

2.14

$

511

(136.5)

(111.0)

(80.8)

(40.0)

9.0

72.1

(4.0)

(5.9)

(7.8)

N/A

73.0

6.0

FastNed

24.25

395

3.3

18.4

49.6

27.0

54.2

79.6

163.5

32.9

13.1

20.1

11.2

6.5

Integrated network/hardware

Blink Charging

2.7

$

216

(59.1)

(32.8)

3.0

(35.4)

(4.8)

31.4

N/A

N/A

108.3

N/A

N/A

3.6

Pod Point

23.5

£

36

(25.7)

(26.0)

(18.9)

(15.9)

(13.9)

(5.7)

N/A

N/A

N/A

N/A

N/A

N/A

Hardware

Beam Global

6.37

$

72

(16.9)

(6.9)

3.3

(13.0)

(5.8)

6.6

N/A

N/A

27.7

N/A

N/A

5.1

Tritium

6.69

$

4

(24.6)

N/A

N/A

(12.4)

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Wallbox

1.64

$

273

(49.4)

(7.2)

15.1

0.7

57.2

76.2

N/A

N/A

29.6

691

8.3

6.2

Zaptec

15.7

NOK

101

154.0

274.0

338.0

186.0

309.0

374.0

7.7

3.9

2.8

6.4

3.5

2.7

Storage/batteries

Alfen

45.98

856

61.0

85.7

111.5

76.9

106.6

137.5

16.8

11.9

8.6

13.3

9.6

7.5

Electrovaya

4.68

$

93

7.3

21.5

36.2

10.4

26.9

38.3

23.4

7.3

4.4

16.4

5.9

4.4

Entech

5.74

72

(21.1)

(17.3)

14.5

(20.5)

(16.6)

15.5

N/A

9.1

3.6

44.8

7.5

4.7

Storage, buffering and fast charge

ADS-TEC

10.20

410

0.9

25.0

55.7

10.0

36.4

66.3

520

18.8

8.4

47.0

12.9

7.1

Source: LSEG. Note: Priced at 8 April 2024.

Overall

We see the DCF calculation as the most appropriate valuation with our value of $12.80 per share. The peer group offer limited comparisons given the activity profiles although we point to Alfen as being one of the more progressed peers.

Exhibit 23: Financial summary

Year end 31 December

€m

2022

2023e

2024e

2025e

2026e

INCOME STATEMENT

Revenue

 

26.4

107.4

199.6

310.9

443.7

Cost of Sales

(30.9)

(97.3)

(152.9)

(227.4)

(317.1)

Gross Profit

(4.5)

10.0

46.6

83.4

126.6

EBITDA

 

(29.3)

(16.6)

10.0

36.4

66.3

Operating profit (before amort. and excepts.)

(33.7)

(26.1)

0.9

25.0

55.7

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

0.0

Share-based payments

(2.8)

(1.0)

(1.0)

0.0

0.0

Reported operating profit

(36.4)

(27.1)

(0.1)

25.0

55.7

Net Interest

20.1

(0.8)

(1.1)

(2.4)

(2.4)

Exceptionals

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

(13.6)

(26.9)

(0.3)

22.5

53.2

Profit Before Tax (reported)

 

(16.3)

(27.9)

(1.3)

22.5

53.2

Reported tax

(2.6)

0.0

0.1

(5.6)

(13.3)

Profit After Tax (norm)

(16.1)

(27.7)

(1.3)

14.5

37.5

Profit After Tax (reported)

(18.9)

(27.9)

(1.2)

16.9

39.9

Minority interests

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(16.1)

(27.7)

(1.3)

14.5

37.5

Net income (reported)

(18.9)

(27.9)

(1.2)

16.9

39.9

Average Number of Shares Outstanding (m)

48.8

49.0

50.6

50.6

50.6

EPS - normalised (c)

 

(33.1)

(56.5)

(2.6)

28.6

74.1

EPS - normalised fully diluted (c)

 

(32.9)

(42.2)

(2.0)

21.0

54.3

EPS - basic reported (c)

 

(38.7)

(56.9)

(2.4)

33.4

78.9

Dividend (p)

0.00

0.00

0.00

0.00

0.00

BALANCE SHEET

Fixed Assets

 

34.2

43.7

53.0

52.1

47.8

Intangible Assets

22.1

28.6

35.1

41.2

46.9

Tangible Assets

5.4

7.3

9.2

6.8

9.0

Investments & other

6.7

7.7

8.8

4.2

(8.1)

Current Assets

 

105.3

94.0

115.9

142.1

187.1

Stocks

53.1

35.3

54.7

72.4

85.1

Debtors

17.7

29.4

49.2

59.6

79.0

Cash & cash equivalents

34.4

29.3

12.0

10.1

23.0

Other

0.0

0.0

0.0

0.0

0.0

Current Liabilities

 

(42.4)

(46.2)

(67.7)

(87.3)

(99.3)

Creditors

(39.3)

(43.1)

(64.6)

(84.2)

(96.2)

Short term borrowings including lease liabilities

(0.8)

(0.8)

(0.8)

(0.8)

(0.8)

Other

(2.2)

(2.2)

(2.2)

(2.2)

(2.2)

Long Term Liabilities

 

(16.3)

(28.1)

(38.1)

(28.1)

(20.1)

Long term borrowings

(2.6)

(14.4)

(24.4)

(14.4)

(6.4)

Other long term liabilities

(13.7)

(13.7)

(13.7)

(13.7)

(13.7)

Net Assets

 

80.7

63.4

63.2

78.8

115.4

Minority interests

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

80.7

63.4

63.2

78.8

115.4

CASH FLOW

Op Cash Flow before WC and tax

(22.0)

(19.2)

10.0

37.4

67.3

Working capital

(25.9)

9.9

(17.7)

(8.6)

(20.0)

Exceptional & other

(9.9)

(0.5)

(1.0)

(1.0)

0.0

Tax

0.0

0.0

0.0

(2.3)

(5.3)

Operating Cash Flow

 

(57.8)

(9.8)

(8.6)

25.6

41.9

Capex (including capitalised R&D)

(11.1)

(15.4)

(17.5)

(15.1)

(18.6)

Acquisitions/disposals

0.0

0.0

0.0

0.0

0.0

Net interest

(0.2)

(0.8)

(1.1)

(2.4)

(2.4)

Equity financing

0.0

9.0

0.0

0.0

0.0

Other

0.0

0.0

0.0

0.0

0.0

Net Cash Flow

(69.1)

(16.9)

(27.3)

8.0

20.9

Opening net debt/(cash)

 

(92.2)

(31.0)

(14.0)

13.2

5.2

FX

10.0

0.0

0.0

0.0

0.0

Other non-cash movements

(2.1)

0.0

0.0

0.0

0.0

Closing net debt/(cash) including lease liabilities

(31.0)

(14.0)

13.2

2.4

5.2

Property lease liabilities

3.5

3.5

3.5

3.5

3.5

Closing net debt/(cash)

 

(34.5)

(17.5)

9.8

1.7

(19.2)

Source: Company accounts, Edison Investment Research

Contact details

Revenue by geography

Heinrich-Hertz-Str. 1
72622
Nürtingen
Germany
www.ads-tec.com

Contact details

Heinrich-Hertz-Str. 1
72622
Nürtingen
Germany
www.ads-tec.com

Revenue by geography

Management team

CEO: Thomas Speidel

CFO: Wolfgang Breme

Thomas Speidel joined the family-owned ADS-TEC Group after completing his studies in electronic engineering at the University of Stuttgart. He took over from his father as CEO in 1998. Thomas founded ADS-TEC Energy in 2010, initially as part of the ADS-TEC Group. He is also president of the German Energy Storage Systems Association (BVES Bundesverband Energiespeicher Systeme) in Berlin and a member of the Fraunhofer ISE Board of Trustees.

Wolfgang Breme has been CFO since July 2022. He has extensive international experience in the financial management of technology-oriented mechanical and plant engineering companies, working as CFO at Aixtron for almost a decade. He also held CFO positions at technotrans, Aventics and the Skeleton Technologies Group, which is involved in graphene-based supercapacitor and battery energy storage.

Chairman: Professor Dr Kurt Lauk

Professor Dr Kurt Lauk is the founder and president of Globe CP, a personally owned family office since 2000. He is an independent director on the supervisory boards of Fortemedia (Cupertino), GuardKnox Cyber Technologies (Israel) and Visby (California, US). Since 2000 he has been a trustee of the International Institute of Strategic Studies in London.

Management team

CEO: Thomas Speidel

Thomas Speidel joined the family-owned ADS-TEC Group after completing his studies in electronic engineering at the University of Stuttgart. He took over from his father as CEO in 1998. Thomas founded ADS-TEC Energy in 2010, initially as part of the ADS-TEC Group. He is also president of the German Energy Storage Systems Association (BVES Bundesverband Energiespeicher Systeme) in Berlin and a member of the Fraunhofer ISE Board of Trustees.

CFO: Wolfgang Breme

Wolfgang Breme has been CFO since July 2022. He has extensive international experience in the financial management of technology-oriented mechanical and plant engineering companies, working as CFO at Aixtron for almost a decade. He also held CFO positions at technotrans, Aventics and the Skeleton Technologies Group, which is involved in graphene-based supercapacitor and battery energy storage.

Chairman: Professor Dr Kurt Lauk

Professor Dr Kurt Lauk is the founder and president of Globe CP, a personally owned family office since 2000. He is an independent director on the supervisory boards of Fortemedia (Cupertino), GuardKnox Cyber Technologies (Israel) and Visby (California, US). Since 2000 he has been a trustee of the International Institute of Strategic Studies in London.

Principal shareholders

(%)

ADS-TEC Holdings

34.9

Robert Bosch

20.7

Lucerne Capital

6.0

Svelland Capital

3.3

APG Asset management

3.2


General disclaimer and copyright

This report has been commissioned by ADS-TEC Energy and prepared and issued by Edison, in consideration of a fee payable by ADS-TEC Energy. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

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New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by ADS-TEC Energy and prepared and issued by Edison, in consideration of a fee payable by ADS-TEC Energy. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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