PODP Pod Point Group Holdings Plc

TIDMPODP

RNS Number : 6193T

Pod Point Group Holdings PLC

16 November 2023

16 November 2023

Pod Point Group Holdings plc

("Pod Point" or "the Group")

Trading Update and Capital Markets Day

Powering Up to deliver significant growth and value

Pod Point, a leading provider of Electric Vehicle ('EV') charging solutions in the UK, will today host a Capital Markets Event to update the market on its new focused strategy and provide more details on its medium-term financial plans. Additionally, the Group is pleased to provide the following trading update.

Full year results are now expected to include revenue of at least GBP63m, adjusted EBITDA loss no greater than GBP16m and year-end net cash at least GBP47m. This is ahead of previous guidance of revenue of GBP60m, adjusted EBITDA loss of GBP17m and closing net cash of GBP40-GBP45m.

Highlights

-- Powering Up, Pod Point's transformation and strategy builds on the Group's core strengths in its brand, leading market share and broad partnerships, by prioritising Home and Workplace segments and developing an Energy Flex recurring revenue stream to build Customer Lifetime Value (CLTV), combined with a significant cost out programme

-- The Group will re-invigorate its core UK business through a refreshed product roadmap, further investment in brand and marketing, and strengthening its routes to market

-- Using a capital-lite model, Pod Point will leverage this refreshed core business into select international markets, intending to supply its units to EDF distribution companies in France and Belgium, with other EU markets being assessed

-- Pod Point has also entered into a Partnership Framework Letter of Intent (LOI) with EDF covering intended energy tariff partnerships and Energy Flex collaborations

-- Material progress is being made in Energy Flex, with a new partnership with Centrica, to run a six month flexibility services trial including participation in National Grid's ESO Balancing Market trial for EV chargers

-- Pod Point will explore opportunities within the Battery Energy Storage market to enhance its energy flex eco-systems having signed a Memorandum of Understanding (MOU) with Gotion, Inobat and Brillpower

-- The core business continues to make progress with recent business wins including: Mercedes-Benz, Halliwell Jones, Group 1 Automotive, West Way Nissan, and Knight Frank

-- New 5 year credit facility, until 2028, agreed for GBP30m with EDF, the Group's largest shareholder, providing material cash headroom to execute the strategy

-- New 2024 guidance of around GBP60m revenue, adjusted EBITDA loss of around GBP14m and closing net cash position of around GBP15m reflecting the orderly exit from non-core segments and transformation cash costs

-- New 2027 financial targets of at least doubling revenue, Free Cash Flow positive, 15% of Group to be recurring revenues, with adjusted EBITDA positive in 2026

Andy Palmer, Chief Executive Officer, said:

"We're excited to share our new focused strategy today, setting out the next stage in Pod Point's journey as a leader in the EV charging sector. In Powering Up, we see us build on our core strengths in Home and Workplace, creating a business that is both streamlined and well positioned for our new product offerings such as Energy Flex, as well as our expansion into new international markets.

The business has made good progress since our last update, with significant business wins and the signing of an Energy Flex partnership with both EDF and Centrica, and we remain confident in our ability to lead the UK's EV transition."

Powering Up - a focused transformation plan

The Group's new focused strategy is the culmination of an intense period of work, with support from external consultants alongside the Pod Point leadership team. The transformation plan is built on three inter-connected priorites: focusing on our core strengths and leveraging them into adjacent markets; driving customer lifetime value through grid load management services or "Energy Flex" and recurring revenues; implementing our cost optimisation programme to ensure the Group's operating model is set up for success.

The strategic workstream has assessed the multiple market segments to ensure Pod Point is focused on the most attractive segments where the Group has the greatest opportunities and can play to existing strengths. Each of these market segments has been modelled for revenue, future growth, contribution margin and potential for strategic opportunities in recurring revenues, including Energy Flex.

Focus on core strengths

The strategy refocuses Pod Point on its core areas of strength, meaning a focus on Home and Workplace segments. These segments account for 60-70% of the UK market and will see significant growth over the medium-term. Both of these segments are longer dwell time locations for EV charging, have similar product specification requirements and offer recurring revenue and Energy Flex revenue opportunities, maximising CLTV, economies of scale and operational efficiency. The trusted, well regarded and established Pod Point brand provides a competitive advantage for the Group in the Home and Workplace segments and the Group can leverage its existing market-leading network of over 222k connected units in the Energy Flex market.

The Group will drive market share recovery and operational improvement by building on strong foundations in three areas:

1. Brand development. Pod Point has leading brand awareness and consideration in the UK EV charging market and excellent customer feedback. A new sales and marketing strategy will further build brand awareness and execution excellence across marketing channels.

2. Product development. Pod Point now has a refreshed and updated product roadmap, which includes the launch of the 'Arch 5' home charger in Spring 2024. The Arch 5 will be OCPP compliant and EU compatible to support our international expansion plans.

3. Customer channels. The Group has a broad set of commercial partners across OEMs, housebuilders, car dealerships and leasing groups that have helped establish Pod Point as the largest network in the UK. These important partnerships will be broadened and complemented by direct sales channels.

Leverage core strengths for capital-lite expansion

With UK market rejuvenation under way, the Group will leverage its core strengths into select international markets through a low-capex, operationally streamlined partnerships including with EDF distribution companies. These markets will take advantage of the Group's new Arch 5 charger, launching in Spring 2024.

-- The Group has signed an LOI with EDF to supply EV charging products to EDF's distribution businesses in France and Belgium.

   --    For France, the Group will supply Izi, with an anticipated launch in Summer 2024 
   --    For Belgium, the Group will supply Luminus, also with an anticipated launch in Summer 2024 

-- For Spain and Italy, the Group is having advanced commercial discussions with distribution partners

-- Pod Point will supply units to the distribution companies, with minimal incremental operational costs and no additional capex requirements

-- Pod Point will leverage its existing relationship with Celestica, its manufacturing partner, with operational experience in these new international markets. The incremental volumes will support Group cost of goods sold improvements

-- A small sales and marketing team will drive customer development across consumer, wholesale and supply-only channels

-- Pod Point will leverage its UK direct to consumer flexible web front end and digital marketing capabilities to build consumer relationships and brand awareness

Drive customer lifetime value through Energy Flex and recurring revenues

The Group already has grid load management contracts in place and will achieve its first revenues in this high growth segment in 2023. The focus on the Home and Workplace segments, where chargepoint dwell time is the longest, will give Pod Point the maximum opportunity to further develop Energy Flex and recurring revenues.

The creation of an Energy Flex ecosystem, which builds on the Group's existing large installed network of over 222k units and existing Energy Flex contracts is critical in driving higher customer lifetime value. The Group believes that each participating customer will be worth c.GBP40-50 per annum to Pod Point.

The Group is pleased to announce it has signed an LOI with EDF to continue its partnership in respect of energy tariffs and Energy Flex. The Group is also pleased to announce it has signed a new partnership with Centrica in relation to a six-month flexibility service, enabling participation in the National Grid ESO's balancing market trial under the Power Responsive programme, with a trial to commence in H1 2024.

Over the longer term, the Group believes that Battery Energy Storage Systems (BESS) will enhance Energy Flex CLTV and is already exploring this market for complementary commercial opportunities. The Group has signed an MOU with Gotion, Inobat and Brillpower to explore these opportunities.

Cost optimisation

The focus on the Home and Workplace segments will allow the Group to streamline its operating model and reduce cost of goods, operating costs and product development costs. The Group will launch its cost reduction programme before the end of 2023, with savings commencing during 2024 and being fully achieved in 2025. Non-recurring total cash costs of GBP5m across 2024 and 2025 are anticipated.

The core areas of cost savings and efficiency improvements are:

   --    Anticipated 500bps improvement in gross margin by end 2025 
   --    Overhead annualised cost saving of GBP6m, to be fully achieved in 2025 

Future growth initiatives will take advantage of partners' existing infrastructure and capabilities and will require limited investment by Pod Point, with its new ROI-focused approach to investment decision making. Expansion into new international markets will only require the addition of a small European wholesale team and will leverage existing new product specifications. Energy Flex and other recurring revenues will leverage existing capabilities within the Group.

Financial targets, operational targets and funding

At the Capital Markets Day, the Group will provide financial targets for the Powering Up transformation plan.

   --    Revenue of at least GBP120m by 2027 
   --    Adjusted EBITDA breakeven in 2026 
   --    Free Cash Flow positive in 2027 
   --    Recurring revenue mix of 15% of Group revenues in 2027 
   --    Energy Flex profit contribution of at least GBP5m in 2027 

Operational targets

To provide further milestones to track the progress of Powering Up, the Group is setting the following nine operational targets for 2024, aligned to our strategic priorities:

Focus on UK Home and Workplace and capital-lite international growth:

   --    Return to year-on-year growth in UK Home segment 
   --    Launch OCCP/OCPI compliant product - Arch 5 
   --    Launch in two new international markets 

Drive Energy Flex and Recurring Revenue:

   --    Enter a new Energy Flex market segment 
   --    Launch Energy Flex consumer proposition 
   --    Energy Flex revenues of at least six figures 

Cost Out:

   --    Complete organisation restructure 
   --    Annualised overhead cost saving of GBP6m 
   --    Embed ROI discipline 

Funding

The Group has sufficient cash to fund its strategy, following an upgrade to our expected year-end 2023 net cash position of GBP47m, and expects positive cash flow in 2027. The Group has sufficient cash to fund its strategy.

EDF, the Group's largest shareholder, has shown its support of the Group's new strategy and has provided a five-year debt facility of GBP30m to provide sufficient funding headroom.

The Group expects exceptional cash costs of cGBP5m in aggregate across 2024-2025 to deliver the transformation programme, delivering cost savings and the orderly exit of non-core business segments. This cash cost is included in the 2024 net cash position guidance.

Outlook, upgraded 2023 guidance and 2024 guidance

The market has remained challenging in the second half of the year, with increased consumer uncertainty in anticipation of potential changes to UK Government policy and ongoing volatility in private new EV demand. However, the Group has traded slightly ahead of prior expectations, and has increased guidance for 2023.

The Group expects the following for financial year 2024:

-- Revenue of around GBP60m, reflecting underlying growth in the ongoing business, and some exits of non-core activities

   --    Adjusted EBITDA loss of around GBP14m 

-- Year-end net cash position of around GBP15m, including GBP5m of non-recurring transformation programme costs.

To join the webcast of the Capital Markets Day, please register here .

Registered attendees should click on the following link.

https://us02web.zoom.us/webinar/register/WN_Pq4pCMVKTIelFRw88ELQGA

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014.

The person responsible for arranging the release of this announcement on behalf of Pod Point is Anita Guernari, Company Secretary.

Enquiries:

Pod Point Plc

Andy Palmer, Interim Chief Executive Officer

David Wolffe, Chief Financial Officer

Phil Clark, Investor Relations phil.clark@pod-point.com

Numis (Joint Corporate Broker)

Jonathan Wilcox / Andrew Coates +44 (0)20 7260 1000

BofA Securities (Joint Corporate Broker)

Marcus Jackson / Mitchell Evans +44 (0)20 7628 1000

Teneo (Media)

Matt Low / Arthur Rogers +44 (0)20 7353 4200 PodPoint@teneo.com

About Pod Point Group Holdings plc

Pod Point was founded in 2009. Driven by a belief that driving shouldn't cost the earth, Pod Point is building the infrastructure needed to enable the mass adoption of electric vehicles and to make living with an EV easy and affordable for everyone. As at 30 October 2023 the company has shipped more than 222k charge points on its network in the UK and is an official charge point supplier for major car brands.

Pod Point works with a broad range of organisations and customers to offer home and commercial charging solutions.

Pod Point is admitted to trading on the London Stock Exchange under the ticker symbol "PODP."

For more information, visit https://pod-point.com/

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November 16, 2023 02:00 ET (07:00 GMT)