Alfen (Euronext:ALFEN) Q2 2026 Earnings Call

0:01 Hello. Welcome to the ALFNF twenty twenty six Half Year Results Conference Call hosted by Michael Kolain, CEO and Bart Mason, Interim CFO. The first part of this call, all participants will be in listen only mode. And afterwards, there will be a question and answer session. And I would now like to hand the call over to Michael Mr. Kollain, please go ahead. Thank you, Elba. Good morning, everybody, and welcome to Alfen's twenty twenty six Half Year Earnings Call. Thank you all for taking the time to join us. I'm Michael Kulane, CEO of Alfen, and I'm delighted to be leading this trading update with you today.

0:47 Before we start, let me introduce Bart Merson, who joined us as Interim CFO on the July 1 and is with us on this call for the first time. With his appointment, continuity of the finance function and financial leadership is safeguarded. Bart joined at a demanding moment and has made a strong start. He has been closely involved in preparing the results we are presenting today. As such, he will take you through our financial performance and join me during Q and A. It has been a pleasure working with Bart these first few weeks. Let me give the word to Bart for a short introduction. Yeah, thank you Michael and good morning everyone also from my side. I joined indeed Alfen as the interim CFO on the July 1 and got a warm welcome by the team.

1:33 I've been working closely with Michael, the Alfen management team and the finance department over the last weeks. The first weeks here, as you said it already, have gone straight into the half year. Like also what's written in the short announcement, I had careers at companies such as KPN, Philips and most recently at BAUM as CFO of The Netherlands. In all those assignments I gained extensive experience and knowledge in finance leadership, business transformation and organisational change. What I found is a finance organisation that knows its business well and a company with a clear sense of what it is building, with many strong and dedicated professionals. My focus is on continuity, making sure the finance function keeps delivering and that, for example, you receive the same quality and consistency of reporting you are used to.

2:22 My second focus is to support the ongoing transformation with everything that is needed to be done with Schrotrter. I really look forward to speaking with you later in the call and to meet many of you over the course of the coming months. Michael, back to you. Thank you Bart. Let me share what we can say about the situation at this moment in time. The Supervisory Board's process is ongoing and Bart will continue in the role until a permanent appointment is made. We will update you in due course. Moving on to today's agenda, which is structured to give you a comprehensive view of the developments during the first half of twenty six. I'll begin with the highlights, we'll then dive into each of our three business lines. Bart will follow with our financials and we will conclude with our outlook before we open the floor for the questions and answer session.

3:15 I'm pleased to report that Alfen delivered a solid first half of twenty six with revenue reaching €261,500,000 representing a 23.6% increase compared to the first half of twenty five. This growth was driven primarily by our energy storage system business and continued momentum in our smart grid solutions. Our adjusted gross margin for the period was 68,300,000 or 26.1% of revenue compared to 61,600,000 or 29.1% of revenue in the first half of twenty five. The margin percentage decline is attributable to a business unit mix shift towards energy storage systems.

4:01 The underlying margins in each of our business units remain healthy and are performing within their expected ranges. Turning to profitability, our adjusted EBITDA increased to 16,400,000 compared to 13,000,000 in the first half of twenty twenty five. Our adjusted EBITDA margin improved to 6.3% from 6.1% in the prior year. I'm also excited to announce that we appointed business unit directors for all business units representing a next step in our transformation. This solid first half reinforces our confidence in our full year guidance, which we're reiterating today. We expect revenue to be between $435,000,000 and $475,000,000 with an adjusted EBITDA margin of 4% to 7% and capital expenditure below 4% of revenue.

4:56 As we've indicated previously, our revenue is front loaded in '26, particularly in energy storage systems. The first half results demonstrate that we're executing well operationally while we position Alfen for its next phase. Moving on to the business unit review. I'm pleased to report that our smart grid solutions business delivered strong performance in the first half of twenty six with revenue reaching 111,600,000 representing a 14.9% increase compared to the first half of twenty five. We saw growth across the board with the majority attributable to an increase in project business with notable mentioning that our transport distribution stations are now a structural part of this. But we also saw an increase in revenue from grid operators in the first half, driven by a stable quarter over quarter pattern.

5:53 As a reminder, last year two grid operators adjusted their forecast downwards after Q1 for which we had to correct in the remainder of the year. 69% of revenue came from the grid operator products and 31% from projects. Operationally, we delivered seventeen sixteen substations during the period, eleven ninety nine in The Netherlands and five seventeen in Finland. The sharp increase in finished substations is attributable to a higher demand. Gross margin performance remained within the expected range at 22.9%, up from 22.4% in the prior year. This improvement was primarily driven by the higher share of project sales in our revenue mix.

6:44 Looking at the market dynamics, we are seeing structural grid congestion continuing to drive the substantial need for grid expansions, something that is increasingly recognized by governments across Europe. At European level we saw the Electrification Action Plan published in July aiming to accelerate the electrification of transport, buildings and industry. The objective is to reduce Europe's dependence on fossil fuels, strengthen energy security and competitiveness and ultimately increase electricity share of the final consumption to around 46% by 2040. This requires not only more electrified transport, buildings and industry, but also the charging infrastructure, energy storage and electricity grids needed to support that transition.

7:33 Relevant for our smart grid solution business is that it identified grid capacity as a key constraint to electrification and therefore urges member states to boost grid investments and accelerate permitting. Looking at The Netherlands specifically, we are starting to see regulators move from designing measures towards execution with a regional approach targeting a spatial planning, site development and permitting. This is further evidenced by the new fast track regime for grid projects that shortens the appeal procedures from October this year. However, the short term reality is more balanced, with the known key constraining factors still impacting our smart grid solutions clients today and therefore we do not expect a volume impact in the current year. These developments are expected to translate into orders and deliveries over time.

8:32 Moving over to EV charging. We faced a decline in the first half with revenue down 17% to 51,100,000 which is in line with expectations as we renew our portfolio. Our performance reflects similar dynamics to those discussed last quarter. First, the gradual ramp up of features on our new product continued impacting order volume, although less so in the last few months. Second, uneven order patterns in the public segments and third, the competitive pressure in the home charging segment, which will stay with us throughout this year until we introduce our new charger for residential segments. Our adjusted gross margin was 39.9% compared with 44.1% in the prior year. This is around the midpoint of the expected gross margin range of 35% to 45% and reflects the introduction of new charger models and ongoing sales campaigns.

9:32 From a production perspective, we delivered approximately 53,700 in the first half of twenty twenty six, representing a 12.3% decrease compared with the 61,200 charge points delivered in the first half of twenty twenty five. The average sales price decreased due to more competitive pricing strategies. But here's what gives me confidence. We're not standing still and we've taken decisive action to address these challenges head on with a comprehensive set of strategic initiatives introduced on this call last quarter. Let me share with you the progress against these initiatives. On the product development front, we are on schedule to launch our new home charging solution, specifically designed to address this competitive market in that segment.

10:24 For our plus models, we have introduced new features and are rolling out the next update in the next few weeks amongst others, solar charging, the availability of the latest OCPP protocol for smart charging and an upgrade of Alfen's own smart charging network capabilities. These together are significant steps in the right direction. What I'm particularly excited about is that we are rolling out our digital strategy. The Eve Control platform launched last month and we have since then handled the first service requests remotely through the platform. This platform combines asset management capabilities for our customers with efficient service handling. It saves both Alfen and our customers valuable time and resources.

11:12 This renewed approach with connected chargers allows us to scale effectively through digitalization without adding complexity to the organization. I would now like to dive deeper into the market context. Across Europe, battery electric vehicle registrations continue their upward trajectory. European battery electric vehicle registrations grew 35% in the first half. More than one in five new cars in Europe is now fully electric, 22% against 17% a year ago. Similar to our market update last quarter, the country specific picture remains mixed. In our core markets, major car markets are driving European growth figures while The Netherlands and Belgium are on the lower end of the spectrum, reflecting their mature market status.

12:07 Conversely, Alfen's expanding markets are demonstrating strong momentum with Italy and Spain showing robust year on year improvements in battery electric vehicle registrations. Current geopolitical tensions have created a reacceleration of demand in 2026 with fuel price hikes driving renewed consumer interest in electric mobility. At the same time we are seeing renewed policy support across the European markets this year. As a result, this positively influences the total cost of ownership which was already compelling for battery electric vehicles compared to internal combustion engine counterparts. This is starting to become a reality for all vehicle segments as new models hit the markets that are cheaper and deliver superior performance.

13:00 It further reinforces our view that electric vehicle adoption will increasingly be driven by consumer adoption rather than regulatory support alone. In all, we are on an undeniable path towards electric transport and this will translate to sustained demand for charging infrastructure across all our European markets in the coming years. While we are currently renewing our portfolio, we expect to benefit again from this momentum in the coming years. Moving to energy storage where we saw a result of strong execution during the first half of the year. Revenue reached $98,800,000 representing an 88% increase compared to the first half of twenty five. This significant growth was primarily driven by achieving major milestones in two of Alfen's largest projects to date, complemented by positive momentum for our mobile storage systems which grew significantly in revenue compared to the first half of last year.

14:02 More specifically, we have seen an increase in traction against the second half of last year, mostly coming from large power rentals that rent our systems to replace traditional diesel gensets for a variety of use cases including construction sites, events or grid services. Our gross margin for the period was 22.8% which positions us comfortably above the midpoint of our expected range of 15% to 25%. I want to provide some context here. In the first half of twenty twenty five our gross margin was elevated to 28.5% due to one off items including the release of project contingencies. Turning to our backlog and pipeline, at the end of the first half, we had $93,000,000 in our backlog with $37,000,000 scheduled for delivery in '26 and the remaining $56,000,000 for '27.

15:01 The underlying pipeline remains healthy and the pace at which orders are converted reflects the lumpiness inherent in our project based business rather than a change in underlying demand. To give you some color, we recorded approximately €30,000,000 of new order intake since the end of the second quarter, including €6,000,000 in mobile storage orders that can be executed in the second half of twenty twenty six, given their shorter order to revenue cycle. During the second half of the year, we will focus on filling the order book for next year. The trajectory is expected to be consistent with our year on year revenue growth ambition. Now let me address timing dynamics candidly. Given typical project timelines and component lead times for utility scale energy storage systems, the natural window for converting pipeline opportunities into 2026 revenue is very tight.

16:00 In July, Alfen and CATL announced a partnership to deploy sodium ion battery storage across Europe. It extends our cooperation we have had with CATL for years now into a new battery technology. Sodium ion technology is promising and aligns with our view of where the market is heading. The raw materials are more widely available compared to lithium about a thousand times more abundance. Its safety performance is strong. It is able to operate reliably across a much wider temperature range and the expected service life is long. The energy density is slightly lower but for stationary storage systems that is acceptable and often not the primary buying criterion.

16:46 With this technology, we aim to diversify our portfolio, meaning that sodium ion complements our lithium ion offering. Let me also share some detail on timing. We expect to bring our first sodium ion project to market from the second half of twenty seven, starting with pilots. This does not yet change what you see in the numbers today, but it does change is our position for the years thereafter. Two technologies, two supply routes and the engineering capability behind both. In short, we aim to be the front runner in the European market and are convinced that having access to this technology puts us ahead of the curve. Now I'll give the word to Bart to talk you through our financial performance.

17:31 Thank you Michael. I'll now walk you through our financials starting with the second quarter figures. Revenue came in at million representing a 22.3% increase compared to the CHF107.7 million in the prior year. Similar to the first quarter, growth is primarily driven by a strong performance in energy storage and smart grid solutions. Our group adjusted gross margin reached €34,200,000 equal to 26% of revenue compared with an adjusted gross margin of €32,400,000 or 30.1% in Q2 twenty twenty five. The percentage decline reflects our business unit mix shift towards energy storage systems which typically carries different margin characteristics than our other business units.

18:25 This mix shift was consistent with our expectations. Our EBITDA was CHF4.2 million in Q2 twenty twenty six compared to CHF5.4 million in Q2 twenty twenty five. The adjusted EBITDA performance increased in absolute terms from CHF7.6 million in Q2 last year to CHF8.2 million this year. The adjusted EBITDA percentage as share of revenue declined from 7% to 6.3% which is attributable to the business unit mix shift. Looking at our half year income statement, I'll walk you through the key financial metrics and how they compare to our performance in the first half of twenty twenty five. Starting with our top line, we delivered a revenue level increase of 23.6% to CHF261.5 million compared with the CHF211.5 million in prior year.

19:21 As previously indicated, revenue was front loaded this year and this first half performance reflects that pattern. Our adjusted gross margin reached CHF68.3 million representing 26.1% of revenue compared with €63,400,000 or 30.1 percent in H1 twenty twenty five. Again, the group percentage is lower due to the business unit mix shift. At business unit level underlying performance remained solid with margins within the expected ranges. No adjustments were made in the gross margin during H1 twenty twenty six. Moving to our operational costs. Adjusted personnel expenses increased by 6.1% to CHF40.1 million mostly due to labor agreement indexations of roughly 5% since June 2025.

20:14 Let me touch briefly on personnel expenses which we expect to be higher in the second half of this year. During a transition of this kind, the old and the new organization exists side by side for a period. Some roles are still being positioned, interim agreements are in place while permanent appointments are complete and we are recruiting and onboarding into the new structure. In addition, we are investing in capabilities ahead of the revenue they support such as software and project management which, as you know, are a deliberate part of the strategy direction. This effect is planned for and we expect it to fade out over the course of next year as the transition completes and the new organization settles. Adjusted other operating expenses decreased by 4.3% to CHF11.5 million compared with CHF12.1 million in H1 twenty twenty five as a result of strict cost control measures which we will continue.

21:16 EBITDA was CHF11 million in H1 twenty twenty six compared to CHF9.6 million in H1 twenty twenty five our prior year. We adjusted for one off costs in the first half year. I'll sum them up for you. First, we recognized one off costs of CHF3.5 million related to the restructuring we announced in February. This amount was primarily driven by settlement agreements and therefore impacting personnel expenses. Second, we took €1,700,000 one off transformation costs which covers non personnel related transformation linked costs, for example advisory costs, therefore impacting other operating costs. And third, 200,000 share based payments associated with our long term incentive plans. You have seen the details in our semi annual report.

22:06 Together, they total CHF 5,400,000 special items which brings us to an adjusted FDA performance of CHF16.4 million representing an improvement in absolute terms from CHF30 million in the comparable prior year periods. Adjusted EBITDA as share of revenue increased slightly from 6.1% to 6.3%. Our net loss improved from CHF1.3 million in H1 twenty twenty five to a loss of CHF0.5 million in the first half of this year. When adjusting though for one off costs and special items after tax, net profit amounted to CHF3.6 million compared to CHF1.3 million in the prior year period. This represents an improvement in our underlying profitability.

22:53 Looking then at our balance sheet position at the end of June of this year, starting with the asset side. Non current assets remained stable reflecting our continued investment in our operational infrastructure to support our growth strategy. Current assets showed an increase of our accounts receivable position due to the front loaded first half of the year. Furthermore, I'd like to point out the significant reduction in inventory which directly contributed to cash generation during H1 twenty twenty six. This led to a substantial increase in cash and cash equivalents rising from 26,700,000 at year end 2025 to 51,100,000 as of 06/30/2026.

23:41 Moving to the liability side of the balance sheet. Non current liabilities remained broadly stable. Our debt position, including lease liabilities, decreased by CHF4.5 million following scheduled repayments. Provisions increased as a result of restructuring measures implemented during H1 twenty twenty six. The current liabilities increased primarily driven by a €30,500,000 increase in trade payables which contributed positively to our working capital position. This reflects the timing of our energy storage system projects. Our borrowings position improved considerably. We moved from a net debt position of CHF20.7 million at the last day of last year to a net cash position of CHF6.2 million at 06/30/2026.

24:33 This represents a swing of nearly CHF27 million. Equity remains solid supported by our improved profitability in the period providing a stable foundation for our continued growth investments. Overall, our balance sheet demonstrates the effectiveness of our working capital initiatives and positions us well to execute on our strategic priorities for the remainder of 2026. Let me now take you through our working capital development which showed a healthy development over the first half. Our working capital decreased by €23,100,000 during H1 twenty twenty six, an improvement that was the primary driver behind our strong operating cash flow of CHF36.5 million compared to CHF10.8 million in the same period.

25:22 Breaking this down into the key components: Inventory decreased by 19,700,000 compared to end of last year, primarily driven by the energy storage battery allocation for a larger project. Looking at the mobile storage side, with strong mobile sales in second quarter we made a significant step in structurally bringing down battery inventory that was on the books with us for some time now. For EV charging inventory decreased slightly whereas smart grid solutions inventory of it increased. This increase is related to higher structure levels to bridge the summer period and Alfen Nv Elcomo in Finland to cope with increased production levels over there. Since we are discussing in Henri, I'd like to mention that in contrary to the last years we are not anticipating a further reduction for the remainder of this year.

26:16 Trade and other receivables as well as trade payables showed an increase triggered by the activity level in the first half of this year. The combined effect is therefore limited. We remain focused on sustainable cash generation from our EBITDA results and working capital management needed to execute on our strategic priorities. And with that, I'd like to hand back the call to Michael. Thank you Bart. Let me update you on our leadership changes that were made in line with our new organizational model. During the second quarter, we announced management changes in line with our new business unit structure. With the appointment of three business unit directors, the leadership of our business units is now complete.

27:02 Each unit will be led by a dedicated director accountable for its performance and its development. Stephanie Schokart has been appointed as business unit director for energy storage systems. Stephanie has been with Alfen since 2017 and previously served as sales director for the business units. She knows our customers, projects and the market deeply. Eva Hasidemo has been appointed as business unit director for EV charging. Eva brings over twenty five years of international leadership experience in the energy and mobility sectors. And finally, Evert Koestra has been appointed Business Unit Director for Smart Grid Solutions.

27:49 Evert brings more than twenty five years of senior leadership experience across technology, e mobility and finance. Together with the appointment of our new HR director, Marika Hornemann, I'm confident that we have the business leadership to guide us in the next phase of our transformation. On the right side of the page, we have outlined our new governance structure. Now turning to our outlook, the solid performance in the first half reinforces our full 2026 guidance. Therefore we reiterate our guidance in full, expect revenue to be between CHF $435,000,000 and CHF $475,000,000, our adjusted EBITDA margin guidance for '26 is between 47% and our CapEx is expected to remain below 4% of revenue.

28:42 On business line level, smart grid solutions revenue is anticipated to increase for both grid operator products and projects. While we're making every effort to restore EV charging revenue to growth for our 2026 planning, we assume a reduction as we upgrade our portfolio and services. For energy storage, we anticipate year on year growth while our revenue distribution remains consistent with the front loaded pattern we communicated during the last two updates. I want to be as transparent as possible on where that leaves us for the second half of the year. The second half will be softer than the first half, resulting in a lower top line compared to the second half last year and the first half this year.

29:33 As a consequence, we expect this to affect our adjusted EBITDA in the remainder of the year. For 2027, we remain confident that the transformation combined with our outlined growth strategies will reignite consistent profitable growth resulting in year over year improvements in both revenue and adjusted EBITDA margin. Lastly, we are convinced that the European energy system will continue to electrify over the coming decades. Alfen's three complementary business units are strategically positioned at the heart of the transition towards electrification. And with that, Alfen aims to be the go to company when battling grid congestion. 2026, as we said previously, is our transformation year focused on establishing the capabilities and market position that will drive long term profitable growth.

30:29 The progress we've made in the first half year reinforces our confidence in executing this successfully. The future, we believe, is electric. Thank you. We'll now open the floor for questions from our analysts. Ladies and gentlemen, we are now ready to take your questions. Our first question comes from Nikita Papachio from Deutsche Bank. Please go ahead. Good morning. Thank you for taking my questions. I would have two. The first one is on your charging business. I mean, you're targeting now for 2027 improvement and maybe in the long term returning to initial margins we saw a couple of years back.

31:22 Do you think that you need the huge turnaround in the chargers to hit this margin level? And especially with the new home charger, do you think that the margin or the gross margin of the business will deteriorate with this new charger? Or is it as competitive as or as profitable as it was as the other products were? The second one is on your guidance for the clarification on the margin we should think of in H2. Are there any mitigation measures in H2 to limit the impact from lower top line and also higher personnel costs? Thank you. Thank you, Nikita, for your questions. I will take the first question on the EV charging business and Bart will answer the guidance question second.

32:14 Regarding the EV charging business, as I said earlier, we are using '26 to transform the business by developing new hardware, launching our digital platforms and making sure that we are prepared for future growth in that area. Again, the home charger, which is under development is not only the hardware itself, but it is also the first step for us to renew our position in all three segments, which are home, business and public because it uses the same software platform that we're rolling out now. And as such, I expect that rollout across those three to also keep stable our position there and it will help to improve profits, but it will also make sure that we get our footing back in our growth.

33:18 Regarding the long term outlook, everything we're doing today is about building our platform stable that is really future proof with all the features that we need to compete head on in a competitive market. Yeah, Nv, coming back to the first question, Nv, you asked there. Good first half year, as we just mentioned, we reiterate the outlook. We said also front loaded here which means, Michael said in his introduction, a softer second half of the year. Market providers still challenges both challenges and opportunities So we keep that outlook and obviously with a softer half year there's this dynamic of the leverage effect, the ability of the organisation to cover organisational costs and the costs linked to the transformation.

34:20 And obviously it's our full focus, to your question, to win tenders not only for next year but also for this year, drive sales, keep our strict cost control and when it comes to more cash, keep a strict focus on our working capital and that is what we have been doing and that's what we will continue to do so for remainder of the year. Thank you very much. The following question comes from David Kerstens from Jefferies. Please go ahead. Good morning, gentlemen. Thank you for the presentation. I have two questions. First on your smart grids business, you had a strong momentum in the first half of the year driven by the project business leading to higher margins, but not yet that much from grid debottlenecking, which you don't expect to impact revenues in the second half of the year. But the question is, will you be able to maintain the momentum you had in the first half with revenues of over $55,000,000 Should we assume that will also be achievable for the second half of the year?

35:29 Then the second question is on a follow-up on the personnel expenses. The €40,000,000 in the first half, you said, will be higher in the second half. Can you give an indication how much high? And can you give an indication roughly what the impact is of the transformation that then will disappear in 2027? And what would be a normalized level for personnel expenses given your current headcount? Thank you very much. Thank you, David. I think I'll take the first question and Bart will take the second question. Regarding your SGS question, I'm really delighted with the question. One of the things that we are doing this year with a focus is to make sure that we are as predictable as possible. And in terms of the SGS business we would expect that it will be a predictable smooth ride for the remainder of the year, meaning that we would see continuation of revenues as planned.

36:26 Yes, actually when it comes to the personnel costs, your second question indeed, personnel costs second half of the year higher than the first half of the year, really linked to the transformation effort which is broad and we're fully into it. Personnel costs H1 also higher than H1 last year but obviously that is not only transformation but also the inflation, labor agreement component roughly 5% coming in. These figures have been included in the outlook of this year which we reiterated and outlook for 2027 we don't give at this moment. And just to clarify, the 40,000,000 is adjusted for the restructuring charge, right? And that is the basis for guidance for the second half.

37:15 The 40,000,000 will be higher in the second half of the year. Yeah. So we make a distinction between the one off restructuring cost of 3,500,000 linked to the transformation program and the running cost just in our P and L of the launch you mentioned. All right. Thank you very much. The following question comes from Luc Van Beek from Degrove Petercam. Please go ahead. Yes. Good morning. First of all, question about your EV charges. You mentioned a new home charge. A couple of questions about that. So one is when do you expect that to start to improve your revenues? And also how long do you think it will take you to roll it out to the other end markets and basically use the new platform for all of your charges?

38:09 Furthermore, I was wondering there if the production of the new charge unit will be more efficient so that it will support your gross margin. And on energy storage, I was wondering if H2 will also be front end loaded or that we should expect the orders to be delivered more evenly between Q3 and Q4. Okay. Thank you, Luke, for those questions. Again, think the first question I will take and Bart will take the second question. Regarding EV charging, we expect to see the full impact of the new home charger in 2027 and all our chargers will also move to that new platform in 2027.

38:56 So we should really reap the benefits of having a unified platform across our EV charging business. With production costs, of course, when we designed the new charger, we kept in mind that we are in a competitive market and that we need to see the ability to compete head on in the coming years. And it's an ongoing effort, it's not a one off. But obviously we're aware that competition is strong and we intend to be also competing with everybody else in that market. Yeah, and coming back to the backlog question for our battery systems, the business unit, 56,000,000 by the end of June backlog for next year, 2027. Since then we've seen we scored additional orders already, not only for this year but also especially for next year and then recognize a healthy pipeline and the idea is to get some wins from that in the course of the coming months and quarters.

40:02 We're confident that we will end up with at least the level we had last year same period that was around €20,000,000 But I was asking about the split between Q3 and Q4. Yeah, so we don't provide details now for the exact months and quarters. And it also relates to the lumpiness of this business. You can just win several small orders or a bigger order and that immediately has an impact, a smaller order, bigger on the backlog. Of course, the sooner the better. And one quick follow-up question on the OpEx.

40:49 You mentioned that personnel expenses will go up in H2. Is there any special movement in OpEx that you expected versus H1? Sorry, on the other OpEx you mean? Yeah. Yeah. Operating cost. No. We just you know, that that is under control. We continue to do a good cost control like we have done in the past, but also in h one twenty twenty six. So no significant movements there. Thank you. Thank you. The following question comes from Ruben Dufus from Kepler Cheuvreux.

41:35 Please go ahead. Yes. Good morning. My first question is to follow-up on a prior question, I think, regarding the personnel costs in the second half. So it'll step up at the normal end twenty seven. I think around in 2024, when you had this restructuring or rightsizing it was said you had around CHF 13,000,000 of net savings with a payback under a year. I think now you sort of provisioned CHF 4,500,000 of restructuring. So my question is, what do you expect that to deliver in annual savings? Yeah, so in contrary maybe to the program you mentioned a few years ago, this has not been and we have communicated that earlier in our call and program to reduce FTEs is really to reallocate FTEs and building up capabilities and in that sense the business case is a quantitative one, you could say, not a definition related to financial impacts.

42:40 Okay. And regarding smart grids, Finland was about 500 of the 1,700 total, so quite a big contributor. Should we now think of El Camo as a structural growth driver in its own right? Mean, in Finland, is it still largely concentrated with FinGrid? Or is more of the volume coming from a broader range of operators? Yes, and I guess how sustainable is that trend you've seen in Finland moving into '27? Thanks Ruben. I think the observation is correct that ALCOMO did a significant chunk of the SGS business in the last half year and we're very pleased with that.

43:31 I think we've taken some measures to make sure that we can maximize the benefits of the Alkimo business. What I can say here is that the business is delivering to a general market trend to a wide range of customers. And what we believe we see is a general grid revamp across Europe with investment in expanding the grid, renewing old transformer substations and making more available also for the addition of renewable energy into the grids and we're benefiting from that. Obviously, we've been extremely active to also reap as much of that as possible. Alchemo forms part of the Alfen business and we will continue to drive it as we do our other STS business as well.

44:24 Okay. And then in The Netherlands, I think the investment plans, they seem to be stepping up quite strongly. You also are pointing to a fast track regime for larger projects as of October. You don't expect any volume impact this year yet, but of course, about how you see that regulatory changes translating to actual orders. Are you seeing any signs of, let's say, tender activity already or framework discussions for 2027? So I think this is a good question. By nature, I'm an optimist and I'm always pushing for faster. We've mentioned before that we see the regulatory changes coming and we see laws in progress, but I haven't seen anything concrete yet that immediately accelerates this market or spurs it on that you can have double digits growth.

45:25 What I do see is that the general trend and readiness for everyone in this market is increasing and we are looking to be part of that and we're ready to do that whenever it happens. But I think that it is there are two elements. The regulatory battle is being fought and I think it will be solved. After that has been solved, immediately comes the question, do we have enough structural as an industry, not specifically Alfen, but also the grid company, do we have enough structural capacity for executing on that growth because installers need training. So we expect a steady predictable growth there, but not a big boom to come very quickly.

46:11 All right, that's it for me. Thank you. Thank you. It appears there are no more questions. So I will hand the word back over to Mr. Cline for any closing remarks. Thank you, Elba. Thank you all for your time. As a reminder, I want to point out that from next quarter onwards, we will publish our results on the morning of the earnings call instead of the evening on the day before, starting with our Q3 trading update on the November 4. Looking forward to speaking to you then.