WBX - Wallbox: The EV Revolution Isn't Being Televised For Now

2023-12-25 01:32:27 ET

Summary

• Wallbox saw revenue dip year-over-year during its recent third quarter but the ABL acquisition and DC fast charger growth could reverse this.
• The company is currently swapping hands for 2.58x annualized third-quarter revenue, falling to 1.34x using forecasted consolidated revenue for 2024.
• A continued long-term shift towards EVs in WBX's key geographical markets will form a tailwind for growth.

Wallbox ( WBX ) at its current $370 million market cap is a long way away from its go-public SPAC transaction value of $1.5 billion . The reasons for the pullback have been multifaceted, from too exuberant equity market expectations in 2021 when WBX and the bulk of EV charging companies went public to the Fed's fight with inflation which would begin a few months after WBX started trading on the NYSE. The company designs, manufactures, and retails a range of chargers for the growing number of EVs. It's based in Spain but is building an increasingly global footprint with sales in the US, Latin America, and Asia Pacific. WBX is not profitable, but revenues could be set for growth on the back of the ongoing shift towards EVs. The company generated €32.5 million ($35.8 million) during its fiscal 2023 third quarter, down from €44.1 million ($48.6 million) in its year-ago comp.

This means the common equity is currently trading for 2.58x annualized third-quarter revenue. Peer EV charging company ChargePoint ( CHPT ) is currently trading for 2.27x annualized third-quarter revenue, with Blink Charging ( BLNK ) trading for 1.40x annualized third-quarter revenue. WBX's peer Volta Charging ( VLTA ) was acquired by Shell ( SHEL ) for $170 million earlier this year in March and had revenue of $54.6 million for its fiscal 2022, around $13.7 million quarterly. This meant Shell paid a 3.11x multiple on revenue. WBX's business model is built around selling its EV chargers directly to the growing number of EV drivers globally, known as AC charging, but it's been expanding its DC fast charging solutions. DC now forms the core driver of growth, with 350% revenue growth on a year-over-year basis during the third quarter.

The ABL Acquisition And DC Fast Charger Growth

With revenue dipping year-over-year, the growth of DC helped materially offset a fall in AC revenue. AC experienced revenue weakness due to what management described during their third-quarter earnings call as an active destocking effort, with a large inventory build in the year-ago period in anticipation of stronger EV deliveries in 2022 not playing out as planned. DC is essentially a public infrastructure buildup play with demand being driven by governmental bodies, utilities, and large corporations. This places WBX in the same pursuit of partnerships and optimal sites for its DC fast charger network as ChargePoint and other large peers. The company recently signed a partnership with Stellantis ( STLA ) in October to offer its Supernova 180, a DC fast-charger, to Stellantis' dealerships in Canada to support electrification.

WBX's third quarter gross profit margin was positive at 35% , a sequential growth of 530 basis points, with its EBITDA a loss of €16.6 million ($18.3 million). Revenue should experience a bump in future quarters, with WBX purchasing the operations and assets of German EV charger provider ABL for €15 million ($16.5 million) in October. The acquisition should add between €60 and €75 million ($66 million to $82.7 million) of incremental sales through 2024 with WBX also stating that it should also be accretive on an adjusted EBITDA basis. Hence, we could see consolidated revenue for 2024 come in at between €200 million to €300 million ($220.45 million to $330.68 million) to place WBX's forward price-to-sales multiple at 1.34x using the midpoint of this estimate range.

A Fast Growing Industry

EV sales continue to rise globally. This represents a fundamental multi-decade tailwind for WBX. The US saw EV sales come in at 313,086 during the third quarter, a new unit volume record and 50% growth over its year-ago comp in a year when higher interest rates and inflation kept overall demand quite muted versus expectations. US EV sales surpassed one million units in a single year for the first time in November. Growth is set to ramp up as inflation dips and interest rates become more normalized to bring down auto loan costs. The 2022 Inflation Reduction Act is also set to start providing $7,500 EV tax credits to eligible EV purchases from next year to achieve its stated ambition of rendering 50% of all new cars sold in the US fully electric by 2030. This would mean roughly 7 million EV sales a year against current sales figures.

Critically, a cumulative capital investment of $53 billion to $127 billion is needed in the US to construct the charging infrastructure required to support 33 million EVs on the road by 2030. This is the required level to make more substantial inroads into meeting emission reduction targets. This required investment is split between AC and DC chargers. WBX has a long runway for growth. However, c urrent EBITDA losses keep me away even as revenue is set to ramp up and cash and equivalents of €81 million ($89.3 million) at the end of the third quarter, around 24% of WBX's market cap, helps somewhat derisk the ongoing ramp. WBX is a hold as the EV revolution continues at pace, despite currently being understated by a market besieged by interest rates at their highest level in decades.

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