Aquaporin A/S (00B.F) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Aquaporin Half Year Interim Report 2025 Conference Call. Please note that this call is being recorded. [Operator Instructions] Thank you. I will now hand the call over to Ulrik Jakobsen, CEO. You may now go ahead, please.

Thank you, moderator. My name is Ulrik Jakobsen. I'm the newly appointed CEO for Aquaporin. I've been here for a little more than 1.5 months now. And together with me today, I have our CFO, Klaus Juhl Wulff, and we are happy to welcome you all to this investor call for the half year interim report 2025. Before we start, please take note that matters discussed in this presentation may constitute forward-looking statements as described on this slide. Today, we are broadcasting from our headquarter in Lyngby in Denmark, where we, on a daily basis, lift the company purpose of rethinking water filtration with biotechnology. Besides our presence here in Denmark, you will find us in Singapore, Turkey, China and the United States. And as you know, we are listed on the NASDAQ Copenhagen with the ticker AQP. Just to bring a little bit of business highlights for the first half year. I'm pleased to recap some of the highlights that you have been able to read in the information sent out during the first half year. I'm especially pleased with the successful completion of the trials with Singapore National Water Agency called PUB, where we demonstrated good results for a 12 months continuous operation benchmarked against the parallel operated commercial membranes. Here, we used our Aquaporin Inside clear membranes and the data confirmed 20% energy savings, which is quite high, having in mind that reverse osmosis technology is a high energy-intensive operation. And this was done while keeping all the strict water standard requirements that are needed for operations like this. Likewise, I'm pleased that the forward osmosis system, pilot systems have been secured for a contract with Trinity College in Dublin, where they will explore more of the opportunities that our forward osmosis technology will bring. And finally, as a highlight, our good collaboration with Gallo in the United States continues, and we are continuing the positive results on the pilot trials that we are in the middle of. With regard to recent events, we have adjusted our revenue guidance where we have lowered the revenue guidance to the range of DKK 40 million to DKK 50 million coming from a range of DKK 60 million to DKK 80 million. This happened on the 11th of August. Adjustment is a result of lowering inflow of orders in 2025 as well as a delay in certain orders. Updated range includes already recognized revenues and firm commitments from other customers. In line with previous years, the large part of the revenue is expected to materialize in the second half of the year. Now I will hand over to our CFO, who will give you the financial headlines.

Thank you, Ulrik. So as we have reported this morning, we have a recognized revenue of DKK 9.1 million for the first six months of 2025. This is compared to DKK 29.2 million last year, and hence, one of the reasons why the revised guidance, the inflow of orders in first half has been below our expectations. Our EBITDA before special items was a loss of DKK 28 million. This compares to a loss of same period last year of DKK 33.5 million. So we are seeing an over year-over-year EBITDA and therefore, improvement on our results despite a drop in revenue. The cash position at the end of June was DKK 29.4 million. We had same time last year, DKK 103 million. And end of the year, we had -- end of year 2024, we had DKK 77.3 million. This is also one of the reasons why we have -- in the guidance adjustment, we also announced that we are initiating a strategic review together with a corporate finance bank. This is to make sure that we have sufficient capital in the years following 2025 to support further growth. And we are reviewing multiple opportunities to raise cash. This could include debt. It could be equity and/or maybe a strategic transaction with other partners. We are basically looking relatively broad and considering all options that could be of relevance. If I look at the most detailed P&L, revenue seen we had quite a good gross margin for first half also compared to last year. This is predominantly done out of that we have some good orders that were good revenue projects in with good margins to it, but also driven by the fact that our product mix also is different than it was last year. So we are seeing, as we also said before, different gross margin levels from between our three business lines. Looking at our cost base, you'll see overall that we are operating at a total cost base of DKK 41.2 million for the first half versus DKK 52.9 million same period last year. There are some fluctuations with some specific things within this. However, this is a result of many cost actions we've taken previous years and some we've taken already this year. We have already -- as we, of course, have not been -- we were in anticipation of that there could be a risk of us not achieving a high revenue number for H1. We took some actions earlier this year to be in the forefront of this. And in general, we are right now operating with a cost base that is more than 20% lower than at the time of the IPO, also giving us opportunities to actually reduce our burn rate, but also to offset some of this. And it actually also meant that after first half of this year, we are on track with EBITDA despite the shortfall on revenue that, of course, is not to the level that we had anticipated and budgeted for. So after the earnings after tax for us was a loss of DKK 38.8 million versus DKK 42.6 million as -- same period last year. This then leaves us to the new guidance that Ulrik also alluded to that we have sent out on the 11th of August. The key thing here is the revenue, as we said, we do feel very -- we feel comfortable and we're actually very comfortable to be within the range of the DKK 40 million to DKK 50 million of revenue compared to the DKK 60 million to DKK 80 million we had previously. The EBITDA guidance of minus DKK 45 million to DKK 55 million is unchanged. And I really want to emphasize that it is unchanged compared to the initial guidance now together with the annual report in March. And this is all driven by actions already taken. This is all driven by us trying to do things in timely matter. And we do believe we now have the right organization -- right cost base for us to move forward, and we will continue doing our work to deliver this. One key element that if you -- for those of you who have been with us for these calls for a number of years is that I want to say that the revenue for this year is going to be roughly evenly spread between our three business lines, so between residential drinking water, industrial water and forward osmosis market development. As you -- those have followed us for a number of years will know that this is a significant change compared to previous years where especially residential drinking water has had the majority of it. So we are really seeing -- even though we would love to see more development, we are seeing traction within all three of our business areas. With that, we have -- we will conclude the works with this, and we much prefer to have it in a good dialogue with you guys. So we will hand it back to you, operator, for questions, and we're happy to take any questions there may be.

[Operator Instructions] As of right now, we don't have any questions in the conference side. I'd now like to hand the call back to Ulrik for final remarks.

Thank you, moderator. And with that, I would like to thank all new participants in this call. And also a big thanks to our shareholders, to our customers and to our committed employees who together with us -- who all are together with us on this journey. What I'm looking into now is a good backlog for the second half of 2025. Although some of the orders in 2025 have materialized lower than expected. And I'm a firm believer that Aquaporin has a foundation in terms of pipeline and potential for the coming years. Thank you all for listening in on our half year interim report broadcast. Thank you.

This concludes the call. You may now disconnect.