Cloudberry Clean Energy ASA (CLOUD) Earnings Call Transcript & Summary

Hi, and welcome to Cloudberry Clean Energy Q1 2025 Presentation. My name is Anders Lenborg, and I'm joined today by our CFO, Ole Kristofer Bragnes. We will take you through a short presentation and it's also possible to post questions. So please use the q&a function and we will try to answer as many questions after our short presentation. The agenda today starts with me giving you some highlights and introduction to Cloudberry. Ole-Kristofer will take you through the financial numbers before we open up for questions. Starting off with the highlights of 2025. We have increased our revenue and EBITDA from last year. We have also realized the power price well above the system price in the Nordics, and we are proud to quarter after quarter realizing higher power price than the system price in the Nordics, and we will get back to the reasons for that in the end of the presentation. As you can see here on the right-hand side, our production is increasing. Also the installed capacity is increasing. And we are happy to see that our team in Denmark is up and running. We have both a development team and asset management team on the ground in Denmark. And we are now working on new projects to increase our footprint in the Danish DK1 attractive price area. We have also worked on our hydro portfolio in Norway. We have just started to construct a new hydro power plant outside Skovgaard in the attractive price area, NO2 and we will see more hydropower projects and more hydro permits application coming into our portfolio over the year. And last but not least, we are very happy to see that all our Siemens Gamesa turbines now is returned to service, has returned to service at the Odal wind farm. And this had an impact on our Q1 numbers, and we'll also have an impact going forward. So very happy to see that the wind farm is up and running approximately a year after we had an incident last March. Before going into the numbers, let's have a look at Cloudberry Clean Energy. We have developed a platform that developed all and operates renewable assets in the Nordics. We believe strongly in being present in all the phases of our renewable project that we have the opportunity to develop our exclusive portfolio, our exclusive backlog projects from greenfield. We can develop them and when they are permitted, construct and put them into production, and also manage our assets as we also managed a lot of third-party assets in the Nordics. This gives us a unique flexibility to always focus on where we see the best returns for Cloudberry. Another important side of our project is that we have different technologies. We have hydropower, wind power, solar and BESS projects, and put these together, you will have a very stable production profile throughout the year, much like a baseload profile. And this is also important for us to have this stable project portfolio, generating long-term cash flow for Cloudberry. And as you see here on the right-hand side, we have developed a project portfolio in the most attractive price areas in the Nordics. We have believed in being in the price areas where you see that the interconnectors were coming, interconnectors to the U.K., to Germany to the Netherlands, to Poland and so forth. And we see also now that these are the attractive price areas when it comes to continued demand. We have our projects close to new data center projects to new logistic hubs in south of Sweden. We are closely working with the Power to X industry in Denmark and seeing now that it is very important to develop project that is attractive the demand side, and we can offer a stable power production with our mixed technologies. And all this, all the different projects, different technologies and price areas gives us this unique flexibility that we strongly believe is important also going forward. And diving into the production portfolio, we have created, as mentioned, a diversified production portfolio, diversified technologies, price areas and countries. And we have now over 1 terawatt hour in production, generating cash flow to the company. At the same time, we have been able to develop our exclusive development portfolio, our backlog. And here, you see on the left-hand side how this backlog has grown over the years, with both projects that we work on to apply for a permit, but also we have a permitted portfolio. And this has been growing over the years. And we see still -- it's very important for us to keep focusing on growing this portfolio. As we also have, as you can see here on the right-hand side, managed to divest and also to sell some of our projects. And we have shown over the last years that we have a strong value creation out of our portfolio, where we have sold a project or farm down projects generating at NOK 500 million gain over the last years. And this recycling, we will also see us continuing going forward. So both having a production portfolio, an exclusive development portfolio is important for us. As mentioned, going forward, I think we will continue to see that we managed to develop attractive projects. We have now a larger footprint in Denmark with a new 160 GVH portfolio of producing assets. DK1 being the strongest price area in the Nordics. We will continue to focus on that, and also continue to focus on developing new projects like the Nees Hede project, as you see here, it's a wind solar BESS project and we are working on this. And hopefully, you will see FID on this project later in 2025. In Norway, we have done some hydropower project and also hydropower sales, and generating more than a 2x book value on the sales of these hydropower assets. We think that the hydro power segment will be strong also going forward and we will continue to focus on building a larger development portfolio of hydro projects, so we can have more in our energy mix, but we can also recycle when we see that we get the right price level for our project. In Sweden, we will continue to cooperate with the large land owners like Holmen, continue to focus on larger projects. And also here, as you see, we have a battery storage project in Sweden, SE3, which is very important when we also see how the market and the balancing market is developing. So here, we are building -- constructing a storage project with a lot of different opportunities and value stacking this project. So looking forward to the future, we have our 2030 strategy. We work on this strategy and putting profitability first, very important for us to show that we can deliver profitable growth that will continue to be our focus. It will also be -- continue to be our focus to stay well financed, to have a strong balance sheet to always be financed for our projects, and also to keep on developing our team to develop our platform and continue to deliver projects on time and at cost or below cost. So more of the same is summing up our strategy going forward. Before I hand over to Ole-Kristofer here, just a short update on our ESG and HSE.We have had no damages in Q1. We have had no whistle blowing incidents in Q1, and we will continue to focus on our safety culture in Cloudberry. And here on the right-hand side, you see a drill from our Sundby Wind farm in Q1. So with that, I hand over to Ole-Kristofer, and he will take you through the numbers, and then I will come back afterwards. Thank you.

Thank you so much, Anders. Hi, everyone. My name is Ole-Kristofer Bragnes, CFO of Cloudberry. I am happy to take you to our financial story this quarter. So before we dive into the details of this quarter, it's good to get a bird's eye view of our development in our balance sheet since our listing. When we started out in 2020, we had a relative small production profile and development backlog, and permitted project that this has grown quite significantly throughout our journey, always delivering on projects on time and cost rate, while creating a sufficient producing asset base that we're now able to capitalize on through generating cash flows. That's been very important throughout our journey while we've also been very -- had a strong focus on capital discipline in order to fuel this. So we raised equity at accretive prices throughout this journey. We're being cautious of that, having sufficient debt facilities in place. That's been important for us as we've had that and increase that throughout this journey, while drawing up this debt as we needed liquidity in order to grow further, but having the equity on hand, on the cash balance on hand has given us opportunities to act on what we see has been available to us. And going forward now, as Anders talked about earlier, we have a production profile of around 1 terawatt hour, diversified throughout the Nordics, giving us a great foundation in order grow further. So that's been very important to kind of look at the bird's eyeview here before we kind of dive into where we are for this quarter. And looking at the right-hand side there for Q1 '25, we continue on the trend, but you see a small drop in consolidated equity, good reasons for that, which I'll come back to on the next slide here, but that has to do with the transaction we just did with Scovgaard. So while the overall equity has gone down slightly. The equity to the controlling interest, i.e., the shareholders of Cloudberry has increased since '24. So diving into the Q1 '25 balance sheet financials. We can start out with taking that equity side. So we see that equity is somewhat down quarter since quarter year-on-year, but the share to controlling interest has increased. So when we acquired the remaining 20% of the Odin portfolio from Scovgaard, which we utilized to reinvest into Cloudberry. But when we acquired that, this is a transaction with the equity. So with the noncontrolling interest. So we acquired a noncontrolling interest from our balance sheet and through our cash balance and the asset side. So this reduced noncontrolling interest from NOK 760 million in Q1 '24 to only NOK 131 million in Q1 '25. So the equity to the controlling interest has increased both in nominal terms and also important in book value per share as we print the shares to Scovgaard at NOK 17 per share in order to finance this transaction. And I urge you to see the quarterly report for more information on how this transaction influences the financial on the balance sheet side as this is -- this purchase price allocation is quite technical. So more on that there and reach out if there are further questions. The cash side, we have a strong cash position and our debt has been increased somewhat as we drawn debt in order to finance the -- increase our liquidity for project that has been equity financed. And we have still the facility in place of NOK 2.2 billion, where we are currently at NOK 200 million approximate undrawn from our local savings banks and very good dialogue with them to potentially increase that further if need be, and also in accordion to NOK 300 million that we could utilize. And of course, it's been important to us to hedge our debt positions as we've grown and reporting date, we still have above 80% of our proportionate interest bearing debt is fixed at long-term agreements at an all-in rate of below 4% and average tenure of approximately 10 years. And that's a strategy we'll continue on doing as we withdraw the debt. Reverting back to our liquidity and commitments overview. We show this slide every quarter now, and it's good to see how -- what the liquidity is available to us in order to continue to grow. Since last quarter, we've paid some of the CapEx on Sundby and Munkhyttan as they are completed. Still some small CapEx items left in relation to tiding the site and grid, et cetera. And also added on the Ullestad project, which Anders talked about, the new hydro construction projects. So NOK 93million now and remaining committed CapEx in Calgary. On the other side, Kvemma, the hydro project, which was completed and taken over by Cloudberry last summer, that's still equity financed. We haven't needed to -- we can draw that, that one need be. But we still have that equity finance as we don't want to draw that debt and pay interest on it when we have sufficient available liquidity, but that can be on a very short notice. And again, like I talked about on the last slide, we have some remaining debt facility liquidity there in place, NOK 140 million approx after doing the Kvemma debt. And we have an accordion and strong relationships with the local savings banks and other banks if we need to increase that facility further to fund remaining portfolio and continuous growth. But we still remain intact with the notion that we want to be 50-50% equity and debt in the project. We don't want to go beyond that. And then we're reverting over the P&L side. We see the same story as we did in the balance sheet, just the income side of it. So we've had strong growth in our journey since listing and as we have more and more assets producing. We have the cash flow for production, selling the power in the Southern prices generating high power prices. That's been good to us. But also very important is the capital recycling and also the value creation from our development side has been very important and fuel Cloudberry's growth in our financials. So we've had internal sales of Hornsund and Bommunketan been completed in ''22 and '24, generating strong value creation in the development or projects segment, which you can see in the proportion of financials. All our third-party valuations, showcasing the value created there in the development phase, but also to capital recycling on the hydropower side in '23 and '24, so showcasing the value of our assets. So Capital recycling has been important to us and will be important to us in order to fuel growth as profitability is very important. And profitability over growth remains an intact story like Anders talked about. And also the value creation that's been done in the project segment will continue to be a strong factor for Cloudberry, although lumpy as it will tie over to project realizations. More on that later. Looking at the Q1 financials. We see we have an increase in proportionate revenue and EBITDA on the back of higher power-related revenues. And taking one step back again, proportion of financials that reflects the ownership stake in all assets. Notably, that includes Odal and Forte, where we have a minority shareholder, where we are the minority shareholder and the ownership adjustment in the one portfolio. So looking at that in relation to consolidated revenue, we see a slight decrease in power related revenue that's primarily caused by Denmark, where we had lower wind resources over the quarter. And again, as Odin is fully consolidated and Odal and Forte are not included with the -- only included with the net income and not the EBITDA and revenue in the consolidated financials, then the lower wind resources in Denmark affects consolidated figures on a relatively much higher level than the proportionate financials. So that's the main reason why they have the differences there between the consolidated and [indiscernible] portions. And just to clarify there is an acquisition that we completed over the quarter in Denmark, which Anders talked about. That's finalized at quarter end. So you do not have any P&L effects notably in this quarter from the revenue generated from the 160 GVH we acquired, and that will continue to generate cash flows as we from the next -- go on from the next quarter. In terms of the segments, commercial segment remains an important financial driver for Cloudberry. This is where we sell our electricity. Power production has increased to 194 from 173. And as this is a winter quarter in Q1, wind power remains the majority of our production, and that has over the quarter-on-quarter mainly due to Odal ramping up production, which is to see. And then [indiscernible] also being completed, while Denmark has shown less production over the -- this quarter compared to last quarter due to lower wind resources, but more on that in the quarterly report of interest. And like Anders talked about, all turbines in Odal has passed return to service in accordance with Siemens Gamesa, and production will continue to ramp up through '25 as final repairs inspection be completed. Average price of NOK 0.71 compared to NOK 0.73in Q1 '24, much higher than the system price, showcasing the favorable position in the southern price areas in the Nordics, which has been the strategy from day one. On the right-hand side there, we showcase the last 12-month figures, and this is the same comment that we had the last quarters, but just to clarify again, we've had accretive asset sales in both '24 and '23, which you see in the Q1 '24 LTM and the Q1 '25 LTM. The gain in '23 was a nominal larger gain at 2x book value compared to the gain we had in '24 at 2.3x book value, more accretive sale, but less nominal value. When you deduct this, we have growth in the LTM figures as well. And lastly, on the remaining segments. We have the project segment will start there. Revenue has decreased with NOK 6 million, but that's due to on Montabeing transferred to the commercial segment as they have been completed. We showcased that in Q4 '24, realizing a strong gain of approximately NOK 2 million per megawatt and asset development gain there recording the project segment, representing the value creation for the projects. Excluding this EBITDA is comparable last -- with the last quarters. And it's important here again, that is driving the projects forward, increasing the backlog. That's been -- that's the main value driver for the project segment, and you'll only see that value creation in the financials as the projects are realized. For the Asset Management segment, that's been, has had a great increase now in -- with the Skovgaard transaction, increasing the solar capabilities in Denmark having a Danish foothold is very important to us and the team will continue to manage the Odin portfolio as well, which they have been. So we have a great foundation now to continue to grow the asset management side in Denmark. And lastly, corporate segment is in line with previous quarters and also, please note there is a noncash cost here related to the warrants of NOK 4 million, which is booked over the quarter. So all in all, a good quarter for Cloudberry. And then reverting back to you, Anders, for our markets and summary before we take some Q&A at the end. Thank you.

So coming in for landing here, just a couple of slides. Here, you see Nordic long-term power price. And as you see, Cloudberry has delivered well above the system price. So quarter after quarter, we managed to get the better price than the Nordic system price, and that is due to like what Ole-Kristofer said, the price areas that we are in, but also that we have managed to entering to PPAs on attractive levels. And that's also part of our strategy is to be well financed and we don't need to enter PPA when we do our FIDs on the projects, we can finance the projects, and we have no requirements for PPAs. But of course, if we see that we get attractive prices for our assets in the most attractive price areas. We have entered into PPAs, and we will continue to also do that as long as it is on attractive levels for Cloudberry. But that's also part of the flexibility that we have in Cloudberry that we can choose to enter into PPA when we think it's right and the level we think is right, and we don't have to do that to finance the construction projects. So here you see the Thema Nordic power price and what we have delivered over the last quarter. To sum it up, we think that we are perfectly positioned. The strategy is working. We like to stay Nordic. Nordic has -- Nordic countries has fantastic resources when it comes to hydropower when it comes to wind and so forth. And we have a lot of projects. We have a lot of opportunities, and we will continue to focus on delivering profitable growth. We will continue to develop our platform with all the great people. We will continue to deliver projects, development projects at time and cost. And with all that, and the market also developing in a positive way. We believe that we are perfectly positioned also for the future. So thank you so much for listening into our presentation. I could see that we have got some questions, and I will hand over the word to Ole-Kristofer who will answer some of them, and I will also get back to some of the questions.

Thank you, Anders. I can start out with taking 2 more detailed questions. So the first one is Ulestad. We reported the NOK 68 million in CapEx there. Someone has been correct that saw that we only had NOK 65 million in contract commitment, which is which is reported in the notes. The difference in the NOK 3 million is what we have added on as internal contingencies and so forth, which is customary for these kind of projects. So that's just the contingency on internal hours, which is a difference there. That cost is all in. That includes the entire EPC contract for Cloudberry, and it's -- and it's a good way to showcase our project and come directly from pipeline and into project under construction and not necessarily through the backlog as we have a vast network and also with entrepreneurs, et cetera, that want to work with us, and that's how we go this project. Also a question about capture rates in Denmark, how that performed over the quarter. Capture rates are hard to estimate. How they will -- how they will develop going forward. There's a lot of very reputable analyst firms that does this, which I'll hand over to if you have more questions about capture rates. But we see maybe Denmark capturing, say, 10%, 15%, 20% discount to the area price, but that will vary from quarter-to-quarter, depending on the resources and other external factors. So not something we can be very precise. And those were the 2 questions I recorded Anders. Do you have others?

I have got a question here for balancing risk and what we how we handle this in Cloudberry is that we do not have any balancing risk in our portfolio in Norway and Sweden. We rather try to look at this balancing cost as an opportunity. [indiscernible] BESS project in Sweden, Nees Hede also with battery storage in Denmark. And we have several other projects with the battery storage and how to turn this into something positive in both Norway, Sweden and Denmark. So balancing costs and risks are very low in the Cloudberry portfolio. And another question was [ Bjornharsberg, ] which is a Swedish wind project we have developed. It has been also some focus on this project in the media. We are continue to developing the project. And we hope to take the next step in the permitting process later in 2025, and it's then work in progress in Cloudberry. Thank you. I think that was it. That was the questions we had, and thank you so much for attending and listening to our presentation, and have a nice day. Thank you.