Kaldvik AS (KLDVK) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Q1 presentation for Icefish Farm. I'm Guðmundur Gíslason, and joining me today is our chief financial officer, Róbert Róbertsson. We'll be walking you through the Q1 results. To begin with, yes, we harvested roughly 4,000 tons during the quarter, though it was a tough one. We had a generation in Fáskrúðsfjörður, and fortunately we saw experienced winter wounds on the fish, and we also found it necessary to speed up harvesting and to bring harvest rates down. Even so, we delivered approximately NOK 28 million in EBIT for the quarter, and roughly 7.1 NOK per kilo. On the other side, the biomass at sea keeps growing, and versus 2023 we now stand at about 30,000 tons compared with 6,200 tons at the close of the quarter. We're also seeing fairly dramatic and strong results in smolt production by the end of the quarter, which gives us optimistic improvements both in the number of fish and in the condition of the fish we can put out in 2024. We're additionally examining the Icelandic market with respect to listing the company on the Icelandic stock market. So we will do a listing. The company will remain on the Norwegian growth market, but will now also list on First North.

That's going to take place on May 28 at our Capital Markets Day, which we'll be holding — we'll invite investors to join us in Eskifjörður on the East Coast to experience it, see the sights, hear the presentations from the company, and get the general outlook going forward. The outlook going forward, on the other hand, is genuinely, genuinely impressive. We see an opportunity for roughly 21,500 tons this year, which is a massive jump from about 4,000 tons last year. We anticipate improvements in the biology and the health of the fish we're harvesting in Q3 and Q4, with better harvest rates. The rise in smolt versus last year, and the condition of that smolt as well, is really exciting, and we're looking forward to beginning the smolt transfers this year. I'll now hand over to Róbert to walk through the financials.

Good morning, and thank you, Guðmundur. I'm Róbert Róbertsson, Kaldvik's CFO, and I've put together a short overview of the Q1 financials. To begin with, our financial health is still robust, with an equity ratio of around 66%, consistent with prior quarters. Total assets rose by 200 million NOK — 200 million NOK — over the quarter, while total liabilities went up by 70 million NOK, chiefly because of CapEx investment and working capital. The book value of our biological assets is stable versus last quarter, at roughly 1.3 billion NOK at quarter-end. Here you can see a high-level overview, or an analysis, of our net interest-bearing debt across the quarter. Net interest-bearing debt rose by 136 million NOK in Q1. EBITDA came in at 62 million NOK. We harvested 4,000 tons, a bit under the guidance we gave in the Q4 presentation. Our site in Fáskrúðsfjörður was harvested out during the quarter, as Guðmundur mentioned. And those sites were affected by winter wounds and low harvest weight, which hurt our cost levels and price achievements in the quarter. That said, seasonal price increases partially offset this. Price achievement came to 85 NOK per kilo, up from around 77 NOK per kilo last quarter.

Working capital net investments, especially in biological assets, came to 47 million NOK. CapEx investments totaled NOK 64 million for us, and throughout 2024 we're maintaining our guidance of NOK 290 million in CapEx investments. Financial items were NOK 38 million, largely driven by NOK 32 million of interest expense. Lastly, currency movements affected our interest-bearing debt, pushing net interest-bearing debt up by NOK 49 million in the quarter. Icefish Farm has full financing through 2025, with a bank facility of EUR 156 million, and net loans from the bank syndicate stood at EUR 117 million at quarter-end. Everyone here at Icefish Farm is delighted to announce our intention to carry out a listing of our shares on the Icelandic market or Nasdaq First North in Iceland. As Guðmundur mentioned, this comes in addition to our existing listing on Euronext Growth in Oslo. Approval of the dual listing is expected on the same date as the planned Capital Markets Day, the 28th of May, with the first day of trading expected the following day, the 29th of May. This relates to the dual listing and the contemplated dual listing's impact on the company's total number of shares outstanding.

On the right side of this slide, you'll find the agenda for Capital Markets Day, which is going to take place in Eskifjörður on the East Coast and will be streamed live from our website as well. That's all from me at this point. Thank you.

Thank you, Róbert. This is going to be an exciting event. I'm moving over to land operations, and as I mentioned before, the land results have me genuinely pleased. The enhancements we've been working through in recent years, along with the top-of-the-line smolt facilities we've built up, are now delivering better outcomes in the salmon farming itself. So the strengthened and improved production plans, plus extensive training for our employees and quality controls, have lifted production. We're continuing to improve, and on the left side you can see a photo of the smolt facility we constructed last year in Fiskalón. Those facilities have really settled the environment down for the fish, and for the employees too, along with better control of feeding and water quality and densities and all the key factors needed for a good, healthy smolt. We can definitely see the improvements through the testing. We have a quality team at each facility to test the fish and check how they're doing, and we're seeing great gains in skin health and the fins and gills and other important factors for fish to survive and thrive in Icelandic conditions. So we're also on the East Coast, or Land North in Reyðarfjörður, the facility we built up almost from the ground again in 2020.

Facilities there are still being upgraded. The new house has been delayed because of winter conditions and other factors, but overall it is now running at full capacity. The snow has melted, and we expect to have fish in that house in the autumn. This marks an important step — it raises the volume of smolt we can produce on the north side, at Land North, and it also supports the all-in, all-out strategy along with better conditions for the fish to grow well and truly deliver what the salmon is capable of. So the release of Generation 24 is approaching, getting underway over the next two weeks, and we are seeing good quality and really looking forward to it; compared with the 5.4 million smolt we put out in 2023, we expect an increase this year. That was last year's step down. We had previously risen to around 6.5 million, but because of quality and other factors we brought it down, and now it is rising again, with a much more robust smolt that we look forward to transporting to sea. On the other hand, at sea we have had a fairly normal winter.

The temperature was pretty normal, and conditions regarding storms and so on were normal as well. No, we didn't have anything like extreme events this winter. But unfortunately, owing to—we'd say, most likely—smolt quality at the outset, the generation we were harvesting at that site in Fáskrúðsfjörður hadn't shown good results from the start. And fortunately, we needed to step in earlier and harvest wounded fish at smaller, lower average weights, as we indicated in Q4. And we are, yeah, looking forward to beginning to harvest better quality going forward. And the program on the smolt side too—we've adapted our vaccine, and we're also still using the ISA vaccine to protect that part. And we have 7.4 million fish in the sea. That's a great increase from last year, so 5.6. Those are good generations, and we're going forward on the outlook that we start harvesting generation 22 in autumn, and then also the spring generation 23. So the big smolts we put out in 2023, they've been in the sea for around, yeah, 10 months now, and we begin harvesting them in Q2 and Q3. And we expect improved biological performance on those.