Kaldvik AS (KLDVK) Earnings Call Transcript & Summary

Good morning and welcome to Q1 presentation of Ice Fish Farm. My name is [indiscernible]. And today with me is Robert Robertsson, our Financial Chief. We will go through the results of Q1. And to start off, yes, we had around 4,000 tonnes of harvest in the quarter, but it was challenging. We had the generation and [indiscernible], we fortunately had experienced winter wounds on the fish. And also, we needed to accelerate harvest and lower harvest rates. And -- but still, we managed around NOK 28 million in EBIT in the quarter, and we managed around NOK 7.1 per kilo. On the other hand, the BMS in the sea is growing. And compared to 2023, we are up to around 30,000 tonnes versus 6,400 tonnes, in end of the quarter. And we also see quite dramatic and good results and smolt production at the end of quarter, giving us optimistic improvements and both number of fish, and the condition of the fish that we can put out in '24. We are also looking at the Icelandic market, regarding listing the company in the Icelandic stock market. So we'll do a list, the company will still be in Norwegian growth market, but also now to listing in the first [North]. This will happen on the 28th of May, during our Capital Markets Day, that we will keep -- invite investors to come over and ask you further on this cost. And experience and see the sites and get the presentations from the company and general outlook going forward. The outlook on [indiscernible] had going forward is really, really impressive. We see a possibility to have around 21,500 tonnes in the year, which is a huge increase from last year's around 4,000 tonnes. And we expect improvements on the biology and the health of the fish, that we're harvesting in Q3 and Q4 with better harvest rates. And the increase of smolt compared to last year and also the condition of the smolt is really exciting, and we're looking forward to starting the smolt transfers this year. I'll now hand over to Robert to go through the financials.

Good morning. Thank you, [indiscernible]. I'm Robert Robertsson, the CFO of Ice Fish Farm, and I prepared a brief overview of the Q1 financials. First of all, our financial health remains robust with around 66% equity ratio, which is consistent with previous quarters. Total assets increased by NOK 200 million, during the quarter and total liabilities by NOK 70 million, mainly due to investment in CapEx and working capital. The book value of our biological assets remains consistent or stable from last quarter, and amounted to around NOK 1.3 billion at the end of the quarter. And here, you can see a high-level overview or an analysis of our net interest-bearing debt throughout the quarter. Net interest-bearing debt increased by NOK 136 million in the first quarter. EBITDA reached NOK 62 million. We harvested 4,000 tonnes. So it was slightly below what we guided in Q4 presentation. Our sites in [indiscernible] out to the quarter like [indiscernible] mentioned. And these sites have been influenced by winter wounds and low harvest weight, which negatively affected our cost levels and price achievements. In the quarter, however, this was partially neutralized to seasonal price increases. The price achievement reached NOK 85 per kilo, with an increase from last quarter when it was around NOK 77 per kilo. Net investments in working capital, particularly in biological assets reached NOK 47 million. Our CapEx investments amounted to NOK 64 million, and we are keeping our guidance of NOK 290 million in CapEx investments throughout the year '24. Financial items amounted to NOK 38 million, mainly due to interest expense of NOK 32 million. And finally, currency fluctuation impacted our interest-bearing debt and increasing that interest-bearing debt by NOK 49 million during the quarter. As farmers fully financed through [indiscernible] 25 with a bank facility of EUR 156 million. And the net loans from the bank syndicate amounted to EUR 117 million at the end of the quarter. And we at Ice Fish Farm are very pleased to announce that we intend to carry out a listing of our shares on the Icelandic or [indiscernible] First North market in Iceland. Like when we said, this is done in addition to our current listing on Euronext growth in Oslo. The delisting is expected to be approved on the same date as the planned Capital Markets Day, on the 28 May, on the first day of trading is expected the day after, on the 29 May. In connection with the dual listing and the contemplated to [indiscernible] the impact on the total numbers of shares outstanding in the company. And on the right-hand side of the slide, you can see the agenda for the Capital Markets Day, which will be held in [indiscernible] on East Coast. And we'll also be streamed live from our website. That's it for me for now. Thank you.

Thank you, Robert. It will be exciting event. I go over to operations on land. And as I said earlier, I'm really pleased with the results in land. And the improvements that we've been going through last years, until [indiscernible] smolt facilities are now showing better results on the farming of the salmon itself. So the [indiscernible] and better production plans and heavy training of our employees and quality controls have improved the production. We are still improving. And on the left side, you can see a picture of the small facility that we built up last year in Fiskalón. Those facilities have really calmed down the environment for the fish and also the employees and better control of, yes, breeding and water qualities and densities, and all the important factors to have a good, healthy smolt. And we certainly can see the improvements with the test. So we have a quality team in its facility to test this and see how they are. And we see great improvements on skin health and the fins and gills and other important factors for fish to live and thrive in Icelandic conditions. So we are also on the North Coast and land North and Rifós. The facility we built up almost from ground up again in 2020. We are still improving facilities there, with the new house that has delayed due to winter conditions and dollar factors there. But in general, now it's in full action, the snow has melted and we hope to have fish in this house in the autumn. And this is an important step, both increasing the volume of smolt. We can produce on the north side, on land north, and also the all-in, all-out strategy, and better condition for this to have a good growth and really deliver what is capable of the salmon. Therefore, the release of the [indiscernible] 24 is coming up, starting up in the next 2 weeks. And we are seeing good qualities and really looking forward and compared to the EUR 5.4 million smolt we put out in '23, we see an increase this year. And that was last years that down. We had earlier gone up to around EUR 6.5 million. But due to quality and all the factors, we took it down. And now it's going up again and with a much more robust smolt, that we are looking forward to go and transport to sea. Then on land on the other hand, or sea, we were experiencing quite normal winter. Those [indiscernible] were quite normal and conditions also regarding storms and such or yes, normal. We didn't have any extreme events this winter. And -- but unfortunately, due to, we would say most likely small qualities in the beginning, generation we're harvesting out at that site and [indiscernible], had not shown good results from start. And fortunately, we needed to start in earlier, and harvest wanted fish with smaller lower average weights, as we indicated in Q4. And we are, looking forward to start to harvest better qualities going forward. And the program also from the small side, we are [indiscernible] our vaccine. And also, we are still using the ISA vaccine to protect that part. And we have 7.4 million fish in the sea. This is a great increase from last year, so 5.6%. Those are good generations. And we are going forward from the outlook, we are starting harvesting generation 22 autumn, and then also the spring generation 23. So the big smolts we put out in '23, we will have been in the sea around 10 months now, and we start to harvest them in Q2 and Q3. And we expect improved biological performance on those. But still, in Q2, we are cautious both on cost and due to the volume and also the just end of the [indiscernible]. And the cost and price achievement, we are cautious on that one. But looking forward to Q3 and Q4, second half of the year, the ramp-up of production through '24 is expected to be positively on our cost. So competitiveness on cost will kick in, in Q3 and Q4. And the utilization of our organization with all the equipment and specialists and team and harvesting plant and [indiscernible] facilities on sea to maintain the high standards, and structure to reach the 30,000 tonne harvest and our investment program and production strategy. Then on the harvesting and sales side, things station was updated quite heavily last year. So we managed to reach up to around 20,000 -- 7,000 fish in a single shift. And we are also increasing now the capacity to have enough capacity for the volume increase in Q3 and Q4. Sales we strategically secured fixed sales contracts for about 40% of our Q2 production. That's mainly to keep up the flow of Salmon yo the customers, as they demand weekly shipments. And then on the quality side, we have our certifications for our retailer in the U.S. and had also the certification for sustainable Salmon since 2014. And we also have been implementing ASC during the winter and Nordics look quite good, and we expect to have that certified in Q3. That really opens the door for many customers that have started to demand ASC. And this was not too much of a job for the company to implement it as we've had these standards from stuff. But there are items there, that have now been implemented such as stakeholders and communication with the people that are valuing around us, and so have a good dialogue with the environment and the stakeholders. So to sum -- yes, the market has been great for Salmon. And at least the spot prices have been really good, and we look good going forward. The future growth, we have a license application still in sales were of 5,000 tonnes, which are now more optimistic to reach us the licenses that were given out on the West Coast in Q1 and start of Q2. I have indicated that the process is now in action, and we are next in line, to have that in place. The investments, as Robert mentioned, is end up around EUR 290 million this year, and that's a part of the investment program to reach a capacity of 30,000 tonnes. Outlook, as mentioned before, is [31,500 tonnes], that's up from 4,000 tonnes last year, and minimum harvest in Q2 to [indiscernible] to grow and have a good size in Q3 and Q4 and onwards. Sustainable farming, as I mentioned, certifications and to be a responsible farmer is a key factor to have a good communication with stakeholders. And finance and business development. We're really pleased to open the doors and invite investors on these coast [indiscernible] asked to see the operations and have some presentations and chat about how we are doing and where the future is going. And then we do a listing in Iceland. We started listing the company back in here, it was 2020. And we have now shown that -- seen that there is quite interest from Icelandic investor environment for Salmon farming. As Salmon has really proved that it's an important pillar in the economic -- economy of Iceland. Total goods sales last year amounted to 4.2% of total with Salmon. So -- and that's -- we are just around 40,000 tonnes last year, and we have an intention to go above 100,000 tonnes in total. So this is an important part, and we are also located in areas that have possibilities for growth in both equipment and people and good farming sites. So we've seen the interest grow and also just to be more accessible to the Icelandic investor community, as there are different types of customers or investors that are pension funds and long-term funds, that really would appreciate that we have the company listed in Iceland. And also the main operations are in Iceland. So to listing is a natural step in the right direction. We would hope and really look forward to see the interest going forward on 28 May. And that sums up. And if we have some questions, please use the chat or speak up.

And a question from Sander Lie. Can you say anything about now how much smolt expect to release to see this year? We are a bit cautious of giving out the number of smolts, but we see that the goal of reaching a stable 7 billion to 8 million smolts, this is getting closer, and the situation in the stations are looking good.

We have a question here. What's the estimate of harvest volume split between Q3, Q4 in '24?

Yes. We haven't given that out yet, but it's quite evenly reaching around 2,000 to 3,000 tonnes harvest volume per month. So that in total is around 6,900 volume, but the split on Q3 and Q4, as we are not doing that out at the moment. And so periods share was low in Q1. The amount of [indiscernible] was high. And also we -- we saw that the market was base that was not superior was quite, yes, quite a lot of [indiscernible] in the market. So we were yes, not too sad about the price we achieved on that fish. But in general, it was too high, and we don't want to repeat that one. Then there is a question, how much is your quarterly fixed cost not being allocated to biomass in [indiscernible]? all fixed costs are allocated to the biomass [indiscernible]. And regarding the long-term cost with [indiscernible] Target, the cost level in the company has been stable and in line or very close to the normal cost level, which is -- yes, the normal cost level in Norway, if you will. But we expect the economics of scale to play a big part, especially after -- or in Q3 and Q4 and onwards. So we expect the cost level to be normal. And I don't think that I could go into specific numbers here, but we haven't seen yet the full effect of the economics of scale. No other questions? Okay. That seems to be more questions, and I thank you really for participating today. This is a great journey we are on, and we're looking forward to meet some of you in [indiscernible] as possible and the tour listing part going forward and might Icelandic investors to join the road going forward. Thank you, [indiscernible] see you again, next time.