Kaldvik AS (KLDVK) Earnings Call Transcript & Summary

Good morning, everyone. Roy-Tore Rikardsen here, CEO of Kaldvík, and it's a pleasure to welcome all of you to the presentation of our results for the first quarter of 2025. Our CFO, Róbert Róbertsson, is with me today, and the two of us will take you through the main highlights and developments of the quarter just passed. Once the presentation is done, we'll open things up for questions, and as usual, you're welcome to send those in by email. You're all familiar with this. Please take a moment to read through it. Let's move on to the agenda. We'll start with some key highlights from the first quarter, covering operational performance, financial results, and a few strategic updates. Then we'll give you a brief outlook and summary before we finish with a Q&A session. During the first quarter, we harvested 6,383 tons, delivering solid operational performance with an EBIT of EUR 1.54 per kg and an average price achievement of EUR 7.44 per kg. Looking ahead to 2025, we're keeping our full-year harvest guidance at 21,500 tons, with around 1,200 tons expected in the second quarter, and we intend to release 7.5 million smolt to support future growth. On the financial side, a process was initiated to finance the company with a long-term financing package of EUR 230 million.

On the strategic side, we've made meaningful progress by acquiring key assets. As for the new licenses in Seyðisfjörður, those are still awaiting approval — Róbert will return to that topic, along with the financial updates, a bit later. Turning to our land-based farming, with spring approaching we're recording all-time-high figures and biomass at those facilities, which places us in a solid position to hit our 2025 goal of releasing 7.5 million smolt. More than 60% of that smolt is set for an early transfer — meaning ahead of August — and that will assist us in optimizing growth cycles. A significant milestone this year came with the successful opening of our new grow-out facility in Lennart, Rifos, which went into operation during the first quarter. Broadly speaking, production results continue to be robust, with mortality rates down by over 30% year over year in recent years, a reflection of continuous gains in fish health and operational efficiency. In Q1, we harvested 6,383 tons at sea, beating our guidance, largely because of early harvesting driven by winter wounds in the 2023 generation. That boosted harvest volume versus a year earlier and was aided by strong harvest weight. During the quarter, we finished harvesting both the autumn 2022 generation and the spring 2023 generation, marking important operational milestones.

Our 2025 goal of putting 7.5 million smolt out remains within reach, and it's worth pointing out that toward the end of the quarter sea temperatures started returning to normal, which bodes well for biological condition down the road. This quarter — the second quarter — we've begun moving the 2025 generation of smolt into the sea. Looking at the biological outlook for Q2 2025, we anticipate harvesting roughly 1,200 tons while carrying on with the autumn 2023 generation. All in all, we're still on course to hit our full-year harvest target of 21,500 tons. As I mentioned earlier, we also intend to release 7.5 million smolt this year, which will underpin future production and long-term growth. Turning to sales and harvesting in the first quarter, we realized a price of EUR 7.44 per kg, even with a lower superior share of 62%, and 25% of our sales came through fixed-price contracts, which helped us keep pricing stable. Our newly formed sales and trading organization has been working hard on opening up new markets, and we likewise see strong potential in value-added products and in logistics. The integrated box factory is now running at full capacity, and we expect the full effect of lower packing costs to show up beginning in the second quarter.

On top of that, now that we fully own our harvesting facility, we’ve picked up more operational flexibility and control, and those things help us be both efficient and responsive in our supply chains. That wraps up the operational update, and at this point I’ll hand things over to Róbert, who’ll take you through how we performed financially.

Good morning, and thanks, Roy. What we have here are the quarter's highlights, in which we recorded robust revenue growth, better price achievement, and a healthy EBIT per kg. Revenue rose considerably, coming in at roughly EUR 48 million versus EUR 31 million in last year's corresponding quarter. The main drivers of that growth were greater harvest volumes and solid price achievement, even with certain production challenges and a reduced proportion of superior-grade products. Average price per kg climbed modestly to EUR 7.5, against EUR 7.4 in the first quarter of last year. We also delivered a meaningful decrease in cost levels in the quarter. That came partly from scale advantage as harvest volumes grew, and partly from harvesting at one of our better-performing sea sites, which contributed positively to our bottom line, with operational EBIT of almost EUR 10 million and an EBIT per kg of EUR 1.5. Moving to the financial summary, total assets rose by EUR 14 million in the quarter. The main drivers were the purchase of the new box factory and a higher cost balance stemming from drawing on a short-term bridge facility. The book value of biological assets fell by around EUR 20 million.

That drop comes from a lower fair value, heavy harvesting volumes, and weak biological growth in the quarter. Liabilities went up by EUR 26 million, mostly because of drawing on the short-term bridge facility and purchase price payables tied to the box factory acquisition. Those payables were settled in the second quarter using shares in Kaldvík. The equity ratio is still healthy, at 52% at quarter-end. Here you can see a high-level look at net interest-bearing debt, which fell by EUR 8 million in the quarter. EBITDA came in at EUR 12.7 million. Net investment in working capital was EUR -10.5 million, largely driven by high harvest volumes and low biological growth. Total CapEx for 2025 is estimated at EUR 18.5 million, and in the first quarter CapEx investment totaled EUR 4.6 million. Financial items were EUR 3.8 million, with finance cost the main contributor, and the net increase in net interest-bearing debt from the box factory acquisition was roughly EUR 7.1 million. At quarter-end, syndicate loans totaled EUR 155 million out of a total facility of EUR 180 million. We breached certain loan covenants in the first quarter, but we successfully secured a waiver from our financing partners, ensuring continued support and stability.

We’re glad to report a major milestone for Kaldvík on the financial side. Kaldvík has now reached a new agreement with the bank syndicate that amends, upsizes, and extends the debt facilities we already have. The overall financing packages come to EUR 230 million, and EUR 20 million of that is financed via lease basket agreements. This deal shows continuing confidence and support from our financing partners, and the packages carry a comparatively light covenant structure for the first two years, plus a 21-month installment holiday, which gives us valuable financial flexibility during the growth period ahead. As part of the refinancing, there is a condition that the company raise EUR 45 million in new equity, and we are in the process of launching that equity raise with strong backing from our biggest shareholder, Øster Holding. The new capital structure materially strengthens Kaldvík’s financial position and provides a solid foundation for our next growth phase, unlocking profit potential by scaling operations on our existing fixed-cost base. Now to the strategic update. Kaldvík has a vertically integrated value chain, which we have built up through substantial investments in recent years, with our main focus on raising quality and capacity at our land facilities, with good results.

Right now, our production capacity is a steady 30,000 tons per year, and that's the first milestone we're aiming for. We believe we can hit that milestone within the next couple of years. At present, we hold a production license in four fjords. Kaldvík is in the process of securing additional fjords for our license portfolio, Seyðisfjörður. The portfolio would then grow to roughly 54,000 tons, divided across five separate fjords, with 41,000 tons being fertile license and 12,800 tons being sterile license. As we've said before, Kaldvík bought a box factory in the first quarter of this year, and it sits conveniently right beside our processing facility in Djúpivogur. At the same time, we raised our stake in that processing facility, and we now own it 100%. That gives us complete flexibility when it comes to utilization and future development in terms of capacity and quality, so we can handle all harvesting volume in-house. On top of that, the box factory acquisition is expected to deliver roughly EUR 3 million in annual cost savings, or about EUR 0.14 per kg. That lifts our margin directly and improves our overall profitability. Just briefly on the license status in Seyðisfjörður — as I said earlier, we're in the process of obtaining a new license there, which carries a total capacity of 10,000 tons MAB.

The breakdown is 6,500 tons under a fertile license and 3,500 tons under a sterile one. This has been a lengthy process, and it remains one. Our application was submitted back in 2016, though we believe we're now in the home stretch. For us, this new production area represents a significant strategic opportunity — it raises our overall capacity, lets us satisfy growing demands, and gives us greater flexibility in our operations. Even more importantly, this new area will contribute to lowering biological risk at sea, supporting the sustainability and health of our operations. To wrap up, the new license in Seyðisfjörður marks a major step forward for the company, boosting our capacity and flexibility while cutting biological risk. That's everything from me at this point. Thank you. I'll hand it back to Roy.