Vow ASA (VOW) Earnings Call Transcript & Summary

Hi, and good morning. Welcome to VOW's first quarter trading update. I'm here to go through VOW's financial performance for the first quarter. But this presentation I have divided into 4 sections. The first section will be sort of a short elevator pitch on who we are, what we do and the core behind our value proposition. The second will be our financial performance for the first quarter. The third will be the rationale behind the acquisition we did in the first part of the year. And the last concluding part of the presentation will be more about the markets, the trends we see in the markets. So could I may add that also I am supported here by Erik Magelssen, who is the CFO of the company. So in the Q&A session, he will also be supporting me. First about us. We are a company that provides technology. Technologies to eliminate pollution, to enhance circular economy and to mitigate climate change. We are offering patented unique technologies that turn waste and biomass into CO2 neutral energy, decarbonized energy, low-carbon fuels and biocarbon. We have, over the years, delivered technology to many industries, and particularly the cruise industry, where it's a high quality demanding industry. So we have proven over the years that we have been able to standardize a system to make the work of course and to scale the business accordingly. We have a strong backlog of orders and a large install base with leading players in some of these industries that provides recurring business for us. On the right side you see the brands within the VOW Group. Scanship is our, so to speak, the vehicle towards the cruise industry. CHE is that the latest acquisition we made. ETIA and Ascodero the French part of our business and of course also the Biogreen is an important trade mark for some of our technologies. Let's say our key points, we're well established with a proven delivery model. We have now a company with 220 employees and we are operating out of 6 countries. We have 45 technologies solutions that is within our IPR, is our intellectual property rights. We have 117 patents on our technologies. And we have over the years delivered a substantial amount of systems out there. And with the acquisition of Evensen that installed base is increasing significantly up to more than 4,450 systems in many different industries. If you look at our backlog, we'll over the next years deliver 144 systems now. And we also reported our ESG numbers in our targets going forward. Just look at last year, we had 0 serious incidents. And of course we are operating in many different industries, onboard a lot of ships on many different sites. So that sort of a very sort of just comes across as that we are HSE and quality management is part of our business and we are making sure that that we are taking all necessary security measures in our business. We have a net 0 ambition by 2025. And we are working to increase gender equality. And we have a target by 2025 to become sort of 25% on that side. We are coming from a level of 14%. The core behind our value proposition is that we aspire to deliver excellence over and over again. And we are focused -- first and foremost we are focused on our customers, our clients. We are customer centric. It's all about knowing how -- knowing our customers and understanding their challenges and needs. Secondly, is the technology, what can the technology do for our clients. And we need to be predictable when we deliver technology and these complex systems, and we are integrating these systems in many different types of applications. So we need to deliver onsite, on time and on budget. And with the numbers we're providing, it's demonstrating, we're saying that we have a strong delivery model, but the delivery model also contains that important aspect of our business. And we're always committed. And that's sort of rooted in some of our sort of core values of the business that we are responsible. So it's always the focus to deliver and support 100% uptime on our systems. So that's sort of the short elevator pitch on VOW, who we are. Then our first quarter performance, the key takeaways. We deliver -- comparing to the first quarter last year, year-on-year, we have an increase of 31% on our order backlog. In the first quarter, our firm contract is at NOK 1.271 billion with additionally NOK 838 million optional contracts. And that's a 31% increase. Our revenues has nearly doubled compared to last year, ending at NOK 183 million, and that's supported by a strong backlog in our business. We are improving our margins. And compared to last year, it's more than doubled at sort of NOK 23.6 million of EBITDA for the first quarter. We also -- we published our 2021 ESG report together with the annual report earlier this week. And we have sort of the ambition to become net 0 by 2025 for both Scope 1 and Scope 2. We are further -- and I will go more into the detail of the rationales behind the acquisition of C.H. Evensen. But we're -- with that acquisition we are further strengthening our foothold and capacity in landbased. Looking at sort of graphically how the numbers and the development have been now over the last 5 quarters. And as you see now for the first quarter in 2020, you see that landbased is now almost as large as the cruise activities. We've said that before, that's the ambition at a certain time to have sort of as large activity as we have had in the cruise. And of course we see growth opportunities in these markets, but it's nice to see now that that is picking up. In the middle, on the revenue side, you see still the cruise industry is coming out of the pandemic for the fourth quarter last year and the first quarter this year. Still revenue is well below the levels that would have been if the cruise industry were fully back at these times. You see a nice development on the margin side, and our EBITDA margin for the first quarter is 12.9% for the total. And all business areas are contributing to that. So these are -- these numbers are all-time high. And of course, also, we are backed with a strong order backlog that provides sort of very good visibility for our business going forward. Looking at the different business areas; cruise newbuilds, we continue to deliver very strong numbers. Our EBITDA margin in this business area is 24.4%. And that's larger than -- a higher number than we accumulated had for the full year last year. And it just demonstrates our capability to streamline our deliveries, to scale and to deliver on these multiple ship series. So of course we have the effect of the replications in this business -- on the business side. That's also why when we're moving towards landbased, we're also looking at the same type of client base that can come back over year after year and buy almost the same type of systems. And we have even confirmed new contracts. Last on Friday, we confirmed a new newbuild contract. We signed up 1+1. So it's -- we're booking orders as this industry is now resuming, going back into operations. The 47% of our top revenue line is cruise newbuild projects. Of course, there are in this is, of course, some of the retrofit activity as well within the -- reported in this business area. But the major part of the revenue here is delivered to our cruise newbuilds. This picture is taken -- these pictures are taken last week. This was cruise Seatrade Cruise Global in Miami. This is a convention. It's my 22nd year. I'm attending this convention. It has now been back from 2 years of shutdowns. The atmosphere is very good, very good momentum. There are -- I spoke with the executives in, for example, Royal Caribbean Group. They have a total of 66 ships. Now they are back with 62 ships. And by the end of June, they will be fully operational with 66 ships. And one of the reasons why they are now not sort of fully back, 100% back, is that they are struggling to get enough crew onboard the ships again. But 62 out of 66 is a good number and it's truly demonstrating that cruise is back. The same numbers that Carnival and Norwegian Cruise Line can report. What's also interesting to see that there's even a higher focus on deploying environmental technology in this business. More and more focused. They're now looking at what we also, what we as a company are doing on landbased side and see whether -- and they want us to look at their fleets, to upgrade the fleets also with the more advanced waste valorization technologies that we are now moving forward on the landside. Because typically, until now, most of our deliveries in the cruise industry has been advanced wastewater purification, garbage handling. But we have -- we started with the development of technology to also convert these type of feedstocks into energy onboard ships. But as we have been actually running faster now on the landbased industries with that type of technology, the cruise industries are actually ready now to do feasibility studies and evaluate these new technologies that we can deliver also on the cruise side. That potentially will give us growth on the newbuild side, but also on the retrofit sides. So all in all, it was sort of good to be back, good to meet all the industry colleagues. And definitely this industry has been able to come through and they are very motivated now to move swiftly forward. And this is just how we are performing in the new building space. And these are -- these numbers here, just to understand the graphics. This is a list of ships that are under construction, to be delivered to market until 2027, 58 cruise ships under construction at different yards in Europe and in Asia, having a capacity of more than 600 people onboard. We are on the waste management side, we are on 40 of these vessels. And on the wastewater purification side, we are on 39 of these vessels. That means that our market share in this picture shows that we are nearly 70% market share. So that's how strong foothold we have in the cruise industry. So when it comes to the industry moving towards even more advanced technology, we are in a very good position to also help them with these type of technologies. On the retrofit side, we earlier said that there are a substantial amount of ships also that will be subject to retrofit with these type of systems. And we said earlier and as we also stated in here that there are approximately 30 ships out there that are considering to upgrade with advanced wastewater purification within sort of the next -- within the next 2 years. So that's part of our growth plan going forward. Looking at what we provide to the installed base within the cruise industry space. Historically that has been 1/3 of our business, naturally down because of the shutdown on the cruise industry over 2 years. We had in 2019 nearly NOK 130 million of revenues. And of course in the fourth quarter and in the first quarter, we are stable, around 20. And in -- if I take into account of how we have increased installed base during the pandemic because the ships have been delivered. We have delivered technologies that more ships have been entering service, but of course not in operation. It means that our aftersales revenue in a non-pandemic would have been sort of NOK 35 million to NOK 40 million in a normal quarter. So this is sort of -- it just demonstrates that the numbers are reflected by low activities on that side of the industry. But it's returning, it's returning definitely. And we are at least profitable covering sort of our fixed expenses in that part of our business. And we have maintained our people through the period. This is -- the graph on the right side is how -- this is the number of ships that are back in service, and you see that the dramatic change from the third quarter last year now until the 1st of May. And you see that the industry is now reporting that 347 ships are back in operation. And out of these 347, 113 ships are with us, means that ships are equipped with Scanship technology onboard, coming from 70 ships in operation in the fourth quarter. So that increase demonstrates that more ships are coming out, and we will grow this business back to where we were, but also take into account that we have delivered more ships in the period. Landbased, good to see now landbased is 41% of our top revenue line. It's almost as large as cruise, as I said, NOK 75.7 million. We have an EBITDA of 11.2%. Of course, the Follum plant is a substantial part of that revenue. We're doing what we said last year. We have created an accelerator for technology deployment for VOW. That's what we're doing now. We have a full activity to deliver our technology to that project. So that's one of the -- that drives the revenue within this landbased side. But of course we are also having revenue from other landbased projects, but not -- to make that clear, not any revenue yet from the C.H. Evensen acquisition because those numbers will be consolidated from the second quarter. What we do see is that it's more and more focused on pyrolysis as a technology on land. And what we are doing in this period is that we are demonstrating the relevance of pyrolysis. And of course, I would say that we are working on a relatively extensive prospect list, a pipeline of prospect where we see that the market is reacting to pyrolysis as a solution, not only to valorize waste, but to produce energy in the energy situation we have now in the markets. But I will come back to that side. But if I would say sort of some keys around our strategy at the moment is to be the one -- VOW to be the one that really industrializes this type of technology and to make it relevant for large industries. Then leaving our financial all-time high record performance that we are sort of very satisfied with. It's, of course, according to our plan then. Looking forward, we acquired C.H. Evensen. This is all about increasing our technology portfolio and bringing more people onboard to execute. Evensen has 40 employees. We really feel that culturally, we share the same type of DNA. We are working towards blue chip companies in many different industries. They are -- they have a very strong track record. This is a company that has a substantial competence within high-temperature processes. And high-temperature processes -- high-temperature industrial processes are key because they consume a lot of energy. And they are in the market to optimize that and to replace type of fossil based energy to electrify, et cetera. This is where we are coming in to help them. The company delivered sort of pre-audit numbers, NOK 57 million with an EBITDA margin of 10.4%. And this company is growing. And you see lately in media in Fredrikstad, where the company is located. That it's picked up, that these -- this company is really growing. We purchased -- the acquisition cost was NOK 50 million, settled in cash and in the sellers, vendor note, where the sellers can elect after 14 months whether they will take this in cash or in shares. And these are the blue chip companies that this business is working with. Elkem, REC Silicon, Hydro, BMW, thyssenkrupp, large companies in different industries that needs heat processes, high-temperature processes, helping them to optimize these processes and to electrify them and to basically help them decarbonize their operations. And they have been -- this company has a long-term history, even started back in 1937. And in some of these industry feels, examples is within the hot-dip galvanizing part of their business, they are sort of -- they are a leader within that section. So there's growth opportunities in the core side of that business. But of course other parts of that business is more a better fit for us. But of course this company has sort of a strong foothold, as I said. And they have a large installed base that is also interesting for us to speed up our lifecycle services part of the business. And now latest few days, they have signed up 2 new contracts, and they now have a backlog of NOK 100 million. And that's for them actually an all-time high. So it was really a good time to buy them. And of course it's -- we are sort of -- they are 40 and it brings us up to a total of 220 people. And it's a very good corporation. And of course there's a lot of synergies between the companies. We are very excited about some of these technology solutions they have, the access to the markets. But -- and of course they really see that we have a strong within Scanship. We have a very strong delivery model that we can make sure that we can even make Evensen much more efficient going forward as well. One of the main rationales was also to get hold of technologies around pyrolysis. And we have spoken a lot about pyrolysis. We started pyrolysis many years back. We were encouraged by the cruise industry to develop technology onboard ships to convert the residues from the wastewater, from the garbage and from the food waste and see whether we could use that as an energy production onboard to replace marine gas oil and the heat production onboard ships as an example. So we developed the microwave assisted pyrolysis technology that we are now deploying. Two of the world's largest cruise ships under construction will have that technology. But it gave us ambitions, of course, and we saw that our technology was relevant for the landbased markets. And that was one of the reasons why we, in 2019, acquired the French company, ETIA, that had another type of pyrolysis technology based on a fully electrified process. It had larger capacities and the mix of those gave us sort of a good flexibility in our offering. And as you have seen that our focus has been to meet high industry demand, high capacity systems. And it's demonstrated by the VOW Follum, the VOW Green Metals ambitions is to play a major role in producing biocarbon towards the metallurgic industry that needs -- we need large capacities to do that. So this is one of the reasons, that we saw Evensen. They had a very interesting technology. We met with them actually a year ago. And we looked at the company, and we gave them a challenge. What if you design a system for us that would be 5x, 6x, 7x larger than capacities that we are working on today? Take that challenge. They took it. They came back to us. That was sort of the reasons why we today have that company in our group. And with the Evensen Reactor, combined with the Biogreen from ETIA and also the pyrolysis, we have a very large technology portfolio to approach many different types of applications with many different types of feedstocks to produce advanced biocarbon materials, all the way from biochar to the typical carbon that we are now offering towards the metallurgic industry and in many different types of industries. And it's a matter of, again, the focus on the customers' needs. That's the first and foremost. And then we have sort of the 2 box to figure out on what application would be the best technology. But I don't see any other players out there with this broad technology portfolio within high-temperature processing and basically pyrolysis as a main type of technology. So what we did, we announced earlier that we have now started, we gave Evensen the order to produce a large-scale pyrolysis reactor. That will be now delivered this year. And this is a real milestone event for us. We have received a lot of attention in the market when we announced that we are now moving towards even larger systems. So this is picked up by a lot of the players in the market. And that's -- we truly believe that even though we are billing it on our own book, we sure have interest on it. But we need to move forward. We need to, as a company, demonstrate that we are the ones that are industrializing these systems on large scales. This is our ambition. This is what we are doing and we are moving fast. We went fast with the VOW Green Metals. Now we're moving fast on large-scale pyrolysis reactors. And this reactor alone can process around 5 tonnes an hour or 25 cubic of feedstock an hour and produce -- can produce gas around 100 gigawatt hour if you are looking at forestry residues and 10,000 tonnes of biocarbon. And only on the biocarbon side, if we would use the biocarbon as taking it out of the CO2 cycle, we're basically taking out 25,000 to 30,000 tonnes of CO2, avoidance. So this technology is very relevant when it comes to the need for biocarbon, the need to have industry scale on gas production. This is renewable gas and also relevant in the aspect of taking carbon out of the CO2 cycle. So concluding on the market. And I've spoken about this slide many times, and this is the trends we definitely see, and we also see the change. Circular economy is still high on the agenda for many types of industry that wants to turn waste into value. It's industry push for decarbonization. They need to reduce their emissions, they need to find replacement for their consumption of fossil-based energy. It's not an easy task, but we can help them. We have the -- backed by the governmental policies and regulations. EU Green Deal has played a very important part. EU is the first mover actually pushing to decarbonize. They have an ambition to become carbon neutral by 2050. And we know how much fossil-based energy there is in the mix in Europe. So these are -- will require a huge transition and we, as a company, we want to be part of that. That's why we are scaling up our technology. And there's a new world order. In just over a few months, we see that it's all about energy security and being self-sufficient on energy side. As a result of what's going on now with the Russian gas that -- and the Russian energy that they're now trying to stop as importing to EU and the industry needs to move on this. How can they be sort of self-sufficient on the energy side? This is the economic realities for industry. We have seen it over many -- a long period, this is the CO2 allowance price that has gone up. It means that the cost of emitting CO2 is increasing. And you have to pay for this allowance. You're trading on this allowance. If you're using -- continuing using the fossil energy, whether it's the carbon because carbon is used in many types of industries, not only as energy, but as reducing agents. The cost of that is increasing. But here you see actually the cost for the product itself, but also the cost of emissions related to using it on the green part of it. But you see everybody is now talking about the energy, how the energy prices have skyrocketed. Look at the gas side, we, as a company, we were in discussions with important clients 2 years back. We talked about Philip Morris International. We talked with them because they wanted to replace natural gas with gas produced from our pyrolysis systems. We spoke -- we established the cooperation with circular carbon in Hamburg that is providing gas to [indiscernible]. Everybody was talking about gas because they wanted to replace natural gas. These were in periods where the natural gas was below EUR 20 per megawatt hour and look how -- what the development. So this is another -- this is a picture that definitely is changing and creates demand for our technology going forward. This is the natural gas used by large industries in Europe. And you see some of the clients that we are working with to develop concepts and projects with and all in all 1,000 terawatt hours. So gas, renewable gas is high on the agenda. And to even further illustrate this is the announcement we did with GRTgaz in the first quarter. This is something even more exciting because what we're looking at here is to -- and what GRTgaz -- GRTgaz is not a small player, it's the second largest gas distributor in Europe. And what we're trying to do here, and they have been running projects in France to demonstrate pyrogas, whether gas -- whether it's gas from pyrolysis or gas from gasifications to convert that into renewable methane for direct gas injection. So we announced progress on our cooperation with GRTgaz to demonstrate pyrolysis gas, converting that into renewable methane for direct injection. This is very interesting for us. What this does is that it allows our clients buying our technology to be less dependent on specific clients on their offtake of the gas because they could build large factories to produce. For example, if you look at VOW Green Metals, it means that they could be more independent of having specific clients on the gas because they can produce gas directly to the grid. So this is an enable for build-own operators such as VOW Green Metals and enables for our clients that -- and making pyrolysis even more relevant going forward. So we're also excited about it. Another trend we see is industry asking for larger and larger systems. So when we announced the VOW Green Metals, the Follum plant, 10,000 to 12,000 tonnes of biocarbon a year. Another large player in the metallurgic nonferrous metal producer came and said, we see what you do in Norway, at Follum, but we want -- can you deliver a 5x larger plant because we have the ambition by 2025 to source 50,000 tonnes of biocarbon as a reducing agent. And we have even ambitions to go even further because this player is consuming much more. But they said by 2025. So that's what our teams now are working on to develop that project. And of course this is a huge project for us. And it just demonstrates -- what I'm trying to convey with this is that industry here now is reacting and are really considering pyrolysis as a solution going forward. And we want to be -- we want to take that position. That's why we're scaling up. That's why we are now so focused on designing optimal larger factories for utilizing this type of technology. So let me conclude this presentation, the summary of the quarter. All-time high financial results. Over all these years, we have never delivered as strong as we delivered in the first quarter. Pyrolysis is emerging as a preferred solution as we see it in many different industries. We are further strengthening the business, bringing more technology into our portfolio, more people to execute. Good to see that the cruise industry is returning. It's an important part of our business. We're going to maintain that, and we're going to grow within the cruise industry space. Ships are back in operation by June. It's predicted that all ships will be back in operation. And that is important for our lifecycle services. We will be back on that side. But it's also important that these companies now are getting back, becoming profitable again because it has been costly for the big cruise owners during these 2 years. But most of them came through and are really now set to start up fully. And Royal Caribbean Group is an example of that, already 62 ships in operation out of 66. And the total order backlog remain robust and it provides a very good visibility for us going forward. But of course, we are now -- we know what we need to do. We know what we need to accomplish this year. So we are working on a large pipeline of potential projects and to build -- to grow this business going forward. So thank you so much for the attention, and we will open up for some questions.

Turner Holm from Clarksons here. So just to follow-up on the point that you were talking about in the cruise industry, Henrik. In terms of the appetite for further newbuilds, very strong performance in terms of market share. But how do you see the major cruise companies, your main clients coming back from the pandemic. Clearly, there's more ships in operation, that's positive. But yes, as you mentioned, they may need to return to profitability. Is there an expectation that we could see more newbuilds later or as we move through 2022? Or do you think that we might need a little while before we see a new wave?

We signed up a newbuild on Friday. We see that there are some projects now on the expedition side of the new building. We also see the large players looking at it. So we have -- there are activities now, plans to further build ships. But the new building side is a longer perspective. We are -- if you look at what we are doing now, we are delivering now to ships that will enter service '23, '24, '25. So what you're looking at is, is the cruise industries capable of placing order to fill up the slots in '26, '27. And I think they are doing it and they are planning for that. So we don't expect actually a slowdown on the new building activity. What we have seen is that they are -- they have outpaced some of the older vessels, and they have used that opportunity, for example, Carnival have taken some ships out of service, and that's also because they want to renew their fleet. But, again, it's all about how fast they can become profitable again. But we know that the industry itself has already shown very robustness and they have been able to finance ships. So that was the short answer.

Yes, sure. But I guess you have a nice order book for the foreseeable future there anyways. But on the after sales, I guess, that's a faster cycle business. You mentioned NOK 130 million in revenues and after sales in 2019. When do you think we can kind of expect that the after sales business gets back to a pre-pandemic level? Is it -- should we just look at the number of ships in operation? How should that progress through the year?

That's the easiest way to see how many ships are now back in operations for sure. The first quarter still slow. We see that we are very busy now in the second quarter. The third and the fourth, we expect to be -- will be fully back. So it means that in the longer run, meaning that this year, we are behind on the first quarter.

But do you expect an improvement in the second half of the year as more ships come in operation?

Yes, definitely. And what we see already now that things are picking up already in the second quarter.

Sure. Switching over to the pyrolysis side. The large-scale order that you made at C.H. Evensen delivers towards the end of this year. How is it going with regards to identifying a client for that unit? And what can we expect there?

We really think that we will have a client on that before that is done. So there are projects we're working on that that will be a nice fit for that reactor.

And then just on your dialogues with clients, I mean, I think you showed a nice slide on some of the economic drivers for biocarbon and syngas. The costs have really increased quite a lot just in the last few months. Have you noticed any -- have you had more dialogues because of that? Or is it you having more incoming requests or kind of how is the -- how are you sensing customer demand for the solutions that you have given that increasing cost of polluting and input costs from pyrogas?

We definitely see an interest on it. We have much more RFQs now than we had a year ago. So we are working on a pretty extensive pipeline of prospects. So it's -- I think it's important that we -- previously we announced some LOIs, MOUs on potential partnerships or potential clients. I think it's important that it's not that all the -- let's say, all the clients we have in the pipeline is something that we are announcing on a LOI level. So it means that you shouldn't sort of wait for us to announce LOIs. It's you shouldn't wait up for us to announce contracts. So that's what we're working on. And I would say it's a huge interest now with those dynamics that you see in the market.

And high level, I guess, you have after sales that's starting to come back. You're executing at a high level on the cruise after sales business. In the landbased, we saw obviously better margins, nicely positive margins. You're executing on Follum. How could the -- sort of what do you see as the total margin development? How is that looking as we move through 2022?

We have maintained strong margins in the cruise even though you see the market and the market, how they develops on, let's say, we have been able to manage the supply chain. If you look at our margins in landbased is affected by also the -- let's say, the fixed cost of that business segment. So you see as we are -- you will see the same on the after sales. When we have low revenues, you have low margins. But once you come up to a certain level, your EBITDA margins are -- we are capable of delivering such strong numbers as we do within the cruise projects because the cruise project side of our business is much more aligned with the activity level. Meaning that we are -- we have put on forces to put on more people to develop the landbased side. Of course, now we are at 11%, but it means that it's still the more we grow the top line, the more margins we are capable of picking up.

Martin Hoang Nguyen from DNB. So more a question on the margin side. So you delivered a solid margin this quarter. But could you elaborate how to think of the margin going forward when you are progressing on the Follum plant? And in particular, what you see in the inflation on the other industries? And on the second question on the C.H. Evensen. Could you comment on the lead time of the contract? Is that a typical under the 1-year contract? And how much of the backlog is expected to be executed this year?

Let me see if I recall the first question. Regarding landbased margins, we are -- I would say, all the projects we're looking at working on in the landbased side are projects that for our clients is an investment and you need to have a return on that capital. And we are not sort of moving into low-margin segments of the market. I see that in many situations, we are actually working closely with clients to develop projects together. So we're not sort of in a situation where it's a huge competition. It's all about delivering a strong business model. And within that frame, we truly believe that we will have good margins.

What do you want to say a good margin is or impromptu gross margin?

We can benchmark what we're delivering on the cruise side. So we don't see that, why should we not be able to deliver such strong on the landbased. We don't see any limitations on that side that we should be capable of that. And when we are positioning the company as relevant on the concept of producing renewable energy to replace fossil and we see development on that side. And I think that as we see it going forward, our business -- our business cases or the business cases we are developing with our clients is the numbers are getting better and better because of increased cost of the fossil alternative. And that allows us to plan for good margins within this business area as well. But we need to have growth as we have been building up resources to deliver on the growth opportunities. It will -- we need a certain top level of the line before we can demonstrate those margin levels. We are demonstrating that in the cruise industries base because we are much more streamlined according to the activity level on the cruise projects. Then on the other question that you had was more on the C.H. Evensen. That is a much shorter delivery of the projects. When we deliver to a cruise new building side, it is a cycle of 2 to 3 years. In many of these projects, they have, they could deliver that within 1 to 1.5 years, I think it's a fair statement. So it means that from book to revenue is much shorter.

Yes, just an additional comment, Martin, the landbased side for instance, the food safety has a much shorter production cycle than the large Biogreen product. So that will be like a year from we get the contract until it's -- it will be a mix within the landbased of the -- and the Biogreen, the large product probably also be a shorter cycle than the cruise newbuilds.

We have a couple of questions from the online audience. First, from Lie Sander, general question on the GRTgaz and the 50,000 tonne project. When is an end of the confirmation process expected?

If you look at the GRTgaz, that is sort of a project to demonstrate, and we have reached a certain milestone there. And it means that that's more sort of to demonstrate technology, the relevance of pyrolysis as a production of renewable gas. On the -- as I said, with these unannounced nonferrous metal producer, 5x larger. That's -- the ambition was to in 2025 and still is the ambition to replace -- to source 50,000 tonnes. So it means that we are now working on the specification on -- we're doing a lot of testing now on the product itself. That the product itself, meaning that the composition of the biocarbon is, let's say, fully replaceable or fully replacing the fossil coke they're using today. So it means that, that's what we're doing these days. And to have a full production in 2025, that means that such a factory needs to be up and running in 2023, by the end of 2023, beginning of 2024. So that's sort of the timeframe. And I hope that we could be able to announce some more progress now as we go forward through the next months.

There's a follow-up from Mr. Sander. Is there any kind of after sales expected also for the landbased segment?

Yes, that's what we are definitely working on. Strategically, we are building up our activities on that side because we are truly seeing the positive effect on working on that. We have such a strong foothold in the marine side because of it and we need to do the same on the landbased side.

Then there's a final question from the online audience, Mr. [indiscernible] is asking, do you have enough feedstock for your plants when you are going to make all of this gas?

On these projects, we're working on, there are. But of course, if we would use pyrolysis to replace 1,000 terawatt hour of gas, I guess, in some areas, it will be a question. But of course, these projects -- and of course, this is on all the projects we are now developing with clients. That is the feedstock is always, but very often, it's why the customers are coming to us because they have that type of feedstock, they want to convert. But it's a valuable point if you're going to use one technology to decarbonize truly the European gas grid, pyrolysis would, I guess, have some challenges to get enough feedstock. But it's a combination. I think still pyrolysis as a technology would be -- is a relevant alternative in many cases. So thank you so much for your attention and for listening to us today.