AKVA Group

Ladies and gentlemen, good morning and very much welcome to the Q&A presentation of Aqua Group. I will do the introduction and highlights. Ronny Mengken, our CFO, will do the financial performance and then we will do our Q&A session. So please post any questions during the presentation and our moderator will read the questions. Kicking off with the highlights for the first quarter, we had a quarterly revenue of 1 billion 140 million and record high quarterly EBIT of 91 million. Strong order intake of around 1.5 billion and order backlog of 2.8 billion at the end of Q1 2026. A last contract with value of approximately 200 million NOK was awarded from Ordal Aqua in February and earlier announced. And a small contract of Euro 28 million was awarded from Luxray in April and will then be part of the order backlog for Q2. Four new barges for the international market were awarded in Q1 with a total contract value estimated of Euro 6 million. Acquisition of remaining shares of Submerge was completed during Q1. That's our smart camera solution. Now we are the 100 cent owner. And a dividend of NOC1 per share were paid on April 21st. And also the strategic review was announced the start of April to maximize shareholder value. I will comment on that a bit later in the presentation. Key figures for Q1 2026, record high activity level of 1,140,000, which is representing 13% higher than a year ago. EBITDA came in at 153 million, where C-based landed at 99 million NOC, land-based at 41, and digital at 13 million NOC. and the overall EBIT of 91 million NOK is representing a record quarter for Aqua Group. Overall order intake of 1.5 billion, which is also a record quarter of which 1 billion and 34 million NOK is related to sea-based and 460 million NOK related to land-based, also driven by the new order contract. stepping up our order backlog, and now it sits at 2.8 billion by end of the quarter. I'm also very pleased to inform you that we have done a strategic expansion into the defense industry. This is a very value-driven milestone for our polar cycle boats being produced here in Norway, in Mo i Rana. So in the first place, Aqua has qualified for the Norwegian defense industry as a supplier of high quality polar circuit boat. So we're very pleased with that. It's a kind of quality stamp and we have used quite some time for getting this qualification. Commercially, we have signed a long-term frame work agreement with the defense industry in Norway for delivery of those boats. and the supply to the defense industry are expected to generate significant scale benefits and improve the profitability for the boat business. Deliveries are scheduled to start in the second half of this year and are expected to be reoccurring and increasing in volume in the years ahead. That's the frame contract. So if I should give some flavor of it, I will say that when we have stepped up pretty well during 27, and the activity of the traditional boat activity will be three times higher for 27 compared to where we came from. So that will drive also profitability because of scale effect. And those deliveries will be in addition to the ongoing commitments related to autonomous boats, both to the generic market and the defense industry. So if we are... more than tripling the activity, we also need more production capacity and that is secured. And we are now moving into new facilities and they will be operational right after the summer. Then moving on to the long term salmon opportunity. This is the high level picture, the challenge, how to double salmon production by 2040. Here you see the illustration in the graph for how the growth protection will be if the industry is to support a 5% demand growth. That's basically a doubling by the year 2040. But the problem is that the current business model is running out of capacity, so new investments are required, and we believe Box to the right, that innovation and growth will be driven out of deep farming, post-smalt and grow-out. And this is an illustration based on our view, how to drive growth out of the traditional fish farming of 3,000 tons, Atlantic 7 as today. We think deep farming can provide growth for the next 10-15 years of half a million, post multi-million tons, and also land-based will provide growth, but also other things like offshore and new technologies like vaccines, new treatment, etc., etc. Looking a bit more specifically into each of the growth platforms, Deep farming, we think it's a potential to unlock 50% higher harvesting volume from existing licenses. It is documented that those submerged cases, the deep farming, will reduce sea lice treatment with around 80%. I will give some statistics in the next few slides. And this is proven to support fish welfare and supporting the social license, which also has to do with growth in the long run. Also, very recently, we saw Zinkaberg, our first mover, our partner on de-parming. They reported that for the year 2025, they produced 38,000 tons of salmon, all with so-called shielded technology, but the clear majority is de-parming and not less from us. And they achieved the... 4% mortality, which is way below the average of the industry being more like 16, 17 and 92% superior, which is also excellent. So this is by far the best in class biological results based on this technology. And we see that the fish thrives in the depth. So far over 400 nautilus units are deployed to the sea. you see significant reduction in life pressure and higher share of superior, as I already mentioned. And then diving a little bit into the details, we have followed 19 harvested sites from the generation spring 22 to fall 24. And to the right, you see the plotting of the data. So we know the 19 sites where de-farming is used. and we have then downloaded the data from Barnswatch to see the number of sea lice treatments on those specific sites. And there you see deep farming is on average for all those harvested fish, one treatment, a little bit more than one treatment for the whole generation. And the benchmark has been the neighboring sites without deep farming and they are on average six treatments for the same generation. And then we also benchmark towards the previous generation at the same site, and there the reference is seven. So to conclude, it's a 78% reduction versus neighboring sites without deep farming, and it's an 83% reduction when you compare the last generation. ballpark, you can say that 80% is a good number based on those 19 harvested sites. So, in addition to our own data, we have also noted that the scientist, Frodo Tordal, from Havforskningsinstituttet, has said in public, and he also did a publication, that research shows that deep farming will reduce number of sea lice treatments in a range from 70 to 90%. Also, there the midpoint is 80%. We think 80 is a good number here. Moving on to Postmalt. Postmalt is established as an industry growth strategy. It provides shorter production cycle with reduced number of months in the seed. If you have a one kilo posmalt, you typically go to seven, eight, max nine months in the sea versus the normal, which can be 16 to 18. So the fish is just less months in the sea. And that is also providing fewer sea lice treatments, lower mortality, and increase the biomass yield. And we have in practice, very strong documentation from the Faroe Islands and the Rogaland region. And if you are successful in implementation of the POSMALT, there is certainly a documented potential to unlock 30 to 35% volume growth. There is a big market here going forward. We are the only true global RAS supplier. We have a setup in Norway, Denmark, and Chile, and we have an international project organization which can execute the project globally. We are ready to capitalize in the emerging growth phase. You saw last year we came up with almost a doubling in our growth for land-based, and that is on the back of the fact that we have invested 300 million to transform this business to improve the science behind the technology and the data and the documentation. We have 250 highly ComptePent, the industry experts there. And last year, a turnover of approximately 1.2 billion, almost doubling as you can see here. And a relatively solid order backlog. So what we deliver is proven and documented technology, end-to-end project execution and advisory services. Also, land-based grow-out is gaining traction. We basically have two major customers that are being lax at Iceland on a hybrid flow-through where we reuse 70% of the water and WAP in China with very high reuse of the water, more than 99%. Both of them are able and capable of harvesting big salmon. Laksa has started to take out fish at four or five kilo and they are planning to harvest 6,000 ton this year with a size of six to seven kilo. We think fundamentally the success of harvesting big salmon has fundamentally to do with the water quality. We have very very good water quality. We are able to take out quite a lot of the particles in the water and that is boosting and stimulating fish health and fish performance in the tanks. We expect to see commercial traction during 2026 and expect to sign one new customer during the year. and also NOAA will decide about their phase three project, which is a large project at the end of the year. And if they decide to go for it, we have the contract there. Moving on to digital, we have also there invested significantly in the last few years, 500 million since 2021. Majority of the investment was related to Observe. we have 120 digital specialists within our digital platform. We have four different platforms there with the presence in all the major markets. Digging into those platforms to the left, you see Fishtalk. Fishtalk is about the biological ERP system where we have a 60% market share. So six out of 10 farm salmon will be on our system. And to the right, it's the control system, bringing hardware and software together, where we have a 50% global market share. And then in the midst, you have new systems, so relatively newly developed system, which is about short-term decision-making supported by AI. And there we have Submerge, which is our smart camera, which can do sea life counting, biomass estimation, and provide the solid KPIs for fish health. and we have Observe. So let's look at Observe. Observe is the market leader by far for automated feeding based on AI, supported by AI. We have now installed Observe globally on more than 170 sites. It's a truly scalable solution and we are now leveraging our global footprint. We expect to see more growth from Norway during this year. Then summing up, we think Aqua is a global leader and a trusted partner. We have the three platforms, sea-based, roughly with a turnover of 3.1 billion last year, land-based with 1.2, and digital with 138 million. So to summarize it, we think we are part of the solution. Our technology can provide growth, the better fish health, lower mortality and more precise feeding with less waste. Then our organic growth agenda for 2026, which is the driver for the step up we are expecting to see into 2027, where we are on track to deliver on the 5 billion mark. We will exceed it the way we see today. And we have five organic growth projects. One is to commercialize next generation of Nautilus Next. That will happen this fall. And the news will be about introducing a winch system, which will make it more easy to operate Nautilus. It will be more easy to bring it on and take it off. You will not need to bring in a service boat. Internationalization of our net business, that's another project where we are now setting up a joint venture with an Indian partner. That is still in motion, still in progress. Also, we will introduce a new, bigger size of our PAN product that will also be launched this fall. We have already partnered with a concrete batch producer, so the customer can choose between steel and concrete. That's Stockhusu, and that is already no part of our product portfolio, what we can offer. And we already announced that we have the ambition to develop both business with the defense industry, and now I already said today that we already there have a contract in place. So I'm very confident that those five generic growth projects will be supportive for reaching the 5 billion target in 2027. And the way we see today, we will exceed the 5 billion target. Focusing on 26, we have guided into this year that we expect to see a 20% increase step up in our EBIT versus 2025. And on the back of a solid financial performance for Q1 and a solid in ordering tech, we want to reiterate that we expect to meet with that guidance. For 2027, we expect to exceed the 5 billion. Then, closing off with some few comments related to the announcement of the strategic review. This announcement was made on April 8th, and the process is supported by the largest shareholder, of course, given the right market conditions. So, APA has entered a phase of strong commercial momentum and sees the potential to exceed the 30% 2030 guidance of 7 billion revenue and minimum 10% EBIT margin. So then a little update from where we are in the process because now we are four weeks down the road. So what we can report is that we see high quality interest and in particular there is interest related to to the potential sale of the entire company as a complete platform. Of course, I have to underline that we are still in the relatively early stage, but this platform sale will be our focus now, and that is what will be given priority. So the strategic review is expected to be concluded after the summer or during the fall of 2026. I have to underline, no decisions have been taken at this stage. And ARPA will provide an update to the market upon conclusion of the process. So that brings me very much to the end. So I hand over to Ronny, please.

Thank you, Knut, and good morning to everyone. We are of course pleased to report that the strong financial performance in 2025 has continued into 2026 with high activity levels and also record high profits. So the revenue for the first quarter was strong, 127 million about Q1 last year, driven by high activity in the land-based business. So on the back of a strong revenue, providing economies of scale, and also a solid product mix in C-based, both EBITDA and EBIT reached record high levels for the quarter. EBITDA amounted to 153 million, which is 40 million higher than Q1 2025. An EBIT of 91 million is 34 million higher than the same period last year and provides strong support to our guidance of delivering at least 20% increase on full-year EBIT compared to last year. Net financial costs in the quarter are high, negatively impacted by 8 million reduced market value on our investment in Nordic Aqua Partners. and profit before tax of 56 million for the quarter. So both revenue and order intake is showing a very positive trend. The book-to-bill ratio of the last 12 months is just about 100% with order intake of 4.6 billion and revenue of 4.5 billion. In Q1, we had a strong book-to-bill ratio of more than 130%. with a solid order intake of close to 1.5 billion. So compared to Q1 last year, we see increased revenue in the Nordic market of 10%, 27% increase in America, and 18% increase in Europe. We have a slight decrease of 8% in Australasia. On the segments we see seed-based business still, the major business area, representing 66% of the total revenue in the quarter. And the increase in the total revenue compared to last year is driven by land-based, which had 96% higher revenue this quarter compared to one year ago. After a soft EBTA margin in Q4 last year, we delivered a strong rebound in Q1 this year with an EBTA margin of 13.4%. Seabase achieved a solid margin of 13.2%, supported by a solid product mix, and Landbase delivered a strong EBTA margin of 11.8%, driven by economies of scale and also a healthy project portfolio. And last, digital maintained a stable and strong EBITDA margin of 32%. Available cash, including unused credit facilities, was 442 million at the end of Q1, which is a reduction of 105 million compared to year-end. As we expected, the net working capital increased during the quarter and the increase was 85 million from the record low, 6.2% at year end to 7.9% at the end of the first quarter. So we aim to stabilize the net working capital below 8% on an average level, but please note that there will be some seasonality to it. Leverage ratio was reduced from 2.37 in the fourth quarter to 2.32 in this first quarter, which is reassuring and also provides a comfortable headroom relatively to the threshold of 4.5. Net interest bearing debts increased by 68 million during the quarter. And the big tickets are the increase in network and capital of 85 million, CapEx of 45 million, and we also had M&A activities of 56 million, including payment of seller credit to the former owners of Observe Technology. And we also increased the ownership in Submerged from 58% to 100% in the quarter. Total CAPEX is 45 million for the quarter, where 20 million that's related to our innovation agenda, and another 7 million is related to our global ERP project. And the return on capital employed continue to improve on the back of strong underlying operations, and a disciplined capital allocation. So the ROH improved from 9.3% in Q1 last year to 12.8% in Q1 this year, and we also expect further improvements during 2026. A dividend of not one pass here was paid on April 21st for the first half year, and the dividend for the second half year will be decided ahead of our Q2 repo thing in August. Continue with some more details on the financial performance in our three business segments. And for the seed-based technology, the revenue of 653 million in the quarter, that's 6% lower than Q1 last year. On the other hand, we had a really strong order intake and more than 30% higher this quarter compared to one year ago. EPJ margin was strong, 13.2% supported by a solid product mix. And overall, we can also report that the product mix in, we added to the order intake and order backlog during the first quarter was really sound. Nordic Region had a reduction in revenue of 9% in the quarter, while auto-intake increased by 25%. In America, revenue is down by 7%, while we had a strong increase in auto-intake of 160%, which is driven by the award of the four new barges. Europe revenue increased by 18%, while order intake is down by 28% compared to last year. On the CBES side, especially the order intake is showing a very positive trend, and we also expect the revenue trend to turn positive the second quarter on the back of a really strong order intake in Q1. The order backlog is high of 1.3 billion and is 215 million higher than one year ago, indicating sound activity levels the coming quarters. And the OPEX-based, C-based revenue in Q1 was 233 million, representing 31% of the total sea-based revenue and was 17 million higher than the same period last year. For land-based, a strong order intake of 416 million in the quarter related to the 200 million contract with Hortal Aqua in addition to variation orders on existing contracts. The revenue was high in the quarter, 346 million and 96% higher than the same period last year. EBITDA improved significantly by 31 million in Q1 compared to last year, and the EBITDA margin ended at 11.8%. And the improved profitability is mainly due to economies of scale on the back of a higher revenue and with additional positive impact from closure of projects. We see that both the 12-months revenue and order intake trend for land-based is positive. Order backlog of 1.3 billion at the end of the quarter is 270 million lower than one year ago. Digital order intake of 44 million in the first quarter and 12 million higher than last year. Revenue increased by 22% in the quarter and EBITDA margin was solid of 32%. We see both the revenue trend and order intake trend is positive for digital and we expect this development to continue throughout 2026, or the backlog of 226 million at the end of the quarter is 85 million higher than one year ago. That was my financial update. I will give it back to Knut now to close off with the outlook and the Q&A.

Thank you very much, Ronny. Closing off with the outlook, we see still a strong momentum for deep farming concepts. Just to elaborate a little bit on that one, we have very good results from bringing the Cod down in the deep. In particular, the Cod doesn't like too much higher sea-water temperatures than 15 Celsius, then it affects the appetite and the growth of the cod. So the cod should, in an ideal situation, be lower in the sea. So we expect to bring more deep farming to the cod industry, the farmed cod industry. We also have an interesting development in Turkey, where they are farming trout in the Black Sea. In the Black Sea, it's very, very hot during the summer with high seawater temperatures, so they need to take out the fish in June. Now we have had one full cycle of production last year, where we took the trout in the Black Sea down by 50 metres, and then we could produce growth the entire summer. So we also expect to see further growth and scale-up there. And then we have the launch of Nautilus Next with the Lynch system this fall, which we think also will gain a good momentum in the market. Moving on, we continue to invest and improve our solutions, both the three times innovation agenda with seed-based, land-based and digital. And we are aiming for revenue above 5 billion. We expect to exceed 5 billion next year in 27. and with a minimum EBIT of 9%. And the strategic review is expected to be completed during the fall of 2026. So that brings me very much to the end, and we'd like to open up for questions. So is there any questions in the call?

Not yet.

Okay. I urge you to post any questions, and we would like to answer. Give it a little bit of time. Okay, no questions. We conclude. It was a very strong quarter, and no need for questions. Thank you anyway for listening. Have a nice weekend.