AKVA Group

Ladies and gentlemen, good morning and very much welcome to the AQA second quarter presentation. The program for this morning is that I will do the introduction and the highlight, Ronny Mink and the CFO will do financial performance, and please post any questions during the presentation. It goes straight to the highlights of the second quarter. We had a high quarterly revenue of 1 billion, 189 million. and record high quarterly EBIT of 111 million. We had a strong order intake of NOK 1 billion 345 million and order backlog of approximately 3 billion at the end of the second quarter. A small contract of approximately Euro 28 million was awarded from Luxe in April, subject to financing, which was secured in June. A dividend of one NOC per share will be distributed during the second half of 2026. Strategic review was announced at the start of April to maximize shareholder value. We'll give a comment on that later. Then to the figures of the second quarter. In the first place, it's in line with the trading update we published on July 20th. It's a record high activity level of 1,189,000,000. EBITDA of 179 million NOC. The other segments came in sea-based at 143, land-based at 21, and digital at 15 million NOC. Actually, we are pleased with the activity and the performance in all the segments. EBIT for the Group at 111 million NOC, which is representing our record quarter. Then looking into the figures for the first half, revenue there at 2,329,000,000, which is a ballpark 7% higher than the first half a year ago. EBITDA of 332,000,000 NOX, segment shares EBIT at 242,000,000, land based at 62,000,000 and digital at 67,000,000 NOX. and EBIT at 202 million NOK, which is also representing a record. Overall order intake of 1 billion 345 million, which is about 300 million NOK higher than a year ago. And as you can see here, land-based at roughly 400, and that's driven by the LAXI contract. We are also pleased with the order intake for the sea-based segment at 913, which is significantly higher than a year ago. And it's also a bit fueled by the high order intake of the boats to the defense industry. Order backlog at 3 billion NOx, stepping up four quarters in a row in terms of building an order backlog. So we're pleased with that as well. Update on the strategic review. announcement originally made on April 8th and the process is supported by the largest shareholders given the right market conditions. In the Q1 presentation on May 8th and following the initial phase of this review, Aqua informed the market about high quality interest around the potential sale for the entire company and as a complete platform. Now the update for now is that the strategic route is in a progressed phase, also filled with unexpected conclusion during the fall in line with previous communications. So no final decisions have been taken at this stage, and Aqba will of course provide an update to the market when conclusion is there. And then looking on the long-term salmon opportunity, the challenge is at large scale, how to double salmon production by 2040. And here you see an illustration on the graph about what the demand increase of 5% year-on-year will do. So that's basically a double into 2040. And we think and industry believe that the 5% growth is is possible, at least from the demand perspective. However, the current business model is a kind of running out of capacity, and new investment is required to support the demand potential. And upper right here, we believe that in terms of examples of new technology, that will be about deep farming post-small and grow-out. and that is to overcome the industry barriers, bottom right. Unlocking growth through technology, some numbers, what we believe is possible here. On the base of 3 million tons of farmed Atlantic salmon today, we think that the deep farming hold the potential to add 15% capacity, post-mortem ballpark 30 to 35%, and then based over some years, but still within the 2040 framework, potential of roughly half a million tons. So that's the big picture, the way we see it. Deep farming, first, potential to unlock 15% higher harvesting volumes from existing licenses. And what we see from farming today, commercial farming, where deep farming is deployed, is that you can reduce the sea life treatments by ballpark 80% and reduce mortality significantly. One example there is Zinkeberg, which for 2025 reported that they produced 38,000 tons of salmon, all with so-called shielded technology and a clear, clear majority being mercilessly delivered by aqua. and they achieved only 4% mortality and 92% superior. The way we see it, this is by far the best in class performance in farming. And just a little commercial update on deep farming. We see outside salmon, we see quite some good commercial traction within cod farming. We are delivering now. significantly volumes to cod farming and also this summer we are producing or one of our customers in Turkey is producing trout in the Black Sea on commercial scale based on deep farming or Nautilus technology. Also during the first half we have sold a solid number of new Nautilus concepts and this is well ahead of our own plan. So we are pleased with that. The fish thrives in the depths. It's a new technology and it's a new way to improve fish health. So far, over 400 mouthless units deployed to the sea. And what we see as results is that it is a significant reduction in lice pressure and need for lice treatments. It's a higher share of superior quality and it provides more stable environmental parameters. And this data here is representing reproduction data from 19 harvested sites based on Aqua Nautilus. And the conclusion from all the data is that we have seen 78% reduction and then compare benchmark with neighboring sites without deep farming or 83% reduction with previous generation without deep farming. So those are very solid numbers. Then Postmalt, Postmalt is established as an industry growth strategy. and shorter production cycle with reduced exposure in the sea, and also fewer sea lice treatments, lower mortality, and increased biomass yield. Commercial update here is that for first quarter we sold for our new order intake around 400 million, the same for the second quarter, and we expect about the same number for the third quarter. relatively good commercial momentum within Postsmalt. We are now pleased with the development. To summarize on the Postsmalt side, we are the only true global Postsmalt supplier. Also in the recent years, for those which have been following Aqua, we have been investing significantly to build our new RAS platform. We talk about 300 million NOC in the transformation since 2020. We have now 250 employees, specialists for us, and today we have scale there and we have profitability. So we are pleased with the development and the investment done. We deliver proven and documented technology, end-to-end project execution and advisory and services. With regards to land-based grow-outs, this is now happening, in particular for us in China with our key customer and partner there, Nordic Aqua Partners. And we have now commissioned and completed phase two, which was adding another 4,000 ton of capacity. And now we are awaiting a new-ups decision, which likely will come late this year. about pastry, which is another 12,000 ton of capacity. In addition to that, we are rather advanced with one other new ongoing customers in China, and we expect to close a contract before end of the year. That's the expectation. Then moving on to digital, we have a complete digital platform within aquaculture. Also, there we have invested significantly in the recent year, as much as 500 million. The majority of that was linked to the acquisition of Observe in two steps. We have four kinds of solutions, and they are fish talk to the right, which is the biological ERP system. Six out of 10 farmed salmons in the world will be on our system. Then you have the control system to the right here, and that's bringing together hardware and software. And then in the middle, it's about short-term decision making supported by AI. There we talk about Submerge, which is a smart camera, and Observe, which is about automated feeding, which is delivered now on more than 170 sites. Actually, we added some recently. And what I can say about this commercially is that we see pretty good traction now, finally, I have to say, in the Norwegian market. So we expect to see good development there in the coming time. Also, we are very pleased with the development of our strategic expansion into the defense industry. This is actually the same information as I gave in the last presentation. The only update here is that we have in the second quarter, mainly we have secured order intake of 230 million for the both segments. And that is a very solid number, which will absolutely propel the activity probably 3x into next year and significantly improve the profitability. So also very pleased with that development. To summarize Aqba Group, we see ourselves as a global leader and trusted partner within our space. We have three platforms there, seed-based with a turnover of 3.1 billion, land-based with 1.2, and digital sits at 138 million. So in combination, we see ourselves as part of the solution. Our solutions in totality can provide growth better fish health, lower mortality, and more precise feeding with less waste. Also, a quick update on our growth agenda, organic growth agenda for 2026. Those are the initiatives we are doing throughout this year in order to build a more robust basis for further growth into 2027. And there I'm also pleased to give an update that we are making good progress. Nautilus Next, that's on track, on plan, and will be launched later this fall. Internationalization of the net business to acquire the HDP quality. There I can tell you that we signed a joint venture with our Indian party in July. extending the portfolio of Penn products. That's the 560 plastic cage. And there we are also on the plan will be launched to the market later this fall. And also partnering with the concrete barge producer that's already executed and the well of the boat supply to the defense industry that's also executed and ongoing. So a very, very positive development. And to conclude, on the basis of a strong financial performance for the first half, and also a strong order backlog, we like to reiterate our 2026 target, and also we are on track for the 2027 target. So that brings me very much to the end, and I'd like to hand over to Ronny. Please, Ronny.

Thank you, Knut, and good morning. We are, of course, very pleased to report another quarter with high activity level and also record high quarterly profit. So revenue was strong in the quarter, 22 million above due to last year, and the growth was driven by higher revenue in the land-based segment. For the first half year, revenue is just above 2.2%. 3 billion, which is approximately 150 million, or 7% higher than in 2025. So profitability is strong, both in Q2 and for the first half year, on the back of significant economies of scale, a solid product mix within C-based, and also continued strong project execution in land-based. EBITDA in Q2 amounted to record high $179 million, which is $34 million higher than last year, and EBIT of $111 million, that's $22 million higher than the same period in 2025, and represents a record for ACWEL. For the first half year, EBITDA is strong of $332 million, that's $74 million higher than last year, and EBIT of $202 million, that's $56 million, or 35% higher than in 2025, and provides really strong support to our guiding for the year of delivering a minimum 20% increase on the full year EBIT compared to last year. year. So we see a very positive trend, both when it comes to revenue and order intake. The book-to-bill ratio of the last 12 months was 107%, with an order intake of $4.9 billion and revenue of $4.6 billion. And also in Q2 isolated, the book-to-bill ratio was strong of 113%. with an order intake of more than 1.3 billion. Compared to last year, revenue increased by 83% in Europe and 75% increase in America, while there is a decline in revenue of 10% in the Nordic market. C-based represents that 69% of the total revenue and the increase in the total revenue compared to Q2 last year is within land-based, which had 23% higher revenue this year compared to 2025. If the margin is strong in Q2 of 15% compared to 12.4% last year, In C-Base, we deliver a strong EPGA margin of 17.4%, supported by a favorable product mix. Land-Base continue with strong project execution and an EPGA margin of 6.5%. And last, Digital, a high EPGA margin of 35.7% in the quarter. So available cash, including unused credit facilities, amounted to 337 million at the end of the quarter, which is a reduction of 105 million compared to Q1. And the reason for this reduction is related to the net working capital, which increased by 150 million during the quarter and ended at 11.2%. So the networking capital is above our normal operating levels, and it's partly related to seasonal factors, as well as a very high activity level at the end of the quarter in Q2. So we expect these timing effects to reverse in Q3 and be back on more normalized networking capital levels at the end of Q3. The leverage ratio was increased from 2.32 in the first quarter to 2.51 now in the second quarter, which is still reassuring and provides comfortable headroom relative to the common threshold of 4.5. Net interest-bearing debt increased by 187 million during the quarter. related to the $150 million increase in net working capital, an additional $56 million in CAPEX. We also had a new IRS liability of $96 million. And last, we also paid dividends of $36 million in April. So Capex in the second quarter of 56 million, where 25 million that's related to our three innovation agendas, another 7 million to the ongoing global ERP project, and last we had 10 million related to rental equipment, which returns attractive profit margins to Aqua. The return of capital employed, continued to improve on the back of strong underlying operations. And the ROH improved from 10.1% in Q2 last year to 13.4% now in Q2 this year. And we are targeting to be around 15% at the end of 2026. We paid a NOC 1 in dividend on April 21st for the first half year, and the company has also decided to pay another NOC 1 per share in dividend for the second half year, resulting in a total dividend of NOC 2 for 2026. We'll continue with some more details on the financial performance in our three business segments, and I will start with the seed-based technology. So overall revenue of $822 million, that is 5% lower than due to last year. However, the order intake was really strong, close to 40% higher this year compared to last year. 17.4% compared to 14.3% last year. And as mentioned, this improvement is driven by a very strong and solid product mix. Looking at the regions, we see Nordic region with decreased revenue of 17%. However, a very strong increase in order intake of 57% quarter on quarter. In America, revenue increased by 28 percent, while there was a decrease in order intake of 33 percent. And last, Europe, with the increase in both revenue and order intake of 49 percent and 29 percent respectively. 12 months order intake trend for CBASE, we see that the development is very positive. And we also expect the revenue trend to turn positive in Q3 on the back of a very solid order intake during the first half of 2026. The order backlog for CBASE of 1.4 billion is record high. and close to 60 percent higher than in Q2 last year, which is very comforting for the activity levels in the coming quarters. The OPEX-based revenue in SEBASTE was $271 million in the second quarter, which is $29 million higher than last year. OPEX-based revenue represented 33% of the total sea-based revenue in the quarter, and it's obviously a very important part of our sea-based business. For land-based, the auto intake of close to 400 million in the quarter is primarily related to this new contract with Laxey on Iceland. And the revenue was very high in the quarter, 33% higher than in Q2 last year. EBITDA improved by 8 million compared to last year, and EBITDA margin ended at 6.5%. And the improved profitability is related to this higher revenue, which generates economies of scale. So we see that both the 12 months revenue trend and order intake trend for land-based is positive, or the backlog is solid of 1.4 billion at the end of the quarter. And digital had an order intake of 35 million in the quarter, which is 46 million lower than the high order intake in Q2 last year. The revenue was strong, 18% higher this year compared to last year. We also see a significant improvement in the EBITDA margin from 21.9% in 2025 to 35.7% this year. We see a very positive revenue trend for digital, and we also see a very positive momentum in the market for our digital products, and we expect the order intake trend to turn positive during Q3. Order backlog of 220 million at the end of the quarter is 32 million higher than one year ago. That was my financial update. I will give it back to Knut now to close off this session with the outlook and the Q&A.

Thank you very much, Ronny. Let's go to the outlook. We are saying we foresee continued strong momentum for deep farming concepts. Also, this is supported by the new development into cult farming. and also into trout in the Black Sea on top of the salmon farming segment, of course. And also the new version of Nautilus Next will also fuel further commercial traction, we expect. We continue to invest and improve our solutions across sea-based, land-based and digital. That's our three times innovation agenda. And we are aiming for revenue above 5 billion NOK and EBITDA of minimum 9% in 2027. This is backed by a solid order backlog and also the organic growth initiatives we are conducting. The strategic review is expected to be completed during the fall of 2026. And that brings me to the end of the presentation. So we are now ready for the Q&A session. Please continue to post any questions you might have, and our moderator will read the question.

Yes, indeed. We have one question from Ola Trovatten. Can you comment on what's driving this very strong order intake in C-base in Q2?

I think I mentioned that there are basically two drivers. We had strong momentum on the deep farming, so relatively strong order intake in first half and most of it came in the second quarter so on that segment we are ahead of our internal plan our budget so that is number one and number two is the intake of the The 230 million, I don't think everything came in the second quarter, but the big majority of that for the boat contracts, mainly to the defense industry. So those are the two drivers, in addition to the regular business.

Yes, we don't have any further incoming questions, but perhaps we should give it 10 seconds.

Please post any questions. If there are no more questions, thanks for listening in and we wish you a nice weekend. Thank you very much.

Thank you.