Q3 2015 Presentation - Investor Relations - Investor Relations relations... · Q3 2015 Presentation...

Your Aquaculture Technology and Service Partner

Q3 2015 PresentationOslo - November 5th, 2015

Trond Williksen, CEOEirik Børve Monsen, CFO


Agenda

Highlights

Financial performance

Outlook

1

2

3

Q&A4

Your Aquaculture Technology and Service Partner3

Highlights Q3 2015 - by CEO Trond Williksen


Strong performance and growth continues

4

• All business segments with good performance

• Chile – continues to be profitable in Q3 despite challenging market conditions

• Acquisition of Aquatec Solutions A/S finalized at 30.09.2015 –strengthening our land based position

• Best order backlog ever

• Dividend of NOK 1.00 per share to be paid in Q4 2015

YTD 2015 – Highlights

• Best first nine months ever – growth in revenues and earnings

• Strong financial position

Third Quarter 2015 – Highlights

1 2461 081

103 108

8,3 %

10,0 %

0,0 %

2,0 %

4,0 %

6,0 %

8,0 %

10,0 %

12,0 %

0

200

400

600

800

1 000

1 200

1 400

2014 2015 - YTD

MN

OK

2014 full year vs 2015 YTD Q3 (12 months) (9 months)

Operating revenue EBITDA EBITDA %


34 41

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

MN

OK

EBITDA

330 355

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

MN

OK

Revenue


5

+19%

+8%

EBITDA of 11.4% in Q3 2015


201 317

187

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

MN

OK

Order Inflow

349

456

187

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

MN

OK

Order Backlog


6

+152% +84%

Best order backlog ever at the end of a third quarter excluding new company

Best order backlog ever after including Aquatec Solutions A/S

505643


AKVA group – uniquely positioned for further growth

• The most recognized brand in aquaculture technology

• Leading technology solutions and service partner to the global aquaculture industry

• Global presence -subsidiaries in 8 countries

• 690 employees

• Market cap of NOK ~876m and net debt of NOK 98m


Presence in all main farming regions

Map of activities Revenue per region, Q3 2015

Nordic

Americas

Export

Nordic65 %

Americas18 %

Export17 %


Strategic priority to increase the proportion of OPEX based revenue

OPEX based vs CAPEX based revenue, Q3 2015 Comments

• OPEX based revenue defined as our revenue booked as OPEX in our customers P&L

• Aim of increasing relative share of OPEX based revenue through software and services – by developing software, farming services, technology services and rental further

• Introduction of rental business model in Norway in late 2014. Already successfully introduced in UK and Canada

• Rental is an “all inclusive” service providing for instance light or picture for an agreed period of time (2 to 5 years duration) -reducing CAPEX and reducing operational work for the customer

• Acquisition of YesMaritime in 2014, a provider of diving, ROV and other services to the salmon farming sector (Farming services)

• Development of Farming Services still in an early stage –opportunity for consolidation

CAPEX based revenue

72 %

OPEX based revenue

28 %


Revenue by product groups and species

10

Cage based technologies = Cages, barges, feed systems and other operational systems for cage based aquaculture

Software = Software and software systems

Land based technologies = Recirculation systems and technologies for land based aquaculture

By product groups – Q3 2015 By species – Q3 2015

Salmon = Revenue from technology and services sold to production of salmon

Other species = Revenue from technology and services sold to production of other species than salmon

Non Seafood = Revenue from technology and services sold non seafood customers

Cage based78 %

Software9 %

Land based13 %

Salmon80 %

Other Species

10 %

Non Seafood

10 %


Acquisition of Aquatec Solutions A/S

11

• Acquisition finalized at 30.09.2015

• Purchase of all the shares in Aquatec Solutions for a price of DKK 35 million. In addition AKVA will pay an adjustment amount based on the net debt and working capital position of Aquatec Solutions as of 30.09.2015. Finally, AKVA will pay to the sellers an additional consideration (earn-out) based on the realized EBITDA of Aquatec Solutions for 2015 and 2016. The parties have agreed an estimated net present value of the earn out in the amount of DKK 21.6 million based on current budgets and forecasts

• The acquisition is paid in cash and will be financed with a loan from Danske Bank

• Aquatec Solutions will strengthen AKVA group’s position in the Land Based Technology segment

• Will be operated as a stand-alone operation going forward


Announcement of dividend from AKVA group ASA – 1.00 NOK per share

12

• Step one: NIBD/equity - ratio = 0.22, hence fulfilled with good margin

• Step two: strong underlying performance gives positive operational cash flow YTD 2015

• Dividend to be paid out in Q4 2015 is 1.00 NOK per share. Total dividend pay out will be NOK 25.8 million

AKVA group ASAs’ current dividend policy:

The Company’s main objective is to maximize the return on theinvestment made by its shareholders through both increasedshare prices and dividend payments

AKVA group ASA aims to pay out dividend twice every year, inQ2 and Q4

A two step policy:• The dividend level shall reflect the present and

expected future cash generating potential of AKVAgroup. AKVA group will target a net interest-bearingdebt/equity ratio of less than 0.5x

• When the target debt vs. equity level is met, at least60% of the annual free cash flow after operationaland financial commitments is intended to bedistributed as dividend

Applicable statutory restrictions shall be observed


Financial performance Q3 2015 – by CFO Eirik Børve Monsen


Q3 2015 - Financial highlights

14

• Good overall financial performance continues – taking advantage of the diversified operations

• Tight cost control in Chile – profitable Q3 despite challenging market conditions

• Acquisition of Aquatec Solutions finalized 30.09.2015 – financial implications in the Q3 report

• Share buyback program initiated in Q3 – Share incentive scheme to employees

• Dividend – details

Revenue

-

50

100

150

200

250

300

350

400

450

1Q 2Q 3Q 4Q

2012

2013

2014

2015

MNOK


Q3 2015 - Financial highlights, continued

15

EBITDA EBITDA %

Stabilizing on a historical higher EBITDA-level both in NOK and in %

Getting closer to medium term target of 10% EBITDA on a annual basis

- 10

- 5

-

5

10

15

20

25

30

35

40

45

1Q 2Q 3Q 4Q

2012

2013

2014

2015

MNOK

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

1Q 2Q 3Q 4Q

2012

2013

2014

2015


Cage Based Technologies

16

Nordic● Q3 traditionally a good quarter in Nordic due to high activity

● Strong performance continued with a slightly different product mix compared to 2014 - a wider range of products contribute to revenue and profit in 2015 vs 2014

Americas● Number of employees / cost base in Chile was reduced in Q2 to be

prepared for expected reduced market activity in the second half of 2015

● S&AS sales and tight cost control gives a profitable Q3 in Chile despite challenging market conditions. YTD Chile have a decent year mostly due to a strong first half financially.

● Canada continues the good performance in Q3 and the best YTD Q3 ever

Export● UK continues the good performance in Q3 and the best YTD Q3

ever

● Turkey continues the good performance in Q3 and the best YTD Q3 ever

● Low activity in Export to emerging markets YoY

185160

54

58

31 59

270277

11,7 %

10,5 %

5%

7%

9%

11%

13%

15%

17%

0

50

100

150

200

250

300

2014 Q3 2015 Q3

CBT (Revenue & EBITDA %)

Nordic Americas Export EBITDA %


Software

17

● AKVA group Software AS continues to deliver stable and high margins – with improved revenue and margins YoY

● A yearly timing effect in accounting of personnel expense July in Norway gives extra good margins in third quarters

● Wise lausnir ehf – with improved performance YoY

● Software continues to invest in new product modules, which is expected to strengthen the financial performance of the SW segment further

20

24

5

7

1

1

25

32

19,2 %

26,1 %

0%

5%

10%

15%

20%

25%

30%

0

5

10

15

20

25

30

35

2014 Q3 2015 Q3

SW (Revenue & EBITDA %)

Nordic Americas Export EBITDA %


Land Based Technologies

18

● Improved performance YoY and QoQ

● AKVA group Denmark A/S with decent performance YTD. Still room for improvement financially

● Plastsveis AS on track with good performance YTD

● Aquatec Solutions will be included in the consolidated P&L from Q4 2015 and onwards

31

45

3

1

35

46

-6,2 %

7,0 %

-10%

0%

10%

20%

30%

40%

0

5

10

15

20

25

30

35

40

45

50

2014 Q3 2015 Q3

LBT (Revenue & EBITDA %)

Nordic Americas EBITDA %


Financials – Detailed P & L

19

• Low interest cost due to low net debt and low interest rate

• Mainly currency – considered as an acceptable level

• Minority shareholders (30%) in Plastsveis AS

P&L 2015 2014 2015 2014 2014

(MNOK) Q3 Q3 YTD YTD Total

OPERATING REVENUES 354,7 329,7 1 081,3 941,0 1 246,1

Operating costs ex depreciations 314,2 295,5 973,2 851,0 1 142,7 EBITDA 40,6 34,2 108,0 90,0 103,4

Depreciation 12,2 9,1 33,5 26,2 35,7

EBIT 28,4 25,1 74,5 63,8 67,6

Net interest expense -0,8 -1,2 -3,6 -4,0 -4,8

Other financial items 0,3 1,5 0,3 0,9 0,0 Net financial items -0,5 0,4 -3,3 -3,1 -4,7

EBT 27,8 25,5 71,2 60,6 62,9 Taxes 8,0 7,3 20,4 14,8 8,4

NET PROFIT 19,8 18,2 50,8 45,9 54,5

Net profit (loss) attributable to:Non-controlling interests 0,7 -0,3 1,2 -0,3 -0,6

Equity holders of AKVA group ASA 19,1 18,5 49,5 46,2 55,1

Revenue growth 7,6 % 82,7 % 14,9 % 39,9 % 35,6 %

EBITDA margin 11,4 % 10,4 % 10,0 % 9,6 % 8,3 %

EPS (NOK) 0,74 0,71 1,92 1,79 2,13


147

100

145 127

17,4 %

8,4 %

10,6 %9,1 %

0 %

2 %

4 %

6 %

8 %

10 %

12 %

14 %

16 %

18 %

20 %

0

20

40

60

80

100

120

140

160

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

MN

OK

MNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOK

MNOK

68 96

153 144

183

144 147 157

226

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

MN

OK

Group financial profile – remains strongAvailable cash Working capital

+43 MNOK

Continued strong working capital level – despite record high activity

Due to strong capital discipline

Including a 90 MNOK credit facility Danske Bank

Cash in Q3 2015 includes the financing of the adjustment amount in the Aquatec Solution acquisition


342 339 347 365 375 389 403 417 443

50,2 % 44,8 %

38,0 %

0%

10%

20%

30%

40%

50%

60%

0

50

100

150

200

250

300

350

400

450

500

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

MN

OK

Total Equity Equity %

Group financial profile – remains strong, continued

21

ROCE Equity

Good nominal increase in equity YoY due to profitable operation

Previous dividend payment of 25.8 MNOK was in Q4 2014

+68 MNOK

15,2 %

14,1 %

12,3 %

15,2 % 14,0 %

Q3 - 2014 Q4 - 2014 Q1 - 2015 Q2 - 2015 Q3 - 2015


Net debt/EBITDA of 0.8x

22

Change in net debt (TNOK)Net debt (MNOK) and net debt/EBITDA

108

75 70

92

44

89 82

76

98

3,2

1,6

1,0

1,3

0,4

0,9 0,8

0,7 0,8

-

1,0

2,0

3,0

4,0

-

30

60

90

120

Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014 Q1 - 2015 Q2 - 2015 Q3 - 2015

Net interest bearing debt NIBD/EBITDA(12months rolling)

Net debt 30.06.2015 75 795

EBITDA -40 564

Income taxes paid 819

Net interest paid 836

Capex paid 15 177

Acquisitions 69 066

Other long term liabilities -13 066

Paid dividend -

Buyback own shares 901

Sale of fixed assets -274

Currency effects 285

Other changes in working capital -11 098

Net change 22 082

Net debt 30.09.2015 97 877


Balance sheet

23

BALANCE SHEET 2015 2014

(MNOK) 30.09 30.09

ASSETS 1 160 836

Intangible non-current assets 337 254

Tangible non-current assets 88 65

Financial non-current assets 8 2

Inventory 209 135

Receivables 382 283

Cash and cash equivalents 136 97

LIABILITIES AND EQUITY 1 160 836

Equity 439 373

Minority interest 3 2

Long-term interest bearing debt 188 126

Short-term interest bearing debt 46 16

Non-interest bearing liabilities 483 320


CAPEX

24

Capex (TNOK) and capex / sales (%)

35 173

7 036

CAPEX breakdown YTD Q3 2015 (TNOK)

Ordinary CAPEX including rental Capitalized R&D expenses

8 628

12 266 10 982

9 133

11 017

18 633

10 994

16 037 15 177

5% 5%

4% 3% 3%

6%

3%4% 4%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014 Q1 - 2015 Q2 - 2015 Q3 - 2015


Dividend in AKVA group ASA

25

• A dividend according to the dividend policy to be paid out in Q4 2015 of 1.00 NOK per share. This amounts to a total distribution of 25,834,303 NOK

• The board of directors was in the AGM in May 2015 authorised, pursuant to the Public Limited Companies Act § 8-2(2), to approve the distribution of dividends based on the Company annual accounts for 2014. The authorisation also includes distribution in the form of repayment of paid-in-capital. The authorisation may be used to approve the distribution of dividends up to an aggregated amount of NOK 75.000.000

• The shares in the company will be traded "ex dividend" as from November 12th,2015

• Payment of the dividend shall be made no later than November 20th, 2015

AKVA group ASAs’ current dividend policy:

The Company’s main objective is to maximize the return on theinvestment made by its shareholders through both increasedshare prices and dividend payments

AKVA group ASA aims to pay out dividend twice every year, inQ2 and Q4

A two step policy:• The dividend level shall reflect the present and

expected future cash generating potential of AKVAgroup. AKVA group will target a net interest-bearingdebt/equity ratio of less than 0.5x

• When the target debt vs. equity level is met, at least60% of the annual free cash flow after operationaland financial commitments is intended to bedistributed as dividend

Applicable statutory restrictions shall be observed


Outlooks – by CEO Trond Williksen


-

100

200

300

400

500

600

1Q 2Q 3Q 4Q

2012

2013

2014

2015

MNOK

-

100

200

300

400

500

600

700

1Q 2Q 3Q 4Q

2012

2013

2014

2015

MNOK

Order backlog and inflow

27

Order backlog Order inflow

Highest order backlog ever after a third quarter before including Aquatec Solutions A/S

Highest order backlog ever after including Aquatec Solutions A/S

The good market activity continues


Positive outlook – but usual low season in Q4

28

● Strong mid term outlook due to high market activity and large order backlog

● Q4 is a low season quarter in Nordic which will influence the Groups’ quarterly performance as usual

● Good demand in the Nordic market continues with shift towards more investment in land based technology

● UK and Canada are expected to continue to perform well in the next quarters with a significant order backlog and a large portion of recurring business

● Continued low expectations in Chile. Majority of our Chilean customers struggle with loss making operations and a need to restructure the industry. Situation expected to last. We adjust our resources, costs and activity level to the situation and are maintaining a good level of service and after sale

● Land based segment is expected to have a positive development with a growing order backlog. The acquisition of Aquatec Solutions A/S will contribute to the positive development in this segment

● Exports to emerging markets will continue to fluctuate short term, but improved project activity is expected in the next quarters

● We continue our effort to build service and after sales as a key business element in all markets and segments


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