Akva Group ASA

OSE:AKVA

Earnings Call Transcript

[Knut Nesse, Chief Executive Officer]

Ladies and gentlemen, good morning and very much welcome to this AKVA group second quarter presentation. Something happening. Okay, my PC is frozen. That's not good. Okay. Thank you. Good to have some helping hand here. All right. Now it's working. Okay. What we are going to do this morning, I'm going to do the highlights and the outlook. And Ronny Meinkøhn, the CFO, he's going to do financial performance. And then after all, we will do the Q&A session. So I kindly invite you to post any questions for the Q&A session during my presentation. Starting with the highlights for the second quarter. We had an acceptable activity level and order intake in the quarter. Operation was still negatively impacted by COVID-19 and the travel restrictions, and that caused some additional losses in the quarter or loss of activity, I should say. And then notable, we also did the final commercial cleanup and provision for old Land Based projects of NOK 25 million, which also reduced the overall profitability.Within innovation and digital, we are making considerable progress on our deep sea farming concepts, which is under development, and we are strengthening our digital organization. That is now completed. And revenue came in at NOK 832 million and EBITDA at NOK 79 million. EBIT landed at NOK 32 million, which is lower than we like, but you should take into consideration the NOK 5 million related to the COVID restrictions and the NOK 25 million related to the Land Based issue. And then let's talk a little bit about what we mean with the final clean-up within the Land Based sector. So first of all, we charged NOK 25 million to the P&L as costs related to old projects and those are already closed projects. And the context here is that we did a management change in the start of the year. And following that, we were a bit distracted by the cyber attack in the first quarter. But in the second quarter, we started to engage a lot with our customers. And the issue at stake was that we noticed over the last couple of years that we didn't do new trading with a number of larger customers in Norway. So we had to find out what was the root cause of the issues. So we did a lot of visits. We talked with old and new customers, and we identified that in accordance to customers' expectations. We didn't close all projects properly. So that's a very delicate consideration in accordance to contract. And we have to admit that, in the old days, contract management was not the strongest one, and that gave some room for the decisions. But somehow and at some point in time, you have to listen very, very carefully to the customer. So we made a due consideration. And finally, we made a commercial decision in the second quarter to what we consider cleaning up and meeting the expectations. And the nature of that is that we did adjustments. We did some mitigating actions with some features, functionalities where the customer were not entirely pleased. No, they are or it's underway to be completed. And that restored commercial relationship with our customers, and that's the important thing. And I can tell you that we already see some positive momentum and positive development because we did this thing. So I expect that we can harvest from this in the months to come in form of new contracts within the post-smolt segment.And that brings me very much to the first half. First half is NOK 1.555 billion in turnover and an EBITDA of NOK 162 million. And you have to take notice here that this is excluding the cyber attack costs, which are NOK 49.7 million. And then EBIT, still excluding the cyber attack cost, is NOK 68 million for the first half. And please take note, still, the specific issues for the full first half, COVID. We had an impact here, bottom line, on the EBIT of NOK 15 million. And the Land Based issues for the second quarter, we already talked about of NOK 25 million. So we have to view the strength of the EBIT in light of those 2 issues. Market development. Salmon price is still a reasonable one at NOK 55, and the forward price for the rest of this year is hovering around NOK 60. And that's also the same level for 2022. So in conclusion, salmon price is important for our customers. It has to do with their cash flow and ability to invest in equipment, for instance, supplied by AKVA. So what we see now with coming gradually out of the COVID-19 tunnel and on the back of the salmon price and the expectations going forward, we see a strong momentum now in particular in the last 2 months, including July as well.So I consider that we are back on normal good activity level when it comes to our core products, for instance, in particular, barges, which had a very slow start of the year when you have the old uncertainty. We have seen a very strong momentum there in the last a couple of months. So that's good to notice. With regards to our order intake, NOK 880 million for the quarter; NOK 735 million for Cage Based, which is pretty strong; and Land Based is NOK 116 million, which is always very dependent on the large projects and some fluctuations there. But overall, pretty good order intake and ending up with a pretty strong order backlog of NOK 1.862 billion. It's pretty stable now in the recent quarters, but a pretty strong order backlog, if you look historically. And you see almost 50-50 between Cage Based and Land Based. COVID 19 for the quarter, still some negative impact on operations. The issue is the travel restrictions for foreign workforce. I already talked about that for the first quarter. It's about bringing in our Lithuanian guest workers. We have a big operation in Lithuania and part of our operational model is that they were part of their time in Norway. That has been difficult during the quarter to manage. However, that eased and opened up during June. So currently, we have a pretty normal situation. If you have some of the workers not being fully vaccinated, they still need to be in quarantine arriving to Norway, but we can bring them into the country. So I will say, for now, we have a normal or as close to our normal operation as possible. So if COVID is not worsening again, we should be good from the third quarter and onwards.Then I'd like to use this opportunity to also reflect a little bit on our strategic status. Certainly, some kind of headwind in the first half, both related to the cyber attack, COVID, also the -- this commercial clean-up in Land Based. So it may be good to go back to the Capital Market Day in November 2020, which is already 9 months ago and look at where we are now and what you can expect from us going forward.The starting point is, of course, on the macro, on the demand side of salmon. Do we expect consumers in the world to continue eating salmon? Do they have appetite for salmon? I would say we are even more optimistic now than in the middle of the pandemic because we see a strong trading of salmon despite the soft HORECA segment, which is coming in, getting stronger by the days. But overall, what we have seen in the last months give at least me a lot of optimism for the future. So we and Aqua, we really firmly believe that there is an appetite for salmon, equal to at least 5% year-on-year growth. So we believe in the high scenario here where salmon consumption is going to go from around 2.6 million tonnes in 2019 to 2 million higher of 4.6 million and equal to a 5% year-on-year growth. That's what we believe the consumer will have appetite for, literally. And that's on the back and on the basis of those mega trends you see on the right here. It's focused on environmental and health. It's the fact that salmon is among favored species, and it's also distribution and opening of new markets and channels as well. Also, new product development on the back of the sushi-sashimi mega trend and also new packaging, et cetera, et cetera. So all this is leading to a strong momentum for salmon, 5% growth year-on-year is achievable and still with a healthy salmon price. That's firmly what we believe. And then you have the other side of the kind will be what -- how the supply consideration, how can supply meet with 5% year-on-year. On the top, you see a repetition of demand. We already talked about that. And then the question is, what can the traditional salmon farming region based on traditional technology do? And we believe that over this cycle, over the next 10 years, the traditional salmon farming regions based on traditional technology will do roughly 3%. So not able to meet with the 5%, but likely 3%. And the factors there are quite some headwind, for instance, in Canada, West Coast of Canada. Because of political reasons and issues, you see a bit of a setback on volume there. You don't see any particular growth from Scotland. And Chile is also facing some different mixed challenges. So it will be Norway to drive much of the volume growth. Probably Norway can do 4% -- 4% to 5% on conventional. But the blend of the whole thing, if you consider all the regions, is slightly not more than 3% as the blend of all salmon farming regions.And then you have a kind of supply gap. If demand can do 5%, if the blend of supply traditional can do 3%, you have a gap of roughly -- if you do the math in terms of tonnage, you have a gap of 800,000 tonnes or something like that if you believe on the 5%, which we do. So that's the window of opportunity. We think that gap needs to be filled by new kind of technologies, which can certainly be offshore. But likely, we believe it's going to be Land Based over the years, which is going to be more environmental friendly. It's closer to the consumer, and you will produce salmon in North America and Asia. So that's the high-level trends. That's what we believe is going to happen here. And for AKVA group on the right, the implications are strong cage farming segment. So that's our core business today. We need -- we will do even more business there, and it needs to be supported by a strong innovation program. And we believe we will see exponential growth in the Land Based segment. And then talking about Land Based, this is the high-level strategy within Land Based, which we talked about during the Capital Market Day. So the basis, the starting point in box #1 is that we have a market-leading Zero Water Concept RAS technology, which is enabling sustainable and cost-effective production. If you are to move production closer to consumer in, for instance, U.S. and Asia, water is a scarce resource. So you need to have technology, which is consuming as little water as possible and where you are reusing the water. And that is our core technology. That's the Zero Water Concept. Other than that, to have a complete value proposition, we have said that we also need to deliver complete scope of things like feeding systems, fish tanks, fish handlings, cameras, lights, sensors, all adapted, customized and fit for the Land Based farming. You cannot simply take that technology from the seaside and transfer it to the land site. You need to customize it, and you need to adapt it. I can update you that we have several innovation projects in place there, and we are making good progress there. We really teamed up with a lot of people, new innovation and resources, and we are making considerable progress within box #2.Box #3, which is about precision farming. In particular, on the Land Based side, where you can control the entire environment, you can control all the input factors, the health status of the fish and the biological dimension to a much larger extent than in the sea, but you need digital capabilities and AI, artificial intelligence, for that. So what we did here in the last period was also to acquire a 33% stake in the AI company, Observe. So that, together with acquiring and hiring own people and building own capabilities will make us fit for purpose with regards to box #3. Production Advisory Services, that's basically the fact that we think that farming fish on land is basically going to be a new spot. You need new capabilities. You need good people, good capabilities to support that one. So we are building up our own team in order to support our new customers in the Land Based space to succeed. So far, we have hired 3 top notch people, 3 PhD with specific competencies and background within RAS. So overall, we are making considerable progress within our strategic agenda for Land Based. Then what is then Land Based? Just a very simple illustration of how to view this segment. The traditional part or traditional technology has been to produce a smolt in our recirculation unit and a smolt of a size of 100 to 250 grams. And that has been our market here for the last 10, 20 years. We are still a player in that market, and that is -- you see steady growth there as well. However, the latest development is more within post-smolt, in particular in Norway, the idea of producing a larger smolt on land before you do stocking to the sea. That is moving fast, and I'm going to give you an update on how we view the market there in a minute. And then finally, you have the new kid on the block, which is the grow-out segment. That's once again hold to fill the demand supply gap, which is about moving production closer to the consumer. So first about the post-smolt market. The post-smolt technology and the concept as such, we consider that as very proven now. A large number of farmers in Norway has already invested in post-smolt facilities. They are growing the fish larger and larger, even up to 1 kilo today before stocking to the sea. And there are 2 clear benefits of doing that. It brings with you increased license utilization, depending on how large your smolt will be. If it is even up to 1 kilo, you can talk about up to 50% better license utilization. And likely, the investment on the land side on post-smolt is still more economic than buying a new license at market price. So the economic is also supportive here, certainly. And then in addition to the increased license utilization, it also comes with better fish health. If you stock a larger fish, it's typically more solid, more robust, I should say. And typically, you can have fewer seed lice treatments for the complete production cycle, and also a stronger fish in general, better immune system, et cetera, et cetera, and fewer months in the sea, which is about exposing the fish for all externalities. So we made -- a year ago, we made 3 scenarios that the entire industry, not only some players, but at the entire industry will move to either 200, 300 or 400 grams. Today, we think it's pretty clear that the industry will move to an average small size of 400-gram or even higher over the next years. And then we have done some calculations, and you can see the assumptions on the right-hand side. I'm not going to talk you through them, but it's clearly stated that if the industry is moving to 400-gram or higher, they need to invest NOK 12 billion ballpark in the next few years and then another NOK 21 billion in the years '26 to 2030. So if you combine the two, the total investment program sits on roughly NOK 33 billion. This is just a modeling with 400 grams. I think the likelihood that can become even higher is pretty high.So to conclude this slide, we can say that post-smolt is about a fast-growing market on the back of a proven technology concept. The customers behind it is well-financed customers because they are the established salmon farmers for the most. And this has a high focus for AKVA. And probably you should also see this commercial cleanup on the back of this one because we really, really believe this market will grow fast in the years to come. Then we have the last segment, which is about the grow-out, and this is our pipeline for prospects and projects we are working with, customers. So we divide in 3 phases. It's early engagement where you see we have pretty good engagement and a good number of prospects. And then you have pre-projects where we are a bit more advanced. And then we have 3 customers where we are already very advanced, where we are doing engineering. And the next phase for those projects will be to get financing. Then to your benefit, we have just done some high-level modeling. If you bring it all together, the post-smolt together with the on-growing, what could it look like for AKVA? So this is done on the basis of an expected strong post-smolt market and the potential, the potential we see for on-growing. Please take this as an illustration. It's not meant as a firm guiding, but an illustration and a modeling for a whole ramp-up could take place. So the starting point is that in the recent years, we typically had a turnover of NOK 400 million to NOK 500 million for the Land Based segment. At the bottom, we see a step-up in the post-smolt segment, which we expect to benefit from and take new contracts and have a steady growth there. The second building block is the Nordic Aqua Partners contract, which is already a firm contract. We have started already deliveries to China. First containers are already shipped. So that's going well. And this company has already a pretty strong financing. They could probably finance also a Phase 2 on the basis of the equity they have. So we expect that at a point in time, we will also have a Phase 2 contract with them. That's not our contract today, but that will be our expectation.And then we -- on the top, we have just modeled the effect or the impact of getting one, not many, but one Land Based contract for on-growing of the magnitude of 10,000 tonnes and that to kick in over the next 6, 9 months. And the combination of those 3 factors, the post-smolt, the ongoing NAP contract, and bringing on new contract is this picture. So we think we will reach the mark of NOK 1 billion turnover within the foreseeable future, within a couple of years. That's our ambition level. On Cage Based, we have a broad range of solutions already. We are very much a complete supplier there. And here, you see the completeness of our product offering and technology. So the key message here is that there is a strong growth in this segment or at least a steady growth in the segment. We are market leader today. Our ambition is to maintain that position. So to do that, we are strengthening our innovation around these product groups.If you take the fish farmer perspective, we think those 4 elements here is the key focus of the fish farmer. It's first and foremost about the marine infrastructure. That is to secure the containment and efficient operation. And as you can see there, we have a huge offering behind. It's about precision farming for optimizing the feed conversion and growth. Also there, we have a huge product and solution offering. And the same goes with digital and the same goes with the sea lice and the fish health focus. So overall, we have a very, very relevant product and solution offering for what matter the most for the farmers. Also, one important development recently is that we believe quite a bit in farming in the deep. On the left-hand side, you can see some of the benefits of farming in the deep, and we think we can really be part of the solution here. We already have, on the right-hand side, you see things like Tubenet at the Atlantis Subsea Farming. We have concrete solutions here. But we are also working with new product and technology development, which can support deep water farming.Then to close off, also a few words about digital. We think that those are the 3 mega trends within digital -- within aquaculture. It's about remote operation. In the future, you will not operate everything from site. You will have people on land doing your feeding. It's about precision farming, and it's about bringing a lot of systems together and create digital ecosystems. And behind that, we have very strong products and concepts already. So we are going to build on that and bring more innovation into this space. So I talked about the market side and some update. The internal focus is very much around operational excellence. All the operating companies within AKVA, we have 14 of them have AKVA way project, which is our operational excellence program. We are focusing on implementing a new ERP system, and we are strengthening our project and business controlling capabilities. And to conclude this strategic update, we believe -- on the back of the demand side, the global mega trends, we believe there is really an organic top line growth possibility here. We believe we have much to improve in AKVA. That's why we have a very solid operational excellence program in place. Our ambition is really to increase focus on innovation by also stepping up the spending within technology development, within innovation and also supported by our 3 digital platforms, which are AKVAconnect, AKVA Observe and Fishtalk. And to conclude there, in the middle, we reiterate that over the years to come, we will deliver a 25% EBIT increase on a year-on-year basis. And within a couple of years, move to ROACE of a minimum of 15%. And that brings me very much to the end. I just wanted to take this opportunity to do a little strategy update, a progress status with you on top of the Q2 numbers. And then we are going to do a deep dive more into the financials for the second quarter. So I hand over to the CFO, Ronny Meinkøhn. Please, Ronny.

[Ronny Meinkøhn, Group Chief Financial Officer]

Thank you, Knut. Good morning. I will start with the consolidated income statement for the second quarter and the first half year of '21. Revenue in the quarter was reduced by NOK 30 million compared to Q2 last year, but both the activity level and the order intake was acceptable, taking into account the uncertainty and the impact from the COVID-19. For the first half year of '21, we have a total revenue of close to NOK 1.6 billion, which are approximately NOK 65 million below last year. As Knut mentioned, we are, however, not satisfied with the overall financial performance in the quarter as profit was negative, impacted by the NOK 25 million in costs related to the final commercial cleanup and provisions for old Land Based projects. In addition, we have this effect from the COVID-19 restrictions of NOK 5 million. Including these extraordinary costs, EBIT ended at NOK 32 million in the quarter, which is NOK 10 million below last year. EBIT for the first half year of '21, including -- or excluding the NOK 50 million in cyber attack costs was NOK 68 million compared to NOK 80 million last year. Higher financial costs in Q2 compared to last year is mainly related to lower share price on our investment in Nordic Aqua Partners with a negative impact of NOK 3 million in the quarter. The accumulated effect from this investment is now negative of NOK 1.5 million.Looking at the revenue development, we have a book-to-bill ratio the last 12 months, just above 100% with an order intake close to NOK 3.2 billion and a revenue of NOK 3.1 billion. Revenue increased by 16% in Q2 compared to Q1 this year, but was 3% lower than last year. The activity level in Q2 is still negatively impacted by the COVID-19 restrictions with travel restrictions on import of personnel to Norway. That is reducing our capacity at the service stations and also, to some extent, slowing down the progress in our Land Based projects.At the various markets, we still see that the Americas' activity is low and the revenue was 28% lower in Q2 this year compared to the same period last year. As in Q1, we still see a high activity in Europe, Middle East. And while the revenue in the Nordic market was reduced by 4% compared to Q2 last year. On the segments, the Cage Based technology still represents the majority of our revenue with a total share of 86% in Q2.As already stated, we are not satisfied with the financial performance in the quarter due to the costs of NOK 25 million related to the commercial cleanup and increased guarantee provisions for old Land Based projects. On top of this, we have the COVID-19 restrictions with an impact of NOK 5 million in the quarter. And please note that this is mainly related to reduced activity level, but also, to some extent, to increased cost base in running the operations. EBITDA ended at NOK 79 million in Q2 and was NOK 14 million below Q2 last year. The financial position is acceptable. However, we experienced a significant reduction in available cash of NOK 147 million in the quarter. Approximately NOK 33 million is related to payment of dividend and another NOK 36 million is related to ordinary CapEx activities. The main part of the reduction is, however, related to the increase in net working capital of NOK 116 million during the quarter. And net working capital increased from 8.2% in Q1 to 12.1% in Q2. And a significant part of this increase is related to the subsequent effects from the cyber attack. During the first half year, we were without ERP systems and support systems for several months and had to monitor our business using manual systems. This had, of course, affect both for inventory control and the invoicing process, and we have used a significant amount of time during Q2 to update our systems and are now finally back to normal. Another part of the increase is also related to larger projects, which for the most have favorable payment terms, but will gradually move towards cash neutral level as they reach 100% completion.One example is barge projects. We have delivered several barge projects during the first half year. But as Knut stated, we have only started a limited number of new projects. So there is also some timing effects when it comes to projects, which also influenced our net working capital level. As a consequence of the increase in net debt, our NIBD/EBITDA covenant increased from 3.4 in Q1 to 3.9 in Q2. And please note that we have adjusted for the NOK 50 million in cyber attack costs when calculating this ratio in agreement with our bank. The return on capital employed is at the same level in Q2 '21 as the previous quarters. Both the cyber attack and the COVID-19 restrictions have disrupted our focus and the financial performance so far in '21, but we still believe that the 15% target minimum in 2023 is achievable. A dividend of NOK 1 per share was paid on April 14. But due to the very challenging situation, the first half year and also, to some extent, the uncertainty related to COVID-19, although we expect to have a limited impact from that one going forward, we have decided not to pay any dividend for the second half year in '21.Then I will go through a bit more details regarding the financial performance in the various business segments and starting with the Cage Based technology. Overall for the business segment, the revenue was reduced by 8% in Q2 this year compared to the same period last year when the order intake was at the same level. The Nordic region, the revenue and the order intake was reduced by, respectively, 9% and 8% in Q2 compared to last year, and the reduced revenue of approximately NOK 45 million is mainly related to reduced activities in our service stations and, to some extent, reduced sales of nets.As in Q1, we still see a low activity level in Americas. The revenue is 26% down compared to Q2 last year while the order intake is down by 7%. And this reduction is both related to our operations in Chile and Canada. Europe and Middle East continued the positive trend from Q1 with high activity and revenue, 44% above last year, driven by very, very strong development in our company in Turkey. Solid order intake increased as well by 62%. The main part of our OpEx based revenue or recurring revenue is related to our service stations in Norway. And the recurring revenue as a percentage of total Cage Based revenue was 31.4% in Q2 compared to 31.9% last year. As already mentioned, the activity in our service stations in the first half year has been impacted by the COVID-19 restrictions, travel restrictions on import of personnel. But as Knut stated, the restrictions were lifted at the start of June, and we had a very strong closing of Q2 with high activity at our service stations. So as long as no new travel restrictions are implemented, we expect the activity to increase in this profitable business going forward.Then the Land Based technology. No significant new contracts were signed during the quarter. Order intake of NOK 116 million compared to NOK 235 million last year. Revenue increased by 31% compared to Q2 '20, but was 15% lower than Q1 this year. We have more or less been engaged in the same projects in Q2 as in Q1, and the reduced revenue is mainly normal fluctuations in a project lifetime. So however, as already mentioned, also the COVID-19 restrictions has reduced the progress in some of our projects in Norway. EBITDA was negative of NOK 20.2 million in the quarter, and NOK 9 million of those are related to the final commercial cleanup of old projects. And they are not -- the remaining NOK 16 million is related to increased guarantee provisions. And please note that the NOK 16 million, they are not related to a specific project or issues. But given the history of the financial performance within Land Based, we think it's fair and reasonable to increase the provisions by such an amount.So we have used a significant amount of time, both internally and together with customers to go through old and closed projects, and we are as comfortable as we can be now that we have cleaned the old history and can have a full focus on ongoing projects and improve further on the project capabilities.Last, Digital Solutions. Increased activity level with a revenue of NOK 18 million in the quarter compared to NOK 16 million last year and also an acceptable EBITDA margin of 22.3%, up from 19.5% last year. Thank you. Knut will now continue with the outlook.

[Knut Nesse, Chief Executive Officer]

Thank you very much, Ronny. So just to conclude the outlook. Order backlog is sound and form a good foundation to execute our organic growth strategy. And the company also expects, as already explained early, limited impact from the COVID-19 restriction in Q3 and onwards. What we are dealing with now are some employees not being fully vaccinated, in quarantines, but that's a very manageable situation. If no new travel restriction is introduced, we should be good there.The long-term fundamentals, as we see it, remains unchanged as presented in our Capital Market Day in November 2020. And also finally, our digital projects, that's an important part of AKVA group's total product offering. And the company will continue to invest and improve our solutions, both within Cage Based and Land Based technology. We have really, really ramped up. We have hired a lot of people, both within digital. We have almost like a new complete team there, a very solid team. Also, when it comes to innovation capabilities, we have ramped up considerable in the last 6 to 12 months.So despite the headwind, we are investing for the future, and we believe the market is really gathering a strong momentum these days. And that's why we are pretty clear on the long-term fundamental sales. So that's going to be my closing words for the outlook, and we like to open up for Q&A. So is there any questions on the line?

[Unknown Executive]

The first question is from Ola Trovatn from Carnegie, asking what is the status on the strategic review of AKVA Marine Services?

[Knut Nesse, Chief Executive Officer]

Yes, we are making some progress there. We expect to have a conclusion there in the next few weeks. We were not ready for our final update today, but we expect to reach out with final conclusions in the next few weeks.

[Unknown Executive]

Then there are some questions from Carl-Emil Johannessen of Pareto. Are you seeing improvements in Chile at the moment as salmon prices has come back to record levels? And yes, there are 2 other questions from him, but maybe one at a time.

[Knut Nesse, Chief Executive Officer]

Yes. Okay. Chile first. First half in Chile has been with some less activity, less investments from customers than in a normal situation. We think it's fair to say that there is a little tendency and trend for a bit of a stronger momentum now. We see, for instance -- I will give one example. We see strong interest for barges. We are quoting barges these days. We didn't do that 3, 6 months ago at all. So that is one example that there is more aspiration for the future in Chile by our customers. So we think that the tide is gradually turning in Chile, but has been a soft first half.

[Unknown Executive]

Second question from Carl-Emil Johannessen. Are you experiencing any new interest in your Tubenet solution?

[Knut Nesse, Chief Executive Officer]

We sold to Mowi last year. They have implemented Tubenet in a number of sites. They are producing now. So they are probably going to evaluate that. I don't know exactly when, but later in the year or into next year when they have harvested. And we have sold Tubenet to 2 other customers, not large contracts, but more kind of pilot for them to other customers to get started to gain experience with Tubenet. It's a new way of operating. So you need to develop very diligent protocols per site for this operation. So it will not happen like kaboom. But over time, we expect some momentum there.But talking about Tubenet, which is about deepwater farming, we have also developed another concept on the back of the Tubenet technology, but a bit more simplified operation, which is beneficial for the farmer, but it's still a deep water operation. There, we are working with one customer, one specific customer, and we have sold 15 solutions there. I think it was 15.

[Ronny Meinkøhn, Group Chief Financial Officer]

That's correct.

[Knut Nesse, Chief Executive Officer]

Yes, that's correct. So that is going very well, and that is also a promising new product concept in addition to Tubenet.

[Unknown Executive]

Third question from Johannessen. How do you expect the working capital to develop going forward?

[Knut Nesse, Chief Executive Officer]

I'll leave that to Ronny.

[Ronny Meinkøhn, Group Chief Financial Officer]

Yes. Thank you. We struggled quite some with the subsequent effects from the cyber attack, and we expect that part to be reversed during Q3 and then be back to more normal levels as you have seen the last 4 quarters. So -- but of course, as I also mentioned, regarding the timing and startup and closing of larger projects, that will always affect the net working capital levels, but we will go down the next quarter.

[Knut Nesse, Chief Executive Officer]

Is there any other questions?

[Unknown Executive]

Not at the moment.

[Knut Nesse, Chief Executive Officer]

So we give it another 30 seconds. If anybody like to post their questions, please do so. All right. If no other questions, we say thank you very much for your attention, and have a nice day.

[Ronny Meinkøhn, Group Chief Financial Officer]

Yes. Thank you.

[Knut Nesse, Chief Executive Officer]

Thank you.