Atlantic Sapphire ASA

OSE:ASA

Q2-2025 Earnings Call

[Gunnar Aasbo-Skinderhaug, executive]

Welcome to the Atlantic Sapphire First Half Financial Results Presentation. My name is Gunnar Aasbo-Skinderhaug. I am the CFO of the company. And together with me, I have Pedro Courard, the CEO of the company, and I'll give him the word now to start off.

[Pedro Courard, executive]

Thank you, Gunnar. I'm Pedro Courard, CEO of Atlantic Sapphire. Let us go to the presentation.

The first half of 2025 has been, by far, the best year for Atlantic Sapphire. We were able to validate our Phase 1, both from a productive and commercial standpoint by harvesting high-quality fish at commercial average weight of 2.9 kilos, giving us the chance to achieve premium price of $8.7 per kilo. All of that with good survival rates, stronger feeding capacity and consistent biomass gain.

The decisions made by the end of 2024, especially in terms of giving stability to our systems, start to realize in concrete results. We expect to finish the year with a record harvest of 5,400 tons with a realistic ambition of 7,000 tons for 2026 and 7,500 to 8,500 tons for the period 2027 onwards.

Our focus has been maximizing the efficiency of Phase 1, while we have reduced the focus in Phase 2, keeping the process to a minimum. To secure fundings of the company until reaching breakeven, we are contemplating a flexible financing option to raise the required funds.

Our unique condition in terms of current and future production capacity is one of our main assets. Once we reach EBITDA positive with Phase 1, we will have the biggest market waiting for us, giving the company an amazing potential in terms of growth and value addition with a medium-term goal of 100,000 tons per year. By the full validation of Phase 1, we will become the salmon company with the greatest growth potential in the world.

Assuming a fully optimized Phase 1 scenario, the company should be able to achieve a stable production of 7,500 to 8,500 tons per year with an EBITDA range from $3 to $5 per kilo. In Phase 2, we are keeping our ambitions in terms of achieving 25,000 tons at a higher optimized EBITDA from 4 to 6 kilos -- $4 to $6 per kilo, profitability that should remain for future phases until reaching 100,000 tons.

Our strong assets give us the right platform for future value creation. Our facility, plus the unique permits conditions related with water availability, has a tremendous value considering we are already starting to play an important role in the American market.

About 1 year ago, the company was in a similar process of raising capital. And even if we don't feel great to be again in this position, there are good reasons why we are here. The projection made 1 year ago were based on wrong information from our production system, basically in terms of stock, information that, as new management, we didn't have the chance to validate properly.

This deviation has, as a consequence, a slower harvest average weight recovery, resulting in lower price achievement, especially in last quarter '24 and first quarter '25. From second quarter '25, we have been able to harvest constantly the right fish at the right price.

Today, we are a totally different company than 1 year ago. As mentioned, we have validated our Phase 1, both from a production and commercial standpoint, and this is a great milestone. All the measures implemented in terms of control, accountability and production stability had positive consequences in terms of performance. But now we are looking for more. We need to complete the validation of Phase 1 by creating the conditions to achieve profitability.

Together with the management that led this first stage, we have recently hired 2 experienced professionals with whom we will lead a strong optimization process to reduce our costs in more important areas like feed, salaries and energy consumption.

While we have had extremely good survival rates, we have consistently been increasing our feeding rate per day, preparing the yield -- the field for future growth. In terms of feed conversion, we have achieved acceptable results. However, we are not satisfied. And as a consequence of that, one of our focus for the coming months will be improving this key parameter.

During the first half of the year, we harvest about 1,200 tons per quarter. While this number doesn't look much higher than '24, the big difference is in terms of average weight and quality. In the first half of '24, our harvest average weight was 1.5 kilos. And for 2025, this value was 2.8 kilos. And the difference is huge in terms of premium prices achievement and costs.

Today, our product is sold through 2 main sales outlets, our premium Bluehouse salmon sold at about $12 per kilo and our fresh superior fillets sold in the spot market but at a higher price than normal salmon. To achieve our ambitions in terms of price, we have been focused on increasing the premium Bluehouse share through increasing our volume among current customers as well as finding new ones.

The strategy has worked well. Helped by good quality fish, we have been constantly increasing our price in our main markets, keeping an average price well above the market. From Q4 '24 to Q2 '25, we were able to increase our average price from $7.2 to $9.3. That is to say $2.1 per kilo or around 30%.

While our Bluehouse premium brand has been from $3.9 to $5.4 per kilo above market reference during the last 3 months, our standard superior fish has also been $1.2 per kilo above price references in the last 2 months. This reality shows the big potential we have in terms of reaching our price ambitions and validates the strategy developed by the company.

To achieve our ambitions in terms of biomass gain and harvest volume, our plan is based on keeping our current survival rates, but improving feed conversion and daily feeding rates, considering a normal operation with all of the growing units in place.

[Gunnar Aasbo-Skinderhaug, executive]

And I will start on the financial section. This slide shows how stronger biology and cost control are now starting to translate into a better income statements. Revenue nearly doubled year-over-year, driven by both higher harvest volume, but more importantly, improved sales price driven by harvesting larger fish.

Costs are trending down with lower cost of goods sold, reduced SG&A and personnel costs and efficiency gains starting to show through. Net loss is lower by USD 16 million from last year, supported by operational improvements and lower financial costs.

Over to the cash flow picture. Operating cash flow improved year-over-year, driven by higher revenue and improved biology. Investing cash flow sharply reduced as Phase 2 construction remains paused. CapEx in the first half of 2025 is mainly related to debottlenecking of current operations. Cash at period end was USD 4.6 million which, together with planned capital raise, is expected to secure the funding through EBITDA breakeven late 2026.

Our balance sheet remains solid, and upcoming financing is expecting to strengthen the liquidity. Equity ratio of 67% underscores a conservative leverage. We have net interest-bearing debt of USD 52 million with maturities well spread, and we have covenant compliance secured. Planned fundraising with DNB-approved amendments to existing bank loan is expected to fund capacity and support runway for EBITDA-positive operations.

And now we will spend some time presenting our new revised business plan, which we have been developing over the last quarters.

The revised business plan accelerates breakeven by focusing on the most impactful upgrades with lower CapEx and OpEx and at the same time with lower risk. CapEx is reduced to $3 million, focusing only on CO2 removal, filtration capacity and energy efficiency. We see a clear path to positive EBITDA in the late 2026 with near-term EBITDA estimates of $1 to $2 per kilogram produced and further target to $3 to $5 per kilogram in an optimized Phase 1 operation.

For the CapEx projects, execution is underway. We are installing currently, and all the upgrades are -- will be completed by early 2026. Phase 2 is shovel-ready with permits secured and meaningful investments already in place. We have invested approximately $110 million into Phase 2 mainly in infrastructure such as tanks, wells, chiller plant, et cetera. All major permits are secured. Phase 2 share some infrastructure between Phase 1 and Phase 2, which reduces our execution risk. Phase 2 brings along significant EBITDA uplift potential with Phase 2 and -- 1 and 2 combined expecting to deliver $100 million to $150 million annually on a 25,000 ton annual harvest volume.

With Phase 1 improvements on track and Phase 2 derisked, a key value driver is the cost curve. This chart shows how scale and optimization unlock strong EBITDA margins. Unit cost is estimated at $10 per kilogram in near-term future and falls to $8 per kilogram in an optimized Phase 1. When we combine Phase 1 and Phase 2, we add volume, and we reset the cost base, which further reduces cost to $6.5 to $7.5 per kilogram at scale. We estimate sales price of about -- of $2 to $2.75 above U.S. reference price, and this gives an EBITDA of $3 to $5 per kilogram in an optimized Phase 1, raising to $4 to $6 per kilogram in a Phase 1 plus 2 operation. This yields a significant EBITDA generation potential of $30 million to $40 million in an optimized Phase 1 and $100 million to $150 million in a Phase 1 plus Phase 2 at a steady state.

To fully fund the company through to positive EBITDA, we are establishing a new convertible loan of -- from $31 million to $35 million. More than $31 million have already been secured from the 3 main Board-represented shareholders and other shareholders. As a part of the proceeds, the 3 main Board-represented shareholders have provided a $6 million bridge loan to secure funding until the convertible loan is established. Subject to $35 million raised, we have agreed with the bank to amend the current loan agreement and contribute with approximately $5 million in liquidity effects.

I give the word over to Pedro.

[Pedro Courard, executive]

Thank you, Gunnar. During last year, we have proved that we can produce good fish. We have also proved we can achieve premium prices with our product. We have realized that our current facility has a great potential. Then our focus for coming months is basically continuing this improvement process, reducing our CapEx to just proven solutions as well as optimizing our cost structure.

Our ambitions in terms of production are realistic. We are in the path to finish this year with 5,400 tons HOG, and we already are farming the stock for a production of 7,000 tons in 2026 and above 7,500 tons in 2027.

In terms of our financial goals, we expect to be EBITDA positive by the end of 2026, finalizing, by this way, the full validation of Phase 1. This is the milestone that we are considering as basic requirement to proceed with our Phase 2. Next 12 to 18 months should be a point of no return in terms of starting the process to become not only the biggest RAS-based salmon company in the world, but also the most profitable one.

We have the market. We have the know-how and the license to operate required to create an amazing company. For sure, it will not be easy, but we have already the competencies and the energy to move towards this direction.

Thank you very much for attending this presentation, and don't hesitate to reach us for any further questions or comments.