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TRANSCRIPT
Your Aquaculture Technology and Service Partner
Q3 2015 PresentationOslo - November 5th, 2015
Trond Williksen, CEOEirik Børve Monsen, CFO
Your Aquaculture Technology and Service Partner
Agenda
Highlights
Financial performance
Outlook
1
2
3
Q&A4
Your Aquaculture Technology and Service Partner3
Highlights Q3 2015 - by CEO Trond Williksen
Your Aquaculture Technology and Service Partner
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 %
Your Aquaculture Technology and Service Partner
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
Strong performance and growth continues
5
+19%
+8%
EBITDA of 11.4% in Q3 2015
Your Aquaculture Technology and Service Partner
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
Strong performance and growth continues
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
Presence in all main farming regions
Map of activities Revenue per region, Q3 2015
Nordic
Americas
Export
Nordic65 %
Americas18 %
Export17 %
Your Aquaculture Technology and Service Partner
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 %
Your Aquaculture Technology and Service Partner
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 %
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner13
Financial performance Q3 2015 – by CFO Eirik Børve Monsen
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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 %
Your Aquaculture Technology and Service Partner
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 %
Your Aquaculture Technology and Service Partner
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 %
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner26
Outlooks – by CEO Trond Williksen
Your Aquaculture Technology and Service Partner
-
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner29
Q & A
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