Earnings Release • Apr 29, 2022
Earnings Release
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Aker BioMarine ASA 29 April 2022
1) Aker BioMarine evaluates the performance based on Adjusted EBITDA. This metric is defined as operating profit before depreciation, amortization, write-downs and impairments, and special operating items. Special operating items include gains or losses on sale of assets, if material, restructuring expenses and other material transactions of either non-recurring nature or special in nature compared to ordinary operational income or expenses. There were no adjustments to EBITDA in the quarter.
Annual harvesting variations – expecting average annual volumes of 55,000-60,000 MT
Annual production
Focus on lifting Q2 and Q3 volumes 25,000
1) After inter-company eliminations. In the 2020 figures, the cost related to the launch of Kori were adjusted out according to Group APM policy to better reflect the underlying performance, and hence not included in the Adjusted EBITDA margin. From 2021 this is no longer an option as this is now running business, and hence, all marketing cost is included in Epion's EBITDA figures. On 1 March 2019, the Group acquired 100% of Lang Pharma Nutrition. Hence, in the illustration above 2019 revenues are for March-December only.
Generating margins wherever the consumer buys krill oil products
Partnering with leading retail chains, supplying innovative dietary supplement and nutrition products in growth categories
Segment transformed from a pure financial tactic to a strategic necessity for retailers
Retailers market their own products to meet changing consumer needs and grow earnings
Increased shelf space in stores opens for more Private Label products on display
The digital economy puts pressure on the competitiveness of retail and Private Label is an important tool to remain competitive
Changing consumer behavior
National brands invest less in retail and more in ecommerce, which is not aligned with retailer strategy
Driving consumer education and category innovation, benefiting own brands and the overall market
Kori has achieved with full listing in all major retail chains in less than two years
Vertical integration allows for higher marketing investments than traditional brands
▪ Heart healthy omega-3s
▪ Omega-3 – heart health & building blocks for a healthy brain
2022 LAUNCH 2022 LAUNCH
Group figures
Revenue
Sales and earnings on par with same quarter last year
Superba category: 33% decrease compared to Q1 last year. Sales in the previous quarter were particularly high. The sales organization has been strengthened and the company targets an increase in sales volumes throughout the year
Gross margin was 32% in the quarter, down from 41% same period last year
Revenue USD million
High sales volume of our US consumer brand, Kori krill oil
Adj. EBITDA and margin USD million
Private label business Lang: Increased sales as a result of higher sales to Epion (Kori), as well as increased private label sales, especially to Costco, Sam's Club and CVS
Gross margin was 25% in the quarter, similar to same period last year.
Curbing the impact on surging oil prices and predictability in largest cost drive
| Call options | 2022 | 2023 | 2024 |
|---|---|---|---|
| Annual expected fuel consumption (Mt) |
33,332 | 33,370 | 33,206 |
| Fuel demand hedged | 100% | 100% | 100% |
| Call strike levels (USD/Mt MGO RD) |
409 | 550 | 580 |
| Q1 2022 | Q1 2021 | 2021 | |
|---|---|---|---|
| USD million | (Unaudited) | (Unaudited) | (Audited) |
| Net sales | 56.9 | 50.1 | 262.1 |
| Cost of goods sold | (35.9) | (32.9) | (173.9) |
| Gross profit | 21.1 | 17.2 | 88.2 |
| SG&A | (22.5) | (19.7) | (85.7) |
| Depreciation, amortization and imp. | (4.1) | (4 8) | (19.2) |
| Other operating income/(cost), net | 0.1 | 0.2 | 3.2 |
| Operating profit | (5.5) | (7.2) | (13.6) |
| Net financial items | (4.7) | (2.4) | 5.7 |
| Tax expense | 0.4 | (0.3) | (0.8) |
| Net profit (loss) | (9.7) | (9.9) | (8.7) |
EBITDA reconciliation
| Net profit (loss) | (9.7) | (9.9) | (8.7) |
|---|---|---|---|
| Tax expense | (0.4) | 0.3 | 0.8 |
| Net financial items | 4.7 | 2.4 | (5.7) |
| Depreciation, amortization and imp. | 4.1 | 4.8 | 19.2 |
| D&A and imp. from production assets incl. in COGS | 9.5 | 8.2 | 37.7 |
| EBITDA (unadjusted) | 8.1 | 5.9 | 43.3 |
| Adjustments | - | 0.9 | 4.7 |
| EBITDA (adjusted) | 8.1 | 6.8 | 48.0 |
▪ Revenue in the quarter was USD 56.9m, up 6.8m from Q1-21 driven by continued sales growth in the Brands segment. Lower krill oil sales in Ingredients segment offset by higher sales of Qrill Aqua.
▪ Increased krill oil sales in the Brands segment driving group profit margins up. In the Ingredients segment, Qrill Aqua was sold with zero margin.
▪ Higher SG&A driven by higher freight rates and marketing campaigns in Brands segment. Lower overall SG&A for Ingredients.
▪ Intangible assets amortized according to plan. Depreciation on production related assets included in cost of goods sold.
▪ Net financial items in the quarter was USD 4.7m, up from USD 2.4m which included a positive effect from fuel options.
▪ No tax in Norwegian entities due to tax losses carried forward. In the US group entities pay state tax based on nexus.
| USD million | Q1 2022 | Q1 2021 | 2021 |
|---|---|---|---|
| (Unaudited) | (Unaudited) | (Audited) | |
| ASSETS | |||
| Property, plant and equipment | 324.3 | 332.8 | 327.9 |
| Right to use assets | 10.2 | 14.8 | 11.3 |
| Intangible assets and goodwill | 167.1 | 178.6 | 171.5 |
| Contract cost | 6.7 | 8.7 | 7.2 |
| Investments in equity-accounted investees | 0.1 | 0.1 | 0.1 |
| Total non-current assets | 508.4 | 535.0 | 518.0 |
| Inventories | 155.3 | 129.6 | 138.2 |
| Trade receivable and prepaid expenses | 62.4 | 61.0 | 77.7 |
| Derivative assets | 25.5 | 9.9 | 12.5 |
| Cash and cash equivalents | 19.1 | 13.9 | 11.1 |
| Total current assets | 262.3 | 214.4 | 239.5 |
| Assets held for sale | 3.8 | - | - |
| TOTAL ASSETS | 774.5 | 749.4 | 757.5 |
| Interest bearing debt | 290.9 | 262.7 | 294.1 |
|---|---|---|---|
| Other non-interest-bearing non-current liabilities | 16.2 | 36.8 | 15.7 |
| Total non-current liabilities | 307.1 | 299.5 | 309.8 |
| Interest-bearing debt | 52.2 | 44.4 | 30.7 |
| Accounts payable and other payables | 43.1 | 39.2 | 46.6 |
| Total current liabilities | 95.3 | 83.6 | 77.3 |
| Liabilities held for sale | 1.3 | - | - |
| TOTAL LIABILITIES | 401.1 | 383.1 | 387.1 |
| Total equity | 373.4 | 366.3 | 370.5 |
| TOTAL EQUITY AND LIABILITIES | 774.5 | 749.4 | 757.6 |
▪ Customer contracts amortized according to plan. Impairment assessment carried out for goodwill and intangible assets as of 31 March. No impairment.
▪ Cash and cash equivalents (including derivatives) was USD 44.6m. Net interest bearing debt USD 324.0m, up from 313.7m at year end.
▪ In October 2021, the Group announced its intention to spin off the circularity business Aion AS. During the first quarter of 2022, it has become certain that a partly sale is highly probable.
▪ Includes the fair value of the earn-out payable to the previous owners of Lang amounting to USD 10.7m. The earn-out including interest was paid 1 April 2022.
| USD million | Q1 2022 | Q1 2021 | 2021 |
|---|---|---|---|
| (Unaudited) | (Unaudited) | (Audited) | |
| Net profit (loss) after tax | (9.8) | (9.9) | (8.7) |
| Tax expenses | (0.4) | 0.3 | 0.8 |
| Net interest and guarantee expenses | 3.7 | 3.1 | 13.7 |
| Interest paid | (3.4) | (2.2) | (12.8) |
| Taxes paid | (1.5) | 0.2 | 3.2 |
| Other P&L items with no cash flow effect | (0.1) | 0.0 | (21.1) |
| Impairment charges | - | - | 5.8 |
| Depreciation and amortization | 13.5 | 13.0 | 52.9 |
| Foreign exchange loss (gain) | 0.1 | - | (0.2) |
| Change in accounts receivable, other current receivables, inventories, accounts payable and other |
(4.9) | (8.1) | (31.1) |
| Cash flow from operations | (2.7) | (3.6) | 2.6 |
| Payments for property, plant and equipment | (6.0) | (55.2) | (78.7) |
| Payments for intangibles | (1.4) | (0.6) | (2.4) |
| Proceeds from sale of property, plant and equipment | - | - | 1.9 |
| Cash flow from investing activities | (7.4) | (55.7) | (79.2) |
| Proceeds from issue of debt and change in overdraft facility | 21.4 | 7.5 | 4.2 |
| Net change in external interest-bearing debt | (3.4) | 55.1 | 74.7 |
| Cash flow from financing activities | 18.0 | 62.5 | 78.9 |
| Net change in cash and cash equivalents | 7.9 | 3.2 | 0.5 |
| Cash and cash equivalents beginning of the period | 11.1 | 10.7 | 10.7 |
| Cash and cash equivalents end of period | 19.1 | 13.9 | 11.2 |
▪ In Q1 2022 there has been payments on several ongoing projects such as Protein, Lysoveta, Houston facility and vessels in shipyard, in total USD 14.1m.
▪ Drawdown on the overdraft facility amounting to USD 21.4 and down-payment on the RCF facility in the quarter.
Revenue Targeted revenue growth of +20%-25%
Adjusted EBITDA margin1 Targeted margin of 20%-25%
Houston factory
A shutdown to carry out upgrades and perform efficiency improvements is planned from June 2022 and for the remainder of the year. The shutdown will not impact sales
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Excluding eliminations between Ingredients and Brands
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