Atlantic Sapphire (Oslo:ASA) Q4 2025 Earnings Call

0:00 Good day, everyone. Welcome to the Atlantic Sapphire twenty twenty five Financial Results Presentation. My name is Gunnar Ospos Skinnerhog. I'm the CFO of the company. And together with me, I have Pedro Carr, the CEO.

0:18 Thank you, Gunnar. Hello, everybody. I will continue with the presentation. 2025 was a good year for Atlantic Sapphire. Among our most important improvements, our revenues jumped from $23,000,000 in '24 to more than $43,000,000 in '25, equivalent to an 87% increase. Reasons behind that were the higher volume and higher average weight allowing us to reach premium prices. While all of the additional KPIs improved during 2025, we are now in a challenging financial situation as consequence of lower revenues and the delay in cost reduction. During March 2026, the company entered into a bridge loan agreement for a total amount of $10,000,000 expecting to reach a final solution to finance our operation and the EBITDA breakeven.

1:21 Last year, we were able to validate our Phase I from an operational standpoint, keeping a stable biology while we consistently increased production parameters like standing biomass and harvest. In terms of operations, the last spending goal is improving feed conversion, process that is linked to the biofiltration and the gas in projects that are currently under execution. Being exceeding capacity one of our most important KPIs, we have consistently increased it during the last six quarters, showing a good path. Losses have been low in levels not higher than 1% in the saltwater stage.

2:07 While feed conversion is higher than our ambitions, we are working on a specific plan to improve this relevant parameter. Aligned with our seed consumption in Greece, we have been able to keep increasing both our biomass gain and standing biomass.

2:27 As a consequence of all of the both, during 2025, we increased our harvest volume, harvest average weight, and prices. Premium share in terms of price has been kept at above 9% confirming our good commercial positioning. Positive tendency also remained during first quarter of twenty twenty six, validating all the improvement actions carried out during that quarter. Now, Gunnar will continue with the presentation. Revenue increased significantly from 2024 to 2025, mainly driven by increased sales price from selling larger fish in a premium priced market. Still, revenue was lower than expected.

3:13 Harvest volume was 5.6% lower with 5,096 tonnes harvested versus expected harvest volume of 5,400 tonnes. And average weight was lower than planned, especially in the fourth quarter, which gave a lower sales price than planned. Harvest weight was lower due to some batches experiencing growth challenges and thus higher FCR towards the end of the cycle. Cost of goods sold in 2025 has been higher than planned. The costs increased by USD 3,000,000, but with higher harvest volume. Cost per kilogram fish produced was reduced.

3:59 The cost of cooling water increased in 2025 compared to prior years. We increased the volume of new water going into the farm and thus also increased the capacity of cooling water. In parallel, we have started implementing new and more efficient cooling systems with more heat exchanger capacity as well as using water cooled chillers to replace prior air cooled chillers. This will improve energy efficiency significantly. The solution will be commissioned throughout the first half of twenty twenty six. Further, the farm has had significant costs during 2025 related to maintenance as department by department has performed planned maintenance activities to increase the farm's operating stability.

4:51 These maintenance costs have been expensed in 2025 and are part of the cost of goods sold. Further, increased production gave an economies of scale effect that partly offsets the increased costs just mentioned. Administrative costs have decreased in 2025 as the company reduced SG and A costs, partly offset by adding more management resources to the company. The company has done an impairment of noncurrent assets of USD115 million. For valuation of the company's assets, we use a scenario model where resuming construction of Phase two is one outcome and maintaining operation of just Phase one is another.

5:38 With today's capital markets and availability of funding Phase two, we consider it to be more likely that the company continues without completing Phase two. The scenario weighting has been amended so that the probability of continuing with Phase one only is set to 55% and the probability of continuing completing Phase two is set to 45%. These scenario weighting can change going forward dependent on the capital markets and the access to capital for expansion. Net finance expenses increased by $6,000,000 driven by increased interest bearing debt and the costs related to the establishing new loan. It's partly offset by financial gain on former convertible loan, which was merged into the new convertible loan at 80% valuation.

6:32 The 20 reduction of the loan is recorded as financial income. Cash flow from operating activities improved by $26,000,000 in 2025, mainly driven by increased revenue. However, operating cash flow is lower than expected and the company requires funding, and I will come back to that on a separate slide. Investing activities were lower than in 2024. We started several projects in 2025 that will continue and commission into 2026. The majority of payments related to these projects will happen in 2026. Financing activities of $35,000,000 are linked to the capital raise through the new convertible loan in the second half of twenty twenty six.

7:20 For the balance sheet, the numbers are affected by results in 2025. The $115,000,000 impairment reduces non current assets and equity. The debt increased with the new convertible loan in 2025 and consists at the end of the year of long term bank loans of $45,000,000 that matures in 2027, a revolving credit facility of up to $20,000,000 dependent on current borrowing base, of which $5,000,000 was drawn at the end of the year and the convertible loan of $60,000,000 that matures in 2030. The equity is $12,000,000 or 9% at the end of 2025.

8:07 As mentioned, the revenue has been lower and the cost improvements have been delayed compared to the plan for 2025. The consequence is that the company needs additional funding to reach EBITDA breakeven. In late March, we secured a $10,000,000 bridge loan, which is now fully dispersed and which matures on May 15. The company needs 25,000,000 to $30,000,000 in liquidity to fund the company to EBITDA breakeven status, including repaying the bridge loan that matures on May 15. We are in dialogue with the largest shareholders that combined represent 63% of the shares and 93 of the convertible loan for a solution.

8:55 The bridge loan was provided from these investors.

9:01 As mentioned in the stock exchange notices, in March, the company has received an indicative offer for a comprehensive refinancing from the investor group of the largest current investors. The potential offer includes a voluntary offer to purchase remaining shares in the company at NOK0.80 per share and raised capital at NOK0.10 per share, as well as converting the investor group's share of the convertible loan minus a 23% value reduction into equity at NOK0.1 per share. The discussions with the investor group are progressing positively, but we have not entered into any final agreement for refinancing yet.

9:47 We have not received or identified any alternative solution that would solve the financing requirements in a satisfactory manner. That concludes the 2025 annual report presentation. We welcome investors to submit their questions on e mail at investorrelationsatlanticsapphire dot com, and the company are aiming to respond to questions in a timely manner. Thank you all.