Aker BioMarine ASA · OSL:AKBM
Aker BioMarine ASA — Investor Presentation (June 2020)
51 slides from Aker BioMarine ASA's investor presentation, Jun 19, 2020
Slide 1: Company Presentation 19 June 2020
IMPROVING HUMAN AND PLANETARY HEALTH COMPANY PRESENTATION 19 JUNE 2020
Slide 2: Important Notice
IMPORTANT NOTICE This presentation has been prepared by Aker BioMarine AS (the "Company"). The presentation does not constitute or form part o f, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or otherwise acquire, any securities of the Company or a
Slide 3: Company Overview
> zx m aD Ey fe) = > 2 Zz m COMPANY OVERVIEW
Slide 4: Molecules and nutrients from krill important for all life on the planet
THROUGH MILLIONS OF YEARS OF EVOLUTION THE MOLECULES AND NUTRIENTS FROM KRILL HAVE BECOME IMPORTANT FOR ALL LIFE ON THE PLANET THE OPPORTUNITY 15 YEARS OF TECHNOLOGY & PROCESS DEVELOPMENT ▪ Largest biomass on the planet ▪ Developing technology for sustainable harvesting ▪ Present in 70% of the plane
Slide 5: Aker BioMarine is the fast growing world leader within krill
AKER BIOMARINE IS THE FAST GROWING WORLD LEADER WITHIN KRILL WITH A 70% SHARE OF THE GLOBAL HARVEST 445 2 KEY COMPANY FACTS CUSTOMERS SEGMENTS REVENUE DEVELOPMENT ▪ World leader within krill harvesting and processing, accounting for ~70% of global harvest 1 and ~80% of global USDm krill oil producti
Slide 6: Recent strategic investments and initiatives built unique capabilities
RECENT STRATEGIC INVESTMENTS AND INITIATIVES BUILT UNIQUE CAPABILITIES, POSITIONING AKER BIOMARINE FOR STRONG GROWTH 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Delisted the New CEO, Fully integrate Focus on own Build US Roll-out of own Phases company from Matts Johansen own value chain resear
Slide 7: Fully integrated value chain results in uniquely efficient business model
FULLY INTEGRATED VALUE CHAIN RESULTS IN UNIQUELY EFFICIENT BUSINESS MODEL, LOWER VOLATILITY, INCREASED SPEED TO MARKET AND HIGHER MARGINS Harvesting Ingredient production R&D Krill oil production Sales & marketing Distribution & brands 69% ofkrillglobal catch 1 30% reduction in CO2-emissions ~60 pub
Slide 8: Strong management and board of directors supporting value creation
STRONG MANAGEMENT AND BOARD OF DIRECTORS SUPPORTING VALUE CREATION MANAGEMENT TEAM BOARD OF DIRECTORS ▪ CEO since 2015 ▪ Previous experience ▪ Responsible for ▪ Chairman of the ▪ Aker ASA’s main ▪ Previous experience as CFO of Yara’s global sales and board since 2014 owner as COO of Aker Production
Slide 9: Aker BioMarine group consists of three companies with distinct capabilities
AKER BIOMARINE GROUP CONSISTS OF THREE COMPANIES WITH DISTINCT CAPABILITIES Ingredients Brands ▪ Aker BioMarine produces and markets ingredients for ▪ State-of-the-art healthcare manufacturing company ▪ Epion is Aker BioMarine’s FMCG brand company aquaculture and dog feed based in the US, acquired b
Slide 10: Krill is the world's largest biomass and most sustainable fishery
KRILL IS THE WORLD’S LARGEST BIOMASS AND MOST SUSTAINABLE FISHERY, AND PROVIDES SIGNIFICANT BENEFITS TO HUMANS, PETS AND OTHER ANIMALS Ingredients Proven preventative health Krill is 2x as effective in increasing the Krill supplements results in a higher KRILL CAN PROVIDE SIGNIFICANT BENEFITS TO Ome
Slide 11: World leading manufacturer of ingredients from krill
AKER BIOMARINE IS THE WORLD LEADING MANUFACTURER OF INGREDIENTS FROM KRILL WITH A STRONG AND DIVERSIFIED CONTRACT PORTFOLIO Ingredients Key products Description Share of ‘19 sales % GM Houston factory purpose-built for krill oil production ▪ Purpose-built plant for processing and production ▪ Powder
Slide 12: Expertise in producing finished consumer goods through Lang and Epion
AKER BIOMARINE HAS ESTABLISHED SIGNIFICANT EXPERTISE IN PRODUCING FINISHED CONSUMER GOODS THROUGH THE ACQUISITION OF LANG AND CREATION OF EPION Brands ▪ Full service, mass market private label and brand manufacturer ▪ Established by Aker BioMarine to develop consumer brands of krill based products ▪
Slide 13: Investment Highlights
> zx m aD Ey fe) = > 2 Zz m INVESTMENT HIGHLIGHTS
Slide 14: Aker BioMarine Investment Highlights
AKER BIOMARINE INVESTMENT HIGHLIGHTS UNDERDEVELOPED MARKET WITH IMMENSE GROWTH POTENTIAL DUE TO HEALTH MEGATRENDS AND GLOBAL PROTEIN 1 SHORTAGE KRILL BASED INGREDIENTS ARE UNIQUELY POSITIONED DUE TO SUPERIOR NUTRITIONAL PROFILE AND PROVEN HEALTH 2 BENEFITS, PROTECTED BY INTELLECTUAL PROPERTY INHEREN
Slide 15: Well positioned to capitalize on growing need for sustainable food and health products
AKER BIOMARINE IS WELL POSITIONED TO CAPITALIZE ON THE GROWING NEED FOR SUSTAINABLE FOOD AND HEALTH PRODUCTS 1 HEALTH CRISIS FOOD PRODUCTION PARADOX Dramatic increase in deaths from chronic Exploitation of farmable land diseases across the world1 Global deaths Leading causes of death 2050 is already
Slide 16: Invested significantly in R&D and IP to uncover health potential from krill
AKER BIOMARINE HAS INVESTED SIGNIFICANTLY IN R&D AND IP TO UNCOVER THE IMMENSE HEALTH AND NUTRITION POTENTIAL FROM KRILL 2 Pre 08 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Confidential Confidential Confidential Confidential Confidential Confidential Salmonids Confidential
Slide 17: Scientifically proven krill products for aquaculture feed market
SCIENTIFICALLY PROVEN KRILL PRODUCTS PUT AKER BIMARINE IN PRIME POSITION TO LEVERAGE THE RAPIDLY GROWING AQUACULTURE FEED MARKET 2 INCREASED GROWTH AND YIELD IMPROVED GROWTH Grams ▪ Improved appetite and hence increased feed conversion and growth +24 % ▪ Attractant properties key part of shrimp valu
Slide 18: Qrill Pet proven superior health benefits for dogs
QRILL PET IS PROVEN TO HAVE SUPERIOR HEALTH BENEFITS FOR DOGS, REPRESENTING THE FIRST PET TARGET GROUP FOR AKER BIOMARINE 2 POSITIVE HEALTH BENEFITS OMEGA-3 PHOSPHOLIPIDS FROM QRILL PET REDUCE ▪ The nutritional ingredients in the QRILL Pet has a range of positive health benefits for the INFLAMMATION
Slide 19: Superba's strong value proposition has led to growth above industry
SUPERBA’S STRONG VALUE PROPOSITION HAS LEAD TO A GROWTH SIGNIFICANTLY HIGHER THAN THE INDUSTRY AS A WHOLE 2 OMEGA-3 FATTY ACIDS EPA & DHA CONTINUED GROWTH IN THE DIETARY SUPPLEMENTS INDUSTRY One of the most researched nutrients with a wide range of health benefits from heart, eyes, liver, skin, join
Slide 20: Large entry barriers secure long term position in krill harvesting
LARGE ENTRY BARRIERS SECURE AKER BIOMARINE’S LONG TERM POSITION AS UNDISPUTED LEADER IN SUSTAINABLE KRILL HARVESTING 3 LARGE ENTRY BARRIERS SECURE AKER BIOMARINE’S LONG TERM UNBEATABLE EFFICIENCIES IN THE FISHERIES POSITION AS UNDISPUTED LEADER IN SUSTAINABLE KRILL HARVESTING Krill harvest in Area 4
Slide 21: Sustainability at the core of the business (1/2)
SUSTAINABILITY AT THE CORE OF THE BUSINESS – DEDICATED CONTRIBUTOR TO ACHIEVING THE UN SUSTAINABLE DEVELOPMENT GOALS 4 (1/2) QUOTA PIONEERING S U S TA I N A B L E FISHERIES <1% STRICT REGULATIONS FOR ECO-HARVESTING CERTIFIED FOR SUSTAINABLE CONTRIBUTE TO ANTARCTIC KRILL HARVESTING ELIMINATES BY-CATC
Slide 22: Sustainability at the core of the business (2/2)
SUSTAINABILITY AT THE CORE OF THE BUSINESS – DEDICATED CONTRIBUTOR TO ACHIEVING THE UN SUSTAINABLE DEVELOPMENT GOALS 4 (2/2) KRILL, THE WORLDS LARGEST GREENHOUSE GAS INTENSITY INCREASE IN GROWTH BIOMASS (t CO2e / t EDIBLE PROTEIN) (GRAMS) 337 Regular feed INGREDIENT FOR A MORE Qrill Aqua S U S TA I
Slide 23: Visible path to growth through new margin enhancing segments
HIGHLY VISIABLE PATH TO REALIZING SIGNIFICANT GROWTH THROUGH NEW MARGIN ENHANCING SEGMENTS 5 CLEAR MARGIN POTENTIAL FROM INNOVATIONS DEVELOPING A NEW DOG FOOD DEVELOPING A PROTEIN POWDER TO UTILIZE MORE OF AND A MOVE TO HIGHER MARGIN END-MARKETS BUSINESS TO TAP INTO THE USDbn THE KRILL AND LIFT MEAL
Slide 24: Strong revenue and EBITDA growth as company close to fully invested
STRONG REVENUE AND EBITDA GROWTH AS THE COMPANY IS CLOSE TO FULLY INVESTED AND READY TO REAP THE REWARDS 6 REVENUE EBITDA, adjusted USDm USDm 246 53 +41% +74% 39 154 124 +80% +268% 71 18 13 39 3 17 18 19 Q1 19 Q1 20 17 18 19 Q1 19 Q1 20 ▪ Strong revenue growth due to increasing production capacity t
Slide 25: Strategy and Business Plan
3 STRATEGY AND BUSINESS PLAN 25
Slide 26: Strategic priorities and projects driving growth ambitions
STRATEGIC PRIORITIES AND PROJECTS DRIVING AKER BIOMARINE’S GROWTH AMBITIONS 1 MAINTAINING OUR LEADERSHIP IN KRILL FISHERIES 2 KEEPING AN ACTIONABLE INNOVATION PIPELINE WITH IMMENSE POTENTIAL 3 DEVELOPING A BEST IN CLASS PROTEIN POWDER FOR PEOPLE 4 CAPITALIZING ON THE GROWING IMPORTANCE OF PRIVATE LA
Slide 27: 5 year aspiration to build a USDm 200 EBITDA company
5 YEAR ASPIRATION TO BUILD A USDM 200 EBITDA COMPANY WITH A STRONG CONSUMER BRAND 5 YEAR ASPIRATION ILLUSTRATIVE EBITDA DEVELOPMENT ADDITIONAL UPSIDE USDm EBITDA margin BRANDED PRODUCTS ▪ Epion targets to be a USDm ~100 business in 2024 contributing 0 in USDM 200 EBITDA due to marketing IN EBITDA ~3
Slide 28: Growth supported by clearly visible drivers
GROWTH SUPPORTED BY CLEARLY VISIBLE DRIVERS 2019 2020 2021 2022 2023 - 2024 ~41,000 mt ~60,000 mt ~74,000 mt ~74,000 mt Harvesting capacity Antarctic Endurance at Antarctic Endurance at Antarctic Endurance at Antarctic Endurance at ~74,000 mt increase ~22% of total capacity ~75% of total capacity ~9
Slide 29: Financials
ig) AKER BIOMARINE FINANCIALS
Slide 30: Limited impact from the COVID-19 crisis
AKER BIOMARINE HAS EXPERIENCED LIMITED IMPACT FROM THE COVID-19 CRISIS ▪ A vertically integrated value chain reduces risk to business continuity ▪ Currency and fuel exposure make Aker BioMarine counter cyclical ▪ Established a team late February to take necessary mitigating actions and monitor the s
Slide 31: Strong revenue visibility through long term contracts and relationships
STRONG REVENUE VISIBILITY THROUGH LONG TERM CONTRACTS AND RELATIONSHIPS MAJORITY OF REVENUE FROM LONG TERM DIVERSIFIED CUSTOMER BASE AND STRONG RELATIONSHIPS WITH KEY CUSTOMERS CONTRACTS Ingredients contract base1 Ingredients customer base2 Brands customer base3 % of revenue % of revenue % of revenu
Slide 32: Significant top-line growth and strong gross margins
SIGNIFICANT TOP-LINE GROWTH AND STRONG GROSS MARGINS REVENUE AND GROSS MARGIN DEVELOPMENT COMMENTARY Revenue and gross margin development ▪ Lead time of ~6 months from production to revenue recognition USDm ▪ Significant revenue increase in 2019 due to inclusion of Lang from 1 March 2019 (implied fu
Slide 33: Positive production volume development with increased capacity from Antarctic Endurance
POSITIVE PRODUCTION VOLUME DEVELOPMENT WITH INCREASED CAPACITY FROM ANTARCTIC ENDURANCE PRODUCTION VOLUME DEVELOPMENT PER OFFSHORE PRODUCTION VOLUME KRILL OIL INGREDIENT REVENUE VESSEL DEVELOPMENT PER PRODUCT DEVELOPMENT Total production per vessel Total offshore production volume by product Total k
Slide 34: Unit economics have shown improvement
UNIT ECONOMICS HAVE SHOWN IMPROVEMENT, WITH REVENUE MIX INCREASING PRICES AND SCALE REDUCING COSTS INCREASING GROSS MARGIN FOR AQUA AND PET INCREASING GROSS MARGIN FOR SUPERBA Price / MT Price / MT +6% 0% 2017 2018 2019 2017 2018 2019 Unit cost / MT Unit cost / MT +1% -15% 2017 2018 2019 2017 2018 2
Slide 35: Cost base driven by salaries, professional services, production costs and fuel
COST BASE PRIMARILY DRIVEN BY SALARIES, PROFESSIONAL SERVICES, DIRECT PRODUCTION COSTS AND FUEL HISTORICAL OPEX DEVELOPMENT SG&A BREAKDOWN BY COST CATEGORY (2019) Opex, by cost category 167,8 2019 SG&A, by cost category USDm USDm Office Travel 3,8% 3,7% Warehouse 124,2 4,6% Consumables/ Salaries ana
Slide 36: Strong EBITDA growth with margin improvements
STRONG EBITDA GROWTH WITH MARGIN IMPROVEMENTS DRIVEN BY SCALE AND POSITIVE EFFECTS FROM ENHANCED PRODUCT MIX HISTORICAL EBITDA DEVELOPMENT EBITDA ADJUSTEMENTS Adjusted EBITDA 2019 EBITDA adjustments 53,0 USDm USDm +202% 0,8 53,0 1,8 39,4 3,4 +268% 45,7 1,3 17,6 12,7 25,6% 21,6% 3,4 17,9% 14,1% 8,8%
Slide 37: Strong growth in revenue and EBITDA across segments
STRONG GROWTH IN REVENUE AND EBITDA ACROSS SEGMENTS INGREDIENTS BRANDS REVENUE ▪ 11% increase in Qrill meal from REVENUE ▪ Lang has uninterrupted YOY sales Ingredients segment revenue development 2017 to 2019, price and volume Brands segment revenue development1 growth; successfully maturing USDm dr
Slide 38: Profit & Loss Statement
PROFIT & LOSS STATEMENT USD thousands 2017 2018 2019 Q1 2019 Q1 2020 COMMENTARY Net sales 124,154 154,182 246,170 39,207 70,742 Depreciation, amortization and impairment (non producing assets) Cost of goods sold (81,768) (88,829) (145,901) (26,009) (45,899) ▪ Depreciation on producing assets (e.g. v
Slide 39: Capex Overview
CAPEX OVERVIEW HISTORICAL CAPEX DEVELOPMENT COMMENTARY Capex ▪ Over the last 10 years, Aker BioMarine has invested USDm ~600 in fixed assets, majority USDm being vessels ▪ USDm 314 invested since 2015 in fixed assets Maintenance capex ▪ The first instalment was paid on Antarctic Endurance in 2017 an
Slide 40: Cash Flow
CASH FLOW USD thousands 2017 2018 2019 Q1 2019 Q1 2020 ▪ COMMENTS COMMENTARY Profit (loss) before tax (16,753) (1,281) (23,750) (7,850) (3,030) ▪ D&A increase driven by investments done over 2017-2019 ▪ Interest expense increase due to above mentioned investments, funded primarily though loans. Othe
Slide 41: Balance Sheet
BALANCE SHEET USD thousands 2017 2018 2019 Q1 2019 Q1 2020 COMMENTARY Inventory ASSETS ▪ The ingredient segment has a complex value chain with production in stages. In accordance with IFRS, actual production expenses are capitalized to inventory each quarter and new weighted average cost is calculat
Slide 42: Additional Information
> zx m aD Ey fe) = > 2 Zz m ADDITIONAL INFORMATION
Slide 43: Fuel Hedging
FUEL HEDGING ▪ In order to hedge its fuel expenses going forward, Aker BioMarine has purchased call options for 100% of its expected consumption during 2021 – 2024: ▪ 37,757 MT in 2021 at USD/MT of 378 ▪ 33,332 MT in 2022 at USD/MT of 412 ▪ 33,370 MT in 2023 at USD/MT of 550 ▪ 33,206 MT in 2024 at U
Slide 44: Vessels fish and produce continuously during the ~10 month season
VESSELS FISH AND PRODUCE CONTINUOUSLY DURING THE ~10 MONTH SEASON LONG SEASON LASTING UP TO 10 MONTHS SUMMARY OF VESSEL ECONOMICS Activity Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2017 2018 2019 Metric tonnes Fishing season Operative vessels 2 2 31 Seasonal variation Total catch 171,554 207,2
Slide 45: P&L Reconciliation
P&L RECONCILIATION Revenue reconciliation Breakdown of reported COGS USDm 2017 2018 2019 Q1 2019 Q1 2020 USDm 2017 2018 2019 Q1 2019 Q1 2020 Ingredients 124.2 154.2 177.2 32.5 41.6 “Traditional” COGS items 65.4 71.5 121.1 21.6 38.4 Brands - - 82.2 6.7 32.7 Depreciation on producing assets 16.4 17.3
Slide 46: Debt Facilities
DEBT FACILITIES Drawn, COMMENTS USDm Amount (m) Q1’20 (m) Currency Interest rate Bank Maturity Instalments ▪ Annual debt repayment of approximately USDm 17 Corporate secured RCF 120.0 120.0 USD 3m Libor + 3.4% DNB, Rabo Apr 2023 Bullet Overdraft facility 15.0 3.4 USD 3m Libor + 2.5% DNB Running Bull
Slide 47: Continuing to build a unique culture that attracts talented employees
CONTINUING TO BUILD A UNIQUE CULTURE THAT ATTRACTS TALENTED EMPLOYEES AND CREATES AN ENGAGED ORGANIZATION AKBM’S UNIQUE CULTURE DESCRIBES US TREATING AND INVESTING IN PEOPLE AS OUR PASSIONATE EMPLOYEES WHO GO ABOVE AND WHEN WE ARE AT OUR BEST MOST IMPORTANT ASSET BEYOND TO REALIZE OUR COMMON GOALS ▪
Slide 48: Certified for industry leadership on sustainable fisheries
AKER BIOMARINE CERTIFIED FOR INDUSTRY LEADERSHIP ON SUSTAINABLE FISHERIES – SUSTAINABILITY COMMITMENT EVIDENT FROM FOCUS ON GREEN INVESTMENTS ANTARCTIC KRILL FISHERY A-RATED: THE WORLD’S MOST AKER BIOMARINE IS TAILORING ITS 2030 TARGETS AND SUSTAINABLE REDUCTION FISHERY FOR 5 SUCCEEDING YEARS REPORT
Slide 49: Competitive Landscape
COMPETITIVE LANDSCAPE GLOBAL OMEGA 3 INGREDIENTS1 FOR HUMAN CURRENT ANTARCTIC KRILL FISHERIES BY VALUE CHAIN CAPABILITIES CONSUMPTION Harvesting Logistics R&D Krill oil production Distribution Market share by source, 2018 extraction 111,210 1,377 859 Catch Krill 102 MT ‘000 243 AKER BIOMARINE Others
Slide 50: Retail market shares – human supplements and pet food
RETAIL MARKET SHARES – HUMAN SUPPLEMENTS AND PET FOOD US OMEGA-3 MARKET SHARE (USD) US DOG FOOD MARKET SHARE (USD) – TOTAL RETAIL SALES OF USDbn 22.31 Other 30 ‘18 market share 14% Sundown 3% Nature Made Smarty Pants 34% 4% 21.6% Private Label 11% 20 20.3% Market share (%) 16% 18% Natures Bounty 15.
Slide 51: Aker BioMarine
® AKER BIOMARINE