GuruFocus -
- Net Profit: $6.0 million, down from $10.6 million in the prior year.
- Pro-forma EBITDA: $13.5 million, up 26% from $10.7 million in the prior year.
- Revenue: $101.7 million, increased by 11%.
- Net Cash on Hand: $32.5 million.
- CapEx (excluding BE pilot): Forecasted at $14 million for FY25.
- CapEx for BE Pilot: Estimated at $9.6 million for FY25.
- Proforma EBITDA Range for Full Year: Adjusted to $26 million to $30 million.
- Harvest Volume: Revised down to 6,800 metric tons.
- Export Distribution: 33% domestic, 44% North America, 11% Australia, 2% China.
- Gross Margin: Impacted by non-cash fair value impacts to biological assets.
- Corporate Costs: Increased due to capability enhancements and compliance requirements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pro-forma EBITDA increased by 26% to $13.5 million compared to $10.7 million in the prior year.
- Revenue increased by 11% to $101.7 million for the half year.
- Net cash on hand remains strong at $32.5 million.
- Ongoing investments in R&D to improve fish health, including thermotolerance work and vaccine developments.
- Blue Endeavor pilot project is progressing well, with infrastructure and fish for the pilot already in place.
- Net profit decreased to $6.0 million from $10.6 million in the prior year.
- Higher mortality rates due to increased biomass on farms.
- Challenges with early runting affecting fish performance and harvest volumes.
- Increased corporate costs due to capability enhancements and compliance requirements.
- Feed pricing remains highly volatile due to global commodity prices and geopolitical issues.
A: Graeme Tregidga, Chief Commercial Officer: In Japan, we've seen cost increases of between 5% and 7%, which have been substantial but absorbed well by the market. Globally, markets have been more accepting of price increases due to inflationary periods, though it's getting harder as things settle. Demand for premium products remains strong across all markets.
Q: Can you drive a little bit deeper into the issue of fish runting and its impact on volume expectations?
A: Grant Lovell, General Manager - Aquaculture: Fish runting is when fish fail to adapt to seawater, impacting forecasting. We've been working on solutions like photo period cues and brackish water trials. The brackish water has been successful but requires RAS technology for full implementation.
Q: Can you reconcile the runting issue with the optimism for the Blue Endeavor project?
A: Grant Lovell, General Manager - Aquaculture: The two are separate. Blue Endeavor is about long-term growth. Fish will go to a nursery site first before Blue Endeavor, ensuring the pilot is not influenced by other production cycle aspects.
Q: What is your current pricing in China, and what type of products are you finding success with?
A: Graeme Tregidga, Chief Commercial Officer: Pricing in China is in line with other markets, with no discounts. We're finding success with whole fish, which are cut down in-store for sushi and sashimi. The product is well-received in premium outlets.
Q: What would you expect net cash to be at year-end, considering total FY25 CapEx of $25 million?
A: Ben Rodgers, Chief Financial Officer: Net cash on hand will likely be down but still positive. CapEx is weighted to the second half of the year, and the final balance will depend on working capital and feed payment timings.
Q: What is the total CapEx for the Blue Endeavor project, and how much has been spent already?
A: Ben Rodgers, Chief Financial Officer: The pilot CapEx is estimated at $15 million, excluding working capital and operational costs. We expect $9.6 million to be incurred this year, with the remaining $5 million next year.
Q: Does the issue with runting mean there's an offset in feed discharge for the year?
A: Grant Lovell, General Manager - Aquaculture: Yes, fish that do not adapt do not eat, reducing overall feed discharge. Feed discharge will be lower than initial expectations, aligning with the reduced harvest forecast.
Q: When will dividends begin being paid? Is it after the Blue Endeavor project is working successfully?
A: Carl Carrington, Chief Executive Officer: Dividends will likely resume once Blue Endeavor is generating cash. In the meantime, we aim to preserve cash to maximize self-funding for Blue Endeavor.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.