Q1 2023 Business Update and 2022 Annual Report
Strong improvement in EBITDA, with continued progress in Q1
Q1 2023 Business Update and 2022 annual report
Q1 2023 highlights
Demand for high value Dutch Yellowtail kingfish remains strong in food service and retail, with volume up 18% Year-on-year (YoY)
Revenue per kg increased by 6% from Q4 2022
Entering the 54th production cycle with improved productivity, reduced Feed Conversion Ratio (FCR), and zero mass mortalities
Phase 2 extension commissioning underway – schedule and budget adjusted
“It has been a great start of the year for The Kingfish Company, with record sales and continuous production improvements. The demand for our high-quality product is strong across all our markets, and we are preparing to increase production to meet growing demand. The commissioning of the Phase 2 extension installation started in January, and we have now a fully functional state-of-the-art hatchery that has delivered the first batches of excellent quality fingerlings. I am excited to complete the construction in the third quarter, and advance our technology while expanding our markets”, said Vincent Erenst, CEO of The Kingfish Company.
Record sales in Q1 2023
Demand for Dutch Yellowtail kingfish has remained strong in all our markets. Sales for the quarter reached €5.6 MM, up 55% compared to the first quarter of 2022. The revenue per kilo continued to improve, up €0.6 /kg compared to Q4 2022, at €15.1, driven by the increasing average size of the fish. Volume sold increased 18% YOY, to 375 tons.
The Phase 1 plant has maintained a steady state capacity for the fourth consecutive quarter, producing 421 tons in Q1. Additionally in Q1, a new productivity record of 0.86 kg growth/m3/day in Q1 was set, and FCR decreased to 1.34. The company continues its feed trials aiming at reducing the content of marine ingredients and further improving efficiency.
Commissioning of Phase 2 extension has started, with revised project schedule
The commissioning of the Phase 2 extension has started, with the new pumphouse, the second hatchery and a new connection to the grid being operational since January 2023. The new state-of-the-art hatchery has already delivered two batches of high quality fingerlings.
After an external review of the construction progress for the waste water treatment plant, the new grow-out facility and the processing plant, the planning has been adjusted. The commissioning of the first of three grow-out systems will start in May 2023 while the last tranche is projected to start in September 2023. The new timeline is mainly a result of delayed development of automation systems and software. As a result of the revised planning, the capex forecast for phase 2 has been adjusted upwards to € 95 MM.
The delay of the Phase 2 extension will not have a material impact on the 2023 harvest volume. Phase 2 harvest is expected to start in Q1 2024, and to reach steady state capacity in Q4 2024. €73 MM have already been spent by year-end 2022 and the company expects to have sufficient liquidity to complete this project in Q3 2023.
Furthermore the company is monitoring its liquidity situation and is considering several funding alternatives to finance the biomass and working capital growth of Phase 2, to meet all required financial covenants, as well as to finance the preparation of future extension projects, either in the US or Phase 3 in the Netherlands.
Full Year 2022 highlights
Revenue increased 81% YOY to €18.7 MM
Operational improvements and production of larger fish offsetting impact of inflation
EBITDA loss per kg halved to €(2.6) confirming path to profitability
The environment in 2022 was challenging, with inflation accelerating significantly after the start of the war in Ukraine. In the second half of the year, input costs saw a sharp increase, particularly in feed and energy expenses. The company was able to mitigate the impact of the increasing operating costs by increasing the revenue per kilo to €14.5 at the end of the year, as well as increasing the efficiency of our operations.
Strong demand for Dutch Yellowtail despite the inflationary environment
The demand for Dutch Yellowtail kingfish continued growing rapidly. Revenue increased by 81% in 2022, with volume up 59% to 1435 tons. The revenue per kilo increased strongly in the second half of the year as a result of an increased proportion of large fish and increased prices.
Path to profitability confirmed
Kingfish has confirmed its path to profitability with operational EBITDA improving by 38% to €(3.9) MM. This is the result of the scaling of the operations, with production increasing by 31% to 1511 tons in 2022, and consistent operations running at steady state capacity during the last three quarters of the year. The introduction of the 3rd generation of fingerlings has shown promising results, with increased growth rates and a reduced FCR. The EBITDA / kg has reached €(2.6) in the fourth quarter of 2022, an improvement of 51% YOY
Outlook
Management remains positive about the outlook for The Kingfish Company despite a recent spike in energy costs and feed prices. The Group capacity will more than double after the commissioning of the new extension of the farm in Zeeland, enabling us to meet the growing demand for high-quality yellowtail kingfish. The company expects to benefit from the scaling effect and further improvement in operations and productivity, to become profitable and cash positive. Management continues developing the plans for further expansions in the US and in Europe.
For more information
Please see the attached Q1 2023 business update and the 2022 financial statements presentation. The Kingfish Company will present the business update to investors, analysts and media on Thursday April 20, 2023 at 15:00 CET. The online presentation will be followed by a Q&A session. Both will be hosted by the company’s CEO Vincent Erenst, and CFO Jean-Charles Valette.
You may access the presentation in full below.