Q2 2026 Salmon Evolution ASA Earnings Call

August 18, 2026

Speaker #1: Salmon Evolution's presentation for the second quarter. We are currently at a true inflection point where we are now transitioning from a period dominated by construction and investment toward scale-up and, ultimately, cash flow generation.

Trond Håkon Schaug-Pettersen: Salmon Evolution's presentation for the second quarter. We are currently at a true inflection point where we are now transitioning from a period dominated by construction and investment, where it is now scale up and ultimately cash flow generation with phase two at Indre Hareid now in operation. This is something we looked forward to for a long time. As I have said many times before, this will be a game changer for the company. In land-based salmon farming, you need scale. By the end of this year, scale is exactly what we will have. While the salmon market has been challenging for some time and impacting our financial results, we are now seeing a more positive market outlook emerging, which is also very encouraging. Coupled with a substantial increase in production over the coming year, this is arguably the most interesting period in Salmon Evolution's history.

Trond Håkon Schaug-Pettersen: Salmon Evolution's presentation for the second quarter. We are currently at a true inflection point where we are now transitioning from a period dominated by construction and investment, where it is now scale up and ultimately cash flow generation with Phase 2 at Indre Hareid now in operation. This is something we looked forward to for a long time. As I have said many times before, this will be a game changer for the company. In land-based salmon farming, you need scale. By the end of this year, scale is exactly what we will have. While the salmon market has been challenging for some time and impacting our financial results, we are now seeing a more positive market outlook emerging, which is also very encouraging. Coupled with a substantial increase in production over the coming year, this is arguably the most interesting period in Salmon Evolution's history.

Speaker #1: With phase two at the Indre Harøy now in operation, and this is something we've looked forward to for a long time. As I've said many times before, this will be a game-changer for the company.

Speaker #1: In land-based salmon farming, you need scale, and by the end of this year, scale is exactly what we will have. Also, while the salmon market has been challenging for some time and impacting our financial results, we are now seeing a more positive market outlook emerging, which is also very encouraging.

Speaker #1: Coupled with a substantial increase in production over the coming year, this is arguably the most interesting period in Salmon Evolution's history. So, my name is Trond Håkon Skau Pettersen.

Trond Håkon Schaug-Pettersen: My name is Trond Håkon Schaug-Pettersen. I am the CEO of the company. Together with our CFO, Trond Vadset Veibust, I will take you through this presentation. As normal, we will start this presentation by going through the highlights. Then I will take you through the operations and our ongoing growth initiatives before our CFO will take us through the financials. Finally, we will end the presentation with a Q&A session. For those of you who are attending virtually, you can submit questions via the webcast. As mentioned, the company is at an inflection point where we, over the coming year, will fundamentally transform the scale of our business. Key to this is phase two, which is now in operation. The ramp-up is progressing according to plan. The fish is performing well, and we have completed the third phase two smolt release now in July.

Trond Håkon Schaug-Pettersen: My name is Trond Håkon Schaug-Pettersen. I am the CEO of the company. Together with our CFO, Trond Vadset Veibust, I will take you through this presentation. As normal, we will start this presentation by going through the highlights. Then I will take you through the operations and our ongoing growth initiatives before our CFO will take us through the financials. Finally, we will end the presentation with a Q&A session. For those of you who are attending virtually, you can submit questions via the webcast. As mentioned, the company is at an inflection point where we, over the coming year, will fundamentally transform the scale of our business. Key to this is Phase 2, which is now in operation. The ramp-up is progressing according to plan. The fish is performing well, and we have completed the third Phase 2 smolt release now in July.

Speaker #1: I'm the CEO of the company, and together with our CFO, Tron Waldseth Vejbust, I will take you through this presentation. As normal, we will start this presentation by going through the highlights; then I will take you through the operations and our ongoing growth initiatives, before our CFO will take us through the financials.

Speaker #1: And finally, we will end the presentation with a Q&A session for those of you who are attending virtually. You can submit questions via the webcast.

Speaker #1: And as mentioned, the company is at an inflection point where we, over the coming year, will fundamentally transform the scale of our business. Key to this is phase two, which is now in operation.

Speaker #1: The ramp-up is progressing according to plan. The fish are performing well, and we've completed the third harvest in July. The building project is also nearing completion.

Trond Håkon Schaug-Pettersen: The building project is also nearing completion with the remaining eight tanks to be gradually handed over and taken into operation throughout this year and enabling a significant increase in production going into 2027. In phase one, we are seeing continued progress from the new feed and updated operating protocols that we implemented earlier this year, particularly around water quality translating into better growth. Although we expect the full effect still to be ahead of us, the recent development gives us increased confidence in the underlying production potential. Clearly, the weak salmon prices impacted our financial results in Q2 where we saw revenues of NOK 67 million, a Farming EBITDA of minus NOK 3 million, and a group EBITDA of minus NOK 11 million.

Trond Håkon Schaug-Pettersen: The building project is also nearing completion with the remaining eight tanks to be gradually handed over and taken into operation throughout this year and enabling a significant increase in production going into 2027. In Phase 1, we are seeing continued progress from the new feed and updated operating protocols that we implemented earlier this year, particularly around water quality translating into better growth. Although we expect the full effect still to be ahead of us, the recent development gives us increased confidence in the underlying production potential. Clearly, the weak salmon prices impacted our financial results in Q2 where we saw revenues of NOK 67 million, a Farming EBITDA of NOK -3 million, and a group EBITDA of NOK -11 million.

Speaker #1: With the remaining eight tanks to be gradually handed over and taken into operation throughout this year, this will enable a significant increase in production going into 2027.

Speaker #1: In Phase One, we are seeing continued progress from the new feed and updated operating protocols that we implemented earlier this year, particularly around water quality, translating into better growth.

Speaker #1: And although we expect the full effect still to be ahead of us, the recent developments give us increased confidence in the underlying production potential.

Speaker #1: Clearly, the weak salmon prices impacted our financial results in the second quarter, where we saw revenues of NOK 67 million, a farming EBITDA of minus NOK 3 million, and a group EBITDA of minus NOK 11 million.

Speaker #1: However, on the positive side, harvest volumes are up 50% year-to-date, and also, year-to-date farming EBITDA is up from minus NOK 8 million last year to plus NOK 15 million this year.

Trond Håkon Schaug-Pettersen: However, on the positive side, harvest volumes are up 50% year to date. Also year to date Farming EBITDA is up from minus NOK 8 million last year to plus NOK 15 million this year, and also despite a challenging salmon market. I think to sum up, our production will increase significantly over the coming quarters, which in turn will reduce unit costs. Combined with a market looking increasingly attractive into next year, we believe that we are in a quite good position. Moving over to the operations. In Q2, we harvested 945 tons gutted, with harvest taking place in May and early June. The superior grade share and tight weight distribution was in line with previous quarters, and harvest weights was up from 3.2 kilo gutted in Q1 to 3.5 kilo gutted in Q2.

Trond Håkon Schaug-Pettersen: However, on the positive side, harvest volumes are up 50% year-to-date. Also year-to-date Farming EBITDA is up from NOK -8 million last year to NOK +15 million this year, and also despite a challenging salmon market. I think to sum up, our production will increase significantly over the coming quarters, which in turn will reduce unit costs. Combined with a market looking increasingly attractive into next year, we believe that we are in a quite good position. Moving over to the operations. In Q2, we harvested 945tons gutted, with harvest taking place in May and early June. The superior grade share and tight weight distribution was in line with previous quarters, and harvest weights was up from 3.2kg gutted in Q1 to 3.5kg gutted in Q2.

Speaker #1: And also, despite a challenging salmon market. So, I think to sum up, our production will increase significantly over the coming quarters, which in turn will reduce unit cost.

Speaker #1: Combined with a market looking increasingly attractive into next year, we believe that we are in a quite good position. So, moving over to the operations.

Speaker #1: In the second quarter, we harvested 945 tons gutted, with harvest taking place in May and early June. The superior grade share and tight weight distribution were in line with previous quarters.

Speaker #1: And harvest weight was up from 3.2 kilos gutted in Q1 to 3.5 kilos gutted in the second quarter. All-in price realization ended at NOK 70 per kilo, reflecting a fairly backloaded harvest profile and also weak salmon prices in the quarter.

Trond Håkon Schaug-Pettersen: All-in price realization ended at NOK 70 per kilo, reflecting a fairly backloaded harvest profile and also weak salmon prices in the quarter. We have updated our guidance for 2026 and expect to harvest approximately 6,000 tons this year compared to the previous guidance of 7,000 tons. The adjustment reflects the lower than anticipated biomass production during the first part of the year. While this impacts 2026 volumes, we continue to see positive operational development and remain confident in our production outlook and targets. Operationally, the quarter marked another step forward. We continue to see stable operations across the farm, minimal mortality. Net biomass growth increased to 1,706 tons. This is up from 1,357 tons in Q1. We had good appetite across the farm in April.

Trond Håkon Schaug-Pettersen: All-in price realization ended at NOK 70/kg, reflecting a fairly backloaded harvest profile and also weak salmon prices in the quarter. We have updated our guidance for 2026 and expect to harvest approximately 6,000tons this year compared to the previous guidance of 7,000tons. The adjustment reflects the lower than anticipated biomass production during the first part of the year. While this impacts 2026 volumes, we continue to see positive operational development and remain confident in our production outlook and targets. Operationally, the quarter marked another step forward. We continue to see stable operations across the farm, minimal mortality. Net biomass growth increased to 1,706tons. This is up from 1,357 tons in Q1. We had good appetite across the farm in April.

Speaker #1: We have updated our guidance and expect to harvest approximately 6,000 tons this year, compared to the previous guidance of 7,000 tons. The adjustment reflects the lower-than-anticipated biomass production during the first part of the year.

Speaker #1: So while this impacts 2026 volumes, we continue to see positive operational development and remain confident in our production outlook and targets. Operationally, the quarter marked another step forward.

Speaker #1: We continue to see stable operations across the farm, with minimal mortality. Net biomass growth increased to 1,706 tons, up from 1,357 tons in Q1.

Speaker #1: We had good appetite across the farm in April. Production in May and early June was somewhat impacted by a suboptimal fish logistics operation and a longer-than-normal adaptation period for a new small group stocked in phase one.

Trond Håkon Schaug-Pettersen: Production in May and early June was somewhat impacted by a suboptimal fish logistic operation and longer than normal adaption period for a new smolt group stocked in phase one. But towards the second half of June and going into July, we saw good development across all groups. We are seeing that the changes implemented earlier this year are beginning to deliver, and that better water quality is providing a stronger biological foundation to take out the full potential of the system. At the same time, phase two continues to ramp up according to plan, although the contribution to biomass growth was limited during the quarter. This will increase significantly over the coming months. I think the key takeaway is that the biological trends are moving in the right direction.

Speaker #1: But towards the second half of June and going into July, we saw good development across all groups. We are seeing that the changes implemented earlier this year are beginning to deliver, and that better water quality is providing a stronger biological foundation.

Speaker #1: To take out the full potential of the system. At the same time, Phase 2 continues to ramp up according to plan, although the contribution to biomass growth was limited during the quarter.

Speaker #1: But this will increase significantly over the coming months. So I think the key takeaway is that the biological trends are moving in the right direction.

Speaker #1: We are building the foundation for higher harvest volumes, larger harvest weights, and also improved unit economics. This slide highlights why we are increasingly confident in our operations and performance.

Trond Håkon Schaug-Pettersen: We are building the foundation for higher harvest volumes, larger harvest weights, and also improved unit economics. On this slide is to highlight why we are increasingly confident in the operations and performance. Historically, we have delivered strong performance up to, say, 2.5 to 3 kilo. The challenge has been to maintain that growth momentum through the later part of the production cycle. The improvements implemented earlier this year geared around feed and operating protocols have had a positive effect on water quality, and we see that this also translates into a positive effect on growth. As you can see from the right-hand chart, the last two groups that we have harvested have had a significant better feeding in the last part of the production cycle compared to the previous two groups prior to implementing those changes.

Speaker #1: Historically, we have delivered strong performance up to, say, 2.5 to 3 kilos. The challenge has been to maintain that growth momentum through the later part of the production cycle.

Speaker #1: The improvements implemented earlier this year, geared around feed and operating protocols, have had a positive effect on water quality. We see that this also translates into a positive effect on growth.

Speaker #1: And as you can see from the right-hand chart, the last two groups that we have harvested have had significantly better feeding in the last part of the production cycle compared to the previous two groups prior to implementing those changes.

Speaker #1: So, while it's still early, the data is encouraging and supports our view that the biological potential of the system is improving. Going forward, I think it's all about building on that positive momentum.

Trond Håkon Schaug-Pettersen: While it is still early, the data is encouraging and supports our view that the biological potential of the system is improving. Going forward, I think it is all about building on that positive momentum. When it comes to phase two, the first months of operation have gone according to plan. We completed the third smolt release in July. All groups have adapted well with minimal mortality, good appetite, and growth in line with expectations. Importantly also, the technical upgrades that we have in phase two are performing as intended with further improvements in water quality, which has been a key focus in phase two, and that means improvements in particles, gas levels, tank hydraulics, and overall more capacities throughout the system.

Speaker #1: And when it comes to phase two, the first months of operation have gone according to plan. We completed the third smolt release in July.

Speaker #1: All groups have adapted well, with minimal mortality. Good appetite and growth are in line with expectations. Importantly, the technical upgrades that we have in phase two are performing as intended, with further improvements in water quality, which has been a key focus in phase two.

Speaker #1: And that means improvements in particles, gas levels, tank hydraulics, and, overall, more capacity throughout the system. Over the coming months, the contribution to biomass growth from phase two will materially increase, and we are planning for two full-size smolt releases in the fourth quarter, meaning that for 2026 as a whole, we plan to stock around 2.8 million smolt, which is up 65% compared to last year.

Trond Håkon Schaug-Pettersen: Over the coming months, the contribution to biomass growth from phase two will materially increase, and we are planning for two full-size smolt releases in Q4, meaning that for 2026 as a whole, we plan to stock around 2.8 million smolt, which is up 65% compared to last year. I would say in short, phase two is delivering operationally. The ramp-up is on track, and we are now building the foundation for substantial production growth over the coming quarters. Delivering on the production ramp-up, that is the primary focus for us now, and we remain confident in achieving our mid-2027 run rate production target of 14,600 tons. That means continued improvement in phase one, so that we, as a first step, get to 85% capacity utilization and also getting phase two to full run rate production. This will fundamentally transform the company.

Speaker #1: So I would say, in short, phase two is delivering operationally, the ramp-up is on track, and we are now building the foundation for substantial production growth over the coming quarters.

Speaker #1: And the delivery and delivering on the production ramp-up—that is the primary focus for us now. We remain confident in achieving our mid-2027 run-rate production target of 14,600 tons.

Speaker #1: And that means continued improvement in phase one, so that we—as a first step—get to 85% capacity utilization, and also get phase two to full run-rate production.

Speaker #1: This will fundamentally transform the company. It will give us critical mass, as well as a fully competitive production cost and stable weekly harvest, which will again enable further initiatives on the commercial side.

Trond Håkon Schaug-Pettersen: It will give us critical mass, also a fully competitive production cost and stable weekly harvest, which will again enable further initiatives on the commercial side. Moving over to our growth initiatives, we believe that we are entering a very attractive phase for the company, where years of execution are now translating into clear and scalable growth. Our strategy is very clear and disciplined. It is now all about execution on the current operation, delivering phase two, and also ensuring that we have a compelling pipeline. Phase three at Indre Hareid is the natural next step that will double the capacity towards the 36,000 tons. This is on one side a platform and also with an organization that is already proven. Also, this is growth that leverage the existing infrastructure and experience that we have, reducing risk and boosting returns.

Speaker #1: So, moving over to our growth initiatives, we believe that we are entering a very attractive phase for the company, where years of execution are now translating into clear and scalable growth.

Speaker #1: Our strategy is very clear and disciplined. It's not all about execution—on the current operation, delivering phase two, and also ensuring that we have a compelling pipeline.

Speaker #1: And phase three, at the end of the hour, is the natural next step that will double the capacity towards 36,000 tons. This is, on one side, a platform, and also with an organization that is already proven.

Speaker #1: So, and also, this is growth that leveraged the existing infrastructure and experience that we have, reducing risk and boosting returns. Importantly, as to Phase Two, we firmly believe that this will set a new benchmark for land-based salmon farming.

Trond Håkon Schaug-Pettersen: Important as to phase two, we firmly believe that will set a new benchmark for land-based salmon farming. As previously mentioned, things are looking very good. We have taken now four years of operating experience from phase one and incorporated those learnings into phase two. The improvements are especially centered around water quality, robustness, and reliability. We are introducing around 20% more fresh seawater. We are upgrading the degassing systems, better water hydraulics, particle filtration on the water that we reuse, and these are targeted and experience-driven upgrades designed to support strong growth through the full production cycle. At the same time, we have also simplified the systems. We have further strengthened the biosecurity to ensure predictable operations at higher volumes. I think the takeaway is clear. Phase two is not just more volume, it is also better biology, it is lower risk.

Speaker #1: And, as previously mentioned, things are looking very good. We have taken out four years of operating experience from phase one and incorporated those learnings into phase two.

Speaker #1: Improvements are especially centered around water quality, robustness, and reliability. We are introducing around 20% more fresh seawater, upgrading the degassing systems, improving water hydraulics, and adding particle filtration on the water that we reuse. These are targeted and experience-driven upgrades designed to support strong growth through the full production cycle.

Speaker #1: At the same time, we've also simplified the systems and have further strengthened biosecurity to ensure predictable operations at higher volumes. So, I think the takeaway is clear.

Speaker #1: Phase two is now—it's not just more volume, it's also better biology, it's lower risk, and together with phase one, we believe that we have a very solid operational platform.

Trond Håkon Schaug-Pettersen: Together with phase one, we believe that we have a very solid operational platform. This is just to illustrate the strength and scale and long-term potential of Indre Hareid. Phase one, as you know, been operating now for several years. We now have phase two in operation that will eventually take production capacity to 18,000 tons. Get that. Additionally, phase three is, in our view, a highly attractive project building on the same proven site infrastructure and organization. Beyond that, we also have a potential phase four that represents meaningful long-term optionality. I think to sum up, this is a very capable and unique platform. It offers significant volume growth in the near term. We have very tangible medium-term expansion opportunities and also a long-term growth optionality.

Speaker #1: And this is just to illustrate the strength, scale, and long-term potential of Indre Harøya. Phase one, as you know, has been operating now for several years.

Speaker #1: We now have phase two in operation. That will eventually take production capacity to 18,000 tons—get that. Additionally, phase three is, in our view, a highly attractive project.

Speaker #1: It's building on the same proven site, infrastructure, and organization. Beyond that, we also have a potential Phase Four that represents meaningful long-term optionality.

Speaker #1: So, I think, to sum up, this is a very capable and unique platform. It offers significant volume growth in the near term. We have very tangible medium-term expansion opportunities, and also long-term growth optionality.

Speaker #1: And as to phase two, disciplined project execution and cost control have enabled the phase two milestone to be delivered in line with plan. We have now taken over four out of twelve grower tanks, with the remaining eight tanks to be taken over during the course of this year.

Trond Håkon Schaug-Pettersen: As to phase two, disciplined project execution and cost control have enabled phase two milestone to be delivered in line with plan. We have now taken over 4 out of 12 grow-out tanks, with the remaining 8 tanks to be taken over during the course of this year. The project is nearing completion. It gives us good visibility on remaining CapEx and milestones. The civil construction scope is largely completed. The project focus is now centered around process installation and final commissioning activities for the remaining tanks. As to the pre-grower tanks we are planning as part of phase two, we estimate total investments of around NOK 400 million, including contingencies. But before making any final investment decision, we will run a structured process with contractors with the aim of further reducing risk in cost estimates. With that, I leave the word over to you, Trond.

Speaker #1: The project is nearing completion. That gives us good visibility on remaining capex and milestones. The civil construction scope is largely completed. The project focus is now centered around process installation and final commissioning activities for the remaining tanks.

Speaker #1: As to the pre-grower tanks, we are planning them as part of phase two. We estimate total investments of around NOK 400 million, including contingencies. But before making any final investment decision, we will run a structured process with contractors, with the aim of further reducing risk in cost estimates.

Speaker #1: So with that, I'll hand the word over to you, Drone.

Speaker #2: Thank you, Drone Håkon. Okay, so let me take you through the financials for the second quarter and the first half of 2026. After harvesting approximately 1,000 tons at an all-in realized price of NOK 70 per kilo, farming in BTA ended at negative NOK 3 million in Q2.

Trond Vadset Veibust: Thank you, Trond Håkon. Okay. Let me take you through the financials for Q2 and the H1 2026. After harvesting approximately 1,000 tons at an all-in realized price of NOK 70 per kilo, Farming EBITDA ended at -NOK 3 million in Q2, representing a substantial year-on-year improvement driven by lower farming costs. Farming costs landed at NOK 71 per kilo in Q2, down from Q1, and a 13% year-on-year improvement. With increasing volumes in phase one and scaling effects from phase two driving fixed cost dilution, we expect gradually reducing farming costs in the H2 2026. I will go through the farming costs a little bit further in a minute. The other segment reported an EBITDA in line with Q1 and an improvement of approximately 35% year-on-year.

Speaker #2: Representing a substantial year-on-year improvement, driven by lower farming costs. Farming costs landed at 71 kroner per kilo in Q2, down from Q1, and a 13% year-on-year improvement.

Speaker #2: With increasing volumes in phase one, and scaling effects from phase two driving fixed cost dilution, we expect gradually reducing farming costs in the second half of 2026.

Speaker #2: And I will go through the farming costs a little bit further in a minute. The other segment reported an EBITDA in line with Q1.

Speaker #2: And an improvement of approximately 35% year-on-year. As previously highlighted, we have implemented several measures to reduce cash burn and costs in this segment, resulting in meaningful cost reductions, including a reduction of five FTEs.

Trond Vadset Veibust: As previously highlighted, we have implemented several measures to reduce cash burn and costs in this segment, resulting in meaningful cost reductions, including a reduction of 5 FTEs. Looking ahead, with the volumes set to more than double, this cost base will scale significantly, and the relative cost burden of these activities will continue to decline. At group level, EBITDA was -NOK 11 million, representing a solid improvement compared to 2025. Looking at the H1 2026, harvest volumes was up 50% compared to 2025. Farming costs down approximately 10%. Farming EBITDA ended at about NOK 15 million or NOK 5.4 per kilo, an improvement of over NOK 10 per kilo compared to the same period last year, even in spite of a relatively challenging salmon market. When it comes to farming costs, we are beginning to see the benefits of scale as phase two ramps up.

Speaker #2: Looking ahead, with the volumes set to more than double, these cost bases will scale significantly, and the relative cost burden of these activities will continue.

Speaker #2: To decline. At group level, EBITDA was negative at €11 million, representing a solid improvement compared to 2025. Looking at the first half of 2026, harvest volumes were up 50% compared to 2025.

Speaker #2: Farming costs were down approximately 10%. Farming EBITDA ended at about 15 million kroner, or 5.4 kroner per kilo, an improvement of over 10 kroner per kilo compared to the same period last year.

Speaker #2: Even in spite of a relatively challenging salmon market, when it comes to farming costs, we are beginning to see the benefits of scale as Phase Two ramps up.

Speaker #2: Although these effects are not yet reflected in the financial results, as we have consistently communicated, our cost structure contains a higher proportion of fixed costs than a traditional farming operation.

Trond Vadset Veibust: Although these effects are not yet reflected in the financial results. As we have consistently communicated, our cost structure contains a higher proportion of fixed costs than a traditional farming operation, and as a result, attractive unit economics are primarily driven by utilization and the ability to scale production across a largely established cost base. Over the past several years, we have built the operational platform required to support phases one and two at Indre Hareid, effectively front-loading much of the infrastructure and organizational cost base needed for future growth. With substantial production growth on the way, we see a material fixed cost dilution ahead. In other words, our underlying unit economics will improve significantly in the coming 6 to 12 months.

Speaker #2: And as a result, attractive unit economics are primarily driven by utilization and the ability to scale production across a largely established cost base. Over the past several years, we have built the organizational and operational platform required to support phases one and two at Indre Harøy.

Speaker #2: We have effectively front-loaded much of the infrastructure and organizational cost base needed for future growth. With substantial production growth underway, we see a material fixed cost dilution ahead.

Speaker #2: In other words, our underlying unit economics will improve significantly in the coming six to 12 months. To dwell further on cost—a topic that has become increasingly important over the last few quarters—feed costs and the benefits of a low economic feed conversion in a tightening feed market.

Trond Vadset Veibust: To dwell further on cost, a topic that has become increasingly important over the last few quarters, feed costs and the benefits of a low economic feed conversion in a tightening feed market. As you are all aware, feed accounts for approximately 50% of farming costs, making feed conversion the single most important driver of long-term competitiveness in the industry. Our controlled land-based production system enable a level of feeding precision, monitoring, and data collection that is difficult to replicate elsewhere and act as a natural hedge against feed cost inflation. Over the last few quarters, we have improved our economic feed conversion ratio by 5% to 6% and remain firmly on track for our 12-month target of 1.1. In fact, the latest group we harvested crossed this threshold.

Speaker #2: As you are all aware, feed accounts for approximately 50% of farming costs, making feed conversion the single most important driver of long-term competitiveness in the industry.

Speaker #2: Our controlled land-based production system enables a level of feeding precision, monitoring, and data collection that is difficult to replicate elsewhere, and acts as a natural hedge against feed cost inflation.

Speaker #2: Over the last few quarters, we have improved our economic feed conversion ratio by 5 to 6%, and remain firmly on track for our 12-month target of 1.1.

Speaker #2: In fact, the latest group we harvested crossed this threshold. Going forward, we expect to continue benefiting from the investments made in feeding technology, personnel training, and artificial intelligence to maintain our already sharp economic feed factor going forward.

Trond Vadset Veibust: Going forward, we expect to continue benefiting from the investments made in feeding technology, personnel training, and artificial intelligence to maintain our already sharp economic feed factor going forward. In a market characterized by rising feed costs, every percentage point improvement creates meaningful value and represents a structural competitive advantage over time. Let's take a brief look at the balance sheet and cash flow. Most of our assets are related to the grow-out facility at Indre Hareid, biomass and other inventory, and cash. The net interest-bearing debt decreased slightly compared to Q1, reflecting the cash injection from the private placement in April. With the phase two expansion project being close to completion, as highlighted, investments in the project are decreasing, and we have good visibility on remaining CapEx and milestone as mentioned. Cash flow from operations reflects harvest timing and the ongoing phase two ramp up.

Speaker #2: In a market characterized by rising feed costs, every percentage point improvement creates meaningful value and represents a structural competitive advantage over time. And then finally, let's take a brief look at the balance sheet and cash flow.

Speaker #2: Most of our assets are related to the grow-out facility at Indre Harøy: biomass, other inventory, and cash. Net interest-bearing debt decreased slightly compared to Q1, reflecting the cash injection from the private placement in April.

Speaker #2: With the phase two expansion project being close to completion, as highlighted, investments in the project are decreasing, and we have good visibility on the remaining capex and milestones as mentioned.

Speaker #2: Cash flow from operations reflects harvest timing and the ongoing Phase 2 ramp-up. Investments in the quarter are, in all material respects, tied to Phase 2.

Trond Vadset Veibust: Investments in the quarter are in all material respects tied to phase two, and cash flow from financing relates to the mentioned private placement, as well as drawdowns on the construction financing. Thank you. Trond Håkon summary.

Speaker #2: And cash flow from financing relates to the mentioned private placement, as well as drawdowns on the construction financing. Thank you. Summary.

Speaker #1: Thank you.

Trond Håkon Schaug-Pettersen: Thank you, Trond. So let me end where we started. The company is at a true inflection point. For years, our focus has been on building the platform, proving the technology, and developing the operational capabilities needed to succeed at scale. Today, that foundation is in place. We have a proven operation. We have a capable team and platform that is now entering its next phase with phase two now online and ramping up according to plan. I will say that the heavy lifting is largely behind us. What lies ahead is about unlocking the value of what we have built through higher production, stronger economics, and ultimately also significant cash flow generation. At the same time, we are seeing encouraging biological development across the farm, which in turn increase our confidence in the production potential of our system.

Speaker #2: So let me end where we started. The company is at a true inflection point. For years, our focus has been on building the platform, proving the technology, and developing the operational capabilities needed to succeed at scale.

Speaker #2: Today, that foundation is in place. We have a proven operation. We have a capable team. And the platform that is now entering its next phase, with phase two now online and ramping up according to plan.

Speaker #2: So I will say that the heavy lifting is largely behind us. What lies ahead is about unlocking the value of what we have built through higher production, stronger economics, and ultimately, also significant cash flow generation.

Speaker #2: At the same time, we are seeing and encouraging biological development across the farm, which in turn increases our confidence in the production potential of our system.

Speaker #2: We also believe that the market backdrop is becoming increasingly supportive. After a prolonged period of pressure, the outlook for salmon prices is finally improving, I have to say.

Trond Håkon Schaug-Pettersen: We also believe that the market backdrop is becoming increasingly supportive after a prolonged period of pressure. The outlook for salmon prices is finally improving, I have to say, and we are uniquely positioned to benefit from that as our production growth now accelerates. I think the combination of improving operational performance, substantial volume growth ahead, and our strengthening market outlook gives us confidence that the most exciting period in the company's history lies ahead of us. Well, thank you all for your attention, and we are now happy to open up for questions.

Speaker #2: And we are uniquely positioned to benefit from that, as our production growth now accelerates. So I think the combination of improving operational performance, substantial volume growth ahead, and our strengthening market outlook gives us confidence that the most exciting period in the company's history lies ahead of us.

Speaker #2: So, I think with that, I'd like to thank you all for your attention. We're now happy to open up for questions.

Speaker #1: Yeah, we can start with the audience first and then move on to the webcast.

Trond Vadset Veibust: Yes. We can start with the audience first and then move on to the webcast.

Speaker #3: Thanks. Herman Dahl, Nordea. Two questions from my side. Firstly, on the pre-growth tanks, could postponement of that investment also mean that it will take longer to ramp up to 18,000 tons?

Herman Dahl: Thanks. Herman Dahl, Nordea. Two questions from my side. Firstly, on the pre-grow tanks, could postponement of that investment also mean that it will take longer time to ramp up to 18,000 tons? A second one on feed. Could you just comment briefly on the composition of your feed basket compared to an average industry feed basket?

Speaker #3: And a second one on feed. Could you just comment briefly on the composition of your feed basket compared to sort of an average industry feed basket?

Trond Håkon Schaug-Pettersen: I think to start with the pre-grow-out tanks, the 18,000 tons, there is a component that relates to the pre-grow-out tanks. Obviously that is part of the 18,000 tons. That I think goes without saying that we have on the pre-grow-out tanks, the design is basically completed, and it is about just getting started. We have not made a final investment decision yet, but obviously that is something we are working on. We are now in a phase where the grow-out tanks are finished by the end of this year. That also frees up capacity. As to the feed composition, I would say we have what I would say is a high-performance feed. I think there are unique features in terms of technical specifications. We have also prioritized high energy content and so forth.

Speaker #2: I think, to start with the pre-growth tanks—the 18,000 tons—there's a component of that which relates to the pre-growth tanks. So obviously that's part of the 18,000 tons.

Speaker #2: So, that I think goes without saying that we have, on the pre-growth tanks, the design is basically completed, and it’s about just getting started.

Speaker #2: So, we haven't made a final investment decision yet, but obviously that's something we are working on. But also, we are now in a phase where, yeah, the grow-out tanks are finished by the end of this year. That will also free up the feed composition, I would say. We have what I would say is a high-performance feed.

Speaker #2: I think there are unique features in terms of technical specifications. But also, we have prioritized high energy content and so forth. So we have a very close cooperation with our feed supplier, and obviously we are monitoring the situation closely as to the increasing feed prices.

Trond Håkon Schaug-Pettersen: We have a very close cooperation with our feed supplier and obviously are monitoring the situation closely as to the increasing feed prices.

Speaker #3: Does that mean a higher inclusion of marine ingredients compared to an average basket?

Herman Dahl: Does that mean a higher inclusion of marine ingredients compared to an average basket?

Speaker #2: Yeah, we have prioritized a high marine inclusion.

Trond Håkon Schaug-Pettersen: Well, we have prioritized a high marine inclusion.

Speaker #3: Okay. Thanks.

Herman Dahl: Okay, thanks.

Speaker #1: Christoph Haugland, Arctic Securities. With the improvements you're seeing on the feeding protocols and water quality, do you expect to see average harvest weights of 4 kilos this year, or is that a milestone for 2027?

Kristoffer Aglen: Kristoffer Aglen, Arctic Securities. With the improvements you are seeing on the feeding protocols and water quality, do you expect to see average harvest weights of 4 kilos this year, or is that the milestone for 2027?

Kristoffer Haugland: Kristoffer Aglen, Arctic Securities. With the improvements you are seeing on the feeding protocols and water quality, do you expect to see average harvest weights of 4 kilos this year, or is that the milestone for 2027?

Speaker #2: As soon as possible. So basically, we are stocking fish every second month now with phase two. We are stocking fish—we will be stocking fish every month.

Trond Håkon Schaug-Pettersen: As soon as possible. Basically we are stocking fish every second month. Now with phase two we are stocking fish. We will be stocking fish every month. So we have a certain window, and the harvest weight is basically just a function of the growth we are able to achieve within that window. Now you saw the harvest weight was up from 3.2 to 3.5 and obviously the ambition for us is to continue to lift those. It is not a problem growing a large fish, it is just being able to do that within the time you have allocated. So that is what we are working for. I cannot give an exact date. I wish I could, but I think we are seeing positive things across the system, and it is all just building on that month to month and get there as soon as possible.

Speaker #2: So, we have a certain window, and the harvest weight is basically just a function of the growth we are able to achieve within that window.

Speaker #2: So now you saw the harvest weight was up from 3.2 to 3.5, and obviously, the ambition for us is to continue to lift those.

Speaker #2: It's not a problem growing large fish. It's just being able to do that within the time you have allocated. So that is what we're working towards.

Speaker #2: I cannot give an exact date. I wish I could, but I think we are seeing positive things across the system. It's all just building on that momentum to get there as soon as possible.

Speaker #2: But four kilos gutted plus—that is definitely the target. We are also seeing that, as I think we've mentioned many times before, we have a very tight weight distribution because we grade the fish during the production process a couple of times.

Trond Håkon Schaug-Pettersen: But 4 kilo gutted plus, that is definitely the target. We are also seeing that, as I think we mentioned many times before, we have a very tight weight distribution because we grade the fish during the production process a couple of times. So even at like in Q2 where we had an average weight of 3.5 kilo, it is very limited with small fish. That is a big advantage. If we are able to get the average to north of 4 kilo, then we basically do not have any fish below 3 kilo. Then it is 4 plus that is the main category, and then we have some 3 to 4.

Speaker #2: So even in the second quarter, where we had an average weight of 3.5 kilos, it's still very limited with small fish.

Speaker #2: So, and that is a big advantage. And if we are able to get the average to north of four kilos, then we basically don't have any fish below three kilos.

Speaker #2: Then it's four plus. That's the main category. And then we have some in the three to four range.

Speaker #1: Thank you. Anyone else, or should we move to the questions a bit via the webcast? Okay, let's do that. All right. First and foremost, okay.

Kristoffer Aglen: Thank you.

Kristoffer Haugland: Thank you.

Trond Håkon Schaug-Pettersen: Anyone else, or should we move to the questions submitted via the web call? Okay, let's do that. All right. First and foremost. Okay. What specific biological and operational milestones do you need to demonstrate over the next 6 to 12 months to be comfortable that phase one and two can collectively deliver around 18,000 tons HOG? Based on what you are seeing today, do you believe you are on track for this? All right. As we highlighted in the presentation, we have a clear plan to reach our mid-2027 run rate production target of about 14,500 tons gutted salmon. In phase one, reaching our next 12 months target encompasses a quarter-over-quarter improvement of approximately 4% from the run rate we have today.

Trond Vadset Veibust: Anyone else, or should we move to the questions submitted via the web call? Okay, let's do that. All right. First and foremost. Okay. What specific biological and operational milestones do you need to demonstrate over the next 6 to 12 months to be comfortable that phase one and two can collectively deliver around 18,000 tons HOG? Based on what you are seeing today, do you believe you are on track for this?

Speaker #1: What specific biological and operational milestones do you need to demonstrate over the next 6 to 12 months to be comfortable that Phase One and Phase Two can collectively deliver around 18,000 tons HOG?

Speaker #1: And based on what you're seeing today, do you believe you are on track for this? All right. As we highlighted in the presentation, we have a clear plan to reach our mid-2027 run rate production target of 14 about 14 and a half thousand tons gutted salmon.

Trond Håkon Schaug-Pettersen: All right. As we highlighted in the presentation, we have a clear plan to reach our mid-2027 run rate production target of about 14,500 tons gutted salmon. In phase one, reaching our next 12 months target encompasses a quarter-over-quarter improvement of approximately 4% from the run rate we have today.

Speaker #1: In phase one, reaching our next 12-month target and compass are quarter-over-quarter improvements of approximately 4% from the run rate we have today.

Speaker #1: And for phase two, it's all about maintaining the momentum we have seen since inception of operations about five months ago, and of course, to become a little bit better every day.

Trond Håkon Schaug-Pettersen: For phase two, it is all about maintaining the momentum we have seen since inception of operations about 5 months ago, and of course to become a little bit better every day. As Tore Tønseth also highlighted, delivering on the production ramp-up is the current main focus and priority of the company. From our perspective, we are definitely on track to reach the targets we have set for the next 6 to 12 months. Okay. Phase two incorporates a lot of operational experience from phase one. Which upgrades do you believe the most in, Tore Tønseth? I think as we have alluded to in the presentation, water quality has been a core focus in phase two, further improving that compared to phase one.

Speaker #1: As Torokon also highlighted, delivering on the production ramp-up is the current main focus and priority of the company. From our perspective, we are definitely on track to reach the targets we've set for the next 6 to 12 months.

Speaker #1: Okay. Phase two incorporates a lot of operational experience from phase one. Which upgrades do you believe in the most in Torokon?

Speaker #2: I think, as we've alluded to in the presentation, water quality has been a core focus in phase two—further improving that compared to phase one.

Speaker #2: And that is sort of the foundation for being able to take out the full potential of the fish and also maintaining a good biological performance of the fish.

Trond Håkon Schaug-Pettersen: That is the foundation for being able to taking out the full potential of the fish and also maintaining a good biological performance of the fish. By water quality, we mean particles, gas levels, the flow of water, et cetera. That is, in our view, very important.

Speaker #2: So, and by water quality, we mean particles, gas levels, the flow of water, etc. So that is, in our view, very important.

Speaker #1: Okay, how should investors think about the impact of phase two on fixed cost dilution over the next 12 months?

Trond Vadset Veibust: Okay. How should investors think about the impact of phase two on fixed cost dilution over the next 12 months? As we also highlighted in the presentation, with phase two gradually coming online and improving performance in phase one, we are beginning to see the scaling effects, although it is not yet reflected in our financial results. As we have elaborated, our cost structure contains a high proportion of fixed costs. It goes without saying that with a high proportion of fixed costs and higher volumes, you get a very meaningful fixed cost dilution. This translates into improved unit economics. As we have also highlighted, over the last few years, we have built the operational platform needed to support phases one and two. So we have effectively front-loaded much of the cost base required for future growth.

Speaker #2: As we also highlighted in the presentation, with Phase Two gradually coming online and improving performance in Phase One, we are beginning to see the scaling effects.

Speaker #2: Although it's not yet reflected in our financial results, as we have elaborated, our cost structure contains a high proportion of fixed costs. And it goes without saying that with a high proportion of fixed costs and higher volumes, you get a very meaningful fixed cost dilution.

Speaker #2: And this translates into improved unit economics. As we have also highlighted, over the last few years, we have built the operational platform needed to support Phases One and Two.

Speaker #2: So we have effectively front-loaded much of the cost base required for future growth. So with substantial production growth expected over the next 12 months, we will see— we will have a material fixed cost dilution.

Trond Vadset Veibust: With substantial production growth expected over the next 12 months, we will have a material fixed cost dilution, and we will see significantly improved unit economics in the coming periods. Okay. How many of the tanks in phase two are in operation? Could you just give a little flavor on operational experiences so far?

Speaker #2: And we will see significantly improved unit economics in the coming periods.

Speaker #1: Okay. Okay. How many of the tanks in Phase Two are in operation? And could you just give a little flavor on the operational experiences so far?

Speaker #2: Yeah. We have taken over four tanks in phase two. Currently, we have fish in three of them, but we are going to split one of the groups before too long.

Trond Håkon Schaug-Pettersen: Yeah. We have taken over 4 tanks in phase two. Currently, we have fish in 3 of them, but we are going to split one of the groups in not too long. Then we will be fishing in all 4 of them. We are now taking over the last 8 tanks over the course of this year. We are also planning, as mentioned earlier, to have 2 full-size smolt releases in Q4. This means that by going into next year, we will stock fish every month going forward and have a very continuous production. I think as I mentioned, the ramp-up in phase two has gone according to plan. We are seeing that the upgrades implemented have had the effects that was intended. We are seeing good water quality. The fish has adapted very well to the environment. Feeding system is working.

Speaker #2: So then we'll be fishing in all four of them. And we are now taking over the last eight tanks over the course of this year.

Speaker #2: So, and we're also planning, as mentioned earlier, to have two full-size smolt releases in the fourth quarter, which means that going into next year, we will stock fish every month going forward and have a very continuous production.

Speaker #2: So, I think as I mentioned, the ramp-up in phase two has gone according to plan. We are seeing that the upgrades implemented have had the effects that were intended.

Speaker #2: We are seeing good water quality. The fish have adapted very well to the environment, the feeding system is working, so we're very happy with what we have seen so far.

Trond Håkon Schaug-Pettersen: We are very happy with what we have seen so far and looking forward to fill up the facility.

Speaker #2: And looking forward to filling up the facility.

Speaker #1: Okay. What is your take on the salmon market?

Trond Vadset Veibust: Okay. What is your take on the salmon market?

Speaker #2: Yeah. No, I think we also—I think we were a little bit surprised about the market this year. We expected it to be stronger, but I think what you are seeing now with the market is that demand is actually very good.

Trond Håkon Schaug-Pettersen: Yeah. I think we included. I think we are a little bit surprised about the market this year. We expected it to be stronger. But I think what you are seeing now with the market is that demand is actually very good. Demand growth is significant, but obviously, you had a period with very high supply growth, and then it is hard being able to increase prices in that kind of scenario. But the good thing about the salmon is that it is very limited storage. If you build cars and don't sell it goes to the inventory. The salmon is sold and consumed. So low prices, high volume means that you are building market.

Speaker #2: Demand growth is significant, but obviously you've had a period with very high supply growth, and then it's sort of hard to be able to increase prices in that kind of scenario.

Speaker #2: But the good thing about the salmon is that there's very limited storage. If you build cars and don't sell them, they go into inventory.

Speaker #2: The salmon is sold and consumed. So, low prices and high volume mean that you are building the market. And when volume growth eventually comes down—which I think is just a matter of time before it will, because we are now, I would say, at a point where production in conventional farming has been very strong—

Trond Håkon Schaug-Pettersen: When volume growth eventually comes down, which I think it is just a matter of time before it will, because we are now, I would say, the production in conventional farming has been very strong, and the license capacity has not been increased. So it is hard to maintain this kind of growth from the high base that we are at now. So we are increasing the confidence in the market outlook and think that after a period now of a couple of years with a challenging market, the salmon looks very interesting.

Speaker #2: And the license capacity has not been increased, so it's hard to sort of maintain this kind of growth from the high base that we are at now.

Speaker #2: So we are increasing confidence in the market outlook. And I think that, yeah, after a period now of a couple of years with a challenging market, 2027 looks very interesting.

Speaker #1: All right. And then finally, a question on Phase 3. I think on that, we can say that Salmon Evolution is laser-focused on delivering Phase 2 and the milestones with SEP.

Trond Vadset Veibust: All right. Then finally, a question on phase three. I think on that we can say that Salmon Evolution is laser-focused on delivering phase two and the milestones with SAPs. So that is priority number one, two, and three in the company. When it comes to phase three, we have the land. We have the license and we have the electricity we need to realize that project when it is time. But for now, our focus is phase two and delivering on the milestones with that. I think that concludes today. Thank you for your attendance. We will release a trading update in early October, and then we have the Q3 quarterly presentation in the end of October. See you then. Thank you for coming. Thank you.

Speaker #1: So that's kind of priority number one, two, and three in the company. When it comes to Phase 3, we have the land. We have the license.

Speaker #1: And we have the electricity we need to realize that project when it's time. But for now, our focus is phase two and delivering on the milestones with SEP.

Speaker #1: And I think that concludes today. Thank you for your attendance. We will release a trading update in early October, and then we have the Q3 quarterly presentation at the end of October.

Speaker #1: See you then. Thank you for coming.

Trond Håkon Schaug-Pettersen: Thank you.

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Q2 2026 Salmon Evolution ASA Earnings Call

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