Benchmark Holdings PLC
LSE:BMK
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
34
48
|
| Price Target |
|
We'll email you a reminder when the closing price reaches GBX.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Benchmark Holdings PLC
You don't have any saved screeners yet
Good morning to all of you, and welcome to the Q1 financial year '23 presentation for Benchmark. I am Trond Williksen, I'm the CEO of the group. And at this time, it's really a pleasure to welcome you all to presentation. First time live since I joined the company with physical presence -- since I joined the company nearly 3 years ago. And first time in Oslo, where we have [indiscernible] 15th of December, last year, where we intend to uplift to the main list.
Here, in Oslo, you are very used to salmon companies, and company is very exposed to the salmon industry or related to the salmon industry. Benchmark is also a company that is very much exposed to the salmon industry. But we are more than just a bet on salmon. With a broad and very relevant footprint, we are a unique to the aquaculture industry. We are also a bet on the aquaculture industry, having market-leading positions in what we do in all the major species in aquaculture globally.
Moving over to the program. As usual, I'm here together with Septima Maguire, who's our CFO, and we are going to follow the normal procedure. I'm just going to take you through the highlights of the quarter first before Septima is going to give you more granularity on the financial numbers, before we move over to talk about the outlooks for the company. And at the end, of course, we are going to open up for Q&A for those of you who are following us.
So let me start with the highlights of Q1 for us. It has been a very good quarter with good strategic and operational progress for Benchmark. Again, we are showing a continuation in the progress with improved top LTM top line and earnings that we consistently have been showing since the reset of the group at the end of financial year '20.
This time, the step that we have taken is even bigger than in previous quarters, explained by significant events that has brought us forward to an even longer -- to an even larger extent than before.
Those of you who have been following us is probably guessing that I'm pointing to the progress that we've been able to show in our Health business area. Finally, it is getting there, showing adjusted EBITDA of GBP 4.1 million for the quarter and having a quarter in the Health business area with a positive cash flow. This is a significant milestone for us that we've been working hard to achieve for a long time.
But before getting into more detail about that, the numbers, they are speaking for themselves, but we are happy to have achieved a strong growth in our top line of 36% compared to first quarter and last year, with the increased efficiency throughout the group and good cost control, this has translated down to an increase in adjusted EBITDA of 61% compared to Q1 last year, ending at an EBITDA of GBP 12.1 million for the quarter, excluding fair value adjustments on biological assets.
We have also advanced significantly in the quarter to move the group towards becoming profitable on the bottom line with very significant improvement, both in terms of EBIT as well as net profit compared to 12 months ago. We are getting there quarter by quarter. The same positive movement we have seen on cash flow from operations, which has increased to GBP 8.1 million in Q1 this financial year compared to GBP 1.1 million in the same quarter 1 year ago.
All in all, a strong financial performance, showing progress in all key financial figures for the group, also being reflected in the balance sheet, where we ended the quarter with cash of GBP 42.8 million and net debt, including lease liabilities of GBP 37.9 million.
A main topic this year or over the last year has been the listing in Oslo, the world's leading aquaculture and seafood listing venue. As I started out, stating in my introduction, we successfully listed at Euronext growth on December 15 with the intention to uplift to the main list where we think that the company belongs. At the same time, we are considering a delisting from AIM in London, and we are currently in the process, consulting with our shareholders on that topic.
The benefits of listing in Oslo are many, being the leading global listing venue for aquaculture and seafood companies. Given that Benchmark is a leading aquaculture biotechnology company globally, we believe this is a natural place for us to be. And we believe that positioning the company on the Oslo listing venue will give more attention to the company from investors, understanding aquaculture and seeking exposure to the sector. This, again, will give a better opportunity to get a fair reflection of the values Benchmark represents, the company being a unique bet on the aquaculture industry.
Moving on, to give more details on the performance in the quarter in our three business areas. Starting out with Genetics, where we have seen a very strong growth in the quarter, 41% top line growth compared to Q1 last year driven by very strong growth in salmon egg sales in Norway and Iceland. In total, we sold 118 million eggs in the quarter, which is by far a record for us. The demand has been good, partly explained by a shortage of eggs experienced in the Norwegian market, a market that has been dependent on import from Iceland as we have previously reported.
The high volume of egg cells has only been possible due to the investment we did on the new incubation center in Iceland, which was a very timely investment for us, just finished in time so we could benefit from the demand -- increased demand that we have seen. At the same time, as it has been making it possible for us, to deliver eggs with high technical and genetic quality.
Iceland has been and will be a very important part of our salmon genetics operations. We have a very unique biosecure set up there. At the same time, it represents approximately 50% of our egg supply -- salmon egg supply capacity in the group. This is also why it has been important for us to bring home the remaining 10.52% of the shares that has been owned by an external party. As announced, 17th of February, we have completed the purchase of these shares and are now the 100% owner of the Icelandic operations for the future. We believe that is a very valued transaction for Benchmark and for our shareholders.
The financial results in Genetics reflects our combination of the well-established and profitable Salmon genetics part of the business in Norway and Iceland, and the growth vectors being the Chilean Genetics operation as well as our SPR shrimp and tilapia breeding programs. In our Chilean operations, we are progressing well in our efforts to responsibly penetrate that market. What we have here is an establishment, a very high-quality operation and an excellent operation. And that poses a unique biosecure alternative for the Chilean industry.
This is starting to be recognized by the industry in Chile, albeit we -- as we have communicated before, it will take some time to make this the profitable business we are aiming to have there. We are still in a ramp-up phase.
This also goes for our SPR shrimp program, where we have a temporary slowdown in commercialization in order to refine product offering based on the customer feedback from the first commercial phase. Here, we are expecting to, again, ramp up the commercial efforts in the second half of the year.
As when it comes to our Tilapia breeding program, we are looking at strategic alternatives for our internal breeding activities while we would maintain and strengthen our long-term strategy to grow genetic services and providing genetic services to tilapia breeding programs as well as other breeding programs from other aquaculture species globally. We have a unique situation there in terms of our genetics services, very, very strong competence, a very, very strong repetition, and we see a lot of opportunity to expand that activity going forward.
Finally, to be mentioned under Genetics is that our excellent long-term leader of this business has decided to retire during this year. Jan-Emil Johannessen has been an excellent leader for our Genetics business for more than 10 years, successfully developing and growing that business. While we regret losing Jan-Emil to retirement, we equally are happy that he will be replaced by Geir Olav Melingen who comes from our own ranks. Currently, he is the Chief Commercial Officer of salmon in the group. Geir Olav comes with a very wide and very relevant background, a lot of experience from the salmon industry, and I'm sure that he will be able to take the lead in the next steps of the development of the Genetics business.
Moving over to our biggest business area, which is Advanced Nutrition, where we again have seen a continuation of a very strong commercial performance in the first quarter of this financial year. Our top line growth within this area ended at 19%, while our adjusted EBITDA grew with 23% year-over-year. This reflects strong trading in the quarter with growth in all three products group in Advanced Nutrition, somewhat helped with a favorable effects. At the same time, it should be pointed out that the performance happens despite more challenging markets, especially the shrimp market has been softer throughout the quarter, making the performance that we are showing in Advanced Nutrition to stand out even more.
As in previous quarters, a dominant part of the progress we have experienced is a consequence of enhanced operations and sharpened commercial efforts by our excellent team in INVE. This continues and is a key mitigation for us when markets are getting more challenging. And we know there will be periods also going forward, where the markets will be good and there will be less good. So to have that capability in the organization is a real asset.
Key to us over the last 2 years has also been to optimize our operation and strengthen our commercial team and efforts. We have also been working on streamlining our R&D activities. And the efforts that we have done on these areas have given good results and will be -- still be strategic priorities for us in the time to come. As well, our efforts to launch new technologies and solutions from this area into the market.
Then finally, over to the performance of our Health business area, where we have reached a milestone in this quarter. As I alluded to in the year end and Q4 presentation last time, we saw a significant increase and positive shift in the adoption of our Ectosan, CleanTreat solution from the beginning of the main sea lice season starting end summer, early fall, last fall. In Q1 financial year '23, this finally comes through in our numbers. Adjusted EBITDA for our Health business area ended at GBP 4.1 million in the quarter, a quarter where our Health business area has also been cash positive, which has been a target for us after many years of investment into this solution that we always have really believed in, and that we now see that the customers at present, being the Norwegian salmon farmers, also believes in more and more.
As I said, this is a real milestone for us, a milestone that we believe that we'll continue to build on. The solution is increased by an increasing number of customers that see the properties and the capabilities of the medicine demonstrated -- the medicine and the solution in total demonstrated. And they are also progressing well to make this solution in its current configuration operationally more and more efficient. This increases the usability of the solution for our customers, and it makes it more financially viable, both for us and for the customers.
We are also progressing in our efforts on the new business model or a new business model aiming at making the CleanTreat, Ectosan Vet solution less costly and more -- and less capital intensive for the future. Experience, so far, tells us that the progress will depend on adoption of -- in new large wellboats, that the integration of solution -- the integration of the solution into large wellboats will be dependent on the adoption of that solution in coming wellboats. Add on to already finished wellboats is more challenging as it will require a more significant rebuild.
In order to make sure that we are well positioned to drive integrated solution forward, we have entered into a partnership with leading specialist wellboat equipment provider, MMC, and ship designer, SALT, to capture opportunities to integrate the CleanTreat system into new wellboats coming into the markets. We are confident that this alliance would make it possible for us to capture the opportunities for integration that comes in the time to come.
Meanwhile, the current configuration of the CleanTreat installed on PSV, also as it shows now, shows feasible. The flexibility, the current setup provides make this a solution that the farmers know seem to work well with. For some, it might be a solution that they also would like to use in the long term. They key for us will always be to reduce the exposure to cost of the infrastructure while we are open to facilitate the customers to own the systems, the CleanTreat systems themselves. Most likely, the future will look as a combination of the integrated solution into new wellboat that eventually will come into the market and as well as customer-owned systems on other platforms, one of them could be the current setup that we have on the PSVs.
Finally, on Health, it should be mentioned that we also have a strong development in the use and sale of Salmosan to Canada, Norway and Faroe Island. Growth has been driven by variation to the label, which supports a longer product exposure. And we also see that we have an effect of an increased engagement by the customers through the portfolio that we now have for sea lice treatment solutions that could be used in a combination -- in a very efficient combination. We believe that this combination is something that we will see more of in the time to come.
So with those comments on the introduction, I will leave it up to you, Septima, to take us more to the financials.
Thank you, Trond. So quarter 1 has been a great start to the year with the core business continuing to deliver on all fronts with revenue growth of 36% and adjusted EBITDA growth at 48%. This growth that then creates the operating leverage that we've been hunting for, which is bringing us towards increased adjusted EBITDA margins in the group. In addition, given the increased depreciation and amortization associated with the Ectosan and CleanTreat, it's really pleasing to see that the increased results is driving better adjusted operating profit of GBP 5.7 million. And this is also, in turn, helping us to shrink our profit after tax loss from GBP 5.1 million in the same quarter of last year to GBP 0.7 million in the quarter.
Now just as a reminder, we exclude fair value uplift from the biological assets associated with our Genetics business area to allow investors to get a clearer view as to how we're doing from a trading perspective. So excluding that, our adjusted EBITDA would have grown by 61%.
The main focus for the group this year is cash generation, getting the group to be cash flow positive with focus on better trading, working capital management and moderating CapEx. And we've made really good progress on this in the quarter, and we're going to look at that later in the presentation.
But moving on to look at our Genetics business area. Our salmon genetics, which is the main revenue generator in this business area, continue to grow very strongly in the quarter with the sales of 118 million eggs versus the 76 million in the same quarter last year, this is growth of 55%. The volume growth, aided by better product mix and price effect, grew the salmon egg revenue by 61%. Additionally, with high salmon prices, our harvest revenue continue to grow and provides really good ancillary income in our core salmon business.
After an extremely high sales quarter-on-quarter -- sales quarter in fourth quarter of last year, followed by quarter 1, the noncash fair value adjustment was actually a reduction of GBP 1.1 million. Absent this, the Genetics business area grew at a gross profit from GBP 7.4 million to GBP 7.7 million. And gross margin, excluding the fair value adjustments, fell in the period to 36%, but this is mainly driven by one-off maintenance spends in Iceland, shift in product mix and the impact of the sales in new growth areas, which are now diluting the gross margin. But we do expect it to normalize as we progress through the year. But more importantly, with good cost control in our core business, we increased adjusted EBITDA, excluding fair value to GBP 3.7 million. And adjusted EBITDA maintained -- margin maintained despite the investment in the growth vector.
Continuing our focus on Genetics, so the core business in Genetics continued the trend of strong sales in quarter 1, which in turn allows us to support our growth areas of salmon Chile, SPR shrimp and Tilapia. We're very aware that these growth vector are both very cash consuming from the group. And during quarter 1, we've reviewed each of those areas with that lens. From an action point of view, we're focused on being very cost-conscious, focusing a targeted commercial effort in Chile, -- refining the product offering in shrimp and expanding markets for Tilapia.
A growth area within salmon genetics is Chile, which is relatively newly launched as Trond noted. And it is starting to see customer momentum, but it's slower to translate that into sales than I would like. And this resulted in an adjusted EBITDA loss of GBP 1.1 million within that area.
On our SPR shrimp, as Trond noted, we've temporarily slowed down commercialization, and we'll reinitiate it once we've refined the product offering. This resulted in adjusted EBITDA losses of GBP 0.9 million in the period.
And with respect to our Tilapia, storms in Florida actually impacted on production in the first quarter. And this, coupled with lower sales levels, resulted in adjusted EBITDA -- loss of GBP 0.4 million.
Now the growth CapEx that we've noted here of GBP 0.7 million relates to additional new tanks in Salten, one of our key production facilities in Norway. And these tanks are geared towards getting us to the 150 million egg capacity within Salten. We expect that the tanks are going to be completed within the third quarter of the financial year, which will allow us to stock these and support us reaching the 150 million production potential next year. The maintenance CapEx is associated with ongoing maintenance in the facilities, of which GBP 0.3 million related to improved heating systems within our nucleus facility in Norway.
Then moving over to Advanced Nutrition. Advanced Nutrition had a good solid start to the year with revenue growth of 4% at constant exchange rate. And we also benefited from the tailwinds with respect to the U.S. dollar, which delivered overall growth at 19% for a revenue level. This, in turn, drove growth at an absolute level in gross profit to GBP 11.4 million, which was supported by the flat gross margin at 50%. Continued good cost control drove adjusted EBITDA to increase by 9% to GBP 5.3 million in the period.
It's important to realize that during the period, we also had two payments on our GSL Artemia contract, which totaled $5.8 million. The next payment associated with this contract will be in the third quarter of this financial year. In terms of the GSL harvest for '22 to '23, this completed in January '23 and was slightly below last year. But given that we've still got quite high levels of Artemia inventory, a lower harvest may help our working capital position as we move forward and this inventory unwinds.
Moving over to Health. Health have made really good progress this quarter, which followed from a stronger end to financial year '23. It delivered sales of GBP 10.3 million, of which GBP 2.9 million related to Salmosan and the balance related to Ectosan and CleanTreat. During the quarter, GBP 2.2 million of this revenue related to recharges for fuel and vessel. But the increased volumes of Ectosan along with a strong quarter for Salmosan, increased gross profit by GBP 3.6 million to GBP 6.3 million, which also increased the gross profit margin to the 61%. This increased profit along with good cost control resulted in adjusted EBITDA of GBP 4.1 million.
One of the big challenges around Health has been from a cash generation point of view and its ability to cover the cash costs of the vessels. In quarter 1, we delivered adjusted EBITDA after cash lease costs of GBP 2 million, which is very good progress in illustrating the cash viability of the current PSV model, which was a really important milestone for us as a business. And that brings us to cash flow.
Overall, I am happy with the progress that we've made with cash generation in the quarter. Whilst it's only 1 quarter within this financial year with cash conversion of 76% in the quarter, which is within our medium-term target range of 70% to 80%. Additionally, we've delivered free cash flow as a percentage of sales of 8%, which is moving us towards that medium-term target of 10% to 15%. We've also delivered cash generated from operations of 10 point -- after working capital of GBP 10.1 million versus GBP 2.1 million for the same period in the last year. This is reflective of better trading in the period and better focus on working capital. As noted earlier, included within this cash flow is the payments related to the nutrition take-or-pay contract.
Then with improved trading we've increased -- we've improved higher cash out for interest and taxes of GBP 3.6 million. But as we previously noted, we've continued to focus on CapEx with GBP 1.4 million in the quarter to ensure that we're retaining cash in the business. As you can see, our cash position was aided by the equity raise, which we completed in December '22 with net proceeds of GBP 11.6 million. As you may recollect, at the end of financial year '22, we refinanced our bond debt into a new green bond facility with September 2025 maturity. In addition to this, in quarter 1, we refinanced our debt associated with our Salten facility to extend the term out. And we also refinanced our [ USD ] 15 million RCF into a GBP 20 million RCF with March '25 maturity. With all of our facilities refinanced within the last 6 months, we have now financial stability as we focus on growing the business and moving it towards cash flow positive this year.
And on that, back to you, Trond, to look at outlook.
Thank you, Septima. And now moving over to the outlook from where we are today. As you would have seen, we have delivered a Q1 with very strong progress in the business. We are, of course, very happy that we have started the year with good momentum and progress in all the three business areas. And this is also a development that has continued after the end of the quarter.
As I've stated before, it is obvious that, for everybody, that we are living in a more onshore world at the moment with numerous issues surrounding us that impact or could impact any business, not only Benchmark but all the businesses. Our focus, given these surroundings is to do what we can to optimize the performance in our business, not allowing ourselves to be distracted by uncertainties outside our control. And we believe that so far, we have been able to successfully keeping that as a focus, bringing the business forward.
The way we look at things now, taking it from business area to business area, in Genetics, we have good visibility on the performance with solid order book of salmon eggs, and salmon eggs is the commercial backbone of our Genetics business. So good visibility throughout the year.
In Advanced Nutrition, we have seen, since the start of the year, also in Q1 very much, we've seen a softer market, and we also expect that we will see a softer market in the coming 2 quarters. But the business is doing well in these circumstances and is very well positioned to mitigate the effects of a more challenging market conditions. And the way we see it, we expect market conditions to become a little bit better as we are moving towards the second half of the year.
In Health, where we've had a significant progress in the first quarter, I think everybody can see that very clearly, we will build on the progress in adoption that we have seen so far. This has already been evidenced moving into our second quarter in the financial year. Even if it's the way things are within that market, Q2 and Q3, especially Q3, is our quarters where we have less demand for salmon sea lice treatment. Then the expectations we have for -- when we're moving into Q4 in this financial year, but also into Q1 into next year. So we expect to continue to build on the progress that we have seen and the shift in the adoption that we have seen in Ectosan and CleanTreat, but also the combination that we have seen in between Ectosan Vet and CleanTreat, but also Salmosan in the time to come.
All in all, we are determined to continue the journey that we have been on and that we are on, consistently improving the performance of the group quarter by quarter, keeping discipline, driving the group towards becoming the cash-generative group it should be in the future.
On a final note, since I am here, first time, live and with physical presence, let me end the presentation reminding everybody why Benchmark is a unique company, a unique value proposition and a unique investment opportunity. Because we are lucky to be in the aquaculture industry, an industry that is young, that will play a crucial role in the global food supply in the future. Consequently, I think everybody sees that this industry will have strong growth, which is driven by demographic sustainability and health. So the industry, in itself, will drive structural growth for those companies who are well positioned in that industry. And this is exactly what Benchmark is.
In this agriculture industry, we provide specialized high-margin mission-critical solutions to enhance farming efficiency, animal growth, fish health and fish welfare, the crucial factors within any biological production. And in this industry, we hold market-leading positions in what we do with a broad and very relevant footprint in the aquaculture industry. In Oslo, as I said initially, we find a lot of companies, and salmon companies and salmon related companies. Benchmark also has a very significant exposure to the salmon industry, but we are much more than that with a much broader footprint, holding market-leading positions in what we do in all the major species of global aquaculture.
In sum, we are a unique aquaculture bet, truly a unique biotech platform, in my mind, the most unique one. But bear in mind also that we are a well invested one, now with three business areas, is well positioned to drive growth and increase profitability going forward. And finally, we are more than just an ordinary company. We are a purpose-driven company with high-quality organization with strong ESG credentials. Sustainability has always been at the core of what we have done and it will always be at the core of what Benchmark is all about.
So with these words, I conclude our presentation, and I open up for Q&A. And it will be a combination of questions from those who are here and from the web.
Thank you. So we'll start off by taking any questions from the room.
Take it here first.
Please just introduce yourself as well.
[ Kirita Watkins, Pareto Markets ]. Two questions. The first, could you give some indication on CapEx for 2023?
And the second, your increasing capacity is around 150 million eggs in Chile. But could you give us some -- at what run rate are you -- are sales up now.
I can take the last question first, and then you can take the first question last just to reorganize a little bit. We are not increasing capacity in Chile to 150 million, that is what we are doing in Salten. And we are well progressed in doing that in Salten. We were north of that in -- north of 100 million eggs in financial year '22. And we are progressing towards the 150 million, and we've done the necessary investment in Salten to get to the 150 million.
In terms of the capacity in Chile, what we're aiming at and what we have invested in is a unique biosecure setup with close containment that will give us capacity there of 50 million eggs. As I said in the go-through, we are continuing our progress in order to penetrate the market. So it's a well-established market. We have a strong competitor there. And we try to responsibly take over market share. But we are very confident given the unique biosecure setup we are with close containment on our facilities that we have a proposition to the Chilean industry that is unique, and we also see that is being recognized in increasing sales.
It always takes time when you do an investment like that. First, you have to complete investment, then you have to responsibly penetrate that market, so we are still in a ramp-up phase in order to get to the 50 million [indiscernible] .
And to answer around the CapEx question. We're currently planning to spend between GBP 7 million and GBP 8 million this year.
Any other questions from the room?
[ Alex Anders ].
[ Alex, Open GB ]. Just on the shrimp, refining the product offering, what does it really mean?
The shrimp market is a huge market. It's actually quite significantly bigger than the salmon market. What differs the shrimp genetics market from the salmon genetics market is that even if you have variations in the salmon genetics market in what is the proposition that a different part of the market would like to have, you have much more variations between regions and between countries within the shrimp genetics market. The conditions of farming a shrimp in Latin America compared to the conditions of farming a shrimp in the Middle East or in Asia are very different.
So, this is a market where you have, of course, something that is common, but it's not a market where one size fits all. So we've been through around now with the first introduction of our genetics into that market. What we are doing now is to make sure that -- we have the opportunity to tune the genetics that we have. So based on the knowledge and learnings that we've had from the first round, we are taking that into the genetics program.
The good thing with genetics on shrimp is that the cycle is much shorter than in salmon. So you get quite -- you get a shorter time line in order to do -- when you do the adjustments. So what we are doing now is to adjust based on the knowledge and the feedback that we have from the market in order to be more precise when we are coming back to the market in the second part of this year. Or we are, of course, in the market right now, but we are doing evaluation of what we have done so far in order to be more precise going forward.
Any other questions from the room?
Sander from Pareto here. I was just wondering, you said that you had good visibility on the revenues on the genetic side. Can you give any guidance for the full year of volumes? Is this the run rate we should assume for next quarters as well as we saw in Q1? Or what do you think there?
Q1 was a very high quarter, 118 million eggs. And we are not expecting a run rate. It's not every quarter that is equal to that. But we have good visibility and a very solid order book for eggs. This is the area where we probably have the best visibility on how it will play out throughout the year. That makes us confident that we will continue to grow that business. So that's how precise I would like to be on that.
Any other questions from the room? Okay. So we'll start with the questions from the web.
So how many PSV-based treatments can you make each day using CleanTreat?
Well, it's -- how should I answer that question? When you're doing a treatment, you get a certain quantity on the site that you agree with the farmer that you're going to treat. It really depends on the configuration of the wellboat. Some wellboats have huge capacity and can take a significant part of a site in one treatment, especially if we do reuse. So it depends a lot on -- the treatment itself depends a lot on the configuration of the wellboats.
The good news is that more and more wellboats are getting fitted and specialized to do Ectosan treatment. So we see an improvement in efficiency, and we see an improvement in the number of wellboats that are capable of doing efficient treatments. When they are finished with the treatment at the site, they go back to the PSV, the CleanTreat system, and then they are transferring the treatment water over to the CleanTreat system and that goes quicker and quicker.
So again, it depends on the configuration and the sites of the farmers, how much you can do per day and how much you can do within a period. But as we pointed out also in the go through that we have seen significant improvement in timing and efficiency in the treatments. We have halved the time it takes to empty a wellboat into the CleanTreat system since we started. So -- and we are just continuously improving that process to be more and more efficient, and the farmers see that. And the farmers are cooperating in order to get it more and more efficient. That's the most precise answer I can give on that question.
Can you please expand on the temporary slowdown of the shrimp business?
I already answered that question basically. I think it's important for us to be transparent on how we are running the business. So everybody understands what we are doing. And I think I already explained that. We are using the experience we have had for the first round of genetics, taking that into consideration and making sure that we are more precise in the next round.
But I think we are seeing softness in end market demand in the shrimp business at the moment. But as you know, we've always seen peaks and troughs associated with the end markets. And what is pleasing is our ability to be robustly commercial and forward leaning in that, and we've seen previously where in markets we're not that strong, that we were still able to progress commercially in terms of our sales endeavors into soft markets. So I think that's what our big focus is on at the moment.
So following the acquisition of the final 10% of the Iceland facility, what is your latest salmon egg capacity? And what is the current run rate or percentage capacity?
No, the capacity has not changed. It's only that we are now 100% owner instead of having a third party in as 10.52% owner. So the capacity has not changed at all.
Are sea lice a seasonal problem or all year round?
Yes and no. Sea lice is always a problem throughout the year. But sea lice is a -- the sea lice blooms really when the temperatures in the sea is high. So you will see a typical growth in the infection of sea lice in -- during the summer and into the fall. And then you will see less growth of it in the periods where we have lower sea temperatures.
But you have -- so there is a seasonality in it, but you have sea lice treatment throughout the year. What I'm alluding to is that sea lice treatment is more intense in what is -- where in the last quarter in our Q1, which is the last quarter -- last part of the year and during the summer than during the period that we have, especially in Q3, where we have done the spring delousing. So there are variations throughout here, but it's more like a constant -- it's a constant problem.
So Ectosan Vet and CleanTreat, can you provide the capacity utilization of two vessels in Q1 and so far in Q2? And can you provide any update on the trials for an expanded label for Ectosan Vet?
Capacity utilization, I think I will say that it has been growing significantly, and it's -- compared to where we were last year, and you can see that through the numbers that we are presenting for our first quarter. We see the same tendency. You see the same tendency of that increased capacity utilization when we are moving after the end of our Q1 into Q2.
You know it's a moving target because we increase efficiency also, but we still have room to improve the capacity utilization of the two current vessels that we have deployed. And are continuing to make sure that we're utilizing these vessels better and better every day. The last part of the question, what was that?
If you could provide an update on the trials for an expanded label for Ectosan...
We are working on several upgrades on the label for Ectosan Vet to the market. This is regulatory processes that is going. As of now, we see that the increased adoption in the market is not dependent on -- is so reliant on these upgrades. It will be added to the label, and that's an important thing in itself. But it's not holding back the progress that we see in the business right now.
That concludes the questions from the webcast. Are there any more questions in the room? Okay. That concludes the Q&A session.
Okay. Thank you for attending. This is the first time we are in Oslo, the first time we are doing this live with physical presence. It has been a pleasure to have you and see you next time.