Aker Biomarine ASA

OSE:AKBM

Earnings Call Transcript 2021-Q2

[Matts Johansen, executive]

Welcome to Aker BioMarine's Q2 Presentation. We'll start with me giving some comments to the report that we published today, then Katrine here who will take you through the financials over the quarter. And then I'm going to take you through the outlook and the recent company development and also give some more deeper insight into the Superba segment and also the performance in harvesting. And then we're going to have a Q&A at the end and you can through these Teams application, put in questions. You can now already start to do that now, and then we will answer those questions at the end of the session today.

So with that, I'm going to start with taking you through the key comments to the report today. So first of all, I'm happy to report that we are back into growth for Aker BioMarine both versus the first quarter but also compared to the same quarter a year ago. There are several areas that are developing very positively. The Brands segment is developing really strongly. The Qrill segment is developing really strongly and Houston also continue to surprise us positively. But we also have some challenges. The Superba situation that we talked about before, it's still here now in Q2 and also, we have challenges in the harvesting area.

We'll go more into details of this in the presentation here now. There's been some key events throughout the quarter. I mean, the first one is that we now are listed in the Oslo Stock Exchange Main List, which gives us access to a broader set of investors and should be good generally for all the investors. Also, we have hired Doug Hicks to lead our venture into the Pharmaceutical space. As you know, we started with our Lysoveta product to start to make the progress into the pharmaceutical area, and this is a strategic area for Aker BioMarine and we are happy to have now Doug Hicks, which has a long track record in the pharmaceutical space on board to lead us through that development.

Also on the innovation side, with INVI Protein, we, in the quarter, achieved regulatory approval for the product in the U.S., which means it's now allowed to sell and market in the U.S. market, which is a key milestone for the development there. Also, we have now order what we call a drone, UVS, which basically is a 7- to 10-meter long vessel autonomously that can travel 2, 3 weeks alone to collect data and self-propel and will help us digitalize our offshore operation and help us find the krill and make sure that we are at the right spot at the right time.

That will be very important for the efficiency of our offshore operations and also make sure that our carbon footprint is being reduced. Katrine will take you through the details of the financials. But as you can see, almost 50% growth from last quarter, 3% growth versus the same quarter last year and about 10% growth quarter-over-quarter on EBITDA. It's worth remembering that in 2020, we adjusted out the marketing costs related to Kori. This year, we are not doing that -- go through the P&L and therefore, also negatively impacting the EBITDA. So the underlying EBITDA development is stronger than the 10% that we're actually showing here.

So then I'm going to take you through -- starting with the Ingredients segment. As mentioned, we've been having challenging with harvesting in the second quarter. We had a fairly good first quarter where we harvested in the south part of the Antarctic Ocean. Once that area closed and we move further north, the availability of krill was lower. The vessel has so far this season worked perfectly through a operational, no technical issues. So it's just the fact that the krill is not in the areas where we are harvesting.

I think also, I would like to mention that there have been recent service of the krill biomass that indicates a positive development and healthy biomass krill in Antarctica. So there's no worries related to if there is krill there or not. But just this year, it has not been in the area where we fish. Antarctic Provider, our supply vessel has been ramping up as planned, been working really well and are now into a fully operation, which means that our previous vessel La Manche and the vessel we have leased, Trinitas will now be dismissed and Provider will be our only vessel to support our fishing vessels in Antarctica. That's only important for efficiency, but also cost.

We have also written in the report that during an offload, we got COVID on board Provider and support vessel. We were able to contain it. We follow strict procedures, so putting crew into isolation and making sure that we didn't have a spread on board fishing vessels. But as a precautionary limit, we also put all the key crew that came from Provider onboard the fishing vessel also in isolation, which meant that we lost 10 to 14 days of fishing because we have to kind of keep everybody in their cabins. But we managed it out. There is no outbreak. It's now finished, but it's just a good reminder that COVID is still around and something that we have to deal with going forward as well.

On the onshore side, Houston continues to be a very positive story. As I mentioned before, when it comes to the impact on margins, our performance in Houston impacts just as much as our harvesting operation in Antarctica and Houston continued to develop very positively, both on the volume side and the output coming out of the factory, but also cost taking down the unit cost and improving the margins in the Superba segment. On the sales side, Superba continued to be the struggle driven mainly by the situation in South Korea that we have talked about in previous quarters. Still, Korea is now about half of what it was at peak.

And as mentioned in the previous quarter, we don't expect a [ long plan ] for that to come back into the previous high levels. Still important to note that Korea is one of the largest markets per capita for krill oil already today at the level we are selling in Korea today. We also have some challenges in what we call the non-mass market in the U.S., which basically is everything else other than the big retail chains. And where we have seen quite choppy development, and we have identified quite big opportunities in that area that we are now working to close out. We have also gotten Halal certification of our product, which is an important milestone for us to offer krill oil to the Muslim consumers all around the world.

I will take a little -- I will give you a little bit more detail into Superba segment a little bit later. On the Qrill segments, things has been developing very positively in the quarter. Both the salmon market, especially in Norway and Northern Europe, it has been developing very strongly together with the increased salmon prices. But we also have expanded into new customers and new markets in Asia, putting us now in a very good and solid position to capitalize further growth and value in the period to come. June was an all-time high for Qrill segment. We have never sold as much in 1 month as we did in June.

And I think it's also worth mentioning that the Pet segment continued to develop very positively, and we see good traction now in both U.S. and Asia, which are relatively new markets for the Pet products. Then talking about the Brands segment, which is one of the key highlights on the positive side from this quarter. We have seen very strong growth in the branded segment, 32% year-over-year growth, driven basically by all categories, but especially krill, so 40% growth year-over-year of sales of krill products through our brand activities versus the same quarter last year, and we see a general growth in all the channels.

So I think this is a combination of kind of strong position we have in the products, a good innovation pipeline that's coming online these days with the retailers, combined with a normalization after COVID that drives consumers back in stores. Kori also continues to develop positively the growth versus last quarter, also with new retailers coming on board. Especially happy to announce that Sam's Club has now decided to put Kori on the shelf on the fishing goods stores after running a test on their online shop since last year. And Sam's Club is probably the second largest channel for sale of krill products in the U.S. market. So that's really an important milestone for Kori.

Epion is now also working on line extension, looking at new innovative krill-based products that can come next to the existing products on the shelf, and that will be presented to the retailers after the summer. Here, you can see the development. So as you can see, continue to grow the total sales in Q2, increasing the marketing activity somewhat.

We are still working to optimize to make sure that we get -- maximize the ROI on marketing dollars. And we see continuous improvement there as we also start to scale up the volumes of marketing. This is an ongoing effort to scale up and make sure that ROI, return on investment, is positive all the marketing activities that we are doing.

With that, I'm going to give the word to Katrine that will take you through the financials.

[Katrine Klaveness, executive]

Yes. Second quarter has been a good quarter. Most likely are 3% up from Q2 last year and significantly up from Q1 this year with a 48% increase in sales. And also as Matts have already mentioned, it's decreased in the Ingredients segment and the private label from Lang in the Brands segment driving the sales growth year-over-year. EBITDA is $19.4 million, up from $17.6 million same period last year. Improvement is mainly driven by offshore and onshore operations where unit costs are down as a result of stronger performance.

And the gross margin for the group as a whole is up from 36% to 40% with corresponding improved EBITDA margin at 26%, up from 24% same period last year. Net debt is down as a result of the capital increase that was completed in connection with IPO last summer, resulting in net debt of $311 million and an equity ratio of 48%. Moving over to the Ingredients segment; the Ingredient sales are down 11% from second quarter last year. There is a significant shift in revenue distribution between Superba and Qrill being 50-50 last quarter, while Superba now is down to 36% and Qrill up to 64% this quarter.

There has been a strong growth in the Qrill category with 17% year-over-year, including all Aqua and Pet products. We have seen good development in the salmon market, which is important for European sales and new contracts with large Asian customers that have been activated. Superba decreased 36% year-over-year, mainly driven by the South Korean situation that Matts has already mentioned, but also due to the company not being successful in capturing recent growth opportunities in the non-mass U.S. markets. Strong EBITDA improvement from last quarter as good harvesting in Q1, combined with strong Houston performance improves the gross margins both Aqua and Superba.

Gross margins for the Ingredients segment is up 46% from 41% last year, leading to EBITDA margins of 40%, up from 32% second quarter last year. And finally, as a one-off La Manche now moving out of our books, we have accelerated the depreciation profile to match the net sales proceeds, and this will have a short-term positive EBITDA effect. That is netted out over time as the increased depreciation is embedded into the costs. Moving over to production volumes; the top graph shows our total onshore oil production of finished goods, including Houston and some smaller third-party production in New Zealand. The Houston output shows a 29% increase over Q2 last year. This is due to the ongoing capacity project 2000 by 2022, which is already yielding both higher volume outputs, but also lower operational costs, which is driving down the unit cost and improving the Superba oil margin.

The bottom graph shows our offshore meal production with second quarter volumes being 13,920 tonnes, down from 16,387 tonnes same period last year. We have struggled with locating the krill over the past few months and as a result, not in the volumes that we were expecting despite having a technically well-performing fleet. The COVID-19 outbreak on Provider had smaller operational and financial implications. And as I already mentioned, La Manche will sail to Turkey in August to undergo ship dismantling and will be replaced by the Antarctic Provider.

Moving over to the Brands segment; we saw strong revenue growth in the Brands segment year-over-year of 32% driven by private label sales in Lang, showing good post COVID recovery. Krill being also one of the private label categories with the highest growth in the quarter, 40% year-over-year for Lang. Kori also shows good development and is growing POS numbers each quarter, but still from a low base. Moving over to margins; gross margins for the Brands segment is slightly down from 27% to 25%. This is mainly driven by product and customer mix in the Lang portfolio. EBITDA margins for Brands is down to 2% in the quarter as a result of the Kori marketing costs no longer being adjusted out of the EBITDA, hence driving costs up in the Brands segment.

We still view this cost as an investment into building the brand. But according to our accounting policy, we cannot adjust for it after the initial launch year. The blue line and the white stack is to illustrate the EBITDA development had the Kori costs being adjusted out also in 2021. As a result of this, EBITDA margin for Epion is negative, while Lang had a 14% EBITDA margin, which is stable compared to same period last year. With the main figures presented, I'll just draw your attention to a few technicalities in the P&L statement.

On the depreciation and amortization in line, we have done a small impairment on the customer and trademark portfolio as a result of the lower Superba sales of $1.8 million in the quarter. Secondly, our fuel options are moved from being a financial item down into the other comprehensive income as we're now doing hedge accounting. This can be seen in net financial item line. And then finally, the accelerated depreciation profile for La Manche can be seen in the EBITDA reconciliation table where you see a slight oil increase in the depreciation and amortization line for production assets.

And this is also, of course, including Antarctic Provider when compared with last year. A few items on the balance sheet; we had total assets of $769 million, up from $678 million, driven by 3 main topics: inclusion of a Antarctic Provider, derivative assets from our fuel options and inventory buildup. The first Antarctic Provider was delivered in February 2021, increasing both our property, plant and equipment and our debt. Second, the derivative assets reflects the mark-to-market value of our fuel options and is currently at $13.6 million, showing a very strong in-the-money option portfolio.

Finally, inventory buildup is a result of a strong Houston production combined with lower Superba sales. Net debt is at $311 million, down from same period last year and equity ratio at 48%. Finally, a few comments on cash flow developments. We have a negative cash flow from operations in the quarter due to a negative change in working capital as a result of the inventory buildup of krill oil as well as sales coming in late in the quarter, building up customer receivables.

The change from last period in cash flow from investing activities is explained by the sale of Juvel in May last year. The change from last period in cash flow from financing activities is driven by a $30 million draw under the RCF in the quarter to fund CapEx related to Houston, Lysoveta and INVI Protein launch plans. This leaves us with a net change in cash for the quarter of minus $1.6 million.

That concludes the finance section, and I will hand it over back to Matts to go through the outlook.

[Matts Johansen, executive]

Thank you, Katrine. So I will start with just sharing my reflections from the development over the last 12 months. So we have some areas that we're showing really good progress. And then we have some other areas where we had setbacks. So starting on the good progress; as talked about already today, in the Qrill Aqua segment, things has been developing really positively over the last 12 months. So despite all the challenges coming with COVID, with the low prices for both salmon and shrimp in the market, we've been able to expand both our customer base and our volumes throughout the global market for these type of products.

We are now in a very strong position where we are -- have products into all the key markets with the key customers globally and are ready to create value and drive volumes now as things start to normalize. So we see a very positive development through the krill category. Then we have done some important innovation launches. INVI Protein, which will be a new segment for Aker BioMarine, just like the Qrill segment and the Superba segment. We have launched the product. We have gotten approval in the U.S. and is starting to build this factory in -- here in Norway these days.

This will be a big driver of growth long-term for the company, but will not short-term impact the profitability of our company. It's still a very important value driver that's happened over the last 12 months. With Lysoveta, it's similar. It represents a market in the dietary supplement area with a bigger addressable market than the Omega-3 market we're addressing today with Superba. So that will also become a new segment side-by-side with Qrill and Superba. In addition, Lysoveta gives us the entry point into the pharmaceutical area.

And as you know, we have the first pharmaceutical agreements already signed up, and this is a focus area for dog health that I presented a little bit earlier to develop that business together with key partners in this area. It's the same here that majority of the impact on profits from this product will come later in the planning period and therefore not come have a short-term impact on the profitability of the company, but create -- but it represents big values and they become a major segment long-term for the company.

Then we have also created and launched AION and AION is developing really positively, scaling up according to plan. And therefore, now we are planning for the spinout of that company. And even if it will be spin out shorter, we will also then provide shareholder value to the Aker BioMarine shareholders as part of that spin out. And as soon as we have everything weather-related to that, we will inform the market. So on the innovation side, we have done a lot of things in the last 12 months, and we have now some new business areas that will be important growth engines for the company going forward.

Q2 continued to perform really well and has done so over a long period of time, giving us, first of all, ability to get more capacity out of the existing CapEx that we have there, limiting the need for further investments in capacity. And number two, it drives the unit cost down and improves the margins for our Superba business, which is a big chunk of what we have today. All of these [indiscernible] products will also be produced in the Houston factory. Then we talked about the Brands segment earlier, and you have seen the positive development with an all-time high quarter now in Q2. So we see a really good development in the Brand area, both with having successful innovations coming on the shelf, driving growth, but also that the existing products we have on the shelf is also provide -- also growing quite healthy.

So we have a robust position with strong growth now in the Brands segment. And then related to Kori, I think it's also important to reflect that in our launch in Kori in the middle of COVID was not the kind of optimal timing to launch a new brand, but nevertheless, it was important for us to do so, and we had a successful launch. Here comes Aker BioMarine out of nowhere and already after a year, we are on the shelves of all the major retail chains in the U.S. and have all evaluated the sales performance of Kori in the first year, and they all have decided to continue having Kori on the shelf going forward. We also see more and more retailers adopting Kori onto the shelves, demonstrating that it's doing quite well.

This provides big value for the company, first of all, in terms of having the platform to continue to develop Kori, but also the possibility for Aker BioMarine to develop new brands and new products on the basis of Aqua platform. So of the last 12 months, a lot of good positive development for the company, some with shorter impact, some with more longer-term impact for the company. And then we have some setbacks as well. We talked about the South Korean situation and how that's impacting the overall Superba growth. And I will take you through a little detail to show you a little bit more insights into the development in Superba.

And then we have had 2 years now with lower-than-expected harvesting. And also here, I will take you through some more details. So starting to show you a little bit more of the development of Superba. So what you see here on the left side is the sales in different regions, and I'm going to take you through each of them. We're looking here at a full year basis. And you see Q2, its last 12 months, so Q2 and then 12 months backward. And then the green one is what we expect for 2021. So if you then starting on the top with the gray one, that's Korea. And you can see how that came in, in 2019 come off suddenly with the strong sales in 2019 and 2020.

And then you can see about half of the sales now when you look at the last 12 months. So Korea situation, as we have communicated, we are not expecting it to get back into 2019 and 2020 levels. But you should rest assured that we are working really hard to try to make that happen. We're working on getting new health claims that allows us to have new marketing claims in the Korean market and working very closely with partners in the Korean market. So we have in no way given up to get it back. But where we stand right now, we are not planning for that to come back to the previous levels, but rather stabilizing at the current level where it's at right now.

Then if we continue down on the, let's call it, the bright blue color, which is the next one. That's non-mass market in the U.S., meaning that all the channels, which is not the big retail change, which is below. So that's e-commerce players. It's M&M, it's catalog companies. It's companies selling through practitioner, all types of channels where they are selling supplements in the U.S. market. And if you look at the history over the last year, you see quite choppy development. Underlying growth, let's say, over the last 4 or 5 years, but us especially in 2020 was a spike up. And then looking at the last 12 months, you see that's coming down.

And I think that spike in 2020. It's partly driven by also the Korean situation as some of especially the e-commerce players in the U.S. position their products towards Korean consumers. But I think also the development that we have seen in 2021 shows that we haven't captured all the opportunities that emerge through some of the growth now e-commerce after or through COVID. So currently, we are going through a strategic process for the U.S. market, and we're also structuring the sales and marketing organization to make sure that we can capture all those opportunities that is there in the non-mass market in the U.S., so we can get this back into growth territory as well.

Then looking at the light blue, this is the mass market in the U.S. So this is where Kori plays, and this is where private label plays. And as you can see, over the last years, I mean, the earlier stages here, you see a decline, and that's driven by MegaRed, which has been the kind of leading brand for krill in the mass market in the U.S. hasn't succeeded on kind of being that locomotive and that kind of fair life in the category to drive it in the right direction. This was the background for why we launched Kori. We wanted to take responsibility ourselves to be that locomotive in the market, be that fair life that can show the direction and drive the consumers into the krill category.

And as you can see now, I mean, partially on the last 12 months, but maybe more if you look to the right, you can see year-to-date, and you see the share of U.S. mass market. You can see that the Kori is starting to have a real effect on sales, both from private label and the brands itself in the mass market. So we feel that going forward, the mass market now income of good shape, and we have a strategy that works in terms of making sure we have growth in that area going forward. The bottom part, the dark blue, it's everything else, which means Europe, Asia-Pacific and South America. And that's been developing very healthy all along.

And you can see also to the right, if you look at just year-to-date, you see rest of the world, which basically means the emerging markets growing really strongly. We have seen what's possible to do in some of the Asian markets through what happened in Korea, and we're now strengthening the sales and marketing organization in Asia to go after all the opportunities in the Asian markets like the one we saw in Korea to accelerate the growth in that area. And also looking at the 2021 plan the green column there, you see that we are expecting higher sales in the second half for Superba than what we have in the first half.

But what this has done, I mean, the situation, mainly then driven by the Korean situation and somewhat driven by the non-mass market in the U.S. is that we have [indiscernible] a growth opportunity or a growth situation in 2021. And the way we see it now, we expect to continue growing now going forward according to the original plans that we had also 12 months ago, but that's kind of lost growth that we have had the last year, we do see less likely that we will be able to catch up. But Superba is still competing in an attractive market, global mega 3 market that is in growth with a clear value proposition and with customers that are driving activities, driving consumers into the category.

So we are still good position with the Superba but it's going to be harder to catch up the shortfall from 2021. Also, like I mentioned, we are doing initiatives and improvements to ensure that we get that growth going forward, both from a strategy point of view, but also in the organization to make sure we have a strengthened organization to capture all the opportunities that we know is out there. So that was some details on the Superba area. Then talking about the harvesting area; so we have now 2 seasons with lower-than-expected harvesting. What you see on the left side here on the graph is based is daily production per vessel.

And what we use here, as an example, is the Antarctic Sea, which is kind of the larger vessel we have where we have history going back. And as you can see since 2014, every year, the vessel has been harvesting and performing better and better, driven by investments that we do each shipyard improvements that will improve the capacity of the vessel, but also driven by the very skilled crew members we have on board the boat that constantly are looking at how we can improve the way we do things, to get more production out of the assets we have. And then you see those 2 out-layers in 2020 and 2021 with a kind of significant drop.

And that drop is -- or those drops are driven by different things. So as you know, in 2021, it was mainly driven by technical issues. We were struggling with the vessels that have challenging to operate and that impacted our ability to harvest and produce. This year, all the vessels are operating perfectly, no technical issues. The [indiscernible] in the water, everything is operating, but the krill is not in the area where we are fishing. As I mentioned earlier, the krill biomass is healthy. The last survey that was done where the systematic came up the biomass krill in the Antarctica showed a 17% growth of the biomass between year 2000 and 2019.

So there's no kind of long-term worry that now some the krill is gone, but there is a natural variation in the fishery. And unfortunately, this season, the krill has not been in the area where we have been with our vessels. We are doing initiatives. As I talked about earlier, we have ordered this, let's call it a drone, this unmanned surface vehicle that will -- that we will use to collect data and search for krill. This can go 3 weeks alone and instead of taking our fishing vessels out of fishery that will go out and look and find where the krill is and then the vessel can follow.

It will also collect systematically data that we will use in our predictive models that we already have implemented on our vessels. So as you can see, I mean also looking in the forecast forward, we don't expect this low harvest that we have seen now 2 years in a row in the future. But I think also it has taught us that there will be natural variation in fishery also going forward. Then the outlook for 2021; so the key change for the 2021 outlook is offshore production and harvesting. So we have now -- we are now guiding offshore production of between 45,000 tonnes and 50,000 tonnes, down from 60,000 tonnes to 70,000 tonnes based on the challenges that I just talked about.

We expect as long as the equipment is working, that the krill will come back. But for this year, we have already lost a lot of harvesting opportunities from the first half of this year. Onshore production, we were planning strong and positive development in Houston, and we see that's going to continue. There's no change in outlook for our Houston production. And given the situation in Superba, we have slightly adjusted our revenue growth profile to now what we call modest revenue growth compared to what we call somewhat lower growth in 2021 versus 2020.

But nevertheless, despite all the challenges that we have, we're still expecting growth in 2021 versus 2020. Still the seasonality of our business, both on the revenue side and on the margin side, tells us that the second half will be stronger than the first half. This is the same as we have guided earlier, driven by seasonality in especially the Aqua Culture segment and is driven by also the seasonality on the unit cost, especially offshore. So driven by the reduced harvesting numbers, this will impact the margins, especially in the Qrill Aqua segment, and therefore, we no longer expect an improvement of the EBITDA margin year-over-year, but rather somewhat lower compared to last year.

But I would like to mention that the underlying EBITDA margin for Aker BioMarine is expected to be higher in 2021 versus 2020. And when I say that, that means when we take out the impact of Kori, where we last year adjusted it out, while we're not doing it this year and just look at the underlying business for ingredient and brand EBITDA margin is improving, again, despite the challenges that we are facing this year. So then on the more on medium-term outlook; so I think it's important to say that we expect very strong sales earning growth in the coming years. We are positioned well with our products. We are a leader in our segment, the segments that where we are competing or operating are developing very positively.

So we have still a very strong sales and earnings growth projected for the years to come. But however, based on what we have seen now on the variability on the harvesting side, the setback in South Korea that we believe it's hard to catch up. We expect a somewhat later realization of our 2024 aspiration of $200 million EBITDA, but still expecting really strong growth in the years to come.

We're working now on an improvement agenda for our company, working on full potential plans in the different areas where we operate. And we would like to invite to a Capital Market Update later in the year. We will take you through a deeper look into our different segments, including our strategies and plans going forward. So in limitation to that, we'll follow later.

So with that, we will move into the Q&A session.

[Katrine Klaveness, executive]

Okay. I will read out the questions. Your new harvest guiding implies a very modest growth during second quarter 2021 compared to last year, impacted by several challenges. Can you please help us understand why?

[Matts Johansen, executive]

Yes, so I think this is on the back of the challenges that we have seen so far this season. We know that things can quickly change in the harvesting side. We are moving -- income big areas. But based on the history of the first half, it's not prudent to plan with the kind of large comeback the second year, and therefore, we have taken down the expectations also for the second half.

[Katrine Klaveness, executive]

Okay. Next question. In light of your disappointing Superba sales, will you continue with the capacity expansion in Houston or will you first need to see higher sales in order to avoid further inventory build? I can probably answer that one. So I think for this year, we are very comfortable with the output from Houston, and it basically meets our strategy of building a much more solid and robust safety stock.

So having products in our inventory to avoid airfreight and also serve customers globally. The point going forward, this will be an important topic, and we are also working on initiatives to make sure that the outputs of -- or that we can run Houston on full production capacity while making sure that there are outlets for the products in the market.

Next question. How is it possible to list Aker BioMarine last year on the estimates given and not deliver one single time on all quarters? This is management's responsibility and how do you see your own responsibility on this?

[Matts Johansen, executive]

Yes. Maybe I can comment on that. So I think like I went through at the end, there's been positive and there's been negative developments in offshore since we started the IPO. Some things are under our control, some things are not under our control. We still have a strong growth again agenda in front of us. We have developed a solid platform for that growth going forward. And I think also if you look at some of the areas that we have reported over the last quarters, we also had quite some positive surprises and development. So it's not all back, but we see clearly that on the harvesting side and the Superba side, we have not delivered as expected, and therefore, also we are implementing different initiatives to deal with that.

[Katrine Klaveness, executive]

Next one, can you say anything about your inventory position in terms of volumes, both in terms of krill and Superba year-over-year development for both? So I mentioned earlier the Superba safety stock as a result of increased Houston performance. I think on krill, what we see there is that we constantly have a very comfortable inventory level also for the krill meal. So despite lower harvesting, we are still able to kind of serve the markets and the growing regions. But again, I mean, this will vary going forward with the variation in grill, but we will make sure -- or we work to make sure that we have sufficient inventory for all projects. Can you please say something about the fundraising for the pharmaceutical company using Lysoveta?

[Matts Johansen, executive]

Yes. So I can give a little update on that. So that's developing well. So there's currently due diligence process going on with several investors, and we hope to close that in the near future.

[Katrine Klaveness, executive]

And last question, based on your experience on the harvesting, how should we think about harvesting volumes for 2021 and 2022? Is it time to adjust your harvesting capacity, i.e., reduce the number of vessels?

[Matts Johansen, executive]

Yes, I can comment on that. So I think for 2022, I think I covered some of this already in the presentation, but the most important factor in the fishery is to make sure that you have equipment that is working. You will have some natural variation from Mother Nature. But as long as the equipment is working, you have control in the waters, you will over time perform. And we expect that also in 2022 we will have years where we will produce fantastically as well above expectations, and we will have years which will be below. So we still will utilize the full capacity that we have in the fleet. And we expect that the harvesting levels will come back to kind of good levels that we have seen historically.

[Katrine Klaveness, executive]

Good. I think that was the end of the question, unless there are any? Okay. Let's see. One more question. Can you please update us on the liquidity position and available RCF? Yes, so as I mentioned in the presentation, we've drawn $30 million in the quarter under the RCF in order to fund CapEx investments for the ongoing innovation projects that we are running. We still have sufficient capacity together with the cash and available debt capacity. We have about $77 million left under the RCF. So we are comfortable with the headroom that we have.

[Matts Johansen, executive]

So with that, we close the presentation, and thanking you all for joining us today.