Studsvik AB
STO:SVIK
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 |
115
144.6136
|
| Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Studsvik AB
You don't have any saved screeners yet
Welcome to Studsvik Q1 2024 Report Presentation. For the first part of the presentation, participants will be in listen-only mode.
[Operator Instructions]
Now I will hand the conference over to CEO, Camilla Hoflund; and CFO, Niklas Karlsson. Please go ahead.
Thank you so much. Ladies and gentlemen, welcome to the Studsvik Interim Report for the first quarter 2024. My name is Camilla Hoflund, the CEO of Studsvik, and together with me on the call is Niklas Karlsson, CFO. We will walk you through the results and focus areas for the specific group. As the operator said, you are welcome to ask questions at the end of the session.
And please note that you can either call in or use the chat function. Studsvik embrace -- Studsvik is a company that provides technology services on the international market for the nuclear industry. We support with our expertise, experience and valuable offerings through the whole reactor life cycle from new bill to operation decommissioning and final storage.
The nuclear power is on the global agenda. There is a strong drivers for nuclear energy, such as the climate change, geopolitical aspects and future increased capacity needs for energy. When reflecting over several decades, it has never been so obvious that the worldwide people actually need nuclear power to enable the transition to a more sustainable future.
Last year, powerful leaders around the world confirmed the commitment to the efforts to triple nuclear energy capacity, and then I'm referring to the COP28. This initiative is part of our efforts to achieve the net zero emissions by 2050. There are also many collaboration initiatives and government-to-government agreements that we start to see within the industry. Also, Sweden is participating in international initiatives.
And recently, we signed a new strategic partnership agreement between U.K. and Sweden. CEO comments, Studsvik has a strong footprint on the U.K. market already and long-term customer relations. Therefore, we welcome the new strategic partnership agreement between U.K. and Sweden, which promote greater collaboration within nuclear energy. It is too early to assess the impact of this partnership, but we expect it to support our position on the U.K. market and over time, possibilities to grow.
The supplier network, which is under construction in Sweden, it's actually an interesting creation that brings together companies with a joint interest to be part of the significant expansion of nuclear energy that is planned. The objective is to create a supplier network with a widespread of suppliers who can support the entire supply chain for new construction of nuclear power in Sweden.
On behalf of Swedish Atomic Forum, SAFO, Studsvik has taken on the assignment to set up the supplier platform as a web page on the Studsvik website. The Swedish network has today 125 members that have signed up and to mention some of the companies from Atom, Rolls-Royce, Small Modular Reactors, [ Ufri ] WSP, [ Rise and Alfalal ].
The [ Rono ] Studsvik is not settled, and there is an ongoing discussion with SAFO about how the supplier network should be organized and taken forward. We see great benefits for the representatives of the network and also for future business opportunities for Studsvik. In addition to organic growth with the example of supporting new nuclear initiatives, Studsvik is also looking into possibilities to grow the company by smaller acquisitions and then with high levels of expertise and a match to our current business.
The group summary. A good start to 2024. The financials are slightly improved compared to last year, and business area, Fuel and Materials Technology is a strong contributor to the results. Within Scan Power Software, we signed a long-term agreement for 6 boiling water reactors, BWRs, with a major U.S. energy company. We welcome Peter Teske as new Chief Financial Officer and member of the Studsvik Executive Team Management Group starting 29th of April.
Peter comes most recently from a position at Skill Scandinavia as CFO. Prior to that, he held various senior positions in the field of economics and finance in both the private and public sector. Decommissioning and radiation protection services is a business area that provides expertise and experience namely for Germany, Switzerland, Belgium and the Netherlands. The business area is investing in the future. We have some extra costs for onboarding of personnel.
The new recruits will be assigned to customer projects later in the year. Last year, we have the last outage works performed for the German nuclear power plants before they closed down permanently in April 2023. The planned outage work in Belgium will start in Q2, and we have had some costs for mobilization for personnel ahead of this work. The onboarding of new personnel is to support growth within the decommissioning area.
The expansion is planned for Germany, but also in Switzerland and other potential countries. We are approaching and being approached by potential strategic partners. They're strengthening our offerings and capabilities to be able to offer more competitive and complete solutions to our customers.
Another driver is also to support the expansion of the market share and customer base in Germany, Switzerland, Belgium and the Netherlands.
Moving to Fuel and Materials Technology with the position as the national -- international laboratory supporting the global industry with world-leading testing and analysis. Due to improved management and planning, the business area is showing a good progress compared to last year, both in customer projects from -- and from the testing applications in our hostel facilities.
There is a positive earnings effect from a property transaction with Baltic Waters for establishment of the fisheries laboratory on the Studsvik site, SEK 2.3 million. Focus areas. There is a high attention to solve the necessary licenses for the delayed fuel transport that has been mentioned before. And the management is working on several alternatives.
The transports are not just important for a single customer project, the material is valuable for our international OECD/NEA programs like Studsvik Material Integrity project, SMIP and Studsvik Material Integrity Life Extension, SMILE. The international transports are engaging several stakeholders, customers, carriers and authority. So it takes some time and efforts, and you have to be patient.
The business area has started some projects for testing of materials applied for SMRs, and this is something that is expected to grow over time. We also see an increased interest in the just mentioned international program, Studsvik Material Integrity Life Extension, SMILE. Recently, it was decided that new country members from France will participate in the program, which increases the scope of the program and also the revenue.
Currently, the interaction with customers is peaking, and probably, we experienced the most intense period since the pandemic. There are customer activities on a broad scale. And this will, of course, over time, increase our pipeline and also give us new business opportunities. And now I move to Scandpower, a software business that is world-leading in fuel optimization from the sign of fuel core to operation and disposal.
Studsvik software is installed in about 50% of the worldwide light water reactors that are in operation today. The business area has increased license sales and software maintenance. At the same time, the cost for research and development are higher, which explains the relatively low profit in the quarter.
The agreement of SEK 40 million over a 2- to 3-year period includes software installations and leasing fees for 6 VWRs. The agreement also includes further options relating to software and services. Some focus areas. The business area has a strong footprint on the U.S. market, and the latest signed agreement is for GARDEL core monitoring application. To capitalize on the fact that our software is installed in 50% of the world's light water reactors, we are approaching countries that has very little or actually none of our softwares.
And recently, we had a market and sales tour to Mexico. In the period, we had increased cost for research and development due to a new initiative to develop a new code, a commercial Monte-Carlo tool that supports advanced modular reactors, medical shielding, criticality, fusion, et cetera. The code applies civil electronics, model linked and simulation and the first version is expected at year-end.
Waste Management Technologies, business area that supports efficiency and safe handling of radioactive waste with our technical solutions and advisory support. There are some customer delays for our license agreements that also postpones our engineering services. And there was a significant customer interest of inDRUM in the yearly International Waste Conference in Phoenix in U.S.
We expect to perform most of the functional test of the inDRUM demonstration facility around end of quarter 2. And in quarter 3, we plan to commission the facility and start with customer projects to test nonradioactive material during the rest of the year. These projects are worth a few million SEK. And a little bit about focus areas. inDRUM is comparable with a typical start-up initiative.
We have a cost-effective solution for customers, radioactive waste problems and everything takes more effort and time than we expect. Today, our customer shows a great interest to the conceptual design and also some results from university tests that have been performed. But now the customers are asking for a reference facility to be able to test larger volumes during real operational conditions.
And this is why the demonstration facility at Studsvik site is being built. During our market campaigns of inDRUM, we also identified the need for treating of radioactive waste from hospitals. There is a new waste stream. The business area is also exploring strategic partnership to offer a more complete solution to our customers and to be able to enter new markets on the broader scale. The initiatives to explore new nuclear at Studsvik sites, including small modular reactors, SMRs, conventional large reactors and research reactors are still progressing.
There are still open aspects on the site that need to be clarified such as safety, an example, hydrosesmic, geological, construction and operational conditions such as cooling, transmission, et cetera. However, a key condition will always be the financing and the political position to support financing of nuclear power. The Studsvik site is a classic Swedish nuclear territory, and the site has an infrastructure and holds a license to operate nuclear facilities. This has initiated early interest in other areas than new nuclear power, such as waste conditioning and services, an area where Studsvik has certain expertise.
So in summary, Studsvik is taking a broader and deeper step into supporting the new nuclear by expanding our existing offerings to include services for SMRs and AMRs and to explore new initiatives such as new nuclear power at Studsvik site. The collaboration platforms [ cut ] our organization very well as we are used to lead worldwide programs with highly specialized experts.
The Studsvik research hub and center of excellence are supporting our customers with pragmatic solutions to their complex problems. Thank you for listening. Thank you for listening to Studsvik Q1 report, and now we hand over to the operator to invite for the Q&A session.
[Operator Instructions]
The next question comes from Stefan Knutsson from ABG.
I have a couple of questions. First, on Scandpower. I was thinking about the quarter, obviously, very positive with the new order that you announced, but I would expect it to translate more to earnings. Will that come at a later stage? Or should we treat this the less or lower-margin deal? Or is it in fact that your new sales initiatives will hamper Scandpower's profitability in the coming years?
You should see that it's coming in a later stage because it's -- this GARDEL has to have some installation and consultancy support before it can handle over to leasing fees.
Okay. Perfect. So you would still -- even though you go for new markets, as you mentioned, Mexico, I think, as one potential market, you will still expect Scandpower stand-alone to deliver solid profitability.
Yes.
Perfect. Then secondly, on the inDRUM technology and the traction that you see there, could you maybe share a bit what the potential deal could look like in terms of size and the contribution margin?
It is a little bit too early to actually say that. And I think that we -- I mean, you know it that our business model is that we sell a license and someone to have the license. And then it depends very much what the license are supposed to be including if it's a total market or if it's a customer's own waste. So I think it's a little bit early to state the potential financial benefit of that. But I think one thing we could say that when we know that the technology works and customers can see that, there is a certain part of inDRUM that is scalable, and that's a quite interesting thing, I think.
Okay. Thank you for that clarification. Lastly, on Fuel & Material, I know that the business area had a very positive development with several large orders coming in a few years back, where are you in the cycle of delivering on those orders? And are you still satisfied with the order backlog as of today?
We have some challenges in -- for example, one of the projects with the authority approval for performing transports. So there are some delays from some of these previous backlogs. But I think that we are in a good position of having a good backlog right now for the coming year. And it's more of being in our hands to make sure that we can perform according to the plans.
[Operator Instructions]
There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Thank you so much for calling in today and listening to our Q1 report. I look forward to present to you the Q2 report in -- not too far away from now. Thank you so much from Niklas and me.