Ann: Investor Presentation, page-9

Hey Folks, interested to get your ideas on CSS as I do some research on it. I used to own this stock way-back-when (2006-08 period - was a wild ride, and definitely got punched in the face).

@Tarvold You mentioned that the planned 10,000t is in 2 years time. Where's the source for this, I couldn't find any timeframe on their expected scale up? I just know with CSS that they have failed to operationalise their strategies for a long time, and now they have promoted capital allocators / finance people to head the company whereas I'd be thinking an aquaculture engineer may be a better skill right now.

I have cracked some numbers to work out what the potential returns are if they hit scale. These are my estimates based on their data, but feel free to tear this apart and tell me where I may be missing something:

• Revenue: 10,000t x $15/kg = $150m at full scale. Maaaybe could be pushed up slightly with better marketing etc to their historical highs of $17/kg, but I have chosen to be a bit more conservative.
• COGS: 10,000t x $9/KG = $90m at full scale. Currently they are around $12/KG with Covid impacts lingering, but let's assume everything goes bang on target for operations and they actually become efficient, then $8.9/KG is the best case scenario according to their calcs.
• Other costs: $2.50/KG = $25m. This is such a poor return on funds, and I have assumed they continue to bring this down from $4.20 to $3.70 (current). Note that with Hofseth they will take a cut somewhere along the line too.
• Depreciation / maintenance CAPEX: $2.50/KG = $25m. Currently this is around $3.50/KG and no reason why it would reduce by 20% but let's assume scale affords that. They calculate this outside of operating EBITDA which is a bit rich for a capital intensive business that requires ongoing maintenance.
• EBIT: $10m. This is a pretty thing margin of around 7% ROE but is probably what one would expect even at this scale. To contrast that however with current market cap of $85m, it's around 12% EBIT yield which is acceptable. The issue however is that most this will be funneled into growth CAPEX to get to 30,000t target.

Risks I see is that CAPEX is actually higher than my estimates; other costs expand with revenue because that's been the M.O. of management; timeframe to hit scale takes longer than expected and won't be achieved before FY25. On the positive side, I think there is optionality with the potential for 30,000t and the macro fundamentals of the industry are really good so I think marketing to US/Japan should be fine.

Thanks for your feedback.