NRC Group ASA

Welcome to this capital market day for NRC Group. We are several in the team who will talk today and the agenda looks like this. We will start with the first quarter, where I will shortly lead. Olle, our CFO, will go into more detail in the numbers. Then I will come back and take the first part of our new strategy Formula One. It will be about the transformation, what platform we have today and how we will look in 2028. After me comes our communication and sustainability chief, Lene, sitting there. Will run that session and will put the word to Harry, who is the head of the Finnish business area. In turn, he will let the word back to Olle, who will take more financial talks. I will try to round off the whole thing. There you have the agenda for this little busy hour. The first quarter, if we start there, I will take the big pencil draw. I apologize. I think we have had a good start on the year. What sticks out in the quarter, I think, is primarily the Swedish business area, which is starting to move in the right direction. We see other small movements, although they are positive. We see a big change in line with last year, weak improvement. We see a result of movement and a movement margin that is improved by a margin. We have a cash flow that I want to discuss a little. It is simply because we are here in Norway, have a larger track-related infrastructure project that we share with the Swedish business area. It is Trøndemeeråkerbanan. It is full production. We handle large deliveries, subcontractors, subentrepreneurs, which are cash flow's influence. The job from our perspective in the quarter, in this job, was a little more than 700 million jobs. We have determined this together with our customers as doubled at the moment. And we come in the near future to discuss this with our customers. There have been big changes from the contracted amounts. We have had a lot of supply orders, we have had change orders, change orders. And we will discuss them with our customers. It is a good conversation climate, but we need to discuss this because it drives a lot of cash flow right now. Ole will come back to that a little. Finally, we have had a good order in the quarter. I can not say that it is at record level, but it is close to the record level. And it naturally builds a strong order book. And the orders we take, except that we are competitive, are orders that are in line with the new strategy. Our staff is doing great. We see a good trend in our employee survey in line with previous years. And when we follow our working-duty frequency and sick supply, we have an improved statistics, which is good. Safety always comes first. And then I think we will fly in a little deeper in the numbers, Ole. Here you go.

Thank you, Anders.

So I will switch over to English for our international viewers. So financially, we had the first quarter more or less in line with the same quarter last year. And this is a seasonally weak quarter, as you can see in the graph to the left. For the first quarter, we had reported revenues of 1.3 billion and an operational result, EBIT adjusted, at minus 43 million. And this compares to the first quarter last year, which also came in at 1.3 billion in turnover, while then our EBIT adjusted was minus 48 million. We see continued positive development and improvement in our Swedish operations, while our Norwegian and Finnish operation is slightly behind the same quarter last year. We also initiated an operational restructuring of our demolition and recycling business, KEPT, in Norway, to structure that business in line with current market conditions. And we have taken a one-off, totalling 59 million in the quarter, and you can see that in adjusted items of minus 56. This breakdown includes a breakdown of assets. We have the discontinued parts of the business unit, and we have also reduced the number of police. And this business unit now is under strategic review. If we move to the different countries, starting with Norway. So the results in Norway are slightly below where we were at the same quarter last year. However, we did have an exceptionally strong order intake with a -to-build ratio of two and a half times sales. And right now we have a much better backlog in Norway than we had at the end of the year 2023, but winning new contracts both in our rail and our civil division remains a high priority. As Anders mentioned, we have had significant change orders in a joint Norwegian-Swedish rail project, where the outcome is still pending. The project is recognized at zero margin, and it also affects our cash flow negatively. Mediation with the customer is to commence now in Q2 for the resolution for these change orders. Moving to Sweden. In Sweden, the ongoing transformation has been highly successful, and we are back to deliver a positive result in Q1, which is seasonally a weak quarter. We have strong organic growth with above 50% of the growth in the remaining business, and we have a -to-build ratio of 1.8 times sales in Sweden. So we have a good backlog, and we're now building a backlog for 2025 and onwards. Operationally, both our maintenance business and our rail business is delivering acceptable results at the moment. In Finland, our activity is down 12% in local currency. We are not satisfied with the performance we have had in the operations in Finland, and this is driven by our rail division. We are working on one project, which is coming to an end in Q1, sorry in Q2 2024. And when this project is completed, we can free up resources for other more profitable projects. We have already initiated actions in Q4 last year and Q1 this year, and we expect this to yield results going forward. The tender pipeline in Finland is very strong and we also won another light rail contract in the first quarter, which is currently in the design phase. If this project is decided to go into construction phase, the value of this contract alone is over 1 billion and it's not included in the backlog. Despite this, winning a new large contract remains a high priority in all segments in Finland. Some comments on our working capital. Our working capital is highly volatile, as you can see in this graph to the left. First and foremost, we have seasonal volatility, where we basically build up working capital during the summer period, where the production is very high, and we build this down during the winter period, when the production is lower. But we also have working capital volatility intramond, where we build up working capital during the mid of the month and then build it down at the end of the month due to the payment pattern of our customers. And over the last year, we have had increasingly tied up working capital in this joint Norwegian-Swedish project, and this has escalated further in Q1 and the beginning of Q2. Except for that, we are very satisfied in the way we are managing our working capital, and we believe that we can continue to reduce this into negative territory over time to free up liquidity in the company. However, this project particularly has highlighted the importance to forecast the cash flow when we do tenders to avoid taking on projects where we take too much of the liquidity risk. Moving to the order intake and the backlog. As you can see, we had a good order intake at 2.6 billion, which is the -to-bill ratio of 2.0, isolated in the quarter, and measured over the last 12 months. As you can see in the graph to the left, this is at 1.0. And this gave the backlog of 8.2 billion, which is in line with the same quarter last year. I will come back with more details later on in the presentation related to our backlog and our pipeline. On the right-hand side, we have a new graph showing how this backlog of 8.2 billion is spread out over the years ahead. So for the current year or the remainder of the year, we have slightly lower backlog than we had at the same time last year. While we are building a very strong backlog now for 2025, as you can see in this graph. Yes, I will be back later with more details on numbers, but I will leave it to you, Anders Malm. Thank you, Ole.