NRC Group ASA

A warm welcome to the presentation for the third quarter of the NRC Group. As usual after this presentation, there is a possibility to ask questions. I think the third quarter is stable and it strengthens our confidence that we will deliver according to the guidance that we have guided for the coming years. And I also think it is an indication that we continue to follow our strategic plan. We have an order backlog that is on a solid level of 8.5 billion. We deliver a margin in the quarter of 3.6%, which I also think is an indicator that we are on the right track. A highlight is the Finnish area in the quarter, which delivers a margin of 7.7% in the quarter. We have a reduction in the cash flow that comes from some larger contracts in Finland and from a maintenance contract and a rate contract in Sweden. I feel confident that we will get a cash flow release in the fourth quarter. If we talk about order entry, we have a stalled order entry and it is as previously communicated, especially in the second quarter, derived from Finland. We are currently in a timing effect where we are designing two larger light rail contracts in Helsinki and Turku. We expect that these design contracts will transition to production phases in the later part of Q2 next year. We have also had a timing effect in a larger RAID contract in Sweden. The project is underway, but some parts of the production are overdue. I am also confident that this will speed up during Q4 and the coming year. If we look at the order entry, Den är i linje med föregående år, men det jag vill betona är att den har tagit fart ordentligt här i det fjärde kvartalet. Vi har så här långt haft en orderingång på annonserade vinster på 1,4 miljarder som ska jämföras med en orderingång på 1,8 miljarder under hela kvartalet fyra föregående år. I still think the market is stable. I have no other indication. The national transport plans are still strong. There is a great demand for track-related infrastructure and our niche business parts, water, energy and the defence sector. Perhaps the defence sector is far behind in the cycle. But I also consider the market to be strong from now and throughout the entire strategy period until 2028. Vi har nu satt en siffra på vår guidning för innevarande år, 2,0%, där vi förväntar oss ett resultat som kommer in mellan 135 och 140 miljoner. To highlight the value of the company, we will, from next year, with the first Q1, present three special units in the company. Our machine business and two subsidiaries here in Norway, Gunnar Knutsen and NRC Kept. For the coming year 2026, we will continue to guide for a margin of more than 3.0% and expect a turnover of SEK 7.5 billion. If I were to classify this in numbers, it would be above all the margin in the quarter of 3.6 as an indicator that we are on the right track and the restart of the company is permanent. I would like to highlight again the Finnish business that makes a margin in the quarter of 7.7%. But the most important thing for me is to see that all three business areas, Norway, Sweden and Finland, make margin improvements. This results in an isolated result in the quarter of 65 million, which should be compared with 40 previous years. I have talked about a reduction in revenue in relation to timing effects. I expect a proper release of the cash flow in the fourth quarter, and I emphasize once again that when we are done with the eventual twist, which comes from Trondheim Meråkebanan, we also expect a large cash release in relation to that project. The backlog is then at 8.5 billion. If we look at book-to-bill, I would like to emphasize that from now on, in the fourth quarter of the current year, and ahead of the strategy period, we will guide for a book-to-bill that will exceed 1.0. And the long-term goal is that the company will reach a turnover of more than 10 billion in 2028. In the middle you see the stack diagram and our backlog is at a stable level of 8.5 billion. The most important thing for me is which makes me confident that we can guide for an increase in revenue or profitable growth in the coming year, is the Backlog for Execution, where you see an increased value for the coming year, 2026, and also an increased value for what comes after 2026 and towards the end of the strategy period, 2028. We have a provisioning principle that we changed Q4 last year, but Oskar will come back to that. But apart from that principle, we still have an increase in backlog for execution from 2026 onwards. Looking at the security situation in the company, it is very pleasing to see that we have focused very much on It's a safe company, and the rate of work injury, where we measure the number of injuries resulting from one day of sick leave for one million working hours, is at a very low level, 2.1. You see a significant improvement in the company, and I also think 2.1 stands very strong in competition. Even the sick leave is still at a stable low level, so we are Thank you, Anders. Good morning everyone.

We have set aside a solid quarter, a quarter that looks a lot like the second quarter, where we deliver a good salary on a lower turnover base. This shows that we have been good here in the last year in taking down the cost level in the company. In terms of net turnover, 1.8 billion is significantly down from last year. It is 13-14% down. There are mainly three effects that temporarily lower the turnover. The first is what we call time effects, and that applies to Finland and Sweden. In Finland, in light rail, as we talked about last quarter, we are between contracts. So it is clear that we are down there. We can call it a bit like a swimmer's curve, where the turnover is temporarily down. The second element in Finland is that in 2025 we have E1 in a operating contract less than we have in 2024 and 2026. We no longer have MA4, which we did not get out of, but MA3, which we won this year, we have started on in January. If we look at Sweden, we have mentioned the project Anders was talking about. We have 83 million Norwegian kroner in Swedish kroner, maybe 87, 88, 89 kroner in Norwegian kroner. On the customer side, it is worth decreases, which means that the turnover is not gone, it only moves into 2026. Further in Sweden, we had some big ambitions and expectations to get started on the energy sector in 2025, also where the order reserve is only moved one level. That was the time effects, the biggest effect. The other effect is on change orders. And on change orders, it has been a little lower activity than usual. It is also the most difficult to predict. It is very often a short time between that we get an order and it will be produced. The third effect, which is also the smallest, is that a slightly lower order intake in the quarter has also led to some lower production, but as I said, it is lower. As a result, we have a good EBIT in the quarter with 65 million kroner, and then 3.6% margin. Positive to see that all countries contribute, especially from Finland, which I will come back to. And then in the middle of the graph, we see that the profitability in the last 12 months has climbed up to 79 million kroner. The view now turns to 2026. We guide for a revenue up from this year, we say 7.5 billion kroner. We have an order base now for Execution in 2026, in line with what we had one year ago for 2025, which is 500 million, quite close to 500 million, equally over. Anders also mentioned that within Lightwell, and perhaps especially Helsinki, which we have high expectations about, we are not in the order reserve yet, so in that sense we think we are well in line for a good growth next year. In terms of profitability, we maintain a margin of over 3.0% in 2026, where the main driver for that is a better order reserve, which we must have so that the turnover goes up, and good project efficiency. Let's look at Norway. In the quarter, Norway has had a steady turnover, a fairly high and steady turnover throughout the year, 552 million. Fifteen percent of that turnover is production at ETM. And ETM, we are right in the middle of the project now, and we have to remember that those 15%, they are recorded at zero margin in our books. In light of that, we are reasonably satisfied with the EBIT at 19 million, or 3.4%. It is generated a little differently, and again draws Gunnar Knudsen as the best in the class in Norway in the quarter. Order-wise, slightly higher than what you might expect from what you have seen from announced dealers, but we are at 417 million, so that is slightly higher. Order-backlog-wise, we are at 1.5 million, and that is still a strong focus area. We said that in Q1, we also said that in Q2, and we also say that in Q3. High activity, very high tender activity. If we look at Sweden, Sweden has, as mentioned earlier, a lower than expected activity. 592 million kroner. And I was talking about the effects earlier. EBIT at 10 million is the same as we had in the previous year. And we now have an LTM, as we see in the middle, last 12 months of profitability at 45 million, or 2.1%. And that, I think, is a milestone for Sweden. Sweden hasn't been there. It's starting to become a so-called robust state. We've seen an LTM of over two quarters. We are very pleased with the so-called restructuring of Sweden. In terms of orders, Q3 on the weaker side was 190 million kroner. The total order reserve is robust, 3.4 billion kroner. There is a significantly higher order for execution in 2026 than we had at the appropriate time for 2025. And then we had, as Anders mentioned, a very good start in Q4. Among other things, a rail contract of over 500 million in the area of Brekke. So that looks good. Then we look at Finland. So it is clear that Finland's turnover of 682 million is low. It is temporarily low. I mentioned the time effects here initially. In terms of EBIT, we are proud to post 52 million, or 7.7%. Yes, there are some machine gains in this. At the same time, it is a good result when we see it in the light of a low turnover level. And this is a result of Acceleration Lane. This is a project that we were really fast at in Q3 last year and Q4 last year, which we are looking forward to now. We are happy about that. The last 12 months of profitability, you can see in the middle, has risen to 79 million, or 3.3%. Order side in the quarter, slightly low, 293 million. The total order base is OK, 3.2 billion kroner. And as I said, in the next year, we expect a lift on the light rail. I did not mention Helsinki. I will also mention Tampere 3. We have Tampere 3 in the reserve. There we are in an upramping phase, a little bit from the start. In 2026, it will take a lot of speed. If we look at it cash-wise, there is no reason to be proud of the increase in working capital here at 190 million, as you can see on the left side. It is temporary. It is Finland that contributes the most, a little over 100 million in Finland. In Sweden, we have 60 million contributing. In Norway, it's okay to mention it, we have 30 million in late income payments from Banen Nord, a pure technical system error with Banen Nord, which then hits right into our numbers. The money came on the account on October 1st. If we look at cash flow from operations in the middle, it is driven by profitability and working capital, so the increase in working capital drives it down to negative terrain, minus 95. And if we look at the cash sits on the right side, we have a total decline of 139 million, from positive 123 last year. And again, operational cash flow driven by working capital, which drives this. A financial content stream that is relatively stable, it is at 76. The largest component there, as I mentioned earlier, is leasing. It was at 42 in the quarter. We have interest rates at 20. And then we have repayment of a loan that I will come back to on the next page, at 15. Our liquidity situation is satisfactory. Apart from what you see here, there is a drop in cash credit at 16. The cash credit is now at 400. We had some limitations earlier this year. They have been removed from Q4. So, in total, a good liquidity situation. Then, of course, it also highlights that we will get a cash release in Q4. Also in the long term, as Anders mentioned, we have a lot of capital tied into the ETM contract. In ETM, just to follow up ETM specifically, we promised you last time that ETM was over a so-called capital top, or binding top. In the quarter, we have had 20 million in release on ETM. A little lower than expected, but still, we have put the top behind us. It was behind us this summer. In the future, we will get an OK release on ETM, and then it will be the largest part of the release when we find a solution with Banen Nord, whether it is within or outside a legal context. If we look at the next page, we can see that our net income has increased with 120 million kroner, again, working capital, to 941 million kroner. It consists of the three elements we see on the left side here. There is a bank income of 150 kroner, and then there is a cash credit on the one on 16, as I mentioned, and then 134 million kroner in a Euro Pante loan. Then we have an obligation that has to be in place all the way at 400 million, and then we have a leasing yield here, operational and financial leasing yield, at 391 million. In the middle, the default times, nothing special is happening here. We pay the Pante loan on a quarterly basis. The last bit goes in 2027, and then you see that the obligation also falls in the fourth quarter of 2027. So after a while we will come back to it and solve it. On the right side, we see the Leverage Ratio, or the ratio between our yield and our recognition level. From Q2, it went down to what we call a more reasonable or more normal level. And we can already see, as it is written in small letters on the right, that in Q4, due to the mentioned cash release and due to what we call the recognition control we have, we will make a significant drop in it. So we are well below 3.0, to put it that way. Finally, we look at the loan conditions we have. We have loan conditions for the bank, and we have loan conditions for the lender in the obligation. Then we have six bank requirements. We have good robustness on this. We had a waiver from the bank out to Q4. We were going to be measured per 1.312. We relaxed that now in Q3, so we are happy with that. If we look at the obligation, we also see that we have a good buffer on it. So, within Covenants, there has been no risk of a break in Covenants for NAC, given the way the world looks to us. With those words, I give the floor back to Anders, summarizing the quarter and the first three quarters of 2025. Thank you.

In summary, we are making a stable quarter, which indicates that we strengthen our confidence that we will deliver what has been promised for the coming year, more than 2%, and that we follow the strategic plan that has been laid from now until 2028. Result-wise, this will be a result of 65 million SEK in Q3, which will be compared to 40 million SEK, with a margin of 3.6%, which I think is an indicator that we are on the right track. I am specifically referring to Finland, which makes a result in Q7 of 7.7%. But the most important thing for me is to see that all three business units, Norway, Sweden and Finland, are involved and contribute and make results improvements. We have talked about the order entry that is somewhat delayed in the quarter, but at the same time I see that it has taken off properly here in the fourth quarter. We have so far announced winning orders of 1.4 billion, so I expect a very strong order entry here in the fourth quarter. In terms of revenue, we have a reduction, and I would like to repeat what has been said during the presentation, that we mostly relate this to Finland, where we have a timing effect in two major design phases, especially in Helsinki, but also in Turku, where we expect these design phases to transition to production phases in later parts of Q2 next year. And we also have a large rail contract in Sweden that is in progress but is also delayed. And also our civil business, where we have won a large energy contract, is also currently under design and this will take off over the next few years. Which makes me I feel safe with the fact that the profitable growth will take over the company from now on. We have set a range on what we guide for this year. We have said more than 2.0 and we have now set a range on that which implies that we will get somewhere between 135 and 140 million for the whole year 2025. Fokus i bolaget är fortsättningsvis att mestadels i år har det varit att se till att restarten av bolaget är permanent, vilket jag känner mig trygg med. Och vi fokuserar från och med nu och framåt då för lönsam tillväxt för att nå ett bolag som har passerat 10 miljarder i omsättning 2028. Och vi guidar för en boktågbild från och med nu då i Q4 och framåt på mer än en då. Oskar mentioned that the production part of the Trondheim-Eriko-Bahn in Norway is finished. What remains before the final inspection is to establish the contract and prepare documentation for the final inspection. Vi förväntar oss, oavsett om det kommer att bli en rättslig tvist eller om vi kommer att hitta en lösning på vägen, att vi kommer att ha en betydande kassarelease när vi är klara med projektet, inklusive de tvisterna vi diskuterar. Avslutningsvis så betonar vi redan nu att vi under nästkommande år, 2026, med start i kvartal 1, kommer att separat redovisa Våran Maskinaffär och två dotterbolag här i Norge Gunnar Knutsen och Kept för att synliggöra värden i de här speciella operationerna som finns i bolaget. Om jag övergår till guidning så står vi fast vid innevarande år på att nå mer än 2,0%. Vi kommer komma in under 7 miljarder i omsättning och vi har nu satt en siffra på vad vi menar med mer än 2,0%. Det är då återigen en range på någonstans mellan 135 och 140 miljoner. Näst kommande år, 2026, guidar vi för en omsättning på omkring 7,5 miljard och ett resultat på mer än 3,0%. Med den presentationen så skulle jag vilja öppna upp för frågor. Varsågod.

I have a question about the guidance on revenue. From 2025 to 2028, if you want to go from 7 to 10, it will be an average of 1 billion a year. And then you guide at 7.5 in 2026, and that may set even higher requirements for 2027 and 2028. Do you need to see now in 2026 for it to be realistic?

I will answer the question. First of all, in the entire company in the strategy period, we are now much more selective about what we are going to do and what we are not going to do. So we are waiting for some projects for us that we are convinced will fit our business and our value chain. And I expect a stable heat rate on those projects. But I have also mentioned that we have a timing effect in the company right now, where we have a dam in the coming year. But I feel safe that the revenue is there. If we take Sweden, for example, we have the big rail project, we have the big energy project, so the revenue is in the company. But I expect that the production parts now take speed from Q1 next year. Maybe not so much in the remaining part of Q4, because we are entering a winter period, but from spring and forward next year. Specially, and also in Finland, these Night Raid contracts that we have a very large experience of and a good history in the company, where design goes to the production phase. We expect to repeat in Q2 next year. Then, of course, we must win orders during the strategy period. But I feel safe with that. We strengthen the company. We have very professional colleagues. I expect a good heat rate from them now through the entire strategy journey.

We haven't calculated exactly how much you want, but of course we say that we will consistently be above 1.0, and we have to do that. So I think that in 2026, I call it a headline in 2026, as a profitable growth, we have to see that we deliver on that turnover. Then we have to see that we are starting to build an order reserve that supports that growth. So we have to see. So the growth into next year is important.

Men återigen i år, under varande år, så har det varit mycket fokus på att se till att restarten av bolaget är permanent. Det har fasat ut vissa delar och så tar det fart här ordentligt med lönsam tillväxt när det kommer en år framåt.

I can follow up a little in the same vein. In 2026, what is the most important driver for lifting the margin to over 3.0%? And then it's actually a bit of the same question as well. What was the most important driver for lifting the margin in Q3, whether it was structural or temporary?

The most important driver to have a stable and improved result is always that we carry out the production in a correct and professional way. Vi har ju stärkt upp boläget avsevärt med vilka produktionsresurser och projektchefer och organisationer vi har där ute och att de ska göra ett bra jobb med de projekt vi har. Det är det viktigaste. Sen ska vi naturligtvis, för att få en marginal måste vi vinna nya projekt. Jag känner mig trygg med att vi har professionella anbudsteam på plats som kommer att ta hand om den fina marknaden som råder nu och genom hela strategiperioden.

As an additional answer to the question about Q3, we can say that what we call the cost-examination that we have done has been very important. That is why we also promote Finland and magic, despite the fact that part of it is a type of machine sales as well. If you go down so much in the turnover that Finland has made and delivers an increased magic, it is a proof of that you have taken down costs. And that is important. In that sense, it is not called a type of one-off. It is a running cost improvement that gives a running improvement going forward. That means that Q3 is a result that can be read as relatively robust. One comment on that is that we have been very consistent in saying that we have a robust accounting practice. And we have that. And with that, it means that we have a very proactive relationship to risk, proactive relationship to risk assessments. So it's not about writing books. It's a robust and good result, which also signifies well for the next quarter.

Can I say something more about the guidance on below 7 billion a year versus around 7 billion earlier?

No, I have nothing more to say. We have said that we will come in under seven. And when we guided for about seven, we were in the early stage of the year. As you know, we can mix in. We have different weather conditions in the company that affects whether we have a early, late, strong or weak winter. We also have, as we have said, when we win a job, how the production phases take off, rather than the customer choosing and possibly putting them later. So... I have tried to explain. When we were early this year, we thought about seven, and now we are guiding for less than seven with reference to these projects we have talked about and the time effect we have produced.

There is also a question about new reporting on machines and special operations. How will that affect historical profitability per business area?

Jag hoppas att det både stärker vår lönsamhet framåt och synliggör värdet i några fina affärer vi har i bolaget. Med det sagt, synliggöra bra affärer. We have a Nordic machine operation today, which is integrated into the country's stock.

It will be lifted out. At the same time, of course, we will lift out some revenue. It will be so that we redefine, or restate, as we call it in the report, from EQE next year. And it will in a slightly larger way affect Norway than the others, because we are also lifting out Gunnar Knudsen, who has been a good value driver or a good loan giver for the Norwegian business. So yes, it will be a change in terms of numbers, mostly for Norway.

I would like to add that Gunnar Knudsen is a very nice business we have in the company, and the brand is very strong, but there are perhaps not many who connect it with the ownership of NRC Group, so we want to make it clear that we have a nice 8 company that goes under a different brand. under our wings.

One last comment on that is that our businesses are becoming a little more similar. Gunnar Knudsen and KEPP are businesses that we don't have in the other countries. So it's easier to benchmark across the country within the group.

One last follow-up question on that. Expectations for the Magin picture in Norway next year, given that Gunnar Knudsen will be lifted out?

We are not guiding for a single country, but we are guiding for the group where we expect to reach a margin of more than 3.0. But I hope that what we have shown today is that the countries strengthen their margin continuously through the strategy period. We are not guiding for a single country.

There were no more questions here, actually.

Vi med det sagt tackar för oss och önskar en fortsatt trevlig dag. Vi avslutar presentationen. Tack så mycket.