Akastor ASA

Good afternoon, and welcome to the presentation of Acastor's second quarter results. My name is Eivind Poske, CFO, and I'm here together with our CEO, Mr. Karl-Erik Kjellstad. As usual, we are glad to also have with us HMH from Houston, represented by Tom McGee, CFO, and David Bratton, SVP Finance. Kalle will start with some key highlights before Tom and David will go through HMH. I will then present the consolidated financials, before Kalle will wrap up. Towards the end, we'll open for questions through the webcast solution, where questions can be posted at any time during the presentation. I'll then leave the word to Kalle. Please, Kalle.

Thank you, Emil. And good afternoon and good morning to all US participants. And thank you for joining us in the middle of the summer break time. We are pleased with our second quarter results and remain positive on the outlook for all of our portfolio companies. Let's move on to slide two, with some key highlights for Acosto in the second quarter. It was a strong quarter with regards to cash, driven by the final settlement of the Drew case that resulted in US dollars 176 million in cash payment to Acosto. The Drew settlement led to a positive accounting effect of a NOC 748 in a quarter or NOC 1.3 billion in total for the first half year. And a strong net cash position per annum of the period with no draw on our corporate bank facilities. After the Drew settlement, we also have extended our corporate revolving credit facility to the second quarter of 2026. We are very pleased to see continued positive development of HMH in the quarter, demonstrated by a 23% year-over-year growth in EBITDA, driven by increased aftermarket activity and stronger margins. HMH delivered an EBITDA result of US$42 million in the quarter, and that is an LTM EBITDA of US$153 per the second quarter. Also, in a quarter, HMH filed a so-called confidential S-1 to the United States Securities and Exchange Commission SEC for a potential US IPO, which may occur in the second half of 2024, pending market condition and a positive IPO sentiment that will enable an attractive valuation. The continued profitable growth for HMH continues to be an important foundation for a future HMH liquidity event. HMH is by far our most valuable investment. The book value of our shareholding in HMH post the Drew Award equals to around 70% of our total net capital employed. With a book value of slightly above 3.2 billion per the end of the quarter, or just about 12% per our cost of share. In the quarter, DDB Offshore completed the reactivation of the Scandi Peregrino And by this, all three DDV vessels are in operation and well positioned in an attractive market. Further, based on the world instrument that we established with Oldfield Drilling in 2018, Acosta received approximately 3 million shares in Oldfield Drilling in the quarter, boosting the value of our listed investments to close to 300 million NOC by the end of the quarter. As you see from the overview on this slide, the book equity value of Acosta by the end of the second quarter was up with three kroner per share compared to the previous quarter. From 7.2 kroner per share in the first quarter to 20.2 kroner per share by the end of the second quarter. And this is driven primarily by the effects related to the Drew Award. With that, I'm pleased to introduce HMH CFO and EVP Thomas McGee. He has been able to connect despite lack of electricity and very challenging conditions in Houston these days. So Tom, the word is yours.

Thank you. Well, fortunately, with HMH, we didn't sustain any significant damage. We just have issues with power and internet right now, which we're finding are very important to function in today's world. But we found a backup location. So as Carl Eric said, we did file a confidential S-1. So we can't comment more on that, but obviously just want to make sure you're aware of the release that we issued around that. We had a strong quarter revenue-wise, continuing to see the growth in our core business that we've been talking about. EBITDA up significantly quarter over quarter and year over year. So very happy with that result with a very strong margin. And we continue to be very proud of our margin as we work on cost initiatives, improving our gross margins and just having the business grow with some solid incrementals. And then finally, the orders were down. I will say there were some significantly large product orders last year and two very large product orders last year that impacted that. So we don't see anything out of the ordinary other than those product orders we've guided have been very chunky. On cash, I do want to say a couple things. And this happened last year. So this is not unusual. And there's a little bit of seasonality here. Last year, we guided toward the second half cash and delivered at year end the way we said we would. I think we're facing largely a similar situation here. We had two significant areas impacting it. And then I'll talk a little bit about the seasonality. First, we had a strategic inventory build related to specific rig reactivations, Middle East opportunities. That's equipment and spare parts provisioning, along with some Sionics positioning on inventory. So you do have some real growth here that's driving inventory. I continue to see that rolling over. I don't think we're looking at significant inventory growth moving forward. That will be released, I think, in the second half of the year. But I think there was a little bit of that driving it. But we also had a couple missteps related to some past dues and timing of product milestones. those are being addressed. They will be resolved over the third and fourth quarter. So what you had in that case was two significant payments pushed out from Q2 to Q3. And then finally, on the seasonality, we have bonus payments and insurance renewal and IPO expense all occurring in Q2. So there are some odd cash items that are there. So we continue to be very happy with where we're performing. I think the EBITDA reflects the state of our business cash timing-wise. I think our business, you got to look at it over the year. This year looks a lot like like last year, and I think we'll see a very strong back half the way we did last year. And as we bring in that inventory that's released and make those collections starting really in a couple weeks and then slipping into late Q3 and early Q4, we'll meet what we have internally as our cash forecast. I think we're comfortable doing that, but just wanted to hit that up front. Other than that, continue to see a strong offshore environment. We're happy with How we're progressing internally in terms of integration and then for right now, further integration of our businesses to become one HMH and continue to put one face in front of the customer and then optimize the operations around that. So I think we've got a lot of good, good things going on on that side and then also really continuing to position for growth and a lot of exciting things going on. in terms of targeting the onshore business globally. And we've got significant progress there in a number of regions, including we've highlighted that what we've been working on hard in the Middle East this year has been a big focus of ours. We are making headway in some North American markets in Mexico and even a little bit in the U.S. So we feel good about where we are. And we think we're set up for a very strong second half and continue to look forward to a great market. So with that, David, I'll walk you through some of the financials.