Akastor ASA

Good afternoon, and welcome to the presentation of Akastor's first quarter results. My name is Øyvind Polske, CFO of Akastor, and I'm joined by our CEO, Mr. Karl-Erik Kjellstad. We're also pleased to have HMH with us from Houston, represented by Tom McGee, CFO, and David Bratton, SVP Finance. Kalle will start by taking us through the key highlights, followed by Tom and David with an update on HMH. I'll then cover Acosta's consolidated financials before handing it back to Kalle. We'll wrap up with a Q&A session. Feel free to submit questions at any time during the presentation. With that, I'll hand it over to Kalle. Please.

Thank you, Eivind, and good afternoon and good morning to our US participants. And thanks to everyone for joining us for this first quarter Acosto earnings call. Let's start on slide two with some key highlights for the first quarter. We are pleased to deliver another good quarter marked by solid performance across our portfolio. HMH reported an EBITDA of US$33 million in line with the first quarter last year, and with a free cash flow of US$15 million. Order intake was US$198 million, implying a booked bill of one. The continued financial performance with a robust performance of HMH continues to be an important foundation for a potential future liquidity event. HMH is keeping its S1 filing with the SEC updated and timing of potential launch continue to be dependent on market conditions and sentiment. HMH remains our most valuable investment. The book value of our shareholding in HMH remains at around 70% of our total net capital employed, with a book value of NOK 3.4 billion per the end of the first quarter, or 12.4 kroner per Acosto share. This is somewhat down from previous quarter due to currency effects. All the Arcov's offshore vessels remain on its contract through the quarter and delivered solid operations for its clients. As mentioned in the last quarterly presentation, our cost of ownership in Arcov's offshore increased to 66.7% in the first quarter, following the completion of the buyout of Mitsui 25% stake and then followed by the sale of 8.3% of this stake to MOL. In the quarter, Arcos Santos was nominated as the winner of the Petrobras reverse auction for a four-year MPSV contract starting July 2026. That has been followed by ongoing negotiations with Petrobras. No contract has yet been signed and remains subject to mentioned negotiations. But we are hopeful that Arco Santos will continue to deliver quality services for Petrobras for another four years immediately after the current contract period ends. Further, early April, the refinancing of Arco's seafarer vessel was completed through a non-recourse USD 110 million facility, uh with a maturity in december 2028. our book value of arcos was around 0.4 per our cost of share per the end of the quarter ddv offshore In a quarter, DDB Offshore entered into an agreement to sell Scanly Peregrino for US$25, with a completion expected in Q2.25. Up and closing, Acosto plans to distribute a significant portion of the net proceeds as dividends to shareholders. The book value of our investment in DDV Offshore is 1.4 NOK per Acosto share, based on an average book value per vessel for about $11 million. Our total book equity value for the end of the period was NOK 20.2 per share, which is somewhat down from last quarter, and this is again mainly due to currency effects. Acosto continues to be in a solid financial state, with a positive net cash position and no draw on corporate CF. With that, I'm pleased to introduce HMS CFO and EVP Thomas McGee that, together with SVP Finance, David Bratton, will take us through the HMH first quarter results. So, Tom, the word is yours.

Thank you, Karl-Erik. Thank you. Good morning. Good afternoon. I'm going to timestamp this for you. It's 8.05 Central Standard Time in Houston, Texas, April 30th. The reason for that is it's something I say in the next 15 minutes will be rendered completely obsolete and wrong by something that happens in the world in the next 48 hours. That is the level of uncertainty we're dealing with. So that's kind of how we'll kick this off. Despite that, we've got some pretty good performance. Let me start by talking about the markets. And this will be – we can't talk about forward guidance given what the – given the regulations we're under right now. I can't talk about the market and give you a picture for what we see both good and bad. Let's start with the bad. The trade situation, we'll get this on the table. We know we already got a question on this. The tariff impact, just the first order impact, had it been in place, the current regime, to the best of our knowledge, as it exists today, not tomorrow, If it were in place in 2024, it would have been about a 3% to 6% hit to EBITDA. We think we can mitigate most of that. So that gives you an idea of what it would have looked like in 2024. So the first-order effects are negative, but they're not significant. I think, obviously, we're more concerned, and we've taken some questions from some of you already since this has been in place. The second- and third-order impacts are what we concern ourselves a lot more with. And that's the macro. You've got recessionary data coming out of the U.S. this morning. You know, oil price. We've got an OPEC meeting next week. We feel like there's a lot of bearishness already built into oil from that. But there's a lot of stuff we can't control there. This is stirred up. So we're definitely worried about what kind of macro impact it has that, you know, that would happen on us. There is also potential for further supply chain disruption. That's unclear. There's a little bit of unknowns there. If you think about freight falling and seeing some of the weird things that are occurring, there's a potential impact there. And then finally you get into some customer behavior and I'll categorize that in two different areas. One would be you can't make that in the U.S., you can't make that in China, and having some of those discussions, which everyone is having right now. And then you have the secondary effect of some of the customers just restraining spending and saying, I'm going to wait and see what happens, right? So that's sort of the negative market backdrop. But let's go to the positives. Despite all of that, you've seen positive offshore drilling data points over the last few weeks. If you're watching earnings reports, you saw a new backlog being issued at what I think are pretty good day rates. And so you think about we're 80% offshore, 75% aftermarket. That resilience in this, in light of all of these macroeconomic challenges is pretty impressive. And so when we saw positive data points over the past few days on that offshore market, albeit probably more geared towards 26, and this is probably about the drillers, you know, getting contracts and starting to erase that white space in 2026, it just shows the resilience of that market. So we do think there are a lot of positive things happening at the same time as a backdrop. Obviously, it's a challenging environment. But despite that, we got a book to build one, and we had an EBITDA that was flat year over year. And we don't release a budget, but that was our budget. It was absolutely on budget. The market behaved exactly as we expected to, despite all of the turbulence that we saw. So we thought that was a very good result. Unlevered free cash flow came in strong. I think we have gone – Really after two things, one is inventory and trying to, we peaked inventory last year, trying to work to bring that back down. We're doing a great job of that. And I think receivables have gone from underperforming to outperforming on collections. So we're very happy with free cashflow performance. And that'll continue to be choppy as you've seen over the years. But I think coming out of the gate strong first quarter of the year is a big message to send that they were serious about bringing that EBITDA to the cashflow line. We signed a new multi-year service agreement supporting long-term – sorry, multi-year service agreement for Riser. Again, we're continuing to grow that business, and we'll talk at the end a little bit more. We are growing businesses now despite the challenging market. I mean, we're adapting these trends through productivity and cost. So we've got a lot of things. If you think about what you can do in this market, you find ways to grow. You control costs. And we're doing a lot of work around bringing manufacturing costs of products down to open new markets for us. So despite the challenging environment, good performance, and a lot of opportunity on the price.