Akastor ASA

Good afternoon, everyone, and welcome to the presentation of Akastor's second quarter results. My name is Øyvind Poske, CFO of Akastor, and I'm here today together with our CEO, Karl-Erik Kjellstad. We're also pleased to have our colleagues from HMH joining us from Houston, Mr. Tomek Yi, CFO, and Mr. David Bratton, SVP Finance. We'll start with some key highlights from Kalle, followed by an update on HMH from Tom and David. After that, I'll walk you through Akastor's consolidated financials before handing it back to Kalle for some closing remarks. As always, we'll wrap it up with a Q&A session. Please feel free to submit your questions at any time during the presentation using our web-based Q&A tool. With that, I'll hand it over to Kalle. Please, Kalle.

Thank you, Eivind, and good afternoon and good morning to our US participants, and thank you to everyone for joining us this afternoon. Let us start with some key highlights for the second quarter at slide number two. We are pleased to announce a cash distribution of NOK 0.25 per share to our shareholders, supported by a strong cash flow in this quarter. This is aligned with our communicated strategy to return excess capital to shareholders while maintaining its own capital structure. HMH continues to deliver robust financial performance despite reduced offshore drilling activity and softer demand for spare parts. HMH reported an adjusted EBITDA of US$36 million and a margin of 17.7% in the quarter. HMH is continuing to keeping its S1 filing with the SEC updated, and the timing of a potential launch continues to be dependent on market conditions and sentiment. 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 end of the quarter and NOK 12.3 per Acosta share. Somewhat down from last quarter due to currency effects. Arcov's Offshore. Building on several years of strong operational performance, including this quarter, Arcov's Offshore is steadily renewing its order book. This includes the previously announced new contract for Akos Seafarer and, more recently, Akos Santos, which has been nominated for an award for a four-year MPSV contract with Petrovas. Both these contracts will have positive effects on the 2020-2026 results and reflect improved market conditions through stronger day rates than the current terms. Our book value of Akos was around 0.3 NOK per Acosto share at the end of the quarter. We consider this book value to be a conservative measure that it does not fully capture the company's underlying asset values. We continue to see meaningful upside potential and remain focused on ensuring that this is increasingly understood and reflected over time. DDV Offshore. Unfortunately, the announced sale of Scandi Perugino vessel was canceled as the current charter did not agree to noviate the associated charter contract. However, All three DDV vessels are now on term contracts in Australia, and we see interesting opportunities for all vessels, both when it comes to possible asset transaction and in terms of new charter contract post existing solid backlog. The book value of our investment in DDV offshore is 1.3 NOK per Acosto share, based on an average book value per vessel of about 11 million US dollars. As you might recall, we received about 3 million shares in Ordfeld Drilling in May 2024, through the execution of a warranty agreement that we established with Ordfeld Drilling back in 2018. In the second quarter, and during some days of this third quarter, we completed a sale of 50% of our shares in Ordfeld Drilling, generating a total proceeds of just over 100 million NOK. Following this sale, we now own 1.5 million shares in order fed drilling. The divestment of parts of our order fed drilling shares is in line with our cost of strategy of realizing assets to enable distribution of capital to shareholders over time. We will continue to assess the holding strategy based on market developments and capital allocation priorities. Our total book equity value by the end of the period was NOK 20 per share, and this is somewhat down from the first quarter, mainly due to currency effects. Our cost tool continues to be in a very solid financial state, which has enabled us to pay dividends. We have a positive net cash position and no draw on corporate LCF. With that, I'm pleased to introduce HMH CFO and EVP, Thomas McGee. And that will take us through the HMH second quarter result. Tom, the word is yours.

Thank you. Thank you, Karl-Erik. Going to the next slide. Order intake of 173 million in the quarter. EBITDA 36 down year on year, up quarter on quarter. Really impacted by the reduced pressure control spares volume due to current offshore rig market conditions. Talk a little bit about that for a second. Customer is being impacted by two things. One is a little bit of white space that we've heard them all talk about, all the drillers talk about. And we're a little bit of a tailing indicator on that. And we'll talk a little bit about the future as we wrap up. These drillers are obviously very positive long-term, but there's a pocket of weakness here where it slows their aftermarket and consumable purchases. At the same time, the macro uncertainty that's been introduced into the market weighs on order rates a little bit in a way that they'll try to say, I'll push this out a little bit longer before I buy. Non-essential spending gets cut. So, you know, I mean, overall, pretty resilient quarter, but it is being impacted by that slowness. So the good news is that's really that is the pocket of weakness. While North America remains weak, it didn't impact us much. And we made some good, solid progress this quarter on some land efforts outside of North America. So overall, again, a little bit of weakness, but it's very specific. In the past, when you look back at COVID, which is a much, much larger event of weakness, if you want to call it that, and you looked at what happened to the order rates, it behaved in a similar manner. And post-COVID, they recovered fairly quickly in that environment. So we've kind of seen all this before, and we've just seen a little bit of air pocket here due to the white space with our customers. On the productivity and cost efficiency side, we say that we began yielding some results. Really, they just started. This is all the process of HMH 2.0 and integrating the company and becoming one HMH. So the initiatives that we're talking about here were the right long-term initiatives for the company that we launched a year ago. It has nothing to do with a little air pocket of weakness in the offshore market. I mean so those just started to really kick in the second quarter that included some facility optimization some very real heavy lifting by our team. And finally continue to take you know steps to mitigate the impact of tariffs on this change obviously is we all know. rapidly and frequently. We think we have the situation under control. We have very good dialogue with our customers. We continue to negotiate the pricing impact of that with them in a very open and transparent way. We're confident we can mitigate a lot of that. The second and third order effects that I talk about in Q1 are still there, is weighing on the general macro environment. But in terms of what we can control, we have a very good handle on that. Our team's done a great job. So with that, I'll pass it on to David. Great. Thanks, Tom.