Akastor ASA

Good afternoon and welcome to the presentation of Akasto's first quarter results. My name is Eugen Polske, CFO, and I'm joined today by our CEO, Karl-Erik Selstad. Before we start, a brief practical note. Following the successful IPO completed in April, HMH is now a listed company and reports independently. HMH held its own Q1 earnings call last week, including a full operational and financial walkthrough. For those interested in more detail on HMH specifically, their Q1 release as well as webcast replay are available on their web page. As a result, today's presentation from Acosta includes less detailed coverage of HMH operations. We'll take questions at the end of the session, and you can submit them at any time through the online Q&A function. To kick things off, Kalle will walk us through the headline developments for the quarter.

Kalle, over to you. Thank you, David, and good afternoon, and thank you to all for joining us today. Let me start with the key highlights on slide number two. Our cost continues to be in a solid financial position. We maintain a positive net cash position and have no drawings on our corporate SEF. Against this trend, backdrop, we are pleased to announce another cash distribution of NOK 1.5 per share, supported by the successful mentioned IPO with HMA on NASDAQ, that generated a significant cash proceeds to Acosto. This marks our fourth consecutive quarterly distribution to our shareholders, and over the past year we have distributed NOK 732 million or NOK 2.65 per share to our shareholders. This fully confirms our strategy of returning excess capital while maintaining a sound capital structure. Turning to HMH, the company competed its IPO after the end of this first quarter, generating total cash proceed of US$53 million to Acosto in the second quarter. Following the IPO and after the green shoe, Acosta now owns about 36% of HMH holding. As mentioned by Evin, HMH released its Q1 on May 6th and continues to deliver solid operational and financial performance. In the quarter, HMH reported an EBITDA of US$30 million, and that corresponds to an EBITDA margin of 18%. Importantly, order intake increased by 10% year-over-year, which is an encouraging signal of improving market activity across HMH product and service segments. For further operational and financial details, I will encourage you, as I even mentioned, to review HMH's old first quarter reports that is available on their website. The value of ownership in HMH can now be observed on a day-to-day basis in the public market. For reference, the carrying value on this slide reflects Acosta's book value of NOK 3.4 billion at the end of the first quarter, equivalent to NOK 12.6 per Acosta share. With HMH now listed following the IPO early in this quarter, we believe we will be evaluating how we present value in our portfolio going forward, including a potential shift towards a more NAV-based approach for HMH. Then, Arcos Offshore. Arcos Offshore delivered stable operations across the fleet, with a strong utilization and uptime. Utilization on Arco Wafer was impacted on a planned and scheduled class renewal survey, which was completed on time and within budget. Arco Vancouver was also formally awarded a new four-year SEV contract with Petrobras, expected to commence in the third quarter of 2027. Arcos remained carried at conservative book value and does not reflect the underlying assets values or improved contract positions. We continue to see clear upside in Arcos over time. EDV Offshore DDB Offshore completed the sale of Scandi Atlantic in the quarter at the US dollar 22.75 million, significantly above the vessel's book value at approximately the US dollar 10 million. Post the quarter, DDB announced an additional vessel sale, Scandi Emerald, for the US dollar 23 million. And finally, during the quarter, we realized our shareholding in Mara Capital, generating cash proceeds to a cost of NOK 40 million. Then let's move to slide 3 with some more facts about the HMH IPO. The transaction marked a key milestone for Acosta, establishing a public market for the largest investment and improving the liquidity going forward. The offering was priced at US$20 per share, applying a market capitalization of approximately US$880 million. Including the green shoe, we reduced our ownership to around 26%, while retaining a significant position in the company. The transaction generated total cash proceeds, as mentioned, of 53 million to Acosto. That strengthened our financial flexibility and also enabled us to do this distribution that we announced today. Overall, the IPO was received well in the market, and it represents an important step in enabling future value realisation for Acosto. Let's move to slide 5. Turning briefly to the portfolio overview. This slide shows our portfolio and our ownership positions, which are largely unchanged from the last quarter. The main change is HMH, which I know I mentioned several times has been lifted, and our ownership thereby has been reduced to 36%. So let's move on to slide 6, HMH. Most of the IPO details have already been covered, so let me briefly reiterate our ownership agenda for HMH. First, we continue to support HMH to actively drive profits for growth and value creation. Second, we want HMH to maintain a strong market position through technology leadership and customer-focused innovation. And thirdly, we will actively manage our ownership over time, leveraging on improved liquidity following the IPO. Turning to the quarter, HMA delivered a solid performance with a good margin supported by disciplined cost management and a favorable product mix. Order intake was strong, exceeding revenue and supporting backlog growth and improved visibility into the second half of 2026. HMA's management expects a stronger second half, supported by improved market activity and the management strengthened backlog. With HMH now listed, more detailed financial and operational disclosure is available through the company's own reporting. Let's move on to slide 7, NERS Faircraft. The company continues to deliver solid performance. Underlying EBITDA increased year-on-year, supported by improved earnings mix, higher contract activity and continued cost discipline. Partly offset by softer permanent recruitment. NERS also delivered strong cash generation and continued deleveraging. In addition, the company has agreed to the acquisition of Holier, strengthened technology and digital talent capabilities and supporting further diversification of the company. From an ownership perspective, our agenda remains to support continued value creation and optimize value at exit, and we will revert to the updates as and when there is important clarity on strategic alternatives for NERS Faircraft. Tantos slide 8, covering Arcov's offshore. Arcov's offshore delivered a revenue of US dollar 42 million and an EBITDA of 40 million in the quarter. Operational performance was solid. Arcov Vapor and Arcov Santos achieved revenue utilization of 75 and 99 respectively, with Vapor impacted by the mentioned completion of the cash renewal survey. Akka Seafarer delivered a technical uptime of 94%, supported by stable operations. Commercially, and also highlighted previously, an important milestone was reached, with Akka Wayfarer formally being awarded a four-year contract with Petrobos that we expect to commence in the third quarter of 2027. Done. Slide 9. GDV Offshore. Operational performance was solid. with Scania Perugino delivering 98% utilization during the quarter. The sale of Scania Atlantic was completed in the quarter at a price significantly above book value, supporting both earnings and cash generation. In addition, the announced sale of Scania Amaral in this quarter further supports the continued value realization and portfolio simplification for Acosto. And done, finally. Let's look at Stratton. summarizing the key priorities for Acosta going forward. That is more or less unchanged from previously. Acosta's strategy remains firmly in place. We focus on active ownership and valuation across our portfolio, enabling equity over time and returning capital to our shareholders following realizations, while maintaining a sound capital structure. The successful listing of HMH, the DDV vessel sales at values above book value, and the realization of more capital are clear examples of continued execution on that strategy and a disciplined capital allocation. So with that, Eivind, I turn the floor back to you, and you can take us through more on our financial performance in the first quarter.

Thank you, Carla. I will then start with slide 12 on our net capital employed. HMH, of course, remains our largest investment, and is, as Carl mentioned, reflected based on our 50% shareholding as per end of March, meaning that our customers' net capital employed at the end of Q1 corresponds to 50% of the book equity value as it stood in HMH at that point. The carrying value decreased by NOK 83 million versus Q4, driven by primarily FX effects in the period. In Q2, the IPO will affect our accounting with an expected net smaller negative impact related to IPO pricing and the sell-down from Akastor. Going forward, H&H will be accounted for as an associated company using the equity method and our post-IPO ownership share. DDE's net capital employed decreased during the period driven by the realization of ScandiAtlantic in January. ACOV's remains carried at zero in net capital employed, reflecting the prior reduction of equity investment. We do continue to carry shareholder receivables provided to the company at full value, totaling NOK 422 million at period end, which are then included in our reported net interest-bearing debt. The value of other, which now includes ABL, alongside smaller financial investments, pension accruals and provisions, increased by 15 million in Q1, reflecting net working capital normalization and value appreciation of ABL, partly offset by the realization of MAHA capital. In total, our net capital employed decreased by 207 million in the quarter. Then over to our net debt movements during the quarter. In Q1, our net cash position increased by NOK 132 million to a cash positive position of NOK 219 million at period end. This was primarily driven by proceeds from the sale of Scandi Atlantic and shares in Maha Capital, partly offset by the dividend payment of NOK 132. 0.4 per share, corresponding to NOK 109 million paid out in February. The Q1 net cash position includes net debt of NOK 68 million in DDV offshore, down from 195 million in the previous quarter, driven by the realisation of Scandi Atlantic. Total net interest-bearing items at quarter-end stood at the net cash position of NOK 965 million. This includes interest-bearing position related to Akos Offshore and HMH, including the shareholder loans towards HMH of US$27 million, which were then fully settled and received in cash in April. Looking at the Q2, the net cash position is expected to improve further, driven by HMH IPO proceeds and the planned realisation of Scandi Emerald, partly offset by the approved dividend scheduled for later this month. Then, an overview of our external financing facilities. At the end of Q1, our USD 30 million corporate RCF remained undrawn, but in connection with the HMH IPO and the associated share sale, we agreed with the banks to suspend availability on this facility as it included a pledge over HMH shares and the security package needs to be updated post-IPO. We are working with the banks to re-establish the facility or, alternatively, establish other type of structures, including potential solutions more directly linked to the HMA shares, which are now listed. That said, based on our current liquidity position and capital allocation strategy, we do not foresee a need for additional financing opportunities. For DDV Offshore, the reducing revolving credit facility was reduced to USD 16 million following the sale of Scandi Atlantic, completed in January, with 11 million drawn as per end of March. Following the sale of Scandi Emerald, expected to close later in Q2, the facility will be further reduced to 8 million. At quarter end, our total available liquidity amounted to 328 million, including 41 million of cash held within DDB Offshore. This then excludes the suspended corporate RCF. Liquidity increased significantly in April following receipt of proceeds from the HMH IPO and is expected to increase further upon completion of the sale of Scandi Emerald in DDB Offshore. This increase will of course partly be offset by the announced dividend payment in May. Then, our consolidated P&L. As a reminder, most of our holdings are not consolidated, and as a result, our consolidated revenue in EBITDA represents a very limited portion of our total values. DTV Offshore delivered total revenues of 182 million in the quarter, including 132 million related to the gain on the sale of ScandiAtlantic. Operationally, Atlantic was sold in early January and therefore delivered only a limited contribution, while Perugino remained on contract throughout the period. Emerald was in the yard for its class renewal survey and generated no revenues in Q1. EBITDA amounted to 140 million, driven by the gain related to ScandiAtlantic. Other revenues were 1 million, while other EBITDA was negative 6, 17 million, and as a result, consolidated revenue and EBITDA for the quarter amounted to 182 and 123 million, respectively. Then, a closer look at our net financials. Financial investments contributed positively by 31 million, driven by share price increases in ABL and Maha, with Maha then fully relived during the period. FX accounting effects were negative by 62 million, one net interest-bearing income of 11 million and other financial income of 3 million, partly offset this, resulting in a total net financial items of negative 17 million for a quarter. Share on net profit from equity-accounted investments contributed negatively by 6 million, including a true-up effect related to 2025 results for H&H following completion of their audit. With that, we are through the presentation, and we'll move over to the Q&A session. We'll take a very short break in order for listeners to provide questions. Thank you. We'll then go through a couple of questions received. So first, there's a question regarding NS Faircroft, the color that I'll refer to. Have you seen increased interest in NAS since the Q4 report, either from IPO investors or potential buyers? And what are the key factors determining timing for potential realization?

So we see continued interest for NERSC trackcraft following the strong performance and the strong market position of the company. We are continuously together with our co-owners evaluating different alternatives in order to maximize value for investment in NERSC trackcraft. So it's difficult to say anything about timing. It will as an all M&A transaction depend on the market. We need to be aligned with our co-owners and also that potential outcome really reflects the underlying values of the Nesfairco business. But I'm quite confident that we will end with a good solution for Nesfairco, both value-wise and also when it comes to the company itself post our ownership.

Thank you. Then a question regarding our customers' ownership in H&H. What should we think, or sorry, how should we think about Acosta's ownership in HMH going forward?

The good thing now is, of course, that following the IPO, we have a good liquidity and a flexibility for ownership in HMH. And at the same time, HMH remains a core investment for us and Our key focus will be to support the continued value creation in HMH. We strongly believe that there is an interesting value creation journey for the company in the coming years. And then we will have to assess the ownership position over time in line with the overall strategy of realizing values when we think timing is optimal or appropriate.

Great. Then finally, I think, how should we think about further shareholder distributions going forward?

When it comes to shareholder distribution, we will remain consistent with what we have communicated and also what we have delivered on. And that is that we will return excess capital to our shareholders following realizations. But at the same time, we have to maintain a robust talent sheet. And I think the recent distribution supported by the procedure received of the HMH IPO is a good example of this and how we plan to proceed when we do future realizations.

Thank you very much. I believe that concludes our session. So we'll just like to thank you all for your attention and look forward to welcoming you back for the presentation of our second quarter results in August. Thank you very much.