Cadeler A/S

Good morning, and welcome to Cattler's earnings presentation for the first half of 2024. Presenting today are Mikkel Glirup, Chief Executive Officer, and Peter Brogard, Chief Financial Officer. Please be reminded that their remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. The risks and uncertainties that could cause Cattler's results to differ materially from today's forward-looking statements include those detailed in Cattler's annual report on Form 20F on file with the United States Securities and Exchange Commission. Any forward-looking statements made this morning are based on assumptions as of today, and Cattler undertakes no obligation to update these statements as a result of new information or future events. This morning's presentation includes both IFRS and certain non-IFRS financial measures. A reconciliation of non-IFRS financial measures to the nearest IFRS equivalent is provided in Cattler's half-year report. The half-year report and today's earnings presentation are available on Cattler's website at cattler.com forward slash investor. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question and answer session. As a reminder, this call is being recorded today. If you have any objections, please disconnect at this time. Mikkel Glerup, you may begin.

Thank you very much. And good morning, good afternoon and good evening, depending on where you are in the world. Very happy to be able to present here from the New York Stock Exchange on our first half year result in 2024, which also is coherent with the strategy we have laid out that we want to visit different parts of the world with these reports that we are going to do on a quarterly basis and meet our investors where they are. And this time it's in New York. So really happy to be here. So in terms of the half one 2024 highlights, just to briefly go through that. Financial performance is in line with our expectations. We have successfully delivered the first new-build wind peak on time and on budget. And as we also said in connection with that, we have delivered 5 million man-hours with zero LTIs on this vessel. And as it was just announced this morning, we have 3 million man-hours on wind pace, the following vessel without LTIs, and 1 million man-hours on wind ally, the third vessel from Kosovo into Dongde. also without zero LTI. So in grand total, 9 million man-hours without LTI, which I really think is something to celebrate. We have launched the wind maker and the wind pace, and the wind apex, the third A-class, has been ordered with effective delivery in the first half of 2027. All levels are on track to be delivered on or in advance of scheduled project work, which is also a key target for us as an organization, really delivering on our capped projects on time on budget. Signing of three BIA reservation agreement in Q2 has marked a very important milestone for the company because we have also signed the largest reservation agreement in the history of the company. It's between 400 and 700 million. And these reservation agreements are not included in the backlog. We will go more into that later how it's done. but our contract backlog now stands at a record 1.9 billion with further growth in the coming month ahead of us. We have continued progress on the post-merger integration of Inetti, and we are realizing synergy is actually above what we expected when we did the combination of the two companies, especially on the financing side, where we have replaced the M-class facility on much improved and more attractive terms. Q2, in terms of commercial, the Wind Orca continues to execute the project on Moray West, where we currently install the world's largest ever installed serial produced offshore wind turbine, the 14.7 MW from Siemens Gamesa. This is a project where we have started working with the new crane on Orca, and I'm happy to say that we are executing as per expectation, both from ourselves and from the client. But with Osprey, also with the new crane, we are executing on the German project Skolvin 3 and Vokum Glitvon 3. And we are continuing to execute on as projected there as well. During the charter, we mutually agreed with Oster to release the vessel for 27 days to go and do some O&M work on some of the projects in the Dutch zone. This was really an opportunity to help a project that needed it while the project we are working on could do with a break, so to speak. And in connection with this, Öster has called additional 74 days on the Goodwin Street project with Catalog. On Vincila, we completed a very comprehensive drive-off work, which we did in France. And we believe that it was very important to really go to the bottom of the vessel here, because the vessel was going to transit immediately after that to the US, where we are going to install first one project, which is the Revolution Wind, and thereafter an unmanned project in this region. And I'm happy to say that we are now in the US. We have worked closely with the American authorities, and we have been Extremely pleased with the collaboration we have met here in the U.S., and this is something we did definitely want to build on, and also happy to say that we are now starting to execute on the Revolution Project. For the Wensaritan, we continue to execute for Siemens Gamesa on the Yunlin Project in Taiwan, and we are still having quite some work there to complete, but I expect definitely completion within this year. In terms of backlog and how the backlog is built up, and when we say that we have a record backlog, we have added this year the Inscape project, which is a project that I believe is worthwhile mentioning because it is a project where really we saw the benefit of having a client that needed the support of what we could deliver, but also having the right asset available for the client. And there we found what we believe is a good balance in terms of project economics, but also the ability to execute to the client's expectations. And hence, I think we demonstrate what the market currently can deliver if the things are really falling in place, both with the supply and the demand of our services. Also on the A-class vessel for 2027, we have... We have closed a project where we have added to the backlog, which would both be turbines or foundation work in 2027. And the focus for us has been 2027, no doubt about that, because with the delayed auction round five, where there was no bidders, 2027 became a focus for us to ensure that we have strong utilization. I'm happy to say that we have very strong utilization with what we have in the backlog, but also in terms of vessel reservation agreements. And on the vessel reservation agreements, We have three reservation agreements, as I mentioned earlier, that is not included in the backlog because they are subject to national auctions. And we are facing one big national auction ahead of us, which is the auction round six, the UK, and coming off a missed auction round five, we saw improved pricing in the auction round six, but also just before the submission of the bids from the developers to the auction round six, we saw the UK government increasing the budget in auction round six with around about 50%. So, of course, it's about betting on different horses in that auction. But we do believe that we are in a good place on the auction round six and are looking forward to seeing the results of the auction expected sometime in September. And on top of this, also, together with Equinor and Pol Energy on Baltic 2 and 3, where we also have another 2027 project that is in process at the moment. So really the project backlog today consists of several projects in Europe. Europe remains our strongest market, but also in Asia where we are developing the pipeline and equally in the US. We do see US as a market that is starting to get real legs and where we can see that there's more and more activity. And with the work we're doing together with Oersted at the moment here in the US, I do believe that we as a company has a firsthand experience in how it is to operate here. And our first experience here has been incredibly positive. And we're working together with all stakeholders in the market, because as I've said for the last years, we believe that the way you positively build in a new market is that you create value for everybody involved. And that is really what we try to do as a company. So in terms of the backlog, the backlog, as we have reported before, now stands at 1.925 billion euros. including the options. And that's something that, of course, has been important for us to continue to build that backlog number. And it remains a focus as well. And we have a second column in this presentation, which is where we have added 94 million on top of that number. And that's because one of the projects in one of the vessel resumations agreements is fully contracted. So we have a fully completed contract that is signed by all parties, which is now only subject to the national auctions. And we are trying to give as much transparency on the backlog and how we can do it, but we do not want to enter into any sort of backlog, any number that doesn't have a firm contract behind it. But of course we are contracting on all these investment reservation agreements, but also it's something that takes a long time, especially when it's around foundations. It's not only time consuming, but it's also incredibly resource consuming. So I think in terms of what we have added, strong utilization, both in Europe in the U.S., and also really a new normal in the industry, I would almost say, in terms of what we have seen with the in-scape. As I said, when things come into the optimum fit, both for us and for the client, then it is an opportunity to really make sure that we create true win-wins, both for the company, for our investors, but also for our clients. And then strong vessel restoration agreements, which we are looking forward to bring to fruition over the coming months. In terms of the progress on the new builds, this is, of course, something that is of great importance to our investors. We know that. And I'm very, very happy to report that the wind peak was delivered on time and on budget, something that I think is not exactly normal in our industry. And we have worked incredibly hard to deliver this. And my thanks really goes to the teams that have been involved in this, especially the on-site team. that have been working day in, day out to deliver this result. And we had a beautiful day in Chidong on the 15th of August where we named the vessel and really are now ready to leave the shipyard to start work with this vessel. On wind pace, we also continue the progress. I'm actually pleased to say that we probably will deliver slightly ahead of schedule on wind pace if everything continues as expected. And that is really now the learnings from the first new building that is starting to come into the number of vessels we are delivering from Costco. On Windmaker, there's a little bit of a thing here. They count slightly different, the two yards. Windmaker is built at Hanwha and Windpace and Geek is built at Costco. And they count slightly different in terms of how the construction completion is. But also that we are confident also with discussions we have had with the top management of both Hanwha Group but also Hanwha Ocean in terms of that we will deliver in time for starting the project that we have signed Windmaker for. We continue to monitor it on a daily basis, and we have also not taken our last trip to Korea to ensure that the actuals also match the reports. So we are following this incredibly closely from every single corner of the company, but we are still very much on target to deliver these vessels for the projects. Same on Windmover. We expect that we deliver at the end of Q4-25 at the moment, and this could slip into Q1-26, which for us has no importance, whether it's the end of Q4 or the beginning of Q1-26. But at the moment, we are trending towards Q4-25, and that's why we report that here. On WinAlly, we are also seeing a very strong performance from the yard, and here we think that we will, you can actually see now here, that we are planning the keel laying for September 2024, which also means that we likely are delivering as much as two months ahead of schedule on the wind ally. On wind ace, everything is scheduled, and on wind apex, we will start the steel cutting in Q3 2025. A few views from the delivery of the wind peak. We have... We have the vessel completing sea trials successfully, doing overload testing of the crane, of the jacking system. And you see some pictures here where we have jacked up to full jacking height. And also a fantastic day together with the godmother of the vessel, where we really made sure that it was probably celebrated this amazing milestone for the company. And also some sneak peeks from the following vessels. You can see the cranes, the crane has been installed on the wind maker. which is, of course, a very, very big milestone, but also really the launch of both Windpace and Windmaker, while we also continue the strong progress on the block assembly for the following vessels. But really, all in all, on track with all the vessels. And this chart here just confirms what we have said, basically, for the last borders, that we are still confident that we will deliver these vessels. And the first one delivered on time and on budget, which of course should give confidence on the remaining vessels from Kosovo. There has been a lot of lessons learned in this, and the learning curve has been steep. But now we are also starting to benefit from that learning curve in the following vessels. In terms of the merger synergies, since the closing of the merger, we have materialized around 30% of our 2026 target. And these merger synergies come from SDNA savings, but also from financial savings, where we have really managed to get much, much better terms on financial terms. And I'm happy to say that we are ahead of our own target in terms of the SDNA and financial synergies. where we earlier expected a slightly lower number, while we still have great confidence in both the operational and the commercial synergies that we are looking into in the years where we are fully delivering the fleet. So the message from us is really that we are slightly ahead on the first milestone in terms of the synergies, but we have unchanged views on the commercial and the operational synergies in the merger. And at this point, I'll hand over to Peter, who will go through the financial highlights of 24.

Yeah, thank you very much. The finances is very much a function of the merger. As compared to last year, now we have both companies fully consolidated with four business instead of two. And of course, it's also first half and two parties also impacted by the pandemic. all class operating on the right up on the syllabus. Revenue was 63 million euro as compared to, this is Q2 number, so that is for three months ending 30th of June. Revenue was 63 million as compared to 49 million last year. Equity ratio is still a very, very strong balance sheet that we We have more on that later. Utilization was at 76% as compared to 100% last year. That was a tough comparison also because of the free utilization of all risks in one quarter, which you cannot expect in every quarter, but they are still impacted a little bit by the crane operation and dry docking. Mine capitalization is now 2.1 billion euros. EBITDA, 32 million, a little bit less than last year. Cash flow from operating activities, 4.2 million, compared to 14 million. The backlog, as mentioned by Mikkel, has increased 500 million euros. This is again three months in the near 30s of June. It's a true number, and you can see revenue is higher than last year because of the poor visits in operations. Whereas cost of change goes up as a simple function of having more vessels on the water. The same with SDNA and other expenses is 14 million as compared to 8 million last year. That is, of course, because we have now merged with the EU. We have the two organizations. And we are also building up for the future. So this is very much finances where we have to invest before we can reap the benefits from the contracts on the foundation, especially. So in order to be able to deliver in the future, we are building the offices to be able to do that. Maybe we had this in mind last year. There's a little bit of still, we see that there is some integration costs to a very small amount, but we are not adjusting for that because it becomes a little bit of an insurance buy-on. So we just report a little bit of strategy. Half year, it's the same story, of course. You can see cost of sales doubled. The same goes for the SG&A expenses. And EBITDA of 32 million as compared to 4.2 million last year. KEDCO in the average for first half, for the six months, is 222. And last year was 97. So this is a consequence of the wrap-up that we are dealing with to be able to deliver on the future Balanced sheet, equity ratio, still it's a very solid balanced sheet with 1.2 billion euros in equity as compared to social assets of 1.6 billion. If you look at the half-year accounts, you can see that the goodwill from the in any measure is still the euro at 17 million. That means that we have not seen any negative surprises in the first half. There were some surprises, negative or positive, and then we need to adjust this goodwill within the first 12 months, but there has been no surprises in the first half so far. I would also like to stress that in 2023, If we look at the coverage program, it is expected to be fully funded. And when we say that, then you have to bear in mind that some of it is already signed and committed. That is 1.1 billion that you can see to the left, that is the RCF and the P-class facility, the M-class facility and the COCO facility where this is a very good customer that we have there. And then there is an A-class facility that has not been permitted yet. So when we say that our care mix program is fully funded, it is of course because we have funded the equity part of also the A-class vessels. But we need to to cross the bridges as we meet them. So we need to finalize financing on the P-class and the refinancing of the M-class and the whole core facility. And now we are starting on financing the A-class facility. And that is on a term sheet basis. And we expect to come in place from the P-class. Nothing indicates that we will not be able to do this financing. So that is something we need to understand when it says we have here a report that we need to finance the A-classes. That is simply because of the practicalities in enabling you to sign four facilities at the same time with the same bank or partner. I would really also like to thank you for the huge support we received from the banks. You can see by the upsize of the whole facility, which is an unsecured facility in the first place, it was 50 million with a 50 million accordion. And now we have upsized it into 125 million in total, and everything is committed. In-class facility was also gone in first half, which was also... A fantastic job, I think, done by the banks that were able to support it in this way. It was signed late in 2023 before the merger, and now it has been refinanced with capital. In terms of conditions, we only have one set of terms of conditions, same pricing. utilizing the bigger balance sheet and the bigger contract right now. And that is what Mikkel also mentioned, that gives us the significance on the financing side. So, all in all, we have 1.8 billion euros in financing, and then we have cash as per 30 to June, 93 million, that is in total 1.9, and then you can see there is a small payment outstanding on the O-class cranes, P-class, We have the equity portion in place for also the third A-class, which is the capital increase that we did in February this year. We have also recently extended the RCFP facility that we had. It was a basic facility we had to ensure that we could go through the merger with the Navy. We originally had a tenure of 18 months, and that now really has been longer, 12 months, and that's simply to be able to capture the opportunities in the market that we see. and to ensure that we have sufficient ability to go through 75 where we are delivering four races. So that funding surplus is 259 million euro and of course we also generate operational cash flow in this period and hence it is our firm view that we have the financing that we need and we are fully funded with the current base We have done hedging as we also have communicated in the past. We are not experts on how interest rates will develop. So we have taken the approach of taking 50% of the US dollars of the FX and 50% of the interest exposure. And that is simply to protect a little bit of the interest rate increases and also on the outside, We've seen decreases, and that has worked very well for us so far, and that is something we're obviously going forward. Financing overview, which is the same story again. We have the existing fleet on board, O-class, Silla and Saraton. We have committed financing of 450 million, utilised as 262, so we still have something on the RCF-80, and we have not utilised anything on the RCF-B. P-class is for community and finance, N-class community and finance. Then this whole co-facility, which is the unsecured facility, of 125 million euro, and there we have utilized 80. And then we are in the process of securing the financing on the A-class, and that is set on a term sheet basis, and we expect to be able to close this before the end of, In addition, we also have increased the amount of performance guarantees that we have available. It was about €100 million. It's a guarantee that we give to our clients in relation to our performance. That is now €200 million to ensure that we have also that available for the contracts that we are signing. Full year outlook for 24, the outlook remains unchanged. The first half has pretty much been exactly as expected. So we maintain a full year outlook for some value and the assumptions behind the 24 outlook was, I mean, is on-time deliveries and execution on projects. We have executed on low-pass upwards in Skilda, Breitdorf, and then it's a successful delivery of Rumpik, and I assume some contracts on Rumpik, Q4, 24. There are two facilities in SDMA, which we are very comfortable with. And then the last bullet, that is really, you know, it's an omni, The outlook is, of course, impacted by the build-up of resources that we need to do, impacting the short-term, the SD&A, but it would be a better fit to the activity that we are looking into in the coming years.