Archer Limited

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the Archer Limited first quarter 2023 earnings release call. Throughout today's presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touch-on telephone. Press the star key followed by zero for operator assistance. I would now like to turn the conference over to Doug Skindle, CEO of Archer Limited. Please go ahead, sir.

Thank you and good morning ladies and gentlemen and thank you for joining this conference call for the first quarter 2023. Archer's chief financial officer Espen Johanger is joining me on today's call. In today's call I will touch upon the key highlights and summarize Archer's operation for the first quarter. Espen will thereafter walk us through the financial section and the outlook. Towards the end of the call we will open the line for questions. Moving to slide two, I would like to note that the information provided in today's call include forward-looking statements as well as non-GAAP financial measures. Forward-looking statements do not guarantee future performance and involve risk and uncertainties. Actual results may differ materially from projections. Further information about these risks and uncertainties are set forth in the most recent annual report for the year ending December 31st, 2022. Next slide, please. I am pleased that we are growing and delivering strong financial results in the first quarter of the year. The growth is driven by solid operational performance and improved market conditions. Revenue in the quarter of $266.6 million represents an increase of 22% year over year, despite unfavorable movements in the foreign exchange rates. Every day for the quarter came in at $25.2 million, representing a 55% increase compared to last year. First quarter is typically a soft quarter for our operations due to seasonality and less operating days. However, as mentioned, we are pleased to report strong EBITDA generation in accordance with our financial guidance. As I will come back to later on the call, we had a busy quarter and managed to reduce our net interest bearing debt considerably. The reduction in NIVD was of course explained by a large extent by the received equity issuance in March. but also our operational performance, efforts and focus on cash management contributed to improved liquidity and reduction in NIBs. The performance was $18 million ahead of projections provided during our equity race. On the back of the solid quarter, a positive view on the market and our contract backlog, we are on track to reach our financial guidance for 2023. We integrated Romara Brado in the quarter and strengthened our wealth services division capabilities and product offering through this acquisition. We also joined forces with Baker Hughes, UK coil tubing business at the end of the quarter. And both of these transactions are accretive to Usher and improves our service offering. Slide four, please. In the first month of 2023, we have successfully refinanced 576 million of our debt. We have worked with existing and new stakeholders to protect value for all parties involved and at the same time provide a solid platform for future growth. The new financing structure includes a new 250 million first-in-bank facility provided by DNB, SEB and Essabank, where Essabank is a new bank in the syndicate. A new 200 second-in-bond. We converted the CB of $15.9 million to equity. And lastly, an equity raise of about $100 million, of which our shareholders contributed with more than 50% of new capital, and our two largest shareholders remain Paratus Energy and Hemant. Performer net debt after the refinancing completed is estimated at $395 million. Equally, an opening leverage of 3.5 based on midpoint guidance for 2023 EBTL. The new financing has maturity in 2027, offers competitive cash interest costs estimated at 7.5% over the period. This estimate is based on our financial projections and the SOFA forward curve. Including the payment in kind element of our bond coupon, we estimate that our total borrowing costs adds up to about 10% over the four-year period. We regard this as competitive pricing when we look at other players in the market. The new financing package will allow us to take advantage of the next oil service upcycle. We will continue to focus on our possible growth and deleveraging, and at the same time execute on accretive bolt-ons within the wealth service segment.

Slide 5, please.