Norbit Asa

Welcome all to this Q2 presentation by Norbit. The company delivered a stellar quarter this morning, and I guess I will leave the details into the CEO and the CFO. So welcome all, and with that, Per-Kristen, sorry.

Thank you Kenneth and thank you all for taking the time to listen in to our second quarter presentation. As Kenneth said, it was a good quarter. The quarter landed according to our plan. It's a new record with in excess of 300 million Norwegian kroner in revenues. And on this level, the EBITDA also comes in the right direction. So we had in the quarter a new record also on EBITDA margin on 78 million Norwegian kroner. This represents a relative margin of 25%. So we say that we are on track on our 2022 target to deliver in excess of one billion Norwegian kroner. So if you have a look on the four last quarters and try to make a sum out of that, you will see that it's already the last 12 months on that level. In the quarter we have also distributed the dividend which was decided in the annual shareholders meeting in May with 0.30 NOK per share. So for first half we've delivered 550 million Norwegian kroner in revenues with 63% growth compared to first half last year. I think the quarter overall is as indicated according to the plan. What is awesome to see is that all three business segments have contributed very well. Going forward, we see that having these three very diversified business segments is very favourable. So I'm diving into each segment, giving you some highlights. Oceans, which is the largest segment, has delivered 29% growth. ending at a revenue of 131 million Norwegian kroner. We've seen that the American region has been very good this quarter. And as you see, the margin is also very good. This is the first time we deliver more than 50 million Norwegian kroner in EBITDA in this segment. On this slide, you can see how this is decomposed. As you can recall, Norbit started out doing sales of a first generation sonar called the IVBMS. In 2021, we released the winghead sonar and we had a good growth on that. So you see the light blue or blue-gray columns showing that also the first sonar family still is growing. And then the winged is a good contributor to the growth. And then we're adding more. So this strategy in oceans to broaden the product offering is really helping us to continue to deliver growth. So coming slightly back to that after the outlook. Connectivity. Connectivity is back with full speed. And we've seen that in this quarter, we have a very good contribution revenues from over dedicated short range communications product, the toll tags and similar products. These products have improved margins compared to what they had in the past. We see that our strategy of migrating that part of the business from tendering to business to business, where Norbit takes the position as a technology partner for the client, gives us more long-term relations and gives us the ability to innovate in the value chain in a different way to bring value to the clients which again they are willing to pay for so the quarter ended at 83 million knock and with a 24 ebta margin amounting 20 million knocks The final segment, product innovation and realization, this is where we sell the spare manufacturing capacity as contract manufacturing services and we have some R&D services in addition to that. So the demand for these services is very strong. So you see we're delivering a good growth. We have also had some challenges to when it comes to components in this quarter. But despite that, it's still a very good quarter, good growth and margins on the level which we are heading for also in the longer term. Revenues of 112 million for the quarter. 42% growth year over year, and 210 million for the second half, 44% compared to the same period last year. There is some special pass-through invoicing in this, which Per-Christian will comment on in his part also. So then maybe Per-Christian could give us some insight in the financial details.

Thank you Per-Jurgen. I will spend some minutes walking you through the main financial highlights of the quarter. Revenues in the second quarter amounted to 315.3 million kroner, representing an increase of 66% from the corresponding period of last year. Adjusted for the acquisition of iData, which was completed in July last year, the organic revenue growth was 55%. All business areas delivered record high revenues. EBDA for the quarter was 77.7 million compared to 50.5 million in the second quarter of 2021. This represents a margin of 25% compared to 27% in the same period of last year. The improvement in the results is largely driven by increased revenues in segment oceans and connectivity. And partly offsetting this was an increase in payroll expenses as we continue to scale the organization due to the activity, as well as an increase in operating expenses. Of the approximately 21 million increase in operating expenses compared to the same quarter last year, IDATA stood for 10 million. And the remaining difference is largely explained by an increase in cost related to consultants, legal advisory, freight, electricity, and travel following easing of the restrictions. Operating profit was 56.9 million in the quarter, while net finance expenses was 2.5 million, and the profit after tax was 42.8 million. All three business areas delivered improvement in the results in the quarter when compared to the second quarter last year. Ocean's result improvement was driven by an increase in revenues of 29% on higher sonar sales, while the gross margin was on par with that of last year's second quarter. This was partly offset by an increase in cost base due to continued strengthening of the organization to manage the activity level, as well as an increase in travel costs post-COVID. Connectivity had a solid result improvement compared to last year's second quarter. This was primarily explained by sub-segment ITS growing revenues by 45 million, as well as IDATA delivering 21.6 million in revenues. Part of the positive gross profit effect was partly offset by an increase in expenses of 23.4 million, where IDATA stood for 15.7 million. Despite the 42% growth in revenues from second quarter last year, segment PRR reported only a small increase in the EABTA. This was primarily due to the large share of revenue generation in this year's quarter being invoicing of extraordinary material cost on a limited set of components to a limited set of clients. These are components that are purchased at alternative marketplaces due to low availability, and we invoice this extra cost directly to the client without the margin. In total, 33.4 million was recognized in such invoicing in the quarter, and adjusted for this effect, revenue growth was 7% in the quarter. As a result of this effect, the EBITDA margin fell 4 percentage points to 10% in the quarter. Next, balance sheet and financial position. Property plan and equipment decreased 2.9 million from the end of last quarter. Intangible assets rose 6.8 million due to R&D investments in the quarter. Inventory increased 36 million in the quarter. The increase is both a result of the activity decrease we are experiencing and also the fact that the supply market from components continues to be challenging, requiring us to hold more components in stock to mitigate the risk of component shortage. Trade receivables decreased 18.3 million, despite revenues increasing more than 30% sequentially. The reduction was primarily a result of us facing in a non-recourse facility for factoring where we sold invoices for approximately 70 million in the quarter. Trade payables was 136.3 million at the end of the quarter, down from 153.2 million at the end of the first quarter. Net interest bearing debt stood at 281.2 million at the end of June, a small increase from 278.3 million at the end of March. Our equity ratio was 49% at quarter end. As per the end of the second quarter, our net interest-bearing debt to EBITDA stood at 1.5 times. This is a decrease from 1.7 times at the end of the first quarter, following the results delivered in the second quarter. Our balance sheet remains strong. We have a solid liquidity position with more than 270 million in available financing under our credit facilities, and this provides a solid foundation to finance our growth plans going forward. Lastly, the cash flow for the quarter. Cash flow from operations was 44.9 million, primarily explained by an EBITDA of 77.7 million, a net increase of 29.7 million in working capital, and 2.5 million in net finance expenses. We invested 23.4 million in the quarter, explained by 17.8 million in R&D investments and 5.7 million in investments in machinery and equipment. The guiding for 2022 is reiterated where we plan to invest between 50 and 60 million in R&D. Investments in machinery and equipment is expected to be between 40 and 50 million gross and before lease financing. We expect a major share of the second half investment to be financed with leasing. Cash outflow from financing was 6.4 million, explained by 18 million in dividends paid, repurchase of shares, partly offset by an increase in borrowings. I will then give the floor back to Per-Jurgen for the outlook section.