Norbit Asa

Welcome to Norbit's fourth quarter and full year 2023 presentation. My name is Per-Jørgen Westhøne. Together with me today, I have our CFO, Per-Christian Reppe. Beginning with the fourth quarter, the fourth quarter came in as a strong quarter for Norbit. We ended our revenues at 390,000 six million NOx with an EBTA margin of 23%, giving them 92 million NOx in EBTA. This is built from underlying growth in all business segments. For the total of 2023, we succeeded in delivering 1,519 million NOx, which is above what was our 2024 target. So this is reached one year ahead. That's the reason why we, after the ordinary quarterly presentation, will give you an update on a new ambition going to 2027. So when it comes to margins for the full year, as you can see from the chart, We ended at 26% EBITDA margin and a total of 392 million NOX. Our board has announced a dividend. It's based on earnings per share for the full year of 2023 of 3.1 Norwegian kroner. which is a 71% increase from 2022. So the ordinary dividend, according to the dividend policy, which says it should be from 30 to 50% of the result to be paid out. So 50% of the 3.1 is 1.55 Norwegian kroner. And in addition to that, it's proposed extraordinary dividend of one Norwegian kroner, which we will explain a little bit later where it comes from. So diving into the segments, the segment oceans, where we do a lot of ocean-related technology, supplying that to a global market, add a new record. So fourth quarter is, as you can see from this chart, historically the strongest quarter. This was also the case for 2023, where Oceans had 177 million NOx in revenues, giving also an all-time high margin of 65 million NOx in EBITDA. For the full year, Oceans delivered revenues very close to 600 million NOx, which is a 35% increase from 2022, the EBITDA margin for the full year ended at 35%. So here we're showing the revenue mix and how this is built and how it develops from 2020 until 2023. So the main strategy remains to broaden the product offering. Norbit is tailoring and adding features to our technology to address and open up a larger market. So from the total revenues of 599 million NOx, 328 million NOx is from the first generation technology of our sonars. On top of that, you see the winged sonar that was launched in 2020. And on top of that, different other initiatives, which is in the making. In the quarter, we also completed the transaction of acquisition of a Canadian company named Ping DSP. It's a company broadening the product offering, adding to our Sonar range. This is also Sonar related business. Going into connectivity. Connectivity delivered a quarter at the same level as the quarter before. So Q4 ended at 116 millions. Slightly better margins than the quarter before. And if you compare with Q4 2022, it's a 44% increase. As you can see for the full year, it's been a very strong growth in connectivity. So we had revenues of 540 million NOx up from 308 in the same period last year. And a margin of 34%, which is an improvement from 25 for the full year 2022. And if you look on the full year, you see connectivity started on a very high activity level in the first half, and it has remained on a very good level also for the second half. So the breakdown on the revenues coming to the mix, as you can see, it's been growth on nearly all over product lines. So the onboard units used for vehicle identification and tolling applications, et cetera, has grown from 136 million NOx to 296. Enforcement modules used for Reading, driving and resting hours remotely from tachographs has grown from 37 to 80 million NOCs. Satellite-based tolling solutions has grown from 48 to 60. And on top of that, the subscription and e-toll business, where we have a quite high percentage recurring revenues, has grown from 77 to 92. So all in all, very strong performance from all product lines. So as earlier explained also, Norbit utilizes its own factories. Approximately or north of 50% of the capacity is used to manufacture our own products. The remaining is sold on contract manufacturing terms. So this is what we report in the product innovation and realization segment together with some R&D services offered. So the revenues came in at 112 million NOx, which is a decrease of 25% from Q4 2022. As earlier explained, we're coming from a climate where we've had a lot of Challenges in the supply chain and we've been buying some components in the broker market at. Extraordinary high prices and this has been invoiced directly to our clients. So if we adjust for this effect and will show on the next page also there is underlying growth of of. No, it's on par on the quarter before. So for the full year, product innovation and realization segment has yielded revenues of 412 million NOx compared to 452. The average margin for the full year is at 13%. It was 10%. in 2022, so the average margin for the full year is on the level we have said that is our target. As you can see, we had very high margins in Q1 and Q2, and the margins isolated in Q4 is somewhat dissatisfaction. Christian will give you some more flavor to what's behind that. As mentioned, this shows the composition of the revenues. 319 million NOX from contract manufacturing, 86 from the R&D services, and some proprietary products. On top of that, it's 7 million NOX in customer reimbursement. This was on the highest level in 2022 with 107. So then I Leave the floor to Per-Christian.

Thank you, Per-Jürgen. Revenues in the third quarter amounted to 396 million kroner, representing an increase of 14% from the corresponding period of 2022. Adjusting for the effect of customer reimbursements, which we invoice certain customers without any margin, underlying growth was 28%. Of this 28%, approximately nine percentage points were currency driven. EBITDA for the quarter ended at 92.1 million kroner compared to 66.5 million in the fourth quarter of 2022. This represents a margin of 23% compared to 19% in the same period of 2022. Operating profit was 63.6 million in the quarter, while net finance expenses was negative 7.6 million. Tax expenses were 13.2 million, while net income for the period was 42.9 million kroner. Moving to the segments. In the fourth quarter, oceans and connectivity were the main drivers behind the increased profitability in the quarter. Segment oceans reported 39% increase in revenues on the back of strong sonar sales and favorable currency development in euros and dollars versus Norwegian kroner. Gross margin was 74% in the quarter, an increase of 9 percentage points compared to the corresponding quarter of last year. This is driven by a lower share of sales on commission as we acquired our distributors COS Geomatics earlier this year, as well as a favorable product mix. The increase in gross profit was partly offset by an increase in operating expenses. primarily due to a strengthening of the organization, operating costs from SeaHorse Geomatics and our latest acquisition, PingGSP, bonus provisions and a depreciating krona. In connectivity, revenues grew by 44%, with growth driven by increased sales of enforcement modules for tachographs and units for satellite baits toll collection. Revenues were also supported by a strong euro against the Norwegian krona, with exports primarily to the European market. Gross profit increased due to higher revenue base, with the gross margin being approximately two percentage points down. Partly offsetting the gross profit effect was an increase in operating expenses, which is partly explained by a stronger Hungarian forint against the Norwegian kroner, as approximately 50% of our operating costs are forint-based. The EBITDA ended at 38.7 million kroner, representing a margin of 33%. In segment PIR, revenues were down 25% year over year. However, adjusting for customer reimbursements of extraordinary material costs, underlying revenues were on par with that of the reported figure in the fourth quarter of 2022. Gross margin was also on par with fourth quarter when adjusting for the mentioned reimbursement effect. Compared to prior quarters in 2023, the gross margin was, however, down, largely explained by delivery of a low margin project provisions for obsolete inventory and sale of inventory at cost. The EBITDA result was 3.3 million, particularly impacted by higher operating expenses, primarily due to higher payroll, following a strengthening organization to support further growth in 2024, in addition to increasing operating expenses. Overall, we are not pleased with the performance in the PIR segment in the quarter, considering our margin targets. Deliver on the low margin project, unfortunately expected to have continued negative impact on the gross margin in the first quarter although we do expect some operational leverage as we forecast sequential growth next the balance sheet and financial position property plant and equipment increased 37.5 million in the quarter following investments as well as an increase in rights of use assets Intangible assets increased 6.8 million to 303.2 million, explained by fair value adjustments in relation to the acquisition of Ping DSP. Inventories increased 16.8 million in the quarter, and the increase is driven by rescheduling of onboard unit deliveries from fourth quarter to January. Trade receivables decreased 8.5 million, and trade payables was 174.5 million at the end of the quarter, up 10 million from the end of the prior quarter. Net interest bearing debt stood at 150.8 at the end of December, a decrease of 74.4 million from the end of the third quarter. Lastly, the cash flow for the quarter. Cash flow from operations was 161.8 million, explained by an EBITDA of 92.1 million, a net decrease in the working capital of 83.1 million, 7.6 million in net finance expenses and 5.7 million in taxes paid. We invested 66.5 million in the quarter. This comprises 15.3 million in R&D investments, 19.8 million in machinery and equipment, and 31.4 million in relation to the acquisition of Ping DSP and investments in shares in the EV charger company and UA. For 2023, Our total investments in R&D came in at 60.2 million in the lower end of our guidance, while investments in machinery and equipment were 55 million, including leased equipment, in the middle of the updated guidance of 50 to 60 million. Cash outflow from financing activities was 78 million in the quarter, explained by repayment of debt and leases. And with that, I give the floor back to Per Jørgen for the outlook section.

Yes, so looking into 2024, which will be the starting year for our new four-year ambition plan, which we will present afterwards. In 2024, we target to deliver revenues in the range of 1.7 and 1.8 billion Norwegian kroner. This supported by growth in all three business segments. First half year revenues is expected to be in line with the level we reported in the first half year of 2023. We also target to deliver EBIT margins, which you will see going into our new ambition plan that we will increase the focus on EBIT margin and less on the EBITDA margin. So the target for 2024 is also to have an EBIT margin in line with what we delivered for 2023. In addition to this, we still continue to explore value accretive acquisitions to add to this target, which is purely organical. So that being said, Norbit yesterday was 29 years since we were established. And I think all these years has been just the preparation for what should come. And I feel it very motivating now to announce to you a new ambition plan, which will make life worth living for all our colleagues to be eager to get to work and deliver on these ambitions so as earlier shown also from 2010 until today we've delivered a good growth it's a revenue cargo on of north of 30% per year. As you see, it's not been a straight line. There has been years where it's been, I mean, Norbit has also been exposed for several different crisis from as the same for the whole business universe. But our way of doing the business has helped us just to be robust during the crisis and to be agile so we're able to continue to grow afterwards. When announcing this plan, this is the third plan after our listing. So in 2018, we made the plan, which was the basis for the IPO in 2019. When we came from revenues of 438 million NOx, we announced the target of 25% annual revenue growth and a target of more than 20% in EBITDA. What we delivered in the period 2018 to 2021 was a revenue growth of 22% and an average EBITDA in the period of 19%. So summer or mid-2021, we announced our 2024 ambition of 1.5 billion NOx in revenues with the EBITDA margin more than 25%. This we just now announced that we reached last year. I think On this slide, you can see what we strongly believe that has helped us to be able to deliver on these plans. We have a very strong corporate culture. Under the logo, it says explore more. This is really at the core of the identity of all our colleagues. Our number one priority in the history and also going forward is to recruit and refine the right people. We have a very opportunity driven mindset, but it's also our entrepreneurial and commercial. We always start in the market. Being a technology company, we could be tempted to think that the technology is the important part, but it's the challenges, the problems you should solve for someone. and it should be someone that are willing to pay for this so you could get some profits to continue to grow your business. So we're fully market driven in all our aspects and we are very cherry picking in which applications we take on. We're tailoring our growth strategy and we are very agile and dynamic. The diversified business model with the three business segments being very little correlated has also been very helpful during some periods where maybe one of the business segments has some challenges, then the others could take more responsibility and carry us through. I mentioned the corporate culture. I'm not going to explain that today but it's been very important for us to spend lots of time on the culture to maintain and develop the culture and so today Norbit is 500 employees and we strongly believe that working on the culture ensuring that all managers inside Norbit is working as leaders executing leadership much more than management is what should underpin and enable us to deliver also this ambition plan so um we see that with a lot of challenges in the world there is a strong need for technology some of these challenges trends are well suited for an orbit especially the blue economics, we see that the geopolitical unrest also requires technology and some of the niches, some of the applications in this segment is well suited for Norbit. Renewable energy, safe and green mobility, digitalization operations and the demand for technology made in Europe and made in Norway is strong. So also when going into a new period, we made some strategic priorities. These strategic priorities is of a nature where they could be shifted faster. The culture lays fast. The core ideology is the same as it was many years ago. The strategic priorities we adapt much more agile. Priorities as of now is to continue to broaden the product offering and remain market driven with tailored technology. As we accumulate references. And as we grow, we also accumulate skills, enabling Norbit to take on larger opportunities, which we express as going from niche to notable. We will remain diversified. And in addition to focusing on broadening the product offering, we will focus on broadening customer base. This is especially attractive in the connectivity segment, which is the segment that has the highest customer concentration. Being a slightly larger company year by year, we see that focusing also on operational excellence and focusing on scalability is utmost important. we see a strong potential in getting even better margins by focusing on scalability. This will give good results in the planned ambition period, but also this is what enables us to deliver a new plan with further growth also after 2027. So inside Norbit, we highly regard autonomy as very important, meaning that we have strong business units which are allowed to make good decisions every day. But still, we also build a strong Norbit overall identity to ensure that we prioritize the opportunities, which is the best overall for Norbit. And of course we will continue to explore value accretive acquisitions. So to the target, coming from 2023, 1.5 billion NOX, ambition for 2024, 1.7 to 1.8 and ambition now for 2027 is 2.75 billion NOX in revenues. yielded from organic growth. In addition to that, we've added a number to say that with some targeted acquisitions, we should be able to deliver revenues north of 3 billion NOx in 2027. Pekristel will give us some more flavor to the different financial figures in this. but I want to point your attention to the target on EBIT margin that we plan to have in the range of 20%. So with that, I leave it to Per-Christian to give some more details.