Norbit Asa

Welcome to Norbit's first quarter 2025 presentation. My name is Per-Jørgen Weisetaune. Together with me today, our CFO, Per-Christian Reppe, also will support in the presentation. It's been an eventful and positive start of the year, with plenty of opportunities to prove that we live by our core value we deliver. Strategic investments in R&D, manufacturing capacity and organization has enabled us to capitalize on the opportunities that are meant for Norbit, growing the business while also improving our margins. Right people, remain diversified, enhance opportunity radar, embrace agility, have been bullet points on over strategy blackboard always. These strategic bullet points remain just as relevant today. They are essential building blocks in our ambition to develop Norbit into a truly great company. Able to adapt to current trends, and well positioned us to take advantage of those to come. In Q1, we have delivered revenue growth compared to Q1 of 29%. The revenue increase is primarily driven by growth in oceans and product innovation and realization. The EBIT ended at 127.4 million, resulting in a margin of 24%. And what really matters at the final bottom line on the earnings per share, fully diluted, we see 1.4 Norwegian kroner compared to 0.5 last year, Q1 last year. Also worth mentioning, after closing of the quarter, we've received some new nice contracts for product innovation and realization. It's a new 125 million order for a European defense client to be delivered second half of this year. The general shareholders meeting conducted on the 6th of May resulted in all resolutions being approved including the three Norwegian kroner share dividend on the way to the shareholders account in a couple of days. So looking into the segments. For those knowing Norbit, you know that it's some lumpiness in the revenues. Q1 is usually seasonally the weakest quarter in Oceans. Despite that, we have delivered a very strong quarter in Oceans in Q1, with a revenue of $240. 33 million NOX, which is an increase of 92%. So one year ago, some of our listeners were disappointed about a weak Q1. We might have weak quarters also in the future, but as always said, we aim for the trend and looking more than just one quarter. Despite that, it's A good start of the year to have a good Q1. We announced in September last year an important contract for underwater surveillance with the guard point sonars and 75 million NOx. There have been some postponements in this project. We have not done any revenue recognition, and we will not do that until we've received full post payment from the client. EBIT margin up from 8% Q1 2024 to 35%. Also worth mentioning, this growth of 92% includes, of course, revenues from the nice company we acquired last year, which now is Nordbit Inomar, located in Rostock, doing sub-bottom profiling. If we adjust for that, the growth would be 70%. So looking into the revenue mix, comparing to Q1, you see good growth both on winged and on our other sonars, VBMS, etc. And adding to that also then the sub bottom profiler part, and the other summing up to 233. One of the good points, so this slide was with us also on the Q4 presentation, but what we see remaining were important for Norbit is to increase the addressable market by broadening the product offering. Late last year, we introduced a new generation of the VBMS sonar, named VBMS-X. It's a new version with a platform where the clients can buy additional features to upgrade by adding software functionality after they bought the sonar and this has been very well taken by the customers. So in the revenues on the sonars, the light blue 118 million, it's a substantial part being this VBMS-X. Connectivity has delivered 146 millions in revenues. It's a 3% decline compared to the Q1 numbers in 2024, with an EBIT margin of 28%. So it's on the same level as last year. So looking into the revenue mix, we see that it's growth, especially on enforcement modules, as expected from the mobility package from the European Union. It's a need for more of the enforcement modules connected to the digital tachographs. And with some decline in standard tolling onboard units, we're happy to see that we could offset that decline by growth on the other products. Again, as said in the introduction, remain diversified. It's diversified business segments, and within each business segment, you have products lines that also are diversified. So that's important for Norbit. Product innovation and realization, the revenues record high for product innovation and realization, 160 million NOx, 11% increase, and an EBIT margin of 14%. So in these numbers, for the first time, we have a revenue split on industries in the segment. So you see that the defense and security has yielded 61 million out of the 161, and automotive has been declining from 40 to 22. This has been a strategy for us that replacing products with low margin with products with more acceptable margin. Yeah, so I think that's the main part of this. The industrial, 56 million. R&D services and some products on top of that, 22 million. That's quite stable. During the last period, we have received two very significant contracts. The first contract of 260 million will be delivered in the second quarter of this year. And 125, so part of it is shown in the Q1 numbers also, add that. And in addition, the mentioned 125 million contracts to be delivered second half of this year. So in total, defense-related revenues in product innovation and realization approaching 600 million this year. As I said in the introduction, the strategic investments we've done in capacity and organization has enabled us to be in a position where we can take responsibility and utilize it on the growing demand for technology made in Norway and Europe. I think during the IPO process five, six years ago, a lot of people we met were a bit uncertain. Why do you bother manufacture in Norway? Today, we see it was a good strategy and we're happy to see that the further expansions also is in progress and progressing according to the plan. So with that, I'll leave the floor to Per-Christian to give you some more flavor to the financial figures. Thank you, Per-Eugen.

I'll spend some minutes walking you through the financial highlights of the quarter. Operating and financial performance in the first three months of 2025 was strong across the group. Revenues in the first quarter amounted to 251.7 million kroner, an increase of 29% from the corresponding quarter of 2024. Adjusted for Inamar, which we acquired 1st of July last year, the growth rate was still an acceptable 22%. EBITDA for the quarter was 162 million, representing a margin of 31%. This compares to 73.1 million and an 18% margin in the first quarter of 2024. Operating profit was 127.4 million, translating into a margin of 24%. This compares to 41.1 million and a margin of 10% in Q1 2024. Net finance expenses were negative 10 million, explained by net interest expenses of 4.1 million, while the rest 5.9 million by foreign exchange losses and other financial items. Tax expenses were 27.7 million, while net income for the period was 89.7 million. In the first quarter, Oceans delivered a quarter with strong sonar sales, supported by rental companies renewing their fleets. Growth from first quarter 2024 was 92% and 70% when adjusting for Inomar. Gross margin increased to 74%, largely in line with the prior quarters, but up from 68% in the first quarter of 2024, a quarter impacted by fewer wing-aid sales and higher share of low-margin third-party equipment delivered. Payroll expenses was up 12.3 million, of which Inomar explained roughly half, and the rest was new hires and wage inflation. Operating expenses was up 3.6 million, while depreciation and amortization expenses increased 2.1 million. In total, this gave an EBIT of 81.4 million for the segment, and the margin was 35%. Connectivity saw a revenue decline of 3% year over year, but reported a 2% point increase in the gross margin, making the gross profit for the quarter largely flat from that of Q1 2024. Payroll expenses increased 2.4 million, but was partly offset by a decrease in operating expenses and depreciation and amortization. Hence, the EBIT result for the quarter was 41.5 million and the margin was 28%. PIR posted a marked improvement from a weak first quarter last year, driven by improved operational performance. Revenues grew 11% and 23% when adjusting for sale of inventory in the first quarter of 2024. Growth was driven, as explained by Per-Eggen, by strong demand from the defence sector. The gross margin increased 11 percentage points to 44%. Part of the increase in gross profit was offset by an increase in payroll and operating expenses on higher activity, resulting in an EBIT of 21.8 million for the quarter and a margin of 14%. Next, balance sheet and financial position. Property plant and equipment, including rights of use assets, increased 6 million in the quarter, following investments in machinery equipment. Intangible assets rose 12.5 million, explained by R&D investments, with continued high activity on the GNSS OBU project in the quarter. Trade receivables were down 23.1 million, explained by Ocean's sequential revenue decline, While inventories increased 137.1 million in the quarter on purchases relating to the announced defence and security orders in PIR, of which a majority of the largest contract will be delivered in the second quarter this year. Cash flow impact was however reduced on a 102.6 million increase in trade payables. Looking ahead, we expect that the inventory level will fluctuate from quarter to quarter, given the anticipated growth this year, combined with the delivery schedule. Net interest bearing debt stood at 191.8 million at the end of March, a decrease from 254 million at the end of the previous quarter. Our equity ratio was 52%, down from 53% at the end of December. In the first quarter, our net interest-bearing debt to EBITDA ratio decreased to 0.5 times, and our liquidity position stood at 791 million. Our balance sheet continues to remain rock solid and provides for a strong financial platform to deliver on the capital allocation framework and the ambition plans that we have set out. A strong balance sheet also enables us to return cash to the shareholders. In a few days, our shareholders will receive a cash dividend of 3 kroner per share, including a 1 kroner per share extraordinary dividend distribution given our healthy financial position. Lastly, cash flow for the quarter. Cash flow from operations was 101.3 million, explained by an EBITDA of 162 million, a net increase of 10.4 million in working capital, taxes paid of 40.3 million, and 10 million in net finance expenses. We invested 47.8 million in the quarter, explained by 36.6 million in R&D investments and 11.1 million in investments in machinery and equipment. The R&D investment level is expected to be maintained in the second quarter. Cash outflow from financing activities was 5.8 million in the quarter, explained by repayment of leases. And with that, I'll give the floor back to Per-Jørgen for the Outlook section.

Thank you, Per-Christian. So looking into the future, we announced that for this year that our target is to deliver revenues in the range of 2.2 to 2.3 billion Norwegian kroner with the EBIT margin improved compared to the 20% reported last year. Based on the current outlook, these targets are considered to be conservative. According to our policy, we update targets for the year during the second quarter. So, a bit more specific on the short term. In oceans, we're moving into a seasonally stronger period, and the quarter Q2 has started out well. So we would like to state that we expect revenues for the quarter to be in excess of 220 million. And in that, no revenue recognition of the mentioned 75 million NOC security project is included in that guidance. For the second quarter, we expect a higher activity also in connectivity, so we give a range from 160 to 180 million NOx in revenues. This is supported by strong demand for enforcement modules for tachographs and satellite-based units. In the product innovation and realization segment, we expect to deliver revenues between 330 and 350 million NOx. This is driven by the growth and the contracts mentioned towards defense and security clients. So all in all, we're targeting revenues in excess of 700 million NOC in the second quarter. So that concludes the presentation. If there is any questions, we're open to try to answer them.