Odfjell Technology Ltd

Hello, welcome to Oddfjell Technologies Q2 presentation. My name is Gert Haugland. I'm the SVP for Finance and Investor Relations in Oddfjell Technology. I'm joined by our CEO, Simon Leung, and our CFO, Jone Torstensen. You'll find the presentation on our website, and I ask you to take notice of the disclaimer on page two. Simon will go through the key highlights and talk about the market outlook the backlog and contract status. Jona will thereafter cover the financial figures before we conclude with a Q&A session. You can submit your questions through the webcast portal or use the dial-in numbers. I'll now hand it over to Simon for the first part.

Thank you, Gert. And thank you for calling in, everybody. I'm going to go through, as Gert said, highlights and the markets for both financials and what's happening in the market. So the overall numbers, which will be more in detail by Jono later, is revenue in a quarter of 1.36 billion NOC. We have an EBITDA of 221, net profit 88 plus. The order backlog is still strong. It's 13.4 billion NOC and still a strong cash position with 846 million NOK, and still quite comfortable leverage ratio with the depth on EBITDA of 0.7. If we look at the order backlog, we are... Next slide, please. We still have, we are reporting the whole backlog and within the operations also what's including platform from drilling and jack up management. We also report options because we see it's quite very likely quite often and very seldom these options are not declared. So it's different from other type of businesses. We are reporting the part of backlog because it's really We perform well and what we do, the options are there and historically shown that these are close to 100% called upon if we do the job well and do right HSE and so forth. So the backlog today is 30.4 billion NOC and of course, the biggest portion of that is within operations. a significant backlog in Welsh services, which is also quite interesting. And the smallest part is by the nature of the business in project and engineering. I come back to the tender activity. We have several tenders active these days, and I'll share with you a little later where and what type of activity we foresee over the next period and the next coming years. contract overview and awards we we have as we announced earlier we have got a stronger portfolio with with equinor in norway we are we by first of october we will start up with new new uh two new platforms yeah and we vision um and still keep uh johan sider and all these options have been been on so that has been declared so we are running these contracts until 28. We also see that the activity level also in the UK is ramping up. We have several tenders now also working to increase the backlog over there. And we have seen that Equinor, for example, has exercised the options on Mariner, a very important business for us in the UK. It's quite complex and demanding operations, and we have deserved our work there. together with an alliance or a teamwork together with the main service and the client himself. We serve with well services and we also serve them with project engineering upgrades. There's a lot of things happening there. So Mariner is really an important operation, both for us and of course for the client. same with the with the with bp clear which is it has extended the the options there and declare them and and of course together with uh with johans so i do you see this coverage here which is a quite comfortable situation regarding the operation side which also includes includes includes jackups This part is quite important for the rest of the company, because all these installations are, in a way, now and then under modifications. We deliver well services type of thing, rental capacity, well-bought cleanup capacity, casing running capacities. So a lot of the business we are doing is kind of an add-on services to operations itself. So the platforms are literally spoken a platform for add-on services for the rest of the company. That's why we focus on this one. And that's why we also want to extend and increase the number of platforms and increase the order backlog in that perspective. If we look at the activity globally, this is the map I have shown you before. What's new here is that we are about to open now the office in the USA, in Houston, for a business development sales office. We are already in quite advanced discussions with clients in Brazil, and we also now have an opportunity in Suriname. So that's where we follow our own rigs, but the rigs are moving in one of the cases. This is one of the rigs we operate, which could be also operating in South America. And of course, by that, we also just follow with the setup we have on all the add-on sales and services. Our unique combination with whale services integrated operations together with the rig crew and the rig management has shown to be a very efficient package. Clients that have seen it, they like it. Many of them have asked for more because you see that, first of all, it's much more efficient and the costs are lower. So having this close integration between well services activities Jone Peter Reistadler, and tools and dynamics in that respect, together with the cross training with a with a cruise show has shown shown to be a very, very interesting and very efficient way of operating, which shows that. Jone Peter Reistadler, That the fleet in odl we are on all of the there is a mostly on maybe one one one one exception, but it has shown shown to be the top notch regarding efficiency six deputy and effective operations. We have several advanced bids running now in Brazil. We have not yet concluded any of them, but we see a significant ramp up in Brazil regarding several tender activities, tenders coming up with both well-sourced things and operations. So hopefully not too far into the future, we hope to announce that we have done the first land, the first contract there. But it's too early to say for the time being. The clients there are big ones. There are main service providers and direct oil companies. We also have opened an office down in Indonesia to serve close to the market in that area. And we are looking at activities both in Australia and also we are looking at some interesting opportunities in Brunei. So yes, the international market is quite big. We are not the biggest player in that market. So we can actually have the luxury of choosing the ones that we find most interesting. We're just not running after the big volume. We're running after the best opportunities where we can have some competitive edge and have some extra margins to offer. Jone Peter Reistadler, I think I think that that. Jone Peter Reistadler, These areas, we see the market in general quite strong, even though we observe that that the deep water market in in West Africa, South America and also North America has. has developed, but not in the pace that the rig owners, I think, would like to see. But our position in OTL is that we serve all the type of rig markets. We operate in the Middle East, onshore, offshore, mid-water, shallow water, deep water. We operate kind of all over the place and see a quite significant market out there. We are positioning ourselves with the things we are good at. We try to concentrate on the biggest clients we can see. I think today we serve more than 200 clients, but the top 10, top 15 is the most important of them. I mentioned the Middle East. Of course, Saudi Aramco is very important in this area. We have not been hit by the by the termination of Jacobs in that area. We serve about 25 Jacobs in Saudi with all these kinds of services. And we see that that area is actually coming quite strongly back. I think to say that, well, as a sum up, we continue to be quite optimistic about the expansion. We have said earlier that over growth, will come international i see i'm smoking speaking from the norwegian sector of growth within rail services will come on the other areas i have mentioned all over the place So our ambition is to grow the international business within Wales services. And we have looked at one small acquisition already. We have mentioned that earlier. We are also looking at other type of interesting companies technologies where we want to kind of expand the product portfolio and type of operations. So all in all, I think we can say that there's no change in what we said earlier we look at the coming coming years that's quite interesting and we will do our effort to kind of uh to to deliver what we have indicated over the next periods so by that i thank you and i think i'll leave the word over to you only for the financial update thank you thank you simon q2 is another good quarter for otl

Revenue in Q2 24 has a growth of 8% compared to Q2 23. EBITDA in Q3 24 is 221 million compared to 212 million in Q2, which means a growth of 4%. Cash generated from operation is 184 million in Q2 compared to 187 million in Q2 23. Available cash was 846 million in Q2 24 compared to 618 million in Q2 23. Net profit of 88 million compared to 79 million in Q2. And the equity ratio is now 32% compared to 29% year end 23. And finally, the CAPEX level in Q2 24 is in line with established plan and the growth strategy. Let's have a look on the business area and starting with wealth services. A good quarter for wealth services with growth in revenue and EBITDA compared to Q2 2023. Revenue growth of 5% compared to Q2 2023 and EBITDA growth of 3% to Q2 2023. Mainly driven by growth in activity in Namibia, Kuwait and Saudi Arabia. And these factors more than compensated for the no renewable of the contract in Norway. EBITDA level of 33% in Q224 compared to 34% in Q223. We see a strong market for well services coming up, expected high demand for all product lines globally. And I will say that WellService is now well positioned for further development in existing and new regions with very high focus on capital discipline and high margin business opportunities. The next area is operation. The improvement plan, we call it recovery plan, is on track. Positive development since Q1 24 reporting. the revenue increased with 8% in Q2-24 compared to revenue in Q2-23. But their margin in Q2 is now 7%. I guess you all remember the poor margin of 2% in Q2. We have worked very hard with this recovery and program plan. I'm happy to see that this approach has given positive contribution on the margin level operation already in Q2-24. There is a high temporal activity ongoing operation, as Siemens said, which is very important for operations since an increase of scale will further improve the financial performance in operation. The next area is project engineering. P&E delivers strong quota with a good margin of approximately 17% due to very high activity and high utilization of all segments. Revenue increased with 12% compared to Q2 2023, and EBITDA increased with 18% compared to Q2 2023. I think we can say that we have built a strong foundation, management capability and project execution model are strengthened, which means that project engineering are well positioned to further develop the service offering in existing segments and future energy transition business opportunities. Going to the slide for cash flow, OTL has a strong balance sheet and the cash position is as expected in Q2 24. The cash balance is affected by typical working capital fluctuation resulting in a 21 million cash balance decline compared to Q1 24. Available cash was 846 in Q2 compared to 618 in Q2 23, which is an increase of 228 million we are now fully prepared for the refinancing process and will execute it on the most optimal time the ltm figures 12 months development hotel revenue and a bit there are demonstrating consistent growth trends the long term strategic direction and actions are in place The market outlook is good, and we expect positive development for OTL for the next upcoming years. To summarize, continuous steady performance, operational and financially. Order backlog remains robust. Expected strong market for 2025 and 2026. Strategic focus on growth organically and through M&A. Liquidity and debt level remain robust, on track with the recovery plan operation. And finally, dividend distribution of 45 million in Q2, up 10 million compared to previous quarter.