Solstad Offshore ASA

Good morning and welcome to the fourth quarter and third year 2024 presentation for Solstads Offshore. This presentation will be held by CFO Kjetil Ramstad and myself, CEO Lars-Peder Solstad. It has been a year with a continued market improvement, which is reflected in the results we are presenting today. The outlook is also promising and we have continued to sign new contracts also into 2025. I would also like to highlight the settlement we did of the Norman Maximus residual claim in fourth quarter. That was very value creating for the company. as well as further investments we have done into the service segment. And I will come back to all this during this presentation. A quick look at the disclaimer before we move over to the 2024 highlights and business update. And as mentioned, fourth quarter and 2024 in general has been a good year for Solskjaer with high utilization and strong financial figures. The CSV segment has performed at a steady high level while the anchor handling segment by nature is more volatile. especially the vessels with spot exposure, had less utilization in port water, but are on an okay level for the year in total. For Solstahl Maritime, adjusted EBITDA came in at 799 million in the quarter and 3.23 billion for the year of 2024. This is slightly behind our guiding from third quarter. A strong net result of 2.6 billion NOC contributed to an improvement in the book equity during the year of 6.8 billion, including 4 billion in equity contribution from the refinancing done in first and second quarter. Sorry. including 4 billion in equity contribution from the refinancing done in first and second quarter of 24. The order intake for the year was above 10 billion NOK, an equivalent to a book-to-bill ratio of 1.8, giving us a solid visibility into 25 and also beyond. Based on the fourth quarter result, the board intends to pay a dividend of 0.5 kronor per share for the quarter, which gives a total dividend payment of NOK 233 million and is similar to what we paid last quarter. As announced earlier, the intention is to list Solstern Maritime on the Oslo Stock Exchange during second quarter this year, and this process has already started. And as we read the market and with the high volume of revenue already in hand, we expect Solstad Maritime to achieve an EBITDA for 2025 of between 3.9 and 4.2 billion NOK. And this is compared to 3.25 billion NOK for 2024. For Solstad Offshore, we achieved an EBITDA in fourth quarter of 436 million NOC and for the year a total of just below 1.4 billion NOC. And this is well above our guiding from third quarter. The book equity improved with about 1.3 billion to a total of 3.1 billion and where the main contribution came from settling the Maximus residual claim in fourth quarter. This settlement also opened up for a refinancing of Solstead Offshore and able Solstead Offshore to start paying dividends again. Order intake for the year was about 5.6 billion, giving a book-to-bill ratio of two times. Based on the intention from the board of Solstad Maritime to pay 0.5 kroner per share for the quarter in dividends, Solstad Offshore will then receive about 64 million NOK in dividends. And Solstad Offshore also intends to start paying quarterly dividends and target the first dividend payment in second half of 2025. We expect Solstad Offshore to achieve an EBITDA for 2025 over in total 1.3 to 1.6 billion NOK where of 650 to 750 million is operational EBITDA, while 650 to 850 million is results from associated companies and JVs. If we look at the market, I will say that in general the market continues to be strong and the outlook for the coming year are promising. I would like to highlight Brazil as the geographical region with most long-term opportunities. and we are mobilizing one of our anchor handlers to Brazil right now, based on a Trier contract awarded last year. At the moment we are participating in several tender processes in Brazil with both CSVs and anchor handlers and where some of the vessels are in Brazil already while others are by now operating in other regions. And typical contract durations for those potential contracts are three or four years each. For the CSV segment, we have high utilization on the fleet and we see a number of new opportunities in the global markets. This segment, and at least for the larger vessels, are very project oriented, meaning also that vessels are transiting a lot between geographical regions. We recently announced a long-term contract for one of our CSVs where we already now are booked on projects in the North Sea, in Guyana, in Brazil and in the Mediterranean in the coming years. And on this contract we also have a substantial service delivery on top of the more traditional time charter delivery. And the fact that we offer more services than the vessel itself has been very well received by our clients. And this adds value to the client and it adds value to Solstar. We reached a settlement agreement for the Norman Maximus historical residual claim in fourth quarter. The overall claim of about $200 million was settled for about $100 million, and this was financed by cash in hand and a new three-year loan agreement. As the claim was booked as debt, the overall debt in Solstad Offshore was then reduced by one billion NOK due to this agreement. That claim also prevented Solstat Offshore to pay dividends while the new financial arrangement now permits dividend payments, of course, subject to financial performance. And the contractual status for Norman Maximus is still a firm contract until the very end of 2026, which gives us a significant EBTA contribution. And Solstice Offshore also has a purchase option to buy the vessel from Solstice Maritime in 2027 for an agreed price of $125 million. The service segment in Solstad continued to increase and as part of this initiative Solstad Offshore agreed to acquire 25.8% of the shares in Omega Subsea in fourth quarter. This further strengthens our service deliveries by also have direct ownership in the operations and not only in the Subsea hardware. Omega Subsea has about 400 employees, own 12 ROVs, has a revenue of around 800 million NOC in 2024 and a result before tax of approximately 100 million. This does not change the Solstat business model. The business model is still to deliver vessel and services on day rates and not take on our own projects with associated risk. And as we speak, we now have vessel number five in the Solstaf fleet mobilized with ROVs from Omega Subsea and vessel number six will be ready during second quarter. And the operating model where Solstar delivers more than a vessel but still on time charter has been very well received by the subsea contractors and we expect to continue to grow the service segment onwards. The service segment achieved a revenue of about 1.3 billion NOK in 2024, which was beyond our expectations, and an EBITDA margin of around 25%, which then comes on top of what each vessel has in earnings from the traditional time charter. And as you see from the graph up in the right corner, vessels in both Solstad Offshore and Solstad Maritime benefits from what we deliver through Solstad services. So then Kjetil, can you take us through the numbers and more details?

Thank you Lars. Let's start with Solstra Offshore financial highlights. Solstra Offshore had a fourth quarter utilization of 91% and 95% year to date. Revenues for the quarter was 691 million NOK and for year to date 2.8 billion. Adjusted EBITDA of 436 million NOC for the quarter and year to date almost 1.4 billion. In the EBITDA adjusted numbers, we have included the IFRS 16 leases as operational leases, and that is mostly related to Norman Maximus, several vessels in Brazil from Solstam Maritime on bare boat, some ROV and office leases. This amounts to 182 million NOC reduction in the quarter. To be consistent, we also account the leases on the net interest bearing debt with a reduction of 3.2 billion NOK as shown in the graph on the upper right hand side. The net result for the fourth quarter was 732 million NOK and it's a strong quarter and the net result for the year end at 1.3 billion. Cash ended in Solsta offshore at 382 million NOK at year end. Equity at the end of the year of 3 billion, giving an equity ratio of 35%. During the year, equity has increased by 1.3 billion NOK. As a result of the Maximus residual claim settlement and the following refinancing in the quarter, the interest-bearing debt in Solskjaer has been reduced with approximately 1 billion NOK. That result in net interest-bearing debt in the financials are 4.6 billion. However, if we exclude the leases from Solstam Maritime, the net interest bearing debt will be at 1.4 billion, as also shown in the upper right hand side. And that gives net interest bearing debt over EBITDA on one time, which illustrating the low leverage for the Solstam offshore. It's very limited amortization over the next two years, with the most facilities refinanced to 2027 and beyond. In Brazil, we have BNDES to 2031. Brazil is performing better than planned and is paying down the debt faster than we have scheduled. Firm backlog of 5.7 billion NOK at year end. We'll come back to that on the next slide. So if we look at Solsta offshore backlog, the total backlog for Solsta offshore was 5.6 billion NOK at the year end, up from last quarter. Solsta offshore backlog also include Solsta maritime vessels being utilized in Solsta Offshore's Brazil setup. And the backlog for the seven owned or controlled vessels in Solsta offshore amounts to 2.6 billion NOK. Most of the backlog in Solsta offshore has been added the last two years, so very few legacy contracts in the backlog. In 2025, approximately 85% of the available vessel days has been booked, securing most of the year already. Then if we move over to Solstam Maritim, fourth quarter financial highlights, utilization of 85% in the quarter, and it's a little bit lower than expected due to spot market in the North Sea for the anchor handlers has been a little bit slower. Utilization for the full year has been 86%. Operating income for fourth quarter was at almost 1.6 billion NOK and 6 billion for the full year. EBITDA adjusted of 799 million NOK in the quarter and 3.2 billion year to date. In EBITDA adjusted, we have assumed the same IFRS 16 treatment on the leases, meaning that they are being seen as operational also in Solstam Maritime. This amounts to an add-back of positive 66 million in the quarter. Net result of 1.2 billion NOC in 4Q and 2.6 billion year-to-date. Backlog of 9.6 billion at year-end. Book equity in Solsta Maritim is at 8.9, giving an equity ratio of 46%. The net interest bearing debt in the financials are 6.7 billion NOK and we are repaying approximately 1.5 billion on the fleet loan annually. Cash has decreased from 2.3 billion to 2 billion in the quarter, mainly driven by dividend payments and debt servicing in the quarter. Net interest bearing debt of 6.7 billion over adjusted EBITDA of 3.2 gives a multiple of two times. Then if we look at the backlog of Solstam Maritim, the total backlog of Solstam Maritim is 9.6 and 16.8 if we include the options. Solid firm backlog additions in the quarter of 3.2 billion. Booked a bill for the quarter of two times. A large part of the backlog has also been added after the upturn started. In 2026, most of the legacy contracts and lower-earning contracts have been finalized. In 2025, 61% of the available vessel days have been booked, and the booked bill for the year ended at 1.8 times. With that, I give the word back to you to summarize, Lars.

Thank you, Kjetil. And to summarize our presentation, the Solstice companies have had a strong year. with the book equity increase of 1.3 billion in Solstice Offshore and 6.8 billion in Solstice Maritime. Significant backlog has been added at healthy terms and gives us a robust visibility into 2025 and beyond. I also would like to highlight the Solstad services, which continues to grow and gives Solstad the ability to take a larger part of the value creation without taking on more risk. And this commercial model has been very well received by the clients. And as mentioned, the Solstad services revenue came in at about 1.3 billion for the full year. And we see also that we will continue to grow that segment into 2025. We are also pleased to announce that Solstad Offshore targets to pay dividends from the second half of this year, while Solstad Maritime continues its earlier announced dividend policy by proposing 0.5 kroner per share for the fourth quarter. And last but not the least, we foresee a growth in earnings for both companies in 2025 and indicates an EBITDA for the year in the region of 1.3 to 1.6 billion for Solstice Offshore and 3.9 to 4.2 billion for Solstice Maritime. So this concludes our presentation. Thanks for listening in. And now we move over to Q&A, Kjetil. Has there been any questions?

There are some questions entering in. So if we start with the first one. As I understand, Norman Jarstein is working on an Omega Subsea project in Africa, and contract announcement and mobilization with ROEs. Is this something that we will see more of? And yes, if I'm looking down the road, the mermaid is available for project work with Omega Subsea Solsta Offshore Cooperation.

Well, first of all, it's not an Omega Subsea project. We don't take on our own projects. It's correct that Norman Jarstein is mobilized with ROVs from Omega Subsea, but the combination of the vessel and the services we have on board, as I have also discussed during this presentation, is working on a project for one of the main subsea contractors in West Africa. So just to clarify, we don't take on the projects ourselves, we work for the other contractors. And there are, we expect to mobilize vessel number six with the same setup in second quarter and that may very well be the Norman Mermaid, but it can also be other vessels.

Can you elaborate a little bit on the different EBITDA margins on service segment in Solstad Offshore and Solstad Maritime? Is it the same margin on both sides or how does that work?

Yeah, in general, it's the same margin. It also depends on what we are able to achieve from the end client. But in general, it's the same service margin irrespective of if the vessel is working for, or if the earnings are on a vessel in the Solstera Maritime side or Solstera Offshore side, it's going to be the same.

And then there's a question on the net interest bearing debt in Solstad of the 4.6 billion NOC. And if that is after Norman Maximus loan payments included paid. And I can respond to that myself. As I said in the presentation, the net interest bearing debt in the financial for SOF is 4.6 billion NOC after the Maximus settlement has been completed. And as I also explained, if you adjust the leases from Solstam Maritim, the adjusted net interest bearing debt at year end will be 1.4. Then we have a question. Can you give some more information what you paid for the 36% of the Omega subsea acquisition?

Well, it was a part of the agreement that the price is confidential. We think we have We have bought into a very good company, which adds a lot of value to Solstead. And we think we have paid a fair price, but also I see it as a very good deal for the shareholders in the Solstead system.

And then we have a question on Solstammaritim holding EBITDA decrease from third to fourth quarter. Why did they drop a little bit in the fourth quarter?

Well, I would say that the short answer to that is mainly because of less utilization on the anchor handling fleet. So that is the short answer to that question. That's the main reason.

And then next question. Is there a plan to merge Solstads Offshore and Solstads Maritime in the future?

Well, we are now concentrating on listing Solstad Maritime. That will be done in the second quarter and what the future brings, who knows. But what we do now is to concentrate on listing Solstad Maritime.

Can you elaborate a little bit on capex levels for 25 compared to 24, also with timing on regulatory dry dockings?

It goes in cycles compared to when the vessels are built. And 2024 and 2025 is high capex years for Solsta. So we will have a higher capex in 2025 than we had in 2024. But then we expect it to come down again in 2026.

Thank you. And then next question. How do you view the anchor handling market in Australia going forward?

Well, we have four vessels, four anchor handling vessels working in Australia. They are working on fairly short contracts, typically well by well. The rates has come up to a quite good level. The utilization is of course the key and as we see it there are rig programs but there are also quite a few mooring projects coming up this year so we expect to see a good utilization for the vessels and if not we i mean if the market comes down there are there are other areas we can we can transport the vessels to so we are following that very closely and the key is to secure best possible utilization regardless of if it's in australia or somewhere else

Can you elaborate a little bit on the open days in 2025 for Solstam Maritime Holding? Is this a concern or an opportunity?

I would say it's an opportunity. I'm not concerned at all. We have good contract coverage. We have about the same pre-booked days for when entering a new year as we normally have, maybe a little bit higher. So not concerned. And for Solstead Offshore, We are nearly fully booked the first three quarters and we have some open slots by the end of the year. But comfortable with the utilization grade we have pre-booked.

Yeah. Then there is a question on if you can give some more color on the Solstah Maritime holding leases in soft balance sheets. And also, I can just refer to the presentation as well. You can see it in the bridge and in the graph that we had on Solstah offshore financial highlights. And there is two... Two main components on the leases. It's the normal Maximus lease, which is included there. And it's the Solsta maritime vessels that are on bare boat in Brazil that is utilizing the Solsta offshore structure locally in Brazil. Yeah, and there is a new question on Australia. I think you responded to that. But how do you see it going forward beyond 25 in the Australian market?

No, well, Australia is not a very big market for offshore services. It's very much dictated by the rig activity in addition to some of the moving work and that comes with more permanent installations. uh whether it's i mean if it's not if it's not uh if it's if if the activity goes down uh we're just gonna move the vessels to where the activity is we see a lot of opportunities other places so whether we work in australia or in norway or in west africa or in brazil that is that is not the most important we we would like to keep the vessels working at the highest possible rate and with the highest possible utilization in the global market that's our main focus

And then we have the last question. How do you see first quarter coming out so far?

Well, it's started OK. We have a quite high dry docking activity that we will have during first quarter and also in second quarter. But the main capex is going to be spent the first half part of the year. Except for that, we see that the market is still quite volatile on the North Sea spot market for anchor handlers, while the subsea vessels are continuing on a high utilization and looks quite promising also for the year ahead. So yeah, I guess that summarizes it.

So that's it. That's the last question.

Okay, so thank you very much and thanks for listening in. Have a good day.