Vow Asa

Good morning and welcome to WOW's second half and full year 2024 presentation. Together with Tina, we will go through a presentation today. But first, I have some opening remarks. After the presentation, we will have a Q&A session. And I will also have some closing remarks before we are done. In 2024, we have accomplished a lot. We are turning the business and we are returning to a positive EBITDA. We passed the $1 billion mark in revenues. We have booked our highest ever order intake in cruise, more than $1.2 billion in in contracts during the last 12 months. For the full year, our EBITDA after restructuring cost came in at 48 million. This is 100 million higher, better than we did in 2023. Even if we in 2024 still are burdened by too low margins in cruise legacy projects and too low revenue within industrial solutions, relatively to the capacity we have in that segment. We are turning the business, but still we have a way to go. And our efforts to improve profitability and liquidity remains high. We have successfully implemented price increases in new awarded contracts, which will improve profits. We have enacted effective price adjustment mechanisms in these new contracts, designed to protect us from future loss of margins. And we have made significant progress in reducing our operating costs. Our backlog of orders in cruise is high. But we see our backlog within industrial solutions declining. So we now need to be successful in signing up new contracts within this segment. After some turbulent months last fall, we raised 250 million in new equity, which has strengthened our balance sheet, and we have welcomed new investors. Going forward, all the above will contribute to improving our performance. Tina and I will welcome Gunnar and Cecilie as our successors later this year, to build further on our unique positions and solid foundation. With these opening remarks, let's go to today's presentation, marking it my 44th quarterly presentation and the last one for VAO. I pretty much summed up most of this in this slide. We continue to build our business on a unique position in the cruise industry. And I would just highlight two more things to my opening remarks. We are doing very great within industrial solutions in the heat treatment segment. The team in Fredrikstad has tripled their revenues since we acquired them. And they have the strongest EBITDA performance or margins in the group in 2024. I will also highlight that we have, with the restructuring we did last year, taken out cost. We have taken out 44 million Norwegian kroners of cost in 2024. And we said we were... You know, we said that we would take out somewhere between 40 and 50, and we made 44, so that's good, and we're on track on that side to make this sort of a leaner operation. I said that we are turning the business and returning to positive EBITDA. These are rolling 12 months in five reporting periods. full year 23, all the way to full year 24. You see the revenue buildup, the three segments we're reporting. You see the growth we have in project cruise maritime, up to 430 million. After sales, we said that we will pass, we will reach and hopefully pass 200 million. In after sales, we did it, 207 million. The industrial revenue or the revenue we have within land-based industrial applications are pretty much stable, but still solid. EBITDA, we reached our lowest point, the first quarter of 24, rolling 12 months. And now you see we're turning positive on the EBITDA side. But still, we have a way to go. But it's good to see that we are back with a positive EBITDA of 61.1 million for the full year 24. But 6% is not good enough. Backlog. And as I said, we have had a strong order intake. And you see how that is reflecting on the backlog here, reaching 1.680 billion backlog. And that's all time high in the business. On top of that, we have 258 millions of options. Those are new options with much better terms and conditions as opposed to what we had in the past. So this is actually a good slide. Returning the business and we are returning to positive EBITDA margins. Now we need to continue that work. Looking at the segments, first, the maritime solutions, the projects we do within the cruise side, you see the key figures. It's 42% of our revenues for the group, 31% of the share of the gross profit in the group. Backlog is increased by 146% since, you know, on the year-to-year basis, 1.437 million. So it's a large part of the backlog that now is, of course, cruise and the 1.2 billion that we have had in order intake the last 12 months. Revenues, 429.5, that's a 14% up from last year. Gross profits, 93.9, ending with a 50.5 million EBITDA, and that's 82 million stronger than last year. 11.8%. So we are delivering stronger, but we have in the past delivered substantially higher than that. And we're working to improve that going forward. The business area maintains a strong momentum. I have a separate slide showing that momentum on the delivery schedules that we have done in 2024. But we see... demand an increased demand not only from the new building side but also on the you know refurbishment retrofit side existing fleets that that are planning for upgrades and we have signed seven new builds and three retrofit projects lately that speaks for for demand within both those segments of the maritime solutions On the graph, on the bar chart on the right side, a bit crowded, but it explains the backlog and the pipeline we are tendering these days. And this shows the year the ship is entering service or the retrofit is completed and operational. So it demonstrates when our system is put into service. You see that in 2025, there are 14 ships that will have equipment that enters service. 26, 9, 27, 5. And you see the buildup. So the dark blue is the backlog basically rolled out until 2033. And you see the gray part of the charts are the ongoing tender activities for projects with equipment. If we get them, we'll be operational. For example, in 27, we have the potential to have an additional six ships out in operation with our technology on board. Another thing that is of interest and that we have been communicated for a long time, our contracts are getting larger. So the red curve, the red line shows the average contract value for the systems that specific year. And you see how that is increasing. So the cake is getting bigger. And we have a substantial piece of that pie. The momentum I talked about, you have seen that slide before. Last year, we delivered equipment to 16 ships under construction in Europe. Delivering to the shipyards, the five production facilities within the Fincanteri Group, in Italy, the Chantier de l'Atlantique in France, and the two yards in the Maievite. We're delivering that to these ship owners. So these 16 ships that we have delivered equipment to, and the lighter green is the ships that are the same year, nine in total, we are commissioning and are then put into service. But it speaks of a high activity level for us And looking at this new billing space, we have a 60% market share. So we have a solid foundation and a strong position within this market. The bar chart on the right is the same as I had showed on the last slide. The pipeline, how that is building up, the addressable market that we are bidding on, and how the contract sizes for us is increasing. This is also a slide that we have presented a couple of times. It speaks about the market. for us, this is actually the number of ships being contracted by ship owners at shipyards within the cruise industry. It means that the number here is the number of ships and the bar is the accumulated gross tonnage. So you see the, how the industry has been impacted by geopolitical crisis over the years, the financial constraints that we had in 2008, 2009. These were the terror attacks in New York in 2001. And then we had the COVID. And what's good now to see is that In 24, the industry has ordered 34 more ships for the years to come, 35 ships. We see that we expect that there's a third wave of ships being ordered. So the pie is getting bigger, more ships there. So the addressable market is getting bigger for a while going forward. And it speaks of demonstrated by the high audit intake we have, but also supported by the fact that the industry is delivering strong numbers. Royal Caribbean, since their startup in the late 60s, have never had such strong numbers as they're reporting these. The third quarter and the full year that they have reported had a record high for Royal Caribbean, as an example, being the second largest player in this space. So, fundamentally, it looks good. It looks very good. A bit about the technology and the evolution of that for us. We started deploying technology back in the 90s. We did the first project with Carnival, with Disney at Fincantieri, and those systems were with food waste processing and waste management with incineration. We're burning all the waste on board a ship. In 2000, 2001, 2002, we got the first systems on wastewater purification. In 2003, we were capable of delivering technology to Norwegian Cruise Line that met a new standard that was enforced in the Alaska and the Alaska state borders. And that gave us a huge potential to deploy this, our technology, our new technology on the new builds. And also we entered into large retrofit programs with Royal Caribbean and with Norwegian Cruise Line. So that was adding to the system. Then we integrated technology to take out all the residues from the food waste, from the wastewater. And lately, over the last, I would say 10 to 12 years, we developed further this process to take that organic matter and to convert that into energy on board, you know, waste to energy. So this is our, you know, complete, fully integrated system today. the contracts are then substantially higher. So the latest contract now per ship is 185 to 190 million. That compared to when we were back in the 90s, around 10 to 15 million. And in average, latest years have been perhaps around 50 million. So the contracts are getting bigger due to the fact that we are delivering more systems on better terms and conditions. I have my chief technology officer here. I covered it OK? But it's actually also amazing, because a ship like this carrying 8,000 people, like the icon of the seas of the EXCEL project for Carnival, is equivalent to a municipality in Norway of nearly 40,000 people. We are basically designing that, constructing that, delivering that on board a ship in a basement of a hotel. processing something equal to 40,000 people. Amazing. Having all these ships entering service over the years, 183 ships out there in operations, and you see the pipeline of already firm 37 new ships that will enter service in the coming years. This business is increasing for us. It's 20% of the group's revenue, and it's 20% of the share of the gross profit. We hit the 200%. milestone mark that we said that we wanted to meet and that's a 60% increase. Gross profit up 8% to 60.4. EBITDA 24.2 million. 11.7% EBITDA margin. That's what we're going to improve going forward. for sure but it's a high activity and more ships are entering service and you see the bar chart on the right side for a longer period you see the growth and that's basically driven by first in the first place we signing up new contracts for ship deliveries to new builds or to retrofits and when they are entering service the ship owners loyally are coming back to us and are sourcing our services, our spare parts, and operational assistance. It's a solid part of our business. We're going to make it even more solid going forward. Industrial solution, what we do within land-based, it started with an acquisition of Etia back in 2019 because we saw the potential of You know, coming from a market-leading positioning cruise, we saw the opportunity, we saw the relevance for our technology within other industry verticals. It has become 38% of our revenue stream and 49% of our gross profit. But we, of course, have a bit overcapacity here. due to the fact that there has been delayed in order intake. And as I said in my opening remarks, now it's important for us to convert those ongoing pipeline of prospects and the feeds into firm orders. Still, we deliver revenue for 381.8 million, gross profit of 144. But of course, down to EBITDA, it's 21.3, and it's only 5.6%. But it's still on the positive side. These days, we are working on this large project in Providence, Rhode Island for green development. It's progressing well. It's, I would say, a project that we receive a lot of attention for in US. And we are working on three front-end engineering design contracts, one for End-of-Life tires in UK, The other for PFAS, the PFAS removal from sludge in order to be able to recycle valuable nutrients into into fertilizers and eliminate the forever chemical challenges we see within that segment. Those are progressing forward. The carbon refinery project, I had actually the team from Circon from Texas, they came over on Monday. We had a meeting with them. So we're working on that project. It's progressing well. We actually had a question regarding, OK, do you see any changes in the US with the new administration? And they say that actually not. We actually see that the new administration in the US is actually supporting these large circular economy projects. And that's promising. And I will repeat what I said in the introduction. The business area heat treatment with CH Evans in Fredrikstad is fantastic. They are progressing extremely well and have made significant contribution to the VAU Group, not only financially, but also on the technology side. And one of the greatest achievements we have now in the cruise industry with new technology within waste-to-energy, with EAP that now is being deployed for the Carnival New Builds and Royal Caribbean Projects are with new technology that I would say that Evensen was instrumental in making that possible for the WoW Group. With those words, Tina, would you take over on the financial side? And then I'll come back.

So I'll start with a short recap of the segments and focusing also on the full year numbers. So we deliver, continue to deliver strong within Maritime. We have a growth of 14% in revenues for the year, up from 375 million in 2023 to 430 million in 2024. Our gross margin ended at 22%. The gross margin continues to be impacted by delivery on our legacy projects in the backlog. However, we do see an improvement in the gross margin during the second half of the year, where we delivered a gross margin of 23% up from 21% during the first half. Our EBITDA ended at 50 million, up from 12 million in 2023, and a margin of almost 12%. For after sales, we continue to grow and we hit the 200 million revenue mark. Our gross margin within this segment ended at 29.2%. Note that the gross margin is increasing during the year, so it had a gross margin during the second half of 32%, up from 27% during the first half. We are taking monitoring this closely and taking measures to improve further. Our EBITDA ended at 24 million and a 12% margin. So for industrials, we delivered on two key contracts during the year. It was the Rhode Island project and also our VGM Follum contract. As Henrik said, the heat treatment business is continuing to deliver solid. We have a growth of 5% in revenues, gross margin ended at 38% in line with 2023. Our EBITDA increased to 21.3 million, so up from negative 12.5 during 2023. We have delivered on comprehensive cost improvement program, and a lot of our cost improvements are within this segment. In addition to this, we also have administration costs amounting to 35 million for the year, which is down from 45 million in 2023. So moving over to the group, we hit the 1 billion revenue mark, increasing 11%. Our gross margin ended at 29.3%. We delivered 44 million in cost reduction compared to 2023, and our EBITDA ended at 48.3 million, representing a 4.7% margin. Our non-recurring costs is mostly related to the restructuring that we've done in our French subsidiary. Depreciation has decreased somewhat in 2024 compared to 2023. This is mainly due to us selling Ascodero at the end of 2023, which is not included in the 2024 numbers, and also that some assets have been fully depreciated. The impairment of 10.7 million is mostly related to the write-down of some assets in our French subsidiary. EBIT ended at negative 9.8 million. And we see an increase in financial items. This is mainly related to less foreign exchange gain and also increased interest costs during the year. Results before tax ended at negative 93.6 million, up from negative 158 million in 2023. Moving over to our balance sheet, the key development there since the Q3 numbers is the share issue that we completed in December. We successfully secured 250 million in new equity and the proceeds were used to repay the short-term liquidity bridge and also to reduce the drawn amount on our working capital facilities. In total, we've reduced interest-bearing debt by 245 million compared to year-end 2023. Other key developments is also that we've improved the working capital situation in the company, which we'll also see in our cash flow. So for the cash flow for 2024, we delivered an operating cash flow of 160 million. A large contributor to this is the release in working capital that we've seen. We've increased our focus on working capital, both in terms of payment terms from clients, but also on our procurement activities. Other operating cash flow amounted to 48.5 million. Investments came in at 73 million. It's down compared to historical levels in line with what we've communicated. Several of our R&D projects are now successfully completed. and the net proceeds from the share issue amounted to 233 million. Other financing activities include net debt repayment during the year, interest costs and leasing. This led us to ending at a cash balance at the end of 2024 of 46.3 million and an available liquidity situation or position of almost 230 million. So on that note, I'll leave it to you for some concluding remarks.

Thank you, Tina. Yeah, 230 million. million of available liquidity that's good that's very good for us and it's good for the way going forward let me uh i have a couple of concluding remarks one is the the new management that will will replace will enter you know will come during the the first half year gunnar pedersen as you saw in the stock exchange notice will join us Latest August, 1st of August, hopefully before, he comes with an extensive leadership experience from the maritime and industry in Kongsberg and the Kongsberg Group and the Kongsberg Maritime in latest years. He currently holds an executive vice president and EVP within automation and control. He's solid. He's a business builder. And I think this is going to be very good for WoW going forward. To help him, Cecilia will replace Tina. She will join us in May. She also has an extensive financial background. experience, leadership. She's also been working with international relations. She's been then also working then with stock listed companies. She's now currently with Speed Group, but she has also experience from Self Storage Group, Color Line and Posten Norge. So she will, I also believe she will be a great asset and a good successor for Tina and the team that Tina has been building up the last two years. We have now a very strong financial team and you see how we have improved in reporting our numbers in the latest two years. It's been fantastic, Tina. It's been great to be working with you. Then I would like to Close. No, no, no. You have to follow the agenda here. Perhaps we should open up for some Q&As.

We can do that. Thank you so much. Right now, we have a relatively large audience online, but there are no questions from that audience, so I just want to remind them that you can file questions by pressing the Ask Question button on the screen. In the meantime, let's see if there are any questions from the audience here. Live.

Can you comment on the confidence situation? Could you comment on the Covenant situation?

Yeah, we are in compliance with the Covenant.

Could you give some figures?

This is something we're closely monitoring and we've given the details that we have on our current one. But of course, monitoring closely and we'll work towards.

Any other questions? It seems not. Everything was loud and clear.

Thank you so much. Normally, we had some tough questions, but OK. With this, I want to express my heartfelt gratitude for a fantastic journey I had in this company, 25 years. And I have actually my daughter in the audience today. And she was one year when I started in the business. I actually remember because we were watching the TV when two airplanes hit the Twin Towers in New York. That's when I started in the cruise industry. But now she's an associate in one of the law firms in Oslo, so it has been some years. I definitely see it now, Tille, when I see you here. But I also... I would like to see or express the gratitude of having had the honour of leading a dedicated group of talented and passionate individuals in Navajo. Driven, I would say, driven by a shared commitment to making impact. a positive impact and supporting our customers in their quest for environmental sustainability, as we really do. Together, we have built a strong foundation and achieved market-leading positions. And I would say another thing, our success steers not only from our ability to deliver effective technology, but also from our deep understanding of the importance of meeting and exceeding our customers' expectations. At the core of it all are the people. And I firmly believe in my mantra, I think some of you have heard it before, people buy from people. As I conclude, I'm not saying goodbye. The company and its mission will always be the love of my life. a passion that I will continue to support and share it. Thank you so much.