Good morning, and welcome to Odfjell Technology's Q2 presentation. My name is Gert Haugland.

I'm the SVP for Finance and Investor Relations in Odfjell Technology. I'm joined by our CEO, Simen Lieungh, and our CFO, Eirik Knudsen.

Today's presentation is available on our website. Please take notice of the disclaimer on page 2.

Simen will now cover the key highlights, the market outlook, the backlog, and our capital allocation update. You can submit your questions through the webcast portal or by using the dial-in numbers.

I now hand over to Simen.

Thank you, Gert. Welcome to this call.

I would like to say I'm very happy to say that we have a record quarterly earnings this quarter. We have earned 243 million EBITDA, a margin of 17 17.4% compared to 14.8% from previous quarter.

It's also the first full quarter with KSM Racer contributing with 35 million to EBITDA and with adjusted EBITDA excluding acquisition still up 8% from previous quarters. These are the main drivers for the improvement.

That's the KSM Racer contribution. As we have said before, we are running an improvement and performance program focusing on performance and cost discipline, and in OTL in general also has improved over the last quarter.

Regarding the market, we signed with Adura Energy, which is a JV between Equinor and Shell taking care of the assets in the UK offshore sector. We signed an LOI extending one of our largest integrated operations on the Mariner platform was extended to November '28 with a further two-year option added.

This is an extremely important achievement because that's one of the platforms we are really showing the integrated operation and the synergies between the different divisions in OTL and showing that these are building together a value creation for the clients. We have a strong order intake of 1.1 billion, that's including the said Adura LOI, but we also see a notable, as we say, well services wins in Kuwait, UK, Spain, and Malaysia.

I will come back to the market later to share with you how we see the market going for the next half and onwards, but I come back to that. We had a strong cash flow during the quarter, about 1 billion NOK in liquidity with a leverage ratio of 1.33 with debt to EBITDA and somewhat down from the previous quarters.

The order backlog is about 11.5 billion NOK. The market, share things about there, somewhat similar to what we said last quarter.

North Sea is stable. We see a lot of increased tendering.

One of the major KPIs we see globally, not only for the North Sea, is the rig count around the world. We operate, as you all know, in more than 30 countries.

We have huge number of clients out there, and we see that the rig count in general are coming up. We also see, finally, an improvement in the deepwater market, which also is an indication of increased activity from the big majors and familiars.

That is in general a important observation that we are seeing here. We also see the tendering activity in general is coming heavy up.

Middle East is always, of the late, as you all know, the war in the Middle East has caused disruption in our business. We have increased costs for evacuation of people, especially from Kuwait and in the Emirates.

However, we have to say that the impact is, knock wood, relatively limited. It could have been much much worse.

We have seen around us that there are other companies being hit harder, but over, I would say, impact is significant compared to numbers, but in general, it could have been much much worse. That is also impacting the performance, especially within Well Services, and the day Middle East get more into normal modus operandi, we think that's going to be picked up.

We have quite good dialogue with the clients down there, as you all know, especially within the acquisitions we did, especially with Racer, we see we are building up their presence in Saudi, and we also build up their presence in the US market, Gulf of Mexico. In general, that's what to say there.

What's also quite interesting, and which is a trend clearly, that we operate here up in the north, UK, Norway, with quite mature fields, also in the Gulf of Mexico, we see more activity building up demand on plug and abandonment. In that respect, it's important to say that our acquisition of Racer and KSM, together with our alliance with Halliburton in Norway, puts us in a well position for capturing our share of the market in that future.

Just an example is what we have won on Ekofisk already and the other projects we are following up in the UK and the Norwegian sector. We see an increased demand for that in that respect.

Regarding our growth profile or initiatives, as I said, we are pushing hard to grow more in the Middle East. I mentioned Saudi Arabia, and Americas, US Gulf, also partly South America.

We are now gradually seeing the synergies by using our Well Services international network for providing tools and equipment, sales, services around the world, especially we have already employed people from Racer into the Americas and into the Middle East, especially with focus on Saudi Arabia. We expect now and we see now gradually starting the synergies by combining Racer and KSM into our own network, that will be beneficial for the growth into the future.

The reason we acquired KSM and Racer, we are looking for more technology-led differentiation. Those acquisitions absolutely bring us into that category.

We also see more demand on the powered wired drill pipe with Reelwell, and we are currently running several operations for Vår Energi here in Norway, testing out the full-fledged of that equipment, and so far, the results are promising. We come back to our capital discipline because, as I said, our improvement and performance program focus on performance improvements and cost discipline, and that's why we also will come back to that, and Eirik will share with you some more of those details somewhat later in the presentation.

Then back to the order backlog. I think the good thing is that in this quarter, we have increased the fixed part of the backlog from 6.7 end last year to 7.2 billion, resulting in the full backlog, including most of the options in operations, to 11.4 billion NOK, which is stable, as you see go backwards.

We keep that level at 11 to 12 12-13, and that's okay for us, as long as we can add on profitable backlog into the portfolio. That most of the backlog is oriented again towards operations, significant also within Well Services.

Just to remind you of the way we pull backlog and report backlog in Well Services for operations, it's clearly the length of the projects we run drilling and operations on platforms. Within Well Services, there are more framework agreements and things are more kind of not that fixed, we normally bring in just 60% of the or 50-60% of the potential backlog what we report.

In theory, there are more in there, but we are also always been on the conservative side regarding Well Services backlog, but in theory, it's much higher. P&E has of course by the nature of the business smaller backlog, but still quite significant compared to or linked to what they're actually doing, the business in projects and engineering.

The backlog is spread between supermajors and very very small. You see there's quite huge number of orders coming in, and they are spread all over the world.

I think we have something like if you count clients out there, I think we are close to 300 clients, different sizes of course, spread all over the regions we are working. Which is stable and good and we think the quality of the backlog is absolutely acceptable.

Operations, platform operations, you see here the platforms we operate. It's about 15 in total, two of them are not active, but to show you the dark blue is the fixed part, the green are options.

Why do we show them? Because we also put the options into the backlog, except for Ekofisk, because they're so long.

The last win we did there was 5 5 and 1/2 year fixed, and the options were up to 10 years, two times 5 5 years, not showing here on the scale, but that's up to in about 2040 plus. We don't report those options into the backlog because they are so kind of a long, so that's very very different from the other type of options.

The reason why we also want to show these options is that these are, we say, not necessarily 100% right, but we say it's very much ours to lose. These options are as long as we perform well, efficiency, HSE-wise, and so forth, statistically, 85 to 90% of these options are declared.

It's relevant to put them into the backlog absolutely because they're much more likely to win them than to lose them. It kind of indicates the total worth we are going to execute.

That's why we report normally the options as part of the backlog, except from the long 2 2 times 5-year options on Ekofisk, because that's 10 years after the first five is an eternity. All right.

Next step is to talk a little about capital allocation. We said last time that we paused dividend for up to two quarters.

We are not intending to pay any dividend this quarter either, but after next quarter, we are paying dividend. That's our absolute ambition.

Why? Because we found it right, 100% supported by our board.

Administration and board said very clearly that we want to be careful and build up the acquisitions to realize the synergies to make sure we have capacity to do things when it comes up. We see a lot of interesting investment cases coming.

Just to remind you, we are building up a network for Racer and KSM into our kind of a network, a business network. We are pushing the tools and equipment from those two companies into those markets, we are also investing in presence in those markets.

First shot will be scale-up in the US, and secondly, we see as potential scale-up already this year in Saudi Arabia. Our intention, as I say, is to show discipline in this aspect.

It's absolutely our intention to come back to what we did from the very beginning of the company's history to pay dividend, but also to be clear to invest into very interesting opportunities that we are seeing and getting. Again, remind our investors and potential shareholders that Odfjell Technology is a company in a growth situation, but at the same time, we have to handle all the different uncertainties in the market.

I mentioned Middle East. Middle East is a super important area for us.

Currently, there are a lot of uncertainties. We have to bear over with them, we have to handle them, so that's why we also decide to go more safe than sorry and be disciplined and allocate the capacity we have in the right pockets.

That's the reason. I hope we can come back to the next quarter and say that we are back on track on dividends, and I actually think that's going to happen.

Eirik, the floor is yours.

Yep. Thank you, Simen.

I will now go through the financials and starting on the group financials. Revenue grew 1.5% both the year-on-year and quarter-on-quarter to close to 1.4 billion NOK with activity held steady across all the three business areas.

As Simen mentioned, EBITDA reached 243 this quarter. That's an increase of 19% from Q1 and also lifting the margin to 17.4% from 14.8%.

This was also the full quarter with KSM Racer, which contributed with 35 million NOK. The business excluding the acquisition also grew with adjusted EBITDA up 2% year-on-year and 8% on the first quarter.

Free cash flow turned positive at 46 million NOK, a marked improvement, I would say, from negative 64 million in the first quarter and negative 73 million a year ago. This was driven by the EBITDA growth together with an improvement in working capital, and it reflects progress on converting a greater share of EBITDA into free cash flow.

To sum up on the group financials: steady revenue, a clear step-up in earnings, and we have the free cash flow back in positive territory. Then we can move over to the segments and starting with Well Services.

Revenue grew 11% quarter-on-quarter and 25% year-on-year to 583 million driven by KSM Racer, which contributed 70 million of revenue in their first full quarter. The legacy business was fairly on level.

EBITDA grew 18% quarter-on-quarter and 26% year-on-year to 182 million with a margin at 31%. In general, I would say the quarter has been satisfactory.

We have managed to successfully integrate KSM and Racer, and we expect the synergies to further improve in the period ahead as we are mobilizing to new regions within the Well Services network. Additionally, Norway had a strong performance within rental and TRS equipment, which was partly offset by lower activity in Africa.

On the capex side, it was 86 million compared to 108 million in similar quarter last year. The level of capex is below from last year, and we continue with our high focus on capex discipline.

Then we continue with Operations. Revenue declined 9% year-on-year and 7% quarter-on-quarter to 597 million.

The reduction was driven by scheduled maintenance on Gjøa for two months of the quarter and by Irma returning to maintenance mode. Despite that, EBITDA grew 9% year-on-year to 49 million with a margin at 8.2%, the strongest for the past three quarters.

The improvement came from better cross-utilization of staff across the portfolio and an improved bonus scheme in line with our performance improvement program. On the right-hand side, you see that the rig count active plus maintenance grew from 14 to 13 a year ago, and the shift within the quarter from active to maintenance reflects the move of Irma that I just mentioned.

Then over to Projects and Engineering. Revenue was 154 million NOK, down 22% year-on-year from a quarter that included high SPS activities, but up 8% quarter-on-quarter.

This is the second consecutive quarter of improvements. The EBITDA was fairly stable at 16 million NOK with a margin at 10.5% against 11.5% in the first quarter, as the revenue growth came at a lower average margin.

The chart on the right shows revenue by asset type, and I'm happy to say that the mix is broadening. The semi-submersibles are down 15% year-on-year to 30%, and production units, FPSOs, and fixed platforms now make up close to a third of the total.

This reduces our dependency of a single asset class and shows result of our effort to sell our services to new customers. We expect more of this diversification going forward.

Then over to the cash flow for the quarter, and rather than reading the waterfall line-by-line, let me give you some commentary around the figures. This quarter, the cash flow of earnings, the operating cash flow, was positive with 139 million NOK compared to a small negative in the first quarter, and this was driven by EBITDA improvement and also less build-up of working capital.

The build-up of working capital was also significantly lower than same quarter last year. As many of you will know, our working capital is seasonal.

We build normally in the first half and then will release in the second, and usually with the largest release in the last quarter of the second half. On the capex side, the spending was high this quarter of NOK 93 million in total.

However, this is due to periodization effects, and we continue to maintain a disciplined capex focus going forward. Lastly, the line called other investments that is approximately 48 million NOK and is related to growth spend.

These are not recurring outflows. They are investments behind the growth strategy that Simen earlier described, building our well intervention and P&A platform and our technology position.

Putting these together, the free cash flow came in at positive 46 million against a negative 73 million in the same quarter last year. That is a swing of almost 120 million NOK, and it's the direction we're working towards, converting more of our EBITDA into cash.

We ended the quarter with available liquidity of 1 billion NOK and a leverage at approximately 1.3, and we are, of course, comfortable with both of these. Then over to the next slide.

This shows the development in revenue and EBITDA, and I would just like to pinpoint the step-up in earnings based on the same revenue base, which is a strong signal that we are improving our EBITDA margin. Then over to our performance improvement program, and it continues to deliver results in 2026.

As mentioned before, in 2025, this resulted in savings of approximately 100 million, and you can also see the numbers are working in this quarter. Operations is a clear example.

Improved cross-utilization of staff was one of the contributors that lifted the margin to north of 8%, the strongest over the last three quarters. P&E is another example where the capacity is held disciplined through a period where we have lower SPS activities.

Going forward, the priority is cash conversion. We are targeting tighter working capital and capex discipline and with clear targets and accountability.

The ambition is to convert a greater share of the EBITDA into free cash flow while accelerating earnings growth and strengthening the balance sheet. To summarize, let me close with three main points to take away from today.

The first is the earnings. We stepped up this quarter to a record of 243 million and with a margin of 17.5%.

The second is the visibility. NOK 7.2 billion of firm backlog means that the earnings is based on contracts with customers we have worked with for many years.

Third, that's the balance sheet. We have a strong balance sheet now with 1 billion NOK of available liquidity.

That gives us the flexibility to both invest and also return capital to our shareholders going forward. We are happy with the development, and our focus is to improve further by converting more of our earnings into cash and continuing the performance improvements you have seen this quarter.

This concludes the presentation, and we open for Q&A.

Thank you. Good morning, Simen.

Good morning, Eirik. A question on capex.

If you go back a few years, you were running sort of capex in the 200s, now you're in the 300 to 400s. As you think about growth and your ambitions, particularly within Well Services, is the current level—I know you don't guide, but say 300 to 400—is that a, call it, sustainable level or does it need to grow further for you to reach the ambitions that you're targeting right now?

Yep. Hi, Truls.

Thanks for the question. I think in general the maintenance level of the Well Services should be somewhere behind 20 to 25% of the EBITDA as a rule of thumb.

You see now the second quarter is influenced by periodization. It's a little bit higher this quarter, but if you take the first half as a guiding point, I think that also is a good mark for the second half.

I think 20 to 25% on the maintenance part on the capex side is a good estimate. Then when we are considering growth capex for Well Services, we are quite strict on the return criterias.

We want to see payback on fairly decent terms. That's kind of a very strict discipline going forward so that we spend money wisely.

We spend it on the product lines that creates a solid return, and that we differentiate on the maintenance capex.

Okay. Good.

You're talking a lot about converting EBITDA to cash, which basically ties into your working capital improvements. Are there other means and ways that you can improve your EBITDA except obviously growing it?

I would like to mention three things. Of course, is to improve the EBITDA by having focus on costs and to prove the general performance.

The second is, of course, to improve the working capital and the tied up working capital. We see that we are building up working capital strongly in the first half.

We know it's going to be released in the second half, but we are continuously working into how we can improve this going forward. The third element is, of course, the capex that I just mentioned.

I think if we add up those three things, that will imply a greater share of the EBITDA being converted to cash. That's kind of to sum up the main priorities from our side going forward.

Thank you. A final one from me, and that relates to the Middle East.

Is it possible to quantify the impact on Well Services down there this quarter and how do you think about that in the second half of the year? Hi, Simen here.

Truls, I think of course we can quantify, and we have done that. The impact was very much in the beginning where we had to evacuate everybody from Dubai into Malaysia.

They relocated there, the whole management plus families. We had to stop a lot of operations in the region because we just follow clients when there are drones, missiles, debris falling from the sky, especially in Kuwait, a lot of the operations stopped.

We still have platforms also in Saudi where operations has been paused. We mitigate it differently.

We try to find other things and other work for the people. If a number could be for Well Services, I would say if I sum up, it not necessarily 100% right, but I guess it's some 7, 8, 9, 10 million impact on direct bottom-line effect.

It's not over, but we expect now that if things calm down, and I think everybody dream about that, this will come back to normal. It has been an impact, but as I said, relatively moderate compared to the worst case we saw in the beginning, because that was really bad.

Significant impact anyway. That's also part of the lack of margin improvements or EBITDA improvements in the Well Services area.

You have to remember that. It's still war down there.

Yeah. Sure.

We have 200

we have 200 people in the region, so all of these has been taken care of and make safe and and evacuate when necessary. There are absolutely costs there, so in a normal world, this number would have been significantly better.

Understood. Difficult to guess on peace and war and all that in the Middle East.

It appears to, but hopefully things has been some improvement in activity on the broader basis and let's keep our fingers crossed. Thank you, guys.

I do it very much, and as I said, we are ramping up. We are moving equipment, people down to Saudi now to scale up Racer, because we already see a lot of potential increase there.

That's one of the synergies we certainly see by buying Racer, especially Racer, in this case, their service side, is to complete our services in the region, and Saudi in the future is going to be big. That's where we see the upside.

All right.

Thanks.

Yes, we have a question from Jørgen Lian. He's asking if just on the working capital for the remainder of 2026, should we expect it to continue to be developed along the lines in Q2?

As mentioned in the previous question, we expect the working capital to release in the second half, and in particular in the fourth quarter. That was the trend last year.

We definitely expect that trend also to be applicable for this year. We last year also saw a small build-up in the third quarter and then a massive release in the fourth quarter, but we generally believe that in sum, it will be a strong relief for the second half.

Yeah. I think we have few questions today, and I think we'll just conclude the Q&A session there.

Thank everyone for calling in.

Of course.

Sure,

of course.

Hi guys, since you didn't have too many questions, I thought I had a couple more actually. Simen, thinking about the growth ambitions that you've outlaid for a while now relating to particularly, call it, Americas, the US, can you provide a bit more color where you're at today and how you think about or envisioned this to move forward?

Yes. Thank you, Truls, again.

In the US, we have employed two persons now from Racer. We are not going to be in the US, we're going to be very disciplined, Truls.

We're not there to do a lot of type of work that creates a lot of crewing. We are there to rent out equipment.

We're there to sell equipment if necessary, but we're not building up a huge portfolio of, for example, running huge TRS campaigns offshore, having typical 10, 15 people per operation. That's not going to happen.

We don't see that as relevant for us. We have already sent equipment to the US base in Gulf of Mexico, US side.

We actually hope and expect those equipment will be engaged quite soon. Then we will see work and we see results from those operations.

From Racer's side, I guess that one of the reasons we took Racer, or was successful to do the acquisition together with the administration there, is that their own desire was there to employ their equipment also in the US, as I mentioned also Middle East. I'm not guiding numbers, but I'm guessing that second half, we'll see good contribution on bottom line on EBITDA and a very good and nice cash conversion from that side.

That's what to expect already this second half.

Perfect. That was what I wanted to hear.

Thank you.

Yeah.

Okay. Then we conclude the Q&A session and thank everyone for calling in today.

Thank you.

Thank you.

Thank you.