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Nekkar Investor Presentation 2024
3669_rns_2024-08-22_c7c17dba-3026-4ce3-9323-b4bccda380a7.pdf
Investor Presentation
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Ole Falk Hansen CEO, Nekkar ASA
Nekkar ASA | 22.08.2024
Disclaimer
By reading this company presentation (the "Presentation"), or attending any meeting or oral presentation held in relation thereto, you (the "Recipient") agree to be bound by the following terms, conditions and limitations.
The Presentation has been produced by Nekkar ASA (the "Company") for information purposes only and does not in itself constitute, and should not be construed as, an offer to sell or a solicitation of an offer to buy any securities of the Company in any jurisdiction. The distribution of this Presentation may be restricted by law in certain jurisdictions, and the Recipient should inform itself about, and observe, any such restriction. Any failure to comply with such restrictions may constitute a violation of the laws of any such jurisdiction.
The Recipient acknowledge that it will be solely responsible for its own assessment of the Company, the market and the market position of the Company and that it will conduct its own analysis and be solely responsible for forming its own view of the potential future performance of the Company's business. The Company shall not have any liability whatsoever (in negligence or otherwise) arising directly or indirectly from the use of this Presentation or its contents, including but not limited to any liability for errors, inaccuracies, omissions or misleading statements in this Presentation, or violation of distribution restrictions.
An investment in the Company involves significant risk, and several factors could adversely affect the business, legal or financial position of the Company or the value of its securities. For a description of relevant risk factors we refer to the Company's annual report for 2019, available on the Company's website www.nekkar.com. Should one or more of these or other risks and uncertainties materialize, actual results may vary significantly from those described in this Presentation. An investment in the Company is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment.
This Presentation contains certain forward-looking statements relating to inter alia the business, financial performance and results of the Company and the industry in which it operates. Any forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts and are subject to risks, uncertainties and other factors that may cause actual results and events to be materially different from those expected or implied by the forward-looking statements. The Company cannot provide any assurance that the assumptions underlying such forward-looking statements are free from errors nor do any of them accept any responsibility for the future accuracy of opinions expressed in this Presentation or the actual occurrence of forecasted developments. This Presentation speaks as at the date set out on herein. Neither the delivery of this Presentation nor any further discussions of the Company shall, under any circumstances,
create any implication that there has been no change in the affairs of the Company since such date. The Company does not assume any obligation to update or revise the Presentation or disclose any changes or revisions to the information contained in the Presentation (including in relation to forward-looking statements).
This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts.
Nekkar in brief
Industrial technology company
Presently a portfolio of established businesses and impact technology ventures within ocean-based industries
World-class engineering expertise
Proven track-record delivering complex and profitable projects Strong in-house innovation and commercialization capabilities
Digitalization of sustainable ocean-based industries
Leveraging software and digitalization to increase efficiency and sustainability for fast-growing industries
Strong industrial ownership and history of value creation
30%+ ownership by Skeiegruppen, which has a solid industrial track record
Revenue 2023 MNOK 575
Order backlog (30/06/24) MNOK 725
MNOK 227 in cash No interest–bearing debt
98
3
Employees
Headquarters Kristiansand, Norway
Stock listed OSE (NKR)
Industrial technology company driving efficiency & sustainability for ocean-based industries
World-class expertise
Scalable software leveraged across the portfolio
In-house innovation & commercialization capabilities
Proven track-record delivering complex and profitable projects
Engaged industrial ownership
Long-term active owner
Buy-to-own strategy
Focus on profitable growth
Strong cash flow to ensure flexibility
Flexible ownership model to maximize value
Individual degree of integration to maximize synergies and value per company
Focus on value-adding activities
Portfolio overview
Companies
The global leading provider of shipyard solutions for safe and efficient ship docking
Intelligent load handling systems, such as cranes and gangways, for renewables, subsea, and aquaculture vessels
Industrial software solutions focused on digitalizing workflows through automation and remote-control systems for drilling and offshore load handling
Full-service ICT and digitalization partner for the global maritime industry
Acquisition completed in Q3 2024 (15th August 2024)
Impact Technology Ventures Associated companies (below 50% ownership)
The leading provider of closed-cage solutions, technical textiles, and software for the aquaculture industry Significant expansion of Nekkar's portfolio and earnings potential during past 12-18 months
Nekkar operates in four main business segments, focused on sustainable technologies for ocean-based industries
The portfolio consists of mature, financially solid businesses, and new impact technology ventures Nekkar portfolio, overview of maturity level and key focus areas
Highlights: Q2 2024
- Revenue of MNOK 150, up 14% versus Q2 2024 (132)
- EBITDA of MNOK 20 (25)
- EBITDA margin of 13.4% (18.6%)
- EBIT of MNOK 17 (22)
- Net cash flow of MNOK 30 (42)
- Strong balance sheet: MNOK 227 in cash, no interest-bearing debt, MNOK 200 undrawn credit facility • Solid order backlog of MNOK 725 at quarter-end (864) • EPS of NOK 0.19 (0.18)
Events subsequent to Q2 2024:
| Highlights: Q2 2024 | |||
|---|---|---|---|
| Financial highlights | Operational highlights | ||
| • Revenue of MNOK 150, up 14% versus Q2 2024 (132) • EBITDA of MNOK 20 (25) |
• • |
Good project execution Continued high tender activity even though no major orders signed in the quarter |
|
| • EBITDA margin of 13.4% (18.6%) • EBIT of MNOK 17 (22) |
• • |
New automation system being installed with Supermajor in Gulf of Mexico Partnership agreement with Salunda for safety application integration |
|
| • Net cash flow of MNOK 30 (42) • Strong balance sheet: MNOK 227 in cash, no interest-bearing debt, MNOK 200 undrawn credit facility |
• • |
Good progress on 70t & 150t crane contracts High tender activity |
|
| • Solid order backlog of MNOK 725 at quarter-end (864) • EPS of NOK 0.19 (0.18) |
Impact technology ventures | • | Progressing commercial partnership discussions for SkyWalker as major component replacement tool |
| Events subsequent to Q2 2024: Agreement to become majority shareholder in Globetech (3rd • July, completed 15th August) |
1 | • • |
Divestment of FiiZK Digital to Bluefront (completed 5th July) Agreement to sell FiiZK Protection to Hampidjan Group (signed 6th August) 9 |
Key financials | Per quarter
Key financials | Per half-year
Order intake and backlog | Per quarter
1 Does not account for FX fluctuations in existing contracts
BUSINESS UPDATE
Syncrolift | Q2 update
| Market & Sales |
• No large new contracts won in Q2 • Continued high tender activity for both new shiplifts and upgrade projects • Geopolitical uncertainty drives agility requirements for navy yards • Tender lost due to believed strategic/political reasons |
|||
|---|---|---|---|---|
| Financials | • 5% revenue growth vs. same quarter last year • EBITDA margin affected by project mix / phasing of projects |
Ownership MNOK 118 |
Employees 47 |
|
| Operations | • Good progress on ongoing projects • Handover in August of shiplift project in Cochin, India • Commissioning of DMC transfer systems progressing well, expected completion in Q3 2024 |
|||
The leading provider of safe & efficient shipyard solutions
High visibility and tendering activity
Techano Oceanlift | Q2 update
| Techano Oceanlift Q2 update | |||||
|---|---|---|---|---|---|
| • Market & Sales • |
High tendering activity, particularly for active heave-compensated subsea cranes Targeting potential opportunities in the SOV market |
Intelligent offshore lifting | |||
| • Financials • |
Strong revenue increase vs Q2 2023 as execution of crane projects is progressing Soft margins as market entry projects required to establish customers' trust in the company's solutions |
Ownership 90% MNOK |
Employees 22 |
||
| • Operations • |
Execution of 70t offshore crane to Sefine Shipyard, delivery planned for late 2024. Agalas, the shipowner, has signed a 3–5-year charter with Reach Subsea Engineering near completion on 150t crane for Sefine Shipyard, with fabrication commenced in Q3. The ship is owned and operated by Agalas and Eidesvik Offshore |
7 | 9 |
Intelligent offshore lifting & load handling solutions
Intellilift | Q2 update
Market &
Sales • Revenue primarily driven by external drilling projects • Decent EBITDA margins with upside potential option to purchase system
Financials
Operations
• Tendering for drilling automation, simulators and other drilling controls • Cooperation agreement signed with Salunda Limited, combining Intellilift's proven automation technology and Salunda's patented camera and wearable digital zone monitoring technology for safer drilling rig operations
Data-driven performance for ocean-based industries
FiiZK | Turnaround progressing well Profitable second quarter of 2024 challenges facing the industry Increased tender activity and growth outlook
closed)
focus
- 2024
- 2024
Kvingedal
Starfish.
Increased focus on fish welfare and environmental risk driving demand for FiiZK
FiiZK Protectus 30,000 m3 Closed system
FiiZK FlexiCage Semi-closed system
20
Globetech – Connecting and securing maritime operations
Product portfolio - Full-service maritime IT solutions provider
Select customers – Ship owners & ship mgmt companies
21
Globetech is a new digital platform for Nekkar • 150+ vessels on recurring agreements • 10+ years track record of profitable growth and delivering solid financials • 20% EBITDA margin • Strong management team with incentives/lock in coming 3+ years
Niche maritime ICT provider with solid profitable growth
-
20% Repeat business & sticky customer base
-
Positioned for step-change in maritime digital transformation
20%
Industry 4.0 Cyber
Satellite disruption
security IoT & Robotics IMO &
Strong financial & strategic fit with Nekkar better serve Nekkar's target customer segment of high-end ship
Digitalization of ocean-based industries: Good fit for Nekkar's strategy of driving efficiency and sustainability for ocean-based industries by leveraging technology
Commercial synergies: Expansion of products and offerings to owners
with increased share of repeat business
| 11788 | ||
|---|---|---|
Skilled team: With deep domain knowledge and shared culture of innovation and growth
Two-staged deal to incentivize growth
- Nekkar acquires 67 percent ownership of Globetech transaction completed 15th August 2024
- months EBTIDA and an implied multiple of 7.7x EBITDA million in Nekkar ASA shares (1.482.550 shares) achieved EBITDA in 2027
-
FINANCIAL UPDATE
Nekkar financial highlights
Profit & Loss, Q2, H1 2024
| Nekkar financial highlights | ||||||
|---|---|---|---|---|---|---|
| Profit & Loss, Q2, H1 2024 | Revenue | |||||
| MNOK | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | 2023 | |
| Revenue Syncrolift |
150 124 |
132 118 |
302 250 |
234 211 |
575 515 |
growth |
| Intellilift Techano Oceanlift Other incl. eliminations |
11 19 -3 |
9 7 -1 |
19 41 -8 |
19 7 -3 |
34 30 -5 |
Profitability |
| EBITDA EBIT |
20 17 |
25 22 |
50 46 |
48 44 |
109 101 |
|
| Net finance Profit (loss) before tax Income tax expense |
6 24 4 |
3 25 5 |
-7 39 9 |
-2 42 9 |
8 109 26 |
|
| 20 | 20 | 30 | 33 | 83 | ||
| Profit (loss) for the period | 18.9% | Sales | ||||
| EBITDA margin | 13.4% | 18.6% | 16.7% | 20.4% | ||
| Net capitalized development costs1 Order intake Order backlog |
8 15 725 |
2 148 864 |
11 203 725 |
8 175 864 |
19 478 803 |
Revenue
- growth
Profitability
- Q2 EBITDA margins impacted by project mix effects in both Syncrolift and Techano combined with currency effects and a higher revenue contribution from Techano Oceanlift with softer margins • Q2 net financial items include Nekkar's share of FiiZK's quarterly profit of MNOK 5.2 • Net capitalized development cost primarily include development cost related to a new series of offshore/subsea cranes in Techano and development of technology in Syncrolift
Sales
More financial details in the Q2 / H1 Report
Key financials | Per company
| Key financials Per company | ||||
|---|---|---|---|---|
| MNOK | H1 24 | H1 23 | FY 23 | |
| Revenues | 250 | 211 | 516 | |
| EBITDA | 63 | 58 | 132 | |
| EBITDA % | 25% | 27% | ||
| MNOK | H1 24 | H1 23 | FY 23 | |
| Revenues | 19 | 19 | 34 | |
| EBITDA | 3 | 7 | 6 |
| H1 23 | FY 23 | |||
|---|---|---|---|---|
| Revenues | 19 | 19 | 34 | |
| EBITDA | 3 | 7 | 6 | |
| EBITDA % | 17% | 37% |
| H1 23 | FY 23 | ||
|---|---|---|---|
| Revenues | 250 | 211 | 516 |
| EBITDA | 63 | 58 | 132 |
| EBITDA % | 25% | 27% | |
| H1 23 | FY 23 | ||
| Revenues | 19 | 19 | 34 |
| EBITDA | 3 | 7 | 6 |
| EBITDA % | 17% | 37% | |
| MNOK | H1 24 | H1 23 | FY 23 |
| Revenues | 41 | 7 | 30 |
| EBITDA | 2 | 0 | 1 |
| EBITDA % | 6% | 6% | 4% |
Balance sheet
Balance sheet, Q2 2024
| Balance sheet | ||||
|---|---|---|---|---|
| Assets | ||||
| Balance sheet, Q2 2024 | ||||
| MNOK | 30.06.2024 | 30.06.2023 | 31.12.2023 | |
| ASSETS | ||||
| Intangible assets and goodwill | 77 | 84 | 67 | |
| Right of use assets | 13 | 16 | 14 | |
| Tangible assets | 9 | 10 | 9 | |
| Financial assets | 48 | 1 | 49 | |
| Inventory | 18 | 10 | 12 | |
| Accrued non invoiced production Trade receivables |
144 71 |
50 97 |
144 85 |
|
| Other short-term receivables | 36 | 12 | 6 | |
| Derivative financial instruments | 4 | 0 | 20 | |
| Bank deposits | 227 | 236 | 194 | |
| Total assets | 646 | 515 | 601 | |
| end | ||||
| LIABILITIES | ||||
| Deferred tax liabilities | 26 | 1 | 18 | |
| Lease liabilities Trade payables |
13 36 |
15 43 |
13 57 |
|
| Prepayments from customers | 56 | 10 | 39 | |
| Other current liabilities | 68 | 58 | 46 | |
| Total equity | 446 | 388 | 427 | |
| Total liabilities & equity | 646 | 515 | 601 | |
| Net working capital | 107 | 56 | 124 | |
Assets
• MNOK 46.7 million of Financial assets as of Q2
- 2023 are linked to the investment in FiiZK Working capital
- Working capital reduction of MNOK 17 compared to year-end 2023 • Accrued non invoiced production remains at high level as several projects are close to reached invoicing milestones - expected to be converted to cash over the coming months • Robust cash position of MNOK 227 at quarter • Quarter was positively impacted by solid EBITDA, partly offset by buy-back program • Available credit facility; MNOK 200 provides additional financial flexibility Net interest-bearing debt and equity • No interest-bearing debt • Solid equity, representing a 69 % equity ratio
Cash
- end
-
Cash flow
Cash flow development, H1 2024
- Cash flow • Cash flow from business is positive at MNOK 46 in H1 2024, driven by a solid EBITDA in the
- period and a reduced working capital • Cash flow from share program is negative at MNOK 13 in H1 2024, due to purchase of treasury shares in the period of MNOK 16, partly offset by cash inflow from sale of treasury shares in the employee share program of MNOK 3 • In total, a net cash inflow of MNOK 33 in the first half of 2024. The company maintains a strong cash position of MNOK 227 at the end of the
- quarter
Nekkar's capital allocation strategy
Portfolio growth
Investments in existing portfolio companies to fuel organic growth while maintaining a strong balance sheet
Share buy-backs
Buy-back program initiated in Q3 2023 and renewed in Q2 2024
New business
Strategic M&A to strengthen Nekkar's defined business segments
Innovation & R&D
Prudent development of Impact Technology Ventures to validate technology and market potential
| Available capital, Q2 2024 |
MNOK |
|---|---|
| Net cash |
227 |
| Undrawn credit facility |
200 |
| Total | 427 |
| Expecting continued solid operational going forward |
cash flow |
| Share buy-backs, Q3/23 – Q2/24 |
30.06.24 |
| Number of shares purchased |
2,980,044 |
| Average price (NOK) |
9.07 |
| Total transaction value (NOK) |
27,042,551 |
Total transaction value (NOK) 2,980,044 9.07 27,042,551 30.06.24
Summary Q2 2024 & outlook
Summary Outlook
Revenue growth of 14% versus Q2 2023, while EBITDA affected by differences in project mix/phasing of projects
Healthy order backlog of NOK 725 million, continued high tendering activity in all our companies
Strong cash flow, solid cash position and balance sheet
FiiZK turnaround progressing well, value-accretive acquisition of Globetech expected to generate higher proportion of repeat revenues going forward
| Backlog provides good visibility for 2024 and 2025 High tendering activity |
|
|---|---|
| xx | Successful implementation of InteliWell's breakthrough award likely to open up further rig market opportunities |
| Execution of backlog for two offshore cranes High tendering activity |
|
| Impact technology ventures | Conclude partnership model for O&M within offshore wind for SkyWalker |
| Complete FiiZK Digital and FiiZK Protection transactions Continue sales and tendering of solutions |
Next update: Q3 2024 financial results, 14 November 2024
Nekkar ASA Alternative performance measures
INTRODUCTION TO ALTERNATIVE PERFORMANCE MEASURES (APMs)
Nekkar Group (Nekkar) discloses alternative performance measures in addition to those normally required by IFRS. Nekkar is of the opinion that APMs are providing enhanced insight into the operations and prospects of the company. APMs are used as an integral part of the management and board of directors' key performance measure reporting and controls. Furthermore, securities analysts, investors and other interested parties frequently use such performance measures.
BASIS FOR PREPARATION
This presentation provides financial highlights for the second quarter of 2024 for Nekkar ASA. The consolidated financial statements for H1 2024 have been prepared in accordance with IAS 34 Interim Financial Statements, however the interim accounts do not include all the information required for a full financial statement and should therefore be read in connection with the audited consolidated financial statements of 2023.
The financial figures are not audited.
PROFIT MEASURES
EBITDA is short for "earnings before interest, taxes, depreciation and amortisation" in the consolidated income statement.
EBIT is short for "earnings before interest and taxes". EBIT corresponds to "operating profit/loss" in the consolidated income statement.
Margins such as EBITDA and EBIT are used to compare relative profit between periods. The margins are calculated as EBITDA or EBIT divided by revenue.
ORDER INTAKE MEASURES
Order intake and order backlog are presented as APMs as they are indicators of the company's revenue generation and operations in the future.
Order intake includes new signed contracts in the period, in addition to expansion of existing contracts and any cancellations of contracts. For newbuild contracts, the order intake is based on the signed contract value excluding potential options and change orders.
Order backlog represents the estimated value of remaining work for signed contracts.