NRC Group — Earnings Release 2022

Feb 21, 2023

NRC Group ASA - Q4 2022 results

NRC Group ASA - Q4 2022 results

NRC Group today published its financial results for the fourth quarter of 2022.

CEO Henning Olsen and CFO Ole Anton Gulsvik will present the results at 09:00 am

(CET) at House of Oslo, Ruseløkkveien 34, Oslo.

The presentation will also be webcast live on the following link:

https://channel.royalcast.com/landingpage/hegnarmedia/20230221_2/

The presentation will be followed by a live Q&A-session. Investors, analysts and

journalists are welcome to participate at House of Oslo or follow the

presentation digitally, where questions can be submitted during the event.

Below you will find a summary and highlights from the report:

Key figures Q4 2022

· Revenue: NOK 2.0 billion vs NOK 1.6 billion in Q4 2021

· EBITA*: NOK 31 million vs NOK 50 million in Q4 2021

· EBITA* margin: 1.6% vs 3.1% in Q4 2021

· Order intake: NOK 1.3 billion vs NOK 1.9 billion in Q4 2021

· Operating cash flow: NOK 160 million vs NOK 149 in Q4 2021

· Order backlog: NOK 7.8 billion vs NOK 7.8 billion in Q4 2021

* Before other income and expenses (M&A expenses)

Strong growth with reduced margins

The fourth quarter revenue was NOK 1,954 million compared to NOK 1,601 million

for the same period of 2021. The

revenue increased with 22% in the quarter, due to strong growth in Norway and

Sweden. Adjusted for currency effects, the growth was 21%.

The Group's operational profit, measured in EBITA* was NOK 31 million in the

fourth quarter, down from NOK 50 million in the same quarter last year. The

result included profit from sale of fixed assets totalling NOK 1 million,

compared to NOK 23 million in the same quarter last year.

EBITA* margin ended at 1.6% compared to 3.1% in the same quarter last year. The

cash flow from operations was NOK 160 million compared to NOK 149 million in the

same quarter last year.

Revenue for 2022 was NOK 7,030 million, an increase of 18% from same period last

year, mainly explained by strong growth in Norway and Sweden. EBITA* amounted to

NOK 151 million compared with NOK 139 million in 2021. The EBITA* included

profit from sale of fixed assets totalling NOK 32 million in 2022, compared to

NOK 75 million in 2021. The EBITA* margin was 2.1% in 2022, compared to 2.3% in

2021. The cash flow from operations in 2022 was NOK 235 million, down from NOK

358 million in 2021.

Finland had a revenue of NOK 677 million compared to NOK 706 million in the

fourth quarter last year. Adjusted for currency effects the organic growth was

-8%, driven by reduced volumes in Light Rail and Maintenance, and partly offset

by higher volumes in Rail construction. The EBITA* was NOK 34 million compared

to NOK 59 million in the same period of 2021, leading to an EBITA* margin of

5.0% for the quarter, down from 8.3% last year. The reduction is mainly related

to net gain from sale of machinery at NOK 16 million in the fourth quarter of

2021 compared to NOK 0 million in this quarter. Good profitability in Rail

construction and Light rail, was partly offset by weak results in Maintenance.

Revenue from the Swedish operation amounted to NOK 646 million for the quarter

compared to NOK 398 million in the same period of 2021. Adjusted for currency,

the organic growth in the quarter was 69%, with strong growth in Rail

construction. The EBITA* for the quarter was NOK -30 million compared to -21

million for the same quarter last year. Improved results in Rail construction

and Maintenance were offset by weak results in Civil construction.

Revenue in Norway was NOK 635 million compared to NOK 508 million in the fourth

quarter of 2021. The organic growth was 25% in the quarter, driven by

improvements within Rail construction and partly offset by lower volumes in

Civil construction. EBITA* was NOK 31 million compared to NOK 21 million in the

same period of 2021, which resulted in an EBITA* margin of 4.9% in the quarter,

up from 4.2% for the same quarter last year. Profitability was driven by strong

results from Environment and improved results in Rail construction.

Amortisation and impairment for the fourth quarter totalled NOK -361 million,

compared to NOK -19 million for the same period last year. This included

goodwill impairment charges of NOK -352 million in the fourth quarter, related

to the Swedish business.

The Group's operating profit (EBIT) for the fourth quarter was NOK -332 million,

a reduction from NOK 10 million last year. The EBIT for 2022 was NOK -240

million compared to NOK 42 million last year. Net financial items amounted to

NOK -15 million for the quarter, compared to NOK -16 million for the same period

last year. This included a reduction in net interest expenses from NOK 16

million to NOK 14 million due to debt instalments in the period. The Group has a

NIBOR hedge linked to the outstanding bond, which partly offsets increased

market interest rates. The share of profit from associated companies totalled a

loss of NOK 6 million for the fourth quarter 2022, compared to NOK 0 million in

the same period last year. Net financial items in 2022 was NOK -58 million

compared to NOK -66 million in 2021.

Earnings before tax (EBT) for the fourth quarter was NOK -353 million compared

to NOK -6 million last year. In 2022, EBT was NOK -313 million compared to NOK

-24 million last year. Net profit was NOK -393 million in the quarter compared

to NOK -9 million last year, with earnings per share (EPS) of NOK -5.40 compared

to NOK -0.12 same period last year. In 2022, the net profit was NOK -364 million

compared to NOK -27 million last year, with EPS of NOK -4.99 compared to NOK

-0.38 last year.

ORDER INTAKE

The order intake in the fourth quarter was NOK 1,254 million, with a split

between announced contracts of NOK 223 million and unannounced contracts of NOK

1,031 million. The book-to-bill ratio was 0.6 in the quarter and 1.0 in 2022.

The order backlog amounted to NOK 7,795 million at the end of December, a

decrease of NOK 814 million from last quarter, including a negative currency

adjustment of NOK -114 million.  The order backlog for production in 2023

amounted to NOK 3,740 million at the end of December, compared to NOK 4,101

million for 2022 at the end of fourth quarter 2021.

ANNOUNCED ORDERS

NRC Group Sweden was appointed by The Swedish Transport Administration to a

contract for catenary works on the railway connection between Kville and

Uddevalla. The contract is valued at approximately SEK 134 million and will

involve rail services such as electro and groundwork. The work will commence in

January 2023 and is scheduled for completion in April 2024. The Swedish

Transport Administration decided in the fourth quarter to exercise the contract

option for the maintenance contract between Hallsberg and Laxå, and Hallsberg

Railway yard. The contract option is valued at approximately SEK 101 million,

and will involve rail services such as track, signal and electro. The contract

option will commence in September 2024 and is scheduled for completion in August

TENDER PIPELINE

The Group has identified an addressable tender pipeline of approximately NOK

26.5 billion for the next nine months. This compares to a NOK 21.3 billion

tender pipeline three months ago and NOK 19.0 billion at the same time in 2021.

The tender pipeline in Finland is approximately NOK 5.8 billion, an increase of

approximately NOK 4.1 billion compared to the tender pipeline three months ago

and the tender pipeline is approximately NOK 4.2 billion higher than in the same

period last year due to more tenders in all divisions.

The tender pipeline in Norway is approximately NOK 10.2 billion, an increase of

NOK 3.2 billion compared to the tender pipeline three months ago. The increase

is mainly explained by increased number of tenders in the market for Rail

construction, and to some extent also for Civil construction and Environment

service. The tender pipeline has increased by approximately NOK 1.3 billion

compared with the same time last year. The increase is mainly related to Civil

construction and Environment services.

In Sweden, the tender pipeline is approximately NOK 10.6 billion, with NOK 4.6

billion for Rail construction, NOK 3.2 billion for Civil Construction and NOK

2.9 billion for Maintenance. The tender pipeline decreased by NOK 2.1 billion

compared to three months ago. The decrease is explained by a reduction in both

Rail construction and Maintenance. The tender pipeline is NOK 2.0 billion above

the same period last year, which is mainly related to increased level of tenders

in Civil construction while Rail construction and Maintenance is unchanged.

OUTLOOK

NRC Group is strongly positioned in a growing market with a substantial tender

pipeline. In 2023, NRC Group expects investments in rail to be at same level as

in 2022, based on proposals in national budgets and national transportation

plans in Norway, Sweden and Finland.

Uncertainty in the world economy has had limited impact on NRC Group per date.

The uncertain situation has led to an evaluation of the public investments in

infrastructure going forward in the Nordics and can impact rail funding in

certain projects.

NRC Group continues its focus on measures to improve profitability. For 2023, we

expect continued positive operational and financial development with a slight

decrease in revenue and moderate increase in EBITA* margins.

The fourth quarter 2022 result report and result presentation can be found

attached and will be available on the company's homepage: www.nrcgroup.com

This information is considered to be inside information pursuant to the EU

Market Abuse Regulation and is subject to the disclosure requirements pursuant

to Section 5-12 of the Norwegian Securities Trading Act.

This stock exchange announcement was published by Charlotte Krog, Communication,

NRC Group ASA., on 21 February 2023.