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NRC Group — Investor Presentation 2021
Nov 9, 2021
3693_rns_2021-11-09_077f4532-7d66-4f21-ae69-07f214ef5016.pdf
Investor Presentation
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3rd quarter 2021 result presentation
CEO Henning Olsen and CFO Dag Fladby 9 November 2021
Disclaimer
- This draft presentation (hereinafter referred to as the "Presentation") has been prepared exclusively for information purposes and does not constitute an offer to sell or the solicitation of an offer to buy any financial instruments.
- This Presentation includes and is based on, among other things, forward-looking information and statements. Such forward-looking information and statements are based on current expectations, estimates and projections. Such forward-looking information and statements reflect current views with respect to future events and are subject to risks, uncertainties and assumptions. We cannot give any assurance as to the correctness of such information and statements.
- Several factors could cause the actual results, performance or achievements of the companies mentioned herein to be materially different from any future results, performance or achievements that may be expressed or implied by statements and information in this Presentation, including, among others, risks or uncertainties associated with the company's business, segment, development, growth management, financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors. Should one or more of these risks or uncertainties materialise, or should underlying assumption prove incorrect, actual results may vary materially from those described in this document. We do not intend, and do not assume any obligation, to update or correct the information included in this Presentation.
- There may have been changes in matters which affect the companies herein subsequent to the date of this Presentation. Neither the issue nor delivery of this Presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of the company/companies have not since changed, and we do not intend, and do not assume any obligation, to update or correct any information included in this Presentation.
- 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 with Oslo City Court AS exclusive venue.
Highlights Q3
Revenue NOK 1.7 billion (NOK 2.0 billion Q3 2020)
EBITA* NOK 102 million
(NOK 88 million Q3 2020)
EBITA* margin 6.0 % (4.5% Q3 2020)
Order intake NOK 2.7 billion (NOK 1.2 billion Q3 2020)
Operating cash flow NOK 238 million
(NOK 129 million Q3 2020)
3
Highlights Q3 – Major wins
FIN: Crown Bridges (Rail Construction)
NOK 1,085 million
SWE + NOR: Trønder-Meråker- banen (Electrification)
NOK 760 million
Health & safety
SICKNESS ABSENCE Q3 2020: 5.0%
SERIOUS INJURIES Q3 2020: 0
• Keep employees safe and minimize impact on operations Covid • Entry restrictions have been lifted gradually in the Nordics -19
*LTI-1: Injuries resulting in absence at least one full day per million man-hours (incl. subcontractors). **LTI-2: lost time injuries in total per million man-hours, also including injuries that require medical treatment and alternative work (incl subcontractors). Figures per 30 September 2021 compared with 30 September 2020.
Profit & loss
- Revenues down 13% from Q320
- Adjusted for currency effects ~ -11%
- EBITA* improvement of NOK 14 million from Q320
- EBITA* margin of 6.0% vs 4.5% last year
- EBT improvement of NOK 25 million from Q320
| (Amounts in NOK million) | Q3 2021 | Q3 2020 YTD 2021 |
YTD 2020 | FY 2020 | |
|---|---|---|---|---|---|
| Revenue | 1 698 | 1 956 | 4 356 | 4 871 | 6 449 |
| Operating expenses | 1 548 | 1 816 | 4 117 | 4 650 | 6 185 |
| EBITDA* | 150 | 140 | 239 | 221 | 264 |
| Other income and expenses (M&A expenses) | -1 | -5 | -12 | -10 | -1 |
| EBITDA | 149 | 136 | 227 | 210 | 263 |
| Depreciation | 49 | 53 | 150 | 160 | 214 |
| EBITA* | 102 | 88 | 89 | 61 | 50 |
| EBITA | 100 | 83 | 77 | 50 | 49 |
| Amortisation | 12 | 13 | 45 | 44 | 59 |
| Operating profit/loss (EBIT) | 89 | 70 | 32 | 6 | -10 |
| Net financial items | -17 | -23 | -50 | -64 | -84 |
| Profit/loss before tax (EBT) | 71 | 47 | -19 | -58 | -94 |
Balance sheet
- Cash: NOK 565 million
- Interest-bearing debt reduced by NOK 71 million to NOK 1,549 million
- Net interest-bearing debt decreased by NOK 194 million to NOK 985 million
- Equity ratio: 48%
| (Amounts in NOK million) |
30.09.2021 | 30.09.2020 | 31.12.2020 |
|---|---|---|---|
| ASSETS | |||
| Intangible assets | 2 900 | 3 028 | 3 010 |
| Right-of-use assets | 499 | 572 | 588 |
| Total other non-current assets | 206 | 316 | 255 |
| Cash and cash equivalents | 565 | 606 | 610 |
| Other current assets | 1 438 | 1 654 | 1 404 |
| Total assets | 5 607 | 6 177 | 5 867 |
| EQUITY AND LIABILITIES | |||
| Total equity | 2 668 | 2 795 | 2 731 |
| Long-term financial lease liabilities | 227 | 284 | 290 |
| Long-term operating lease liabilities | 84 | 104 | 106 |
| Other non-current interest-bearing liabilities | 920 | 1 109 | 1 042 |
| Other non-current liabilities | 28 | 71 | 52 |
| Short-term financial lease liabilities | 116 | 117 | 120 |
| Short-term operating lease liabilities | 54 | 54 | 57 |
| Other interest-bearing current liabilities | 148 | 162 | 153 |
| Other current liabilities | 1 362 | 1 482 | 1 316 |
| Total equity and liabilities | 5 607 | 6 177 | 5 867 |
Cash flow
| (NOK million) | Cash flow from operation* per quarter | (Amounts in NOK million) | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | FY 2020 | ||
|---|---|---|---|---|---|---|---|---|---|
| 238 | Profit/loss before tax | 71 | 47 | -19 | -58 | -94 | |||
| 200 | Net cash flow from operating activities | 238 | 129 | 209 | 217 | 316 | |||
| 150 | 129 | Net cash flow from investing activities | -17 | -110 | 29 | -148 | -150 | ||
| 100 | 110 | Net cash flow from financing activities | -97 | -100 | -287 | 402 | 304 | ||
| 50 | 63 43 31 |
17 | Cash and cash equivalents at the end of the period | 565 | 606 | 565 | 606 | 610 | |
| 0 | |||||||||
| -21 - 50 |
-45 |
Q3 2021
• Operating cash flow of NOK 238 million
• YTD last year was positively affected by improved payment terms to Trafikverket in Sweden, due to Covid-19 support measures
Q1 2020
Q4 2019
Q3 2019
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q2 2020
Strong order intake Q3 2021
- Order book NOK 7,647 million
- Order intake of NOK 2,683 million
- YTD order intake NOK 5,709 million (+45% vs acc. Q320)
* "Zero margin" projects, related to the project adjustments in Q4 2019 is ~ NOK 30 million on 30 September 2021, and is scheduled for execution in 2021.
Solid financial position as per 30 September
- Cash position of NOK 565 million
- Undrawn Revolver Credit Facility of NOK 200 million
- Net interest-bearing debt of NOK 985 million
Operational review
NRC Group Finland – Strong profitability
| (NOK million) | Q3 2021 | Q3 2020 |
|---|---|---|
| Revenue | 793 | 831 |
| EBITA* | 87 | 84 |
| EBITA* margin | 10.9% | 10.0% |
| Order intake | 1,409 | 730 |
- Organic growth** -1%
- Lower activity and profitability in Materials
- Strong profitability in Rail Construction
- Solid order intake in Rail Construction
- Low hit rate in Maintenance
NRC Group Finland – Solid tender pipeline
NRC Group Norway – Improved profitability
| (NOK million) | Q3 2021 | Q3 2020 |
|---|---|---|
| Revenue | 495 | 541 |
| EBITA* | 20 | 16 |
| EBITA* margin | 4.1% | 3.0% |
| Order intake | 697 | 312 |
- Organic growth -8%
- Improved profitability in all divisions
- Continued good progress on improvement measures
- Important win in Rail Construction with Trønder- Meråkerbanen
NRC Group Norway - Solid tender pipeline
NOK 7.4 billion tender pipeline1 NOK million value, # of tenders, next 9 months
| Strong pipeline | • Decrease of NOK 0.9 Bn in tender pipeline vs Q221 and an increase of NOK 1.2 Bn vs last year • The new government will stop privatisation of maintenance |
|
|---|---|---|
| Budget proposal 20222 |
• NOK 26.7 bn for 2022, at same level as 2021 and NTP for 2022 |
1) NRC Group estimates 2) Proposed National budget 2022, prop 1S
NRC Group Sweden – Improved order intake
| (NOK million) | Q3 2021 | Q3 2020 |
|---|---|---|
| Revenue | 411 | 583 |
| EBITA* | 0 | -7 |
| EBITA* margin | 0% | -1.2% |
| Order intake | 576 | 152 |
363 299 1 668 1 845 2 031 2 144 Coming years Current year Order backlog (NOK million)
Q3 2021 Q3 2020
- Organic growth** -28%
- Improved EBITA despite low revenues
- Improved order intake
- Still fierce competition
NRC Group Sweden – Continued high tender activity expected
NOK 8.7 billion tender pipeline1 NOK million value, # of tenders, next 9 months
- Decrease with NOK 0.3 Bn from Q221 pipeline, mainly from Rail construction projects
- NOK 1.5 Bn higher than last year at same time, mainly explained larger Rail construction projects coming into the market
- Five Maintenance contracts with Trafikverket to be tendered for in the pipeline, including three of our existing contracts
• SEK 30.7 bn for 2021, +2% higher than estimated in the NTP
Operational improvements
Status presented at Capital Market Update 2020
Measures presented at Capital Market Update 2020
Win the right projects at the right price
A fact-based analytical approach throughout the tender process by
- Selecting projects based on competitive edge and commercial potential
- Professionalising calculation process
- Group-wide process for commercial risk assessments in tender phase
- Analytical pricing approach based on systematic use of market intelligence
Operational excellence – do the projects right
Strengthen execution model and portfolio governance by
- Robust project organisation matching capabilities with project challenges
- Strengthen resource planning and sub-contractor strategy
- Contract management
- Implement new risk management tools
- Monthly processes for governance of production cost vs. actual completion rate
Measures contribute to increased margin on new projects
Status presented at Capital Market Update
Project margin1on projects won before 2020 Project portfolio: Rail and Civil in Sweden, and Rail in Norway
Projects won in 2020 and YTD 20212
Project margin1 on project portfolio: Rail and Civil in Sweden, and Rail in Norway
Weighted project margin ~7% p.p higher than projects won before 20203
- 2) Projects won in 2020 and 2021 with PTE (project-to-end) revenue > NOK 5 million and YTD 2021 revenue > 5 million.
- 3) Compared with project portfolio in Rail and Civil in Sweden, and Rail in Norway presented at Capital Market Update in February 2020
Summary
- Financials
- Improved profitability • Strong order intake
- Solid cash flow
Operations • Continued focus on core processes in tendering and project execution continues in order to restore profitability
- Outlook 2021 EBITA*margin expected to be 1.75-2.5%
- Confirmed strong outlook for investments in sustainable infrastructure
Appendix
Improved order book and book-to-bill
Order book execution by country NOK million
Book-to-bill ratio Period order intake/revenue
Segments – Key figures quarterly development
| Reported Reported | Reported Reported*** | Reported | Reported | Reported | Reported | Reported | Reported | Reported | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Norway operations (NOK million) | FY 2017 | FY 2018 | FY 2019 | FY 2020 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | Q3 2021 |
| Total revenue | 771 | 1 598 | 2 281 | 1 866 | 470 | 545 | 683 | 583 | 407 | 476 | 541 | 442 | 423 | 433 | 495 |
| EBITDA* | 43 | 136 | 186 | 82 | 14 | 65 | 75 | 32 | 7 | 50 | 41 | -17 | 6 | 29 | 42 |
| EBITA* | 21 | 96 | 97 | -14 | -5 | 43 | 52 | 8 | -14 | 27 | 16 | -43 | -17 | 2 | 20 |
| EBIT* | 5 | 75 | 70 | -23 | -13 | 35 | 45 | 2 | -18 | 23 | 16 | -44 | -18 | -7 | 20 |
| Sweden operations (NOK million) | FY 2017 | FY 2018 | FY 2019 | FY 2020 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2020 | Q2 2021 | Q3 2021 |
| Total revenue | 1 613 | 1 591 | 1 539 | 1 777 | 299 | 411 | 460 | 370 | 311 | 487 | 583 | 396 | 259 | 400 | 411 |
| EBITDA* | 221 | 27 | -77 | -21 | -7 | -13 | 14 | -71 | -15 | 0 | 4 | -10 | -22 | 0 | 13 |
| EBITA* | 198 | -8 | -125 | -69 | -20 | -24 | 2 | -83 | -27 | -13 | -7 | -22 | -35 | -12 | 0 |
| EBIT* | 179 | -16 | -125 | -71 | -20 | -24 | 2 | -83 | -28 | -14 | -8 | -23 | -36 | -13 | -1 |
| Finland operations (NOK million) | FY 2017 | FY 2018 | FY 2019 | FY 2020 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2020 | Q2 2021 | Q3 2021 |
| Total revenue | 2 388 | 2 811 | 361 | 601 | 712 | 713 | 540 | 700 | 831 | 740 | 446 | 695 | 793 | ||
| EBITDA* | 191 | 231 | 4 | 64 | 70 | 53 | 16 | 37 | 100 | 78 | 15 | 78 | 100 | ||
| EBITA* | 116 | 161 | -13 | 45 | 55 | 29 | -3 | 19 | 84 | 62 | 2 | 65 | 87 | ||
| EBIT* | 75 | 116 | -24 | 35 | 45 | 19 | -14 | 7 | 72 | 50 | -9 | 55 | 76 | ||
| Total group segment accounts | FY 2017 | FY 2018 | FY 2019 | FY 2020 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2020 | Q2 2021 | Q3 2021 |
| Total revenue | 2 373 | 3 176 | 6 193 | 6 449 | 1 130 | 1 551 | 1 850 | 1 663 | 1 254 | 1 661 | 1 956 | 1 578 | 1 129 | 1 529 | 1 698 |
| EBITDA* | 236 | 132 | 267 | 264 | -3 | 103 | 153 | 13 | -1 | 81 | 140 | 44 | -10 | 99 | 150 |
| EBITA* | 190 | 57 | 55 | 50 | -54 | 51 | 105 | -47 | -54 | 27 | 88 | -10 | -59 | 47 | 102 |
| EBIT* | 156 | 29 | -15 | -8 | -72 | 34 | 87 | -63 | -69 | 11 | 75 | -25 | -71 | 26 | 90 |
*Before other income and expenses (M&A expenses).
**Design operations restated as discontinued operations.
***Restated due to deviation from Q4 to full-year 2019 report related to the final settlement of a dispute from 2015 decided by an arbitration court.
Finland – Proposed higher level of investment in 2022
Rail investments and maintenance spending1 EUR million, 2019-24
Sweden – Proposed budget 2022 in line with expectations
Rail investments and maintenance spending1 SEK billion, 2019-24
Investments Maintenance,renewals and operations
- Budget proposal SEK 30.7 bn for 2021, +2% higher than estimated in the NTP
- Rail investments SEK 16.7 bn mainly targeted to existing larger projects, slightly higher than NTP
- Maintenance 2022 In line with NTP. Expected additional increases in 2023/24
- Renewal SEK 4.7 bn in 2022 vs SEK 4.3 bn in P 2021
- Maintenance backlog SEK ~18 Bn in 2020 and expected to be stable going forward
1) Sweden: National budget 2022 with estimated for 2022-24, Swedish Transport Administration estimates for 2024 excluding estimated railroad tax. Maintenance is including renewal/reinvestments, excluding tram and metro.
Norway - Proposed budget 2022 for operation and investments is in line with 2021 and NTP
Rail investments
maintenance and
renewal
Rail investments and maintenance spending1 NOK billion, 2019-24
Operations, maintenance and renewal Investment and investment planning
Budget proposal • NOK 26.7 bn for 2022, at same level as 2021 and NTP for 2022
• Increase of NOK +3.0 bn from 2021 mainly due increased investment and technical changes is the budget (ERMTS is moved to investments)
• Investments mainly targeted to already awarded Inter City investment (IC) projects
Budget for operations, • NOK 7,6 bn - down NOK 1.6 bn mainly due to technical changes in the budget (ERMTS moved to investments)
• Renewal and upgrade NOK 3.2 bn in 2021 (NOK 2.3 bn in B2021)
Maintenance backlog • NOK 23 bn in 2021 and expected to increase to NOK 24,4 bn during 2022
1) Norway: Proposed National budget 2022, National Railway Directorate NTP filings. Maintenance figures include Bane NOR operations and renewal, partly addressable. Excluding tram and metro. S2021: Revised budget 2021. NTP: National Transportation Plan 2022-2033