NRC Group — Investor Presentation 2024

Aug 29, 2024

2nd quarter 2024

CEO Anders Gustafsson

CFO Åsgeir Nord

Summary first half 2024

• Solid governmental support to upgrade and build sustainable infrastructure
• Market outlook is strong with tender pipeline at high levels
• Strong order intake first half
• Comprehensive analysis and decisive actions taken
• Financial performance in second quarter is weak with downward adjustments of NOK 160 million
• Strengthen liquidity position with potential share issue to raise capital
• 2024 is expected to be a set-back
• Long-term targets of more than 5% margin and NOK 10 billion in revenue reaffirmed

Downward adjustments of NOK 160 million in second quarter

Project	Reason	Effect	Actions
ETM (Electrification of Trønder and Meråkerbanen – NOR)	Major changes in scope, unsuccessful mediation with client (Bane NOR) in June	NOK 125 mill	• Process expected to continue in second half of 2024 • Extensive documentation work • New project management
Maintenance project (SWE)	Court decision in old project	NOK 15 mill	• Decision is appealed
Maintenance project (FIN)	Unresolved discussions related to a contractual term	NOK 20 mill	• Ongoing discussions with client
Rail project (FIN)	Tender calculation error, own productivity, procurement challenges		• Implemented unified Nordic tender process and group-wide methodology for risk assessment • Improved local routines for cost control
Rail project (FIN)	Tender calculation error, own productivity		and change order management • Established common local templates for procurement plan and procurement management principles

Committed to providing a safe and secure workplace

Health and safety

1. LTI: Injuries resulting in absence at least one full day per million man-hours (incl. subcontractors)

2. Injury that results in prolonged disability

Results dominated by the downward adjustments

Key figures Q2 2024

NOK 1.3

Q2 2023: NOK 1.6 billion

NOK 7

Q2 2023: NOK 107 million

EBIT adj. margin

-5.1%

Q2 2023: 3.6%

Order backlog

NOK 7.8 billion million billion

Q2 2023: NOK 8.0 billion

Significant effects of downward adjustments – and impairment of GW

121

%

-27

-1,0 %

-0,5 %

0,0 %

0,5 %

1,0 %

1,5 %

2,0 %

2,5 %

-0,4 %

Profit & loss

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD Q2 2024	YTD Q2 2023	FY 2023
Revenue	1 747	1 797	3 053	3 088	6 732
Operating expenses	-1 788	-1 678	-3 090	-2 965	-6 400
Depreciation and amortisation1	-47	-55	-94	-106	-211
EBIT adj.	-88	65	-131	17	121
EBIT adj. margin	-5,1 %	3,6 %	-4,3 %	0,5 %	1.8 %
Adjusting items2	-653	-1	-709	-2	-16
Net financial items	-23	-17	-42	-32	-59
Share of profit from associates and JVs	0	0	0	0	-2
Taxes	-20	-10	5	12	-8
Net profit / loss	-785	37	-878	-6	37

Notes

• Revenues at same level as in Q2 23
• EBIT adj. at NOK -88 million, down from NOK 65 million last year due to downward adjustments of NOK 160 million
• Impairment of goodwill of NOK 650 million (not part of EBIT adj.)

Pending clarification of substantial change orders in one project

Operational review NRC Group Norway

Revenue and EBIT adj. LTM Order backlog (total)

NOK million and percent NOK million

913 649 761 1 322 1 674 1 972 Coming years Current year

Q2 2023 Q2 2024

Key figures Notes

(NOK million)	Q2 2024	Q2 2023
Revenue	494	524
EBIT adj.	-46	23
EBIT adj. margin	-9.3%	4.4%
Order intake	271	277

• Write-down of NOK 62.5 million in joint Norwegian and Swedish project (ETM project). Process with client expected to continue in second half.
• Continued strong results from mass transportation business (Gunnar Knutsen). Lower volumes and results from the Civil construction business.
• Members of leadership team replaced, Ingvild Storås starting as new MD in Jan 2025

Successful transformation ongoing – temporary set-back due to ETM

Operational review NRC Group Sweden

Revenue and EBIT adj. LTM Order backlog (total)

NOK million and percent NOK million

Key figures Notes

(NOK million)	Q2 2024	Q2 2023
Revenue	438	552
EBIT adj.	-60	10
EBIT adj. margin	-13.6%	1.8%
Order intake	525	251

• Result negatively affected by NOK 62.5 million write-down on the ETM project. Additionally, NOK 15 million negative result recognised following a court decision related to a completed project in Sweden (decision is appealed)
• EBIT adj. LTM would have been 1.4% (compared to -1.8% YTD Q2 2023) without the downward adjustments.
• Strong order intake and book-to-bill at 1.2x in the quarter
• Leadership team strengthened with new MD, Tomas Johansson, starting Sept 2024 and new CFO, started June 2024

Finland

Coming years Current year

Ongoing tender and improvement processes

Operational review NRC Group Finland

2 089 1 504 3 237 2 478

1 148 974

Q2 2023 Q2 2024

Key figures Notes

(NOK million)	Q2 2024	Q2 2023
Revenue	823	726
EBIT adj.	32	42
EBIT adj. margin	3.9%	5.8%
Order intake	531	1 044

0,0 % 1,0 % 2,0 % 3,0 % 4,0 % 5,0 % 6,0 % 7,0 %

• Revenue growth of 14% in local currency
• Result negatively affected by downward adjustments of NOK 20 million in three specific projects
• Improvement programs ongoing
• Two alliance light-rail contracts won last nine months are currently in design phase with significant backlog potential if construction is decided

Working capital reduced following significant downward adjustments

Cash flow and working capital

Net interest-bearing debt, maturity profile and leverage ratio

Financial position

Bank debt* Bond

*All bank debt is in the balance sheet per Q2 2024 classified as short-term debt as waivers from the bank in relation to the leverage ratio covenant and interest cover ratio covenant were not received before after the balance sheet date.

NRC Group, together with our advisor Danske Bank, have initiated dialogues with certain key bondholders, with the aim to agree the terms of the necessary waivers within short

The order backlog gives some downward pressure on short term EBIT Backlog

Order intake & Book-to-bill LTM Order backlog (total) Order backlog execution

NOK million

NOK million NOK million

Unannounced Announced LTM book-to-bill

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

High demand for infrastructure – continued robust tender pipeline

NOK 29 billion tender pipeline in Group¹ Notes

BNOK value, next 9 months (submission)

• Continued high tender pipeline across all countries
• Foundation for future profitable growth for NRC Group
• Governmental support to upgrade and build sustainable infrastructure, presents significant opportunities (10 years National Transportation Plans)

Second quarter

Summary

Financials

• Revenue of NOK 1,747 million (NOK 1,797 million)
• EBIT adj. margin of -5.1% (3.6%), result affected by downward adjustments of NOK 160 million
• Strengthen liquidity position with potential share issue to raise capital

Operations

• Strengthen management team especially in Norway
• Ongoing successful transformation in Sweden with strong order intake
• Improvement programs in Finland ongoing
• New strategy for next four years in place

Market

• Investments from Nordic governments at high levels
• Substantial tender pipeline
• Strong sustainable profile

Guiding

Targets for long-term strategy reaffirmed

2024 targets	2025 targets	2028 targets
NOK ~6.5 billion	NOK ~7 billion	>NOK 10 billion
Revenue	Revenue	Revenue
-0.9 to -1.5%	>2%	>5%
EBIT adj. margin	EBIT adj. margin	EBIT adj. margin

Linear improvement towards 2028

Q3 2024 results 20 November

Appendix

Reconciliation of EBIT adj.

(Amounts in NOK million)	02 2024		Q2 2023 YTD 2024	YID 2023	FY 2023
Operating profit/loss (EBIT)	142	64	-840	14	105
Adjusting items
Gain from sale of Gravco	0	0	0	-40	-40
M&A expenses	0	0	-4	1	-7
Restructuring recycling and demolition business (NRC Kept)	3	0	63	0	0
Restructuring items, other	O	1	O	6	21
Write-down operations to be discontinued (Civil Sweden)	0	0	0	35	43
Impairment of goodwill (Norway)	150	0	150	0	0
Impairment of goodwill (Finland)	500	0	500	0	0
Adjusting items, total	653	1	709	S	16
EBIT adj.	-88	65	-131	17	121
Depreciation	44	51	87	ਰੂਰ	197
Amortisation of IT software investments	3	4	7	7	15
EBITDA adj.	-41	119	-31	123	332

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, forwardlooking 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.