Nrc Group Asa · OSL:NRC
Nrc Group Asa — Q1 2024 Earnings Presentation
76 slides from Nrc Group Asa's earnings presentation, May 23, 2024
Slide 1: 1st quarter 2024
23 May 2024 st 1 quarter 2024 CEO Anders Gustafsson CFO Ole Gulsvik
Slide 2: Key figures Q1 24
KEY FIGURES Q1 24 Improved results and strong order intake REVENUE EBIT adj. EBIT adj. margin NOK 1.3 billion NOK -43 million -3.3% Q1 2023: NOK 1.3 billion Q1 2023: NOK -48 million Q1 2023: -3.7% ORDER INTAKE OPERATING CASH FLOW ORDER BACKLOG NOK 2.6 billion NOK -126 million NOK 8.2 billion Q1 2023
Slide 3: Health and safety
HEALTH AND SAFETY Committed to providing a safe and secure workplace LTI1 SICKNESS ABSENCE SERIOUS INJURIES2 6.4 4.8 % 2 2 6.0 6.0 4.2 % 5.6 5.6 3.9 % 4.9 3.8 % 3.8 % 3.5 % 0 0 0 0 2019 2020 2021 2022 2023 LTM Q1 2019 2020 2021 2022 2023 LTM Q1 2019 2020 2021 2022 2023 LTM Q1 2024 2024 2024 1) LTI:
Slide 4: Operating profit in line with last year
PROFIT & LOSS Operating profit in line with last year Revenue and EBIT adj. LTM (Amounts in NOK million) Q1 2024 Q1 2023 FY 2023 FY 2022 NOK million and percent Revenue 1 306 1 291 6 732 7 030 160 2.5 % Operating expenses -1 301 -1 289 -6 400 -6 695 7 030 6 732 6 747 137 Depreciation and amortisatio
Slide 5: Strong order intake and book-to-bill at 2.5x
OPERATIONAL REVIEW NRC GROUP NORWAY NO Strong order intake and book-to-bill at 2.5x Revenue and EBIT adj. Order backlog (total) NOK million and percent NOK million 2 281 2 373 115 5.0 % 2 194 2 136 2 091 4.3 % 97 3.8 % 3.6 % 95 3.4 % 4.0 % 1 921 1 866 1 859 80 81 75 74 3.0 % 736 1 234 55 1.4 % 2.0 %
Slide 6: Successful ongoing transformation
OPERATIONAL REVIEW NRC GROUP SWEDEN SWE Successful ongoing transformation Revenue and EBIT adj. Order backlog (total) NOK million and percent NOK million 30 20 3 428 2 080 10 0 1.0 % 3 271 1 877 1 973 0.0 % 1 777 -10 0.0 % 1 539 1 468 -30 -2.0 % -50 -4.0 % -4.8 % -2.5 % 2 207 -4.0 % 2 114 -52 Coming
Slide 7: Lower volumes – attractive tender pipeline
OPERATIONAL REVIEW NRC GROUP FINLAND FIN Lower volumes – attractive tender pipeline Revenue and EBIT adj. LTM Order backlog (total) NOK million and percent 7.1 % NOK million 2 851 200 188 2 730 2 811 2 753 2 640 2 709 180 7.0 % 2 582 5.6 % 160 5.0 % 145 6.0 % 2 388 141 140 1 528 1 298 4.1 % 5.0 % 12
Slide 8: Strong order intake in the quarter
BACKLOG Strong order intake in the quarter Order intake & Book-to-bill LTM Order backlog (total) Order backlog execution NOK million NOK million NOK million 2 670 3 729 2 582 8 610 3 550 1.3 1.3 8 348 8 200 8 195 7 982 2 161 7 795 7 331 1.1 6 940 2 024 6 613 1.0 1.0 1.0 2 441 2 427 0.9 2 205 1 566 2
Slide 9: High demand for infrastructure – strong tender pipeline
High demand for infrastructure – strong tender pipeline NOK 31 billion tender pipeline in Group1 Notes BNOK value, next 9 months • Continued high tender pipeline across all countries 35 34 31 • Foundation for future profitable growth 30 for NRC Group 25 21 20 19 19 18 18 18 18 Q1 21 Q2 21 Q3 21 Q4 2
Slide 10: Working capital and cash flow
Working capital and cash flow Cash flow from operations Net working capital (NWC) Change in cash Q1 2024 NOK million NOK million NOK million Operating CF NOK -126 million 306 208 160 102 110 96 107 62 60 55 69 12 9 -48 -90 -62 -126 -84 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q1 22 Q2 2
Slide 11: Net interest-bearing debt, maturity profile and leverage ratio
FINANCIAL POSITION Net interest-bearing debt, maturity profile and leverage ratio Net interest-bearing debt (NIBD) Bank and bond maturities Leverage ratio: NIBD/EBITDA adj. LTM Ratio NOK million NOK million Target < 2.5x 3.1 2.8 2.8 2.8 2.8 2.7 2.6 400 2.4 2.3 57 57 72 43 2024 2025 2026 2027 Q1 22 Q
Slide 12: Q2 2024 results 29 August
MM Q2 2024 results 29 August SN ee | ee
Slide 13: Appendix
Appendix
Slide 14: Reconciliation of EBIT adj.
Reconciliation of EBIT adj. 14
Slide 15: Financial position and cash flow
Financial position and cash flow (Amounts in NOK million) 31.03.2024 31.03.2023 31.12.2023 (Amounts in NOK million) Q1 2024 Q1 2023 FY 2023 ASSETS Intangible assets 2 612 2 570 2 557 Profit/loss before tax -117 -65 45 Right-of-use assets 446 559 542 Total other non-current assets 161 208 171 Net cas
Slide 16: Disclaimer
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
Slide 17: Capital Markets Update
CMU May 2024 Capital Markets Update
Slide 18: Disclaimer
Disclaimer This draft presentation (hereinafter referred to as the “Presentation”) has been changes in competition and pricing environments, fluctuations in currency prepared exclusively for information purposes and does not constitute an offer exchange rates and interest rates and other factors. Sh
Slide 19: Agenda
Agenda Capital 09:00 am 09:55 am Markets First quarter 2024 results Anders Gustafsson and Ole Anton Gulsvik Strengthened execution platform Harri Lukkarinen Update 2024 09:15 am 10:10 am The most ambitious infrastructure Delivering on targets and creating value builder in the Nordics Ole Anton Gulsv
Slide 20: First quarter 2024
NRC Nero ony First quarter 2024
Slide 21: Improved results and strong order intake
Improved results and strong order intake Key figures Q1 2024 Revenue EBIT adj. EBIT adj. margin NOK 1.3 Q1 2023: NOK 1.3 billion billion NOK -43 Q1 2023: NOK -48 million million -3.3% Q1 2023: -3.7% Order intake Operating cash flow Order backlog NOK 2.6 Q1 2023: NOK 1.3 billion billion NOK -126 Q1 2
Slide 22: Operating profit in line with last year
Operating profit in line with last year Profit & loss EBIT adj. (Amounts in NOK million) Q1 2024 Q1 2023 FY 2023 FY 2022 NOK million Revenue 1 306 1 291 6 732 7 030 91 Operating expenses -1 301 -1 289 -6 400 -6 695 80 Depreciation and amortisation1 -47 -52 -211 -198 65 EBIT adj. -43 -48 121 137 60 E
Slide 23: Norway: Strong order intake and book-to-bill at 2.5x
Norway Strong order intake and book-to-bill at 2.5x Operational review NRC Group Norway Revenue and EBIT adj. LTM Order backlog (total) NOK million NOK million and percent NOK million 2 281 2 373 115 2 194 4.3 % 97 5.0 % 2 136 2 091 3.8 % 3.6 % 95 3.4 % 1 921 1 866 1 859 4.0 % 80 81 75 74 3.0 % 736
Slide 24: Sweden: Successful ongoing transformation
Sweden Successful ongoing transformation Operational review NRC Group Sweden Revenue and EBIT adj. LTM Order backlog (total) NOK million NOK million and percent NOK million 30 20 3 428 3 271 2 080 10 0 1.0 % 1 877 1 973 0.0 % 1 777 -10 0.0 % -2.5 1 539 1 468 -4.0 -4.8 % -2.0 % -30 2 207 Coming years
Slide 25: Finland: Lower volumes – attractive tender pipeline
Finland Lower volumes – attractive tender pipeline Operational review NRC Group Finland Revenue and EBIT adj. LTM Order backlog (total) NOK million NOK million and percent NOK million 7.1 % 2 851 188 2 730 2 811 2 753 200 2 640 2 709 180 7.0 % 2 582 5.0 % 5.6 % 2 388 160 141 145 6.0 % 140 4.1 % 5.0
Slide 26: Working capital
Working capital Net working capital (NWC) Comments NOK million Significant fluctuations in working capital 208 173 Q1 2024 reflects increased tied-up capital 164 related to joint Norwegian-Swedish rail project 110 102 88 77 80 62 60 55 7 9 -2 -35 -62 -84 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 22 Q3 22 Q4
Slide 27: Strong order intake in the quarter
Strong order intake in the quarter Order intake & Book-to-bill LTM Order backlog (total) Order backlog execution NOK million NOK million NOK million 2 670 3 729 2 582 8 610 3 550 1.3 1.3 8 348 8 200 8 195 7 982 7 795 2 161 7 331 1.1 6 940 2 024 6 613 1.0 1.0 1.0 2 441 2 427 0.9 1 566 2 205 0.8 2 044
Slide 28: The most ambitious infrastructure builder in the Nordics
Strategy update The most ambitious infrastructure builder in the Nordics
Slide 29: 2028 targets
Building and maintaining critical 2028 targets infrastructure Strong Nordic foundation in rail construction and maintenance >NOK 10 billion Revenue Realising full potential through disciplined expansion in civil construction and new adjacent markets Leveraging group capabilities across the Nordics >
Slide 30: Megatrends driving growth in addressable market
Megatrends driving growth in addressable market Addressable market1 ubåt NOK billion +35% 82 Population growth and Increased defence urbanisation spending 60 Intensified focus on critical Energy transition and infrastructure security of supply 2023 2028E 1) Sources: National Transportation Plans Nor
Slide 31: Leveraging on established Nordic market position
Leveraging on established Nordic market position… Market leader in rail in Norway, Finland and Sweden Competitive advantage through a complete value chain offering OSLO HELSINKI Growing footprint within selected civil construction segments with STOCKHOLM special expertise in power, concrete and wate
Slide 32: Unique capabilities to expand in attractive niche markets
...with unique capabilities to expand in selected attractive niche markets Civil Finland addressable renewable energy market1 expected to double by 2028 to Energy Solar power construction, power stations, onshore wind farms NOK ~17 billion Critical infrastructure Water reservoirs, water supply Statk
Slide 33: Strong growth expected in priority markets
Strong growth expected in priority markets Rail Civil Maintenance Construction Energy: Solar power construction, Rail and light rail Substructure power stations, onshore wind farms New markets such as electrical Superstructure Defence: Ports, harbours, mobility installations for renewable Signalling
Slide 34: Stand-alone machine unit to support growth in priority markets
Stand-alone machine unit to support growth in priority markets Cross-Nordic use of machines, vehicles and equipment Optimising internal and external utilisation Capturing synergies to increase return on investments • Improved planning • Lower purchasing costs • Lower overhead costs • Improved fundin
Slide 35: Clearly defined success factors guiding the organisation
Clearly defined Excellence success factors Delivering operational excellence, ensuring guiding the top quality and added customer value organisation Efficiency Building a unified, digital and cost-effective Nordic structure Culture Creating a winning culture across the Nordics
Slide 36: Implementing strategy to increase value and efficiency
Implementing strategy to increase value and efficiency The NRC way The NRC Way Win big Improve project Nordic spirit Active Building with execution leadership purpose Build winning positions in Collaborative culture priority markets Streamline processes and Leverage best-practice Strengthen leadersh
Slide 37: Building with purpose
RO CMU roup Building with purpose
Slide 38: High-quality infrastructure enables modern societies to grow and thrive
High-quality Entrepreneurial infrastructure enables We deliver infrastructure, not bureaucracy. modern societies to We are driven by a strong commercial mindset. grow and thrive NRC Group converts Credible sustainability credentials into contract-winning We work according to high ethical standards,
Slide 39: Unique position in our market
Unique position in our market EU Taxonomy Taxonomy-aligned revenue 20231 Eligible Aligned Turnover (revenue) 98% 72% 88% 2022: 87% 2022: 67% 72% Operational expenses (OpEx) 99% 74% 2022: 87% 2022: 67% Investments (CapEx) 98% 76% 8% 2022: 81% 2022: 73% Peer group Nordic green average industry leaders
Slide 40: Committed to safe and responsible operations
Committed to safe and 2023 performance responsible operations Health and safety first LTI1 6.0 6.4 6.0 Sickness absence 0 0 5.6 5.6 4.9 4.8 % 4.2 % Serious Accidental 3.9 % 3.8 % 3.8 % 3.5 % injuries2 spills 2019 2020 2021 2022 2023 LTM Q1 2019 2020 2021 2022 2023 LTM Q1 2024 2024 1) LTI: Injuries r
Slide 41: Received highest rating – Dark Green Shading – from S&P Global Ratings
Received highest rating – Dark Green Shading – from S&P Global Ratings NOK 400 million Green Bond issued Q4 2023 Green finance framework 4-year duration at 3-month NIBOR +4.40% Proceeds used to finance 100% taxonomy- aligned investments and activities Aligned with the ICMA Principles Established our
Slide 42: A sustainable business model supporting growth and value creation
A sustainable business Transitioning to renewable fuel sources Handling/sorting waste in all three countries 2023 model supporting growth Biogas 89% and value creation Increased weighting in tenders and focus Over 50 diesel trucks handling from clients mass transportation are replaced with biogas Cr
Slide 43: Strengthened execution platform
CMU Strengthened execution platform
Slide 44: Strengthening platform for delivering profitable growth
Strengthening platform for delivering profitable growth >10 billion Revenue NOK and EBIT adj. margin >5% 6.7 billion 6.2 billion Harmonising processes at country level Improved tender selection and review processes and governance Decentralised execution and project reporting 1.8% Local transformatio
Slide 45: Executed strategic measures across all operations
Executed strategic measures across all operations Challenges Actions Status Rail construction Norway Profitable operations from 2022, Turnaround initiated in 2020 Large losses in 2019 legacy project impacting cash flow Rail construction Sweden Completed, profitable operations Turnaround initiated in
Slide 46: Improved project margins over time
Improved project margins over time Project portfolio margins1 Comments PTD margin %, entire project portfolio excluding Civil and environment Margins for the upper and lower 60% percentile projects lifted Average 2020-2022 2023 Continued impact from a few non-performing projects 40% Root causes iden
Slide 47: Platform in place to deliver profitable growth
Platform in place to deliver profitable growth >10 billion Revenue NOK and EBIT adj. margin >5% 6.7 billion 6.2 billion Centralising Nordic structure and processes Harmonising processes at country level Centralised tender processes Efficient unified project execution Group financial management polic
Slide 48: Implementing unified Nordic project governance standards
Implementing unified Nordic project governance standards 1 2 3 Centralised + Efficient project + Margin recognition tender processes execution Group financial management policies with more conservative Improved tender selection Enhanced risk management approach and review processes and from project
Slide 49: Unified Nordic tender process
1 Unified Nordic tender process Term changes to be approved by Nordic decision committee Prepare Negotiations/ Project Cost Nordic Offer price and signing of planning calculation review submission quality offer contract Schedule and scope Labour costs Cost of capital Centralised decision Professiona
Slide 50: Efficient project management and strict cost control during execution phase
2 Efficient project management and strict cost control during execution phase Execution Regular status meetings Improvements Leverage best- practices across Improvements the Nordics Project Operational Project Management Control plans establishment Production plans Stakeholder control Main timeline
Slide 51: Unified project margin recognition principles
3 Unified project margin recognition principles Margin % • Project margin being recognised as the project progresses • Unified conservative margin recognition approach being implemented across the Nordics Estimated project margin (prognosis) 1) Percentage of completion (%) 1) Risk reserve to reflect
Slide 52: Delivering on targets and creating value
CMU Delivering on targets and creating value
Slide 53: Moderate improvement to financial KPIs over last strategy period
Moderate improvement to financial KPIs over last strategy period Revenue EBIT adj. NOK million NOK million NOK million 7 030 2.0 % 6 747 1.8 % 1.9 % 6 732 1.8 % 137 6 449 126 6 193 121 5 957 110 0.6 % 0.4 % 36 25 2019 2020 2021 2022 2023 Q1 2024 LTM 2019 2020 2021 2022 2023 Q1 2024 LTM Net working c
Slide 54: Strategic priorities towards 2028
Strategic priorities towards 2028 Improve Realise Grow Ensure margin in high margins revenue robust existing in new to NOK financial business markets 10 billion platform
Slide 55: Material margin impact from three items in 2023
Material margin impact from three items in 2023 Illustrative adjusted EBIT margin1 Phase-out 2023/2024 ~4% EBIT adj. margin Completion Q2 2024 Completion 2025 + 1.8% EBIT adj. margin 1) Excluding the two projects and non-core business for full-year 2023
Slide 56: Declining impact from non-performing projects
Declining impact from non-performing projects Revenue and backlog from zero-margin and loss-making projects Comments NOK million 2023 and Q1 2024 impacted by two non-performing projects and other loss-making projects from non-core 1 500 business Strategic measures executed, Discontinued including di
Slide 57: Successful transformation in Norway and Sweden, improvement program ongoing in Finland
Successful transformation in Norway and Sweden, improvement program ongoing in Finland Net project adjustments Norway1 Net project adjustments Sweden2 Net project adjustments Finland NOK million, last 12 months, entire project portfolio NOK million, last 12 months, entire project portfolio NOK milli
Slide 58: Larger contracts enabling improved utilisation and margins
Larger contracts enabling improved utilisation and margins Project margins ongoing and finalised projects in 2023 with value over NOK 25 million1 Comments Transitioning towards projects 60% with right size and right risk reward 50% Over 80% of tender pipeline value 40% are projects > NOK 300 million
Slide 59: Unique rail market position in the Nordics
Unique rail market position in the Nordics Main large players in each market1 Comments Leading national and Nordic market position Norway Sweden Finland within rail construction and maintenance Fewer competitors in mid-size segment due to Rail construction barriers of entry and full-service requirem
Slide 60: Realising high margins in selected adjacent markets
Realising high margins in selected adjacent markets Above-average margin realisation in target niches Indicative average project margin realisation 2022-2023 Electro projects Waterside civil construction Group average project margin Leveraging competence and expertise Unique platform and market posi
Slide 61: On path for continued profitability improvement
On path for continued profitability improvement Illustrative EBIT adj. margin % >5% Strong growth and expansion into adjacent markets Larger projects and scale effects Strengthened execution platform 1.8% 2.0% 1.8% 0.6% 0.4% 2019 2020 2021 2022 2023 2024 2028 target guidance
Slide 62: Growing addressable markets across the Nordics
Growing addressable markets across the Nordics Norway NOK billion Sweden NOK billion Finland NOK billion NOK billion NOK billion NOK billion 33 25 24 21 20 20 2023 2028E 2023 2028E 2023 2028E Rail Civil Rail Maintenance Civil Rail Maintenance Civil 1) Company estimates
Slide 63: Tender pipeline and order intake supporting growth
Tender pipeline and order intake supporting growth Tender pipeline next 9 months1 Order intake Order backlog (total) NOK billion NOK million NOK million 2 670 8 610 2 582 8 348 8 200 8 195 7 982 35 34 7 795 7 331 31 2 161 6 940 30 6 613 2 024 25 21 1 566 19 18 18 1 254 1 257 874 773 Q1 22 Q2 22 Q3 2
Slide 64: Growth supported by strong underlying drivers and strategic shift
Growth supported by strong underlying drivers and strategic shift Estimated revenue development Billion NOK >10 Strengthened position in growing rail infrastructure market 6.7 Disciplined expansion in civil niches Leveraging capabilities from construction to grow maintenance business 2023 Market gro
Slide 65: Ensure robust financial platform
Ensure robust financial platform Net interest-bearing debt break-down Leverage ratio (NIBD/EBITDA adj. LTM) NOK million 1 633 4.4 4.3 4.3 525 3.5 1 158 Target < 2.5x 3.0 3.0 2.8 2.8 2.8 2.8 950 2.7 891 2.6 866 2.4 2.3 573 761 528 422 492 1 108 503 585 399 422 444 258 2019 2020 2021 2022 2023 Q1 2024
Slide 66: Available liquidity and extended maturities
Available liquidity and extended maturities Available liquidity NOK million Maturity profile NOK million NOK million 810 826 769 672 400 577 354 57 57 72 43 Q4 19 Q4 20 Q4 21 Q4 22 Q4 23 Q1 24 2024 2025 2026 2027 Cash and cash equivalents Undrawn credit facility Bank debt Bond
Slide 67: Clear capital allocation priorities
Clear capital allocation priorities Support existing activities Optimise capital Dividend and organic growth structure and M&A Continue to improve Establish stand-alone Competitive direct returns profitability over time machine unit over time 2028 revenue target will Optimise working capital Policy
Slide 68: Summary
NRC Nero CMU Summary
Slide 69: 2028 targets
2028 targets Building and maintaining critical infrastructure >NOK 10 billion Strong Nordic foundation in rail construction and Revenue maintenance Realising full potential through disciplined expansion in >5% civil construction and new adjacent markets EBIT adj. margin Leveraging group capabilities
Slide 70: Appendix
Appendix
Slide 71: Norway: Improved performance since turnaround processes in 2020
Norway Improved performance since turnaround processes in 2020 Close-up on Norway Key statistics EBIT adj. margin LTM Revenue per division LTM NOK million 4.3 % 3.8 % 3.6 % 2 373 ~600 Employees 3.4 % 2 281 2 136 2 091 97 1 866 1 859 80 81 74 2.1 BNOK revenue (LTM) 1.4 % 26 2.2 BNOK order backlog -0.
Slide 72: Norway: Order backlog, tender pipeline and addressable market outlook
Norway Order backlog, tender pipeline and addressable market outlook Order backlog and tender pipeline Comments NOK billion Order backlog Solid order backlog after strong order intake last two quarters 3.0 Tender pipeline 14 Tender pipeline at continued high levels, albeit down following recent anno
Slide 73: Sweden: Successful ongoing transformation
Sweden Successful ongoing transformation Close-up on Sweden Key statistics EBIT adj. margin LTM Revenue per division LTM 30 20 10 0 1.0 % 0.0 % ~400 Employees 0.0 % -10 2 080 -2.0 % 1973 -30 1 877 1 777 -4.0 % -2.5 % -50 -4.8 % 1 539 2.0 BNOK revenue (LTM) -52 -4.0 % 1 468 -70 -71 -71 -90 -8.1 % -6.
Slide 74: Sweden: Order backlog, tender pipeline and addressable market outlook
Sweden Order backlog, tender pipeline and addressable market outlook Order backlog and tender pipeline Comments NOK billion Solid order backlog after strong order intake last two quarters Order backlog Tender pipeline 14 Tender pipeline at continued high levels although reduced following recent 3.5
Slide 75: Finland: Challenging recent year – solid platform for improvement
Finland Challenging recent year – solid platform for improvement Close-up on Finland Key statistics EBIT adj. margin LTM Revenue per division LTM 7.1 % 188 5.6 % 2 811 2 753 ~850 Employees 5.0 % 2 640 2 582 2 709 145 2 388 141 2.7 % 4.1 % 2.8 % 2.7 BNOK revenue (LTM) 98 78 73 2.7 BNOK order backlog
Slide 76: Finland: Order backlog, tender pipeline and addressable market outlook
Finland Order backlog, tender pipeline and addressable market outlook Order backlog and tender pipeline Comments NOK billion Order backlog down from peak levels in 2021/22 due to lower hit rate and a period Order backlog with no light rail contracts out in the market 4.0 Tender pipeline 14 3.5 12 Ne