Akastor (Oslo:AKAST) Q1 2026 Earnings Call

0:00 Good afternoon and welcome to the presentation of Akastor's First Quarter Results. My name is Jurgen Polske, CFO and I'm joined today by our CEO, Karl Erik Selzta. Before we start, a brief practical note following the successful IPO completed in April, HMH is now a listed company and reports independently. HMH held its own Q1 earnings call last week including a full operational and financial walkthrough. For those interested in more detail on HMH specifically, their Q1 release as well as webcast replay are available on their webpage. As a result, today's presentation from Akastor includes less detailed coverage of HMH operations. We'll take questions at the end of the session and you can submit them at any time through the online Q and A function.

0:52 To kick things off, Kalle will walk us through the headline developments for the quarter. Kalle, over to you. Thank you, Ewy. Good afternoon and thank you to all for joining us today. Let me start with the key highlights on Slide number two.

1:09 Akastor continues to be in a solid financial position. We maintain a positive net cash position and have no drawings on our corporate asset. Against this backdrop, we are pleased to announce another cash distribution of NOK1.5 per share, supported by the successful mentioned IPO with or NASDAQ. That generated a significant cash proceeds to Akastor. This marks our fourth consecutive quarterly distribution to our shareholders. And over the past year, we have distributed million or NOK2.65 per share to our shareholders. This fully confirms our strategy of returning excess capital while maintaining a sound capital structure.

2:01 Turning to HMH, the company completed its IPO after the end of this first quarter, generating total cash proceeds of US53 million dollars to Akastor in the second quarter. Following the IPO and after the green shoe, Akastor now owns about 36% of HMH holding. As mentioned by HMH, released its Q1 on May 6 and continues to deliver solid operational and financial performance. In the quarter, HMH reported an EBITDA of US30 million dollars and that corresponds to an EBITDA margin of 18%. Importantly, order intake increased by 10% year over year, which is an encouraging signal of improving market activity across HMH product and service segments.

2:51 For further operational and financial details, I will encourage you, as Ewen mentioned, to review HMH's own first quarter report that is available on their website. The value of our ownership in HMH can now be observed on a day to day basis in the public market. For reference, the carrying value on this slide reflects Akastor's book value of 3,400,000,000 at the end of the first quarter, equivalent to NOK 12.6 per Akastor share. With HMH now listed following the IPO early in this quarter, we believe we will be evaluating how we present value in our portfolio going forward, including a potential shift towards a more NAV based approach for HMH.

3:42 Then, AKOS Offshore. AKOS Offshore delivered stable operations across the fleet with a strong utilization and uptime. Utilization on AKKO wafer was impacted on a planned and scheduled class renewal survey, which was completed on time and within budget. Akkermainfer was also formally awarded a new four year SEV contract with Petrobras expected to commence in the third quarter of twenty twenty seven. AKOS remained carried out conservative book value and does not reflect the underlying asset values or improved contract positions. We continue to see clear upside in AKOS over time. DDV Offshore. DDV Offshore completed the sale of Splendid Atlantic in the quarter at US22.75 million dollars significantly above the vessels book value at approximately US10 million Post the quarter, DDV announced an additional vessel sale, Skandje Emerald for US23 million dollars And finally, the quarter, we realized our shareholding in Maher Capital, generating cash proceeds to Akastor of NOK40 million.

4:56 Then let's move to Slide three with some more facts about the HMH IPO. The transaction marked a key milestone for Akastor, establishing a public market for our largest investment and improving the liquidity going forward. The offering was priced at US20 dollars per share, implying a market capitalization of approximately US818 million dollars Including the green shoe, we reduced our ownership to around 26%, while retaining with significant position in the company. The transaction generated total cash proceeds, as mentioned, of $53,000,000 to Akastor, that's strengthening our financial flexibility and also enable us to do this dissipation that we announced today.

5:43 Overall, the IPO was received well in the market and it represents an important step in enabling future value realization for Akastor. Let's move to Slide five. Turning briefly to the portfolio overview. This slide shows our portfolio and our ownership positions, which are largely unchanged from the last quarter. The main change is HMH, which I know mentioned several times has been lifted and our ownership thereby has been reduced to 26%. So let's move on to Slide six,

6:20 Most of the IPO details have already been covered, so let me briefly reiterate our ownership agenda for HMH. First, we continue to support HMH flat fee to drive profitable growth and value creation. Second, we want HMH to maintain a strong market position through technology leadership and customer focused innovation. And thirdly, we will actively manage our ownership over time, leveraging on improved liquidity following the IPO. Turning to the quarter, HMH delivered a solid performance with a good margin supported by disciplined cost management and a favorable product mix. Order intake was strong, exceeding revenue and supporting backlog growth and improved visibility into the second half of twenty twenty six.

7:06 HMH management expects a stronger second half supported by improved market activity and the management strengthened backlog. With HMH now listed, more detailed financial and operational disclosure is available through the company's own reporting. Let's move on to Slide seven, NES Farecroft. The company continues to deliver solid performance. Underlying EBITDA increased year on year, supported by improved earnings mix, higher contract activity and continued cost discipline, partly offset by softer permanent recruitment. Neos also delivered strong cash generation and continued deleveraging. In addition, the company has agreed to the acquisition of Halion, strengthened technology and digital talent capabilities and supporting further diversification of the company.

7:59 From an ownership perspective, our agenda remains to support continued value creation and optimize value at exit and we will revert with updates as and when there is important clarity on strategic alternatives for NES aircraft. Turning to Slide eight, covering AKOS Offshore. AKOFS Offshore delivered a revenue of dollars US42 and an EBITDA of US14 million dollars in the quarter. Operational performance was solid. AKOVAPOR and AKOFSHANTOS achieved revenue utilization of NOK75 million and NOK99 million, respectively, with wafer impacted by the mentioned completion of the clash renewal survey. Akkos Seafarer delivered a technical uptime of 94%, supported by stable operations.

8:46 Commercially and also highlighted previously, an important milestone was reached with Akastor ASA formally being awarded a four year contract with Petrobras that we expect to commence in the third quarter twenty twenty seven. Then slide nine, GDV Offshore.

9:05 Operational performance was solid with Scania Peruvina delivering 98% utilization during the quarter. The sale of Scania Atlantic was completed in the quarter at a price significantly above book value, supporting both earnings and cash generation. In addition, the announced sale of Elscania Emerald in this quarter further supports the continued value realization and portfolio simplification for Akastor. And then finally, let's look at Sraltar, summarizing the key priorities for Akastor going forward. That is more or less unchanged from previously. Akastor strategy remains firmly in pace. We focus on active ownership and value creation across our portfolio, enabling equity over time and returning capital to our shareholders following realizations, while maintaining its own capital structure.

10:01 The successful listing of HMH, the DDV vessel sales at values above book value and the realization of Marra Capital, a clear example of continued execution on that strategy and a disciplined capital allocation. So with that, I will turn the word back to you and you can take us through more on our financial performance in the first quarter. Thank you, Karl. I will then start with Slide 12 on our net capital employed. HMH of course remains our largest investment and this as Karl mentioned reflected based on our 50% shareholding as per end of March, meaning that Akastor's net capital employed at the end of Q1 corresponds to 50% of the book equity value as it stood in HMH at that point.

10:55 The carrying value decreased by NOK83 million versus Q4 driven by primarily FX effects in the period. In Q2, the IPO will affect our accounting with an expected net smaller negative impact related to IPO pricing and the sell down from Akastor. Going forward, HMH will be accounted for as an associated company using the equity method and our post IPO ownership share. DDB's net capital employed decreased during the period driven by the realization of Scandi Atlantic in January. Akast remains carried at zero in net capital employed reflecting the prior reduction of equity investment.

11:40 We do continue to carry shareholder receivables provided to the company at full value totaling NOK422 million at period end, which are then included in our reported net interest bearing debt. The value of other, which now includes ABL alongside smaller financial investments, pension accruals and provisions increased by $15,000,000 in Q1 reflecting network working capital normalization and value appreciation of ABL partly offset by the realization of Maha Capital. In total, our net capital employed decreased by $2.00 $7,000,000 in the quarter. Then over to our net debt movements during the quarter.

12:28 In Q1, our net cash position increased by NOK 132,000,000 to a cash positive position of NOK $219,000,000 at period end. This was primarily driven by proceeds from the sale of Scandi Atlantic and shares in Maha Capital, partly offset by the dividend payment of NOK0.4 per share corresponding to NOK109 million paid out in February. The Q1 net cash position includes net debt of NOK68 million in DDB Offshore, down from NOK195 million in the previous quarter, driven by the realization of Scandi Atlantic. Total net interest bearing items at quarter end stood at a net cash position of NOK965 million.

13:17 This includes interest bearing position related to Akastor and HMH, including the shareholder loans towards HMH of US27 million dollars which were then fully settled and received in cash in April. Looking ahead to Q2, the net cash position is expected to improve further driven by HMH IPO proceeds and the planned realization of Scandi Emerald, partly offset by the approved dividend scheduled for later this month. Then an overview of our external financing facilities. At the end of Q1, our USD 30,000,000 corporate RCF remained undrawn but in connection with the HMH IPO and the associated share sale, we agreed with the banks to suspend availability on this facility as it included a pledge over HMH shares and the security package needs to be updated post IPO.

14:16 We are working with the banks to reestablish the facility or alternatively establish other type of structures, including potential solution more directly linked to the HMH shares which are now listed. That said, based on our current liquidity position and capital allocation strategy, we do not foresee a need for additional financing. For DDB Offshore, the reducing revolving credit facility was reduced to US16 million dollars following the sale of Scandi Atlantic completed in January with US11 million dollars drawn as per end of March. Following the sale of Scandi Meral expected to close later in Q2, the facility will be further reduced to $8,000,000 At quarter end, our total available liquidity amounted to $328,000,000 including $41,000,000 of cash held within DDB Offshore.

15:11 This then excludes the suspended corporate RCF. Liquidity increased significantly in April following receipt of proceeds from the HMH IPO and is expected to increase further upon completion of sale of Scandi Meral in BVB Offshore.

15:31 This increase will of course partly be offset by the announced dividend payment in May. Then our consolidated P and L. As a reminder, most of our holdings are not consolidated and as a result, our consolidated revenue and EBITDA represent a very limited portion of our total values. DDV Offshore delivered total revenues of $182,000,000 in the quarter, including $132,000,000 related to the gain on the sale of Atlantic. Operationally, Atlantic was sold in early January and therefore delivered on the limited contribution, while Peregrino remained on contract throughout the period. Emerald was in the yard for its class renewal survey and generated no revenues in Q1.

16:17 EBITDA amounted to $140,000,000 driven by the gain related to Scandalantic.

16:23 Other revenues were $1,000,000 while other EBITDA was negative $617,000,000 and as a result consolidated revenue and EBITDA for the quarter amounted to 182,000,000 and and $123,000,000 respectively.

16:39 Then a closer look at our net financials. Financial investments contributed positively by $31,000,000 driven by share price increases in ABL and MAHA, with MAHA then fully realized during the period. FX accounting effects were negative by $62,000,000 while net interest bearing income of $11,000,000 and other financial income of $3,000,000 partly offset this resulting in a total net financial items of negative $17,000,000 for the quarter. Share on net profit from equity accounted investments contributed negatively by $6,000,000 including a true up effect related to 2025 results for HMH following completion of their audit.

17:28 With that, we are through the presentation and we'll move over to the Q and A session. We'll take a very short break in order for listeners to provide questions. Thank you. We'll then go through a couple of questions received. So first, there's a question regarding NES per croft, the color that I'll refer to you.

18:17 Have you seen increased interest in NES since the Q4 report, either from IPO investors or potential buyers? And what are the key factors determining timing for potential realization? So we see continued interest for the Svecwolf following the strong performance and the strong market position of the company. We are continuously together with our co owners evaluating different alternatives in order to maximize value for investment in this backlog. So difficult to say anything about timing, but it was as an all M and A transaction depend on the market. We need to be aligned with our co owners and also that potential outcome really reflects the underlying values of the Nestle Sverdrup business. But I'm quite confident that we will end with a good solution for Nestle Faircoat both value wise and also when it comes for the company itself post our ownership.

19:25 Thank you. Then a question regarding Akastor's ownership in HMH. What should we think or sorry, how should we think about Akastor's ownership in HMH going forward? The good thing now is of course that following the IPO, have a good liquidity and the flexibility for ownership in HMH. At the same time, HMH remains a core investment for us and our key focus will be to support the continued value creation in HMH. We strongly believe that there is an interesting value creation journey for the company in the coming years. And then we will have to assess some ownership position over time in line with our strategy of realizing values when we think timing is optimal or appropriate.

20:20 Great. Then finally, I think, how should we think about further shareholder distributions going forward? When it comes to shareholder distribution, we will remain consistent with what we have communicated and also what we have delivered on. And that is that we will return excess capital to our shareholders following realizations. But at the same time, we have to maintain robust balance sheet. And I think the recent distribution supported by the proceeds received of the HMH IPO is a good example of this and how we plan to proceed when we do future realizations. Thank you very much.

21:06 I believe that concludes our session. So we'll just like to thank you all for your attention and look forward to welcoming you back for the presentation of our second quarter results in August. Thank you very much.