Earnings call transcript: DOF Group Q2 2025 sees record EBITDA, strong fleet

DOF Group ASA (DOF) reported its second-quarter 2025 earnings, highlighting a record EBITDA of $214 million. Revenue ranged between €1.9 billion and €2.0 billion, with a notable contribution from soft end markets. The company declared a dividend of $0.30 per share, summing up to $148 million in total dividends for 2025, representing a 3.24% yield. The stock price saw a modest increase of 0.05% following the announcement. According to InvestingPro data, the company has demonstrated impressive revenue growth of 25.53% over the last twelve months, with a healthy P/E ratio of 7.16x.

Key Takeaways

• Record EBITDA of $214 million, marking an all-time high for the company.
• Revenue between €1.9 billion and €2.0 billion, with a strong contribution from soft end markets.
• Fleet utilization stood at 81-82%, with significant global presence.
• Dividend declared at $0.30 per share, totaling $148 million for the year.
• Stock price increased slightly by 0.05% post-announcement.

Company Performance

DOF Group demonstrated robust performance in Q2 2025, achieving record EBITDA figures. The company’s diversified fleet and strategic global presence contributed to its strong financial results. InvestingPro analysis reveals the company maintains an excellent financial health score of 3.15 (rated as "GREAT"), with liquid assets exceeding short-term obligations. Despite varied market conditions, DOF capitalized on high-rate contracts in Brazil and growing opportunities in North America and Canada.

Financial Highlights

• Q2 EBITDA: $214 million (record high)
• Revenue: €1.9-2.0 billion
• Fleet utilization: 81-82%
• Dividend: $0.30 per share, total $148 million for 2025

Outlook & Guidance

DOF Group expects 2025 EBITDA to range between €740 million and €770 million, with similar expectations for 2026. The company plans to focus on Brazil and North America markets, with potential rate increases in its backlog. A Capital Market Day on September 9th will further discuss strategic initiatives.

Executive Commentary

CEO Manfossa emphasized the significance of the Brazilian market, stating, "Brazil is the biggest subsea market on the globe." He also noted the company’s competitive edge in complex international projects and the strategic importance of local expertise.

Risks and Challenges

• Global market variations, particularly the weak North Sea spot market, pose challenges.
• Dependency on the Brazilian market could impact results if conditions change.
• Potential refinancing plans for OSCOM debt may affect financial stability.

Q&A

During the earnings call, analysts inquired about potential vessel additions in the CSV segment and the company’s refinancing plans for OSCOM debt. The discussions highlighted DOF’s strategic focus on reducing spot market exposure and expanding its presence in key regions. InvestingPro analysis suggests the stock is currently undervalued, with additional ProTips highlighting strong returns over the past five years and promising profitability forecasts. For deeper insights into DOF’s valuation and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

Full transcript - Dof Group ASA (DOFG) Q2 2025:

Moderator/Host: Hello, and a warm welcome to this Q2 presentation with Dov. In this presentation, we will cover operational and financial highlights from the quarter in addition to outlook and guiding before we do a Q and A session at the end. You can submit the questions through the Q and A function in the webcast player, and that is open also during the presentation. So with that, I leave the word to our CEO, Manfossa.

Manfossa, CEO, DOF Group: Thank you, and welcome again to the presentation. Yeah. So we the front page we saw was a picture of, Skani Ongra, who is just to just to change the front page to because she is one of the seven, Gandalfs that we have been in more, like, long term context with. Petrobras on in the quarter and the start of quarter, so we’re building a lot of backlog. And also worth mentioning is, of course, that the rate levels are up quite a bit from the existing ones that they have.

So one of the highlights, of course, in the quarter is that we have signed some and some long term contracts starting early twenty six and done backlog into early twenty twenty two of the all over ’7. So it’s it’s a big big win for us. And, of course, it it derisked the earnings all the way to ’22. So then we can start, on the so this is stuff at a glance. I guess, most of you have seen it before.

And and so we still operate 77 boats. We are of the own 65, and we charter in four and then have management on eight. So operating globally, long history. Backlog at and over the quarter was 3,700,000,000.0. When we include the what has been awarded after after the close of the quarter, we are available €4,000,000,000 We’re to talk a bit more about the backlog after, yeah?

If we look at the graph here on the revenue last twelve months, of course, it’s up a lot from ’24. It’s it’s also up last twelve months on EBITDA. It’s it’s moving up. Yeah. And on the on our graph, you you see where we have the employees and where we have all vessels.

So to still, the Atlantic region, which is mainly North Sea and, West Africa, or where we have the biggest presence, then followed by South America, which is mainly Brazil. We have one both in Argentina. And then we are growing in in North America and and also have a very nice presence in APAC here. So that’s, where we are at the glance. And if we move to the next, this is what we do.

As mentioned, we own the own 65 volts. We also hire in four volts that we utilize in our projects around the globe. And and then we own I think we are the third of our largest owner on what you can call, subject equipment or ROVs and AUVs. And we have several thousand, subsea specialists that execute our projects globally, and then we deliver to our clients the integrated services. The only part of the the the deliveries we make.

And looking at the new earnings, we see last month, the asset earnings are quite a bit. Also, the the regional earnings or the what I call the people earnings, this is what we get out of the the teams working on the projects. They also are growing, And totally, we are growing, of course, as well. So it’s it’s been and, of course, when we look closer at second quarter, which is on the next slide, we of course, it’s been a good quarter for us. We have to say that it was a good quarter.

It was above almost above our own expectations and also, as we understand, beating consensus quite a bit, yes. So to $214,000,000 in EBITDA in the quarter, which is, I guess, all time high for us. Soft end market, which we are very happy with. We saw a big step up on that fleet compared to third quarter, so we made €45,000,000 in the quarter from that. Still room for improvements as I think we had 81%, 82% utilization of the fleet, so there is still a potential for more.

Interesting also, of course, is that this is only the assets, but part of the reason why our subsidy earnings or the regions from the the earnings from the regions increases is, of course, that we have executed projects for for a few more of the the docked unmarked vessels. Yeah. So so and, of course, that’s also part of the reason why utilization is at 82 on that fleet because some of them have been stopped to install the subsea equipment in the quarter. Perhaps, what our most probably is that we are able to deliver a 35% increase on on on, let’s say, the the old or for the legacy offer. And, of course, that is for the same fleet for the same fleet people.

So we we see an increase on on old dock from 120 ’2 to 169 compared to last year, which is pretty good. Yes. So all in all, a very nice and good quarter on operations. Backlog, I mentioned, as we come back to that. And on the guidance, we have narrowed it you know, to seven forty to seven seventy.

And the the reason why taking it down a bit, on the top, but also, of course, increasing it. The bottom is that we you know, due to the due to the 10 signed contracts with Petrobras and and some of them will be mobilized start mobilizing in in second half quarter four, meaning we will have a few books auto earnings in one to one point five months. And that will, of course, reduce EBITDA a bit in the fourth quarter. On the debt side, we are down at, I think, it’s 2.05. And we are almost down to the level we have communicated, where we want to be 1.5% to 2%.

So I think with that, the the only included of Danmark by eight months. We continue the dividend. We we will pay on fourth September 0.3 US dollar per share, and and and then we will see going forward how we if if how we we if we with the board and the management, of course, we’d like to see the dividend grow a bit going forward. So let’s see what how that pans out going forward.

Unidentified Participant, DOF Group: So then the next page, please, is then

Manfossa, CEO, DOF Group: new contracts. And of course, it has been a good quarter also and a good July on that. We have it’s a lot Brazil, of course, but also quite a few. So so all in all, a very good order intake in the quarter line. I don’t go through all of these contracts yet.

So you can read them yourself, and you always trust in the q and a section after if you have trust in one specific of this new contract. But good order intake. And if you look at the next page, of course, we we summarize more the Brazil. So we have here 14 votes. We which we have indicated that we believe we will sign up for all your contracts.

10 of them are now signed. The seven nine can last three RSVs, and and then there’s four left, and we we we expect to to, you know, in the, let’s say, in the next, in the near future, sign up the the reminder on the four four last. So so it is a big jump and big log. And and, of course, you also have to note that, of course, it’s it’s on very decent terms. Yeah.

So so I think on the seven anchor analysts or the five anchor analysts that already are in Brazil, you are talking at least 30% rate increase compared to the old rates. Yes. So roughly speaking. Yes. So it’s good to to bank such backlog at those levels.

So

Unidentified Participant, DOF Group: then, we have, I guess, the next one is,

Manfossa, CEO, DOF Group: and if you remember, and I don’t know if you do, but I do. And and it goes when we did the we announced the the, let’s say, the acquisition of Mass Supply Service, which we know called Oftalmark. We had we had one of the, let’s say, challenges we wanted to to solve was to high exposure in the, let’s say, in the oil the spot market for. Yeah. So so when you look at it, we auto lease fleet, we we had the we had only one boat with a firm contract into ’26 and then another one with options.

Yeah. So so what we have done since that is that we have done which here is in in dark blue where where we have done Scandinavian and Scandinavian on long term contracts in Canada at five and a half and two years supporting the White Rose field in Canada. We have done, recently also done LFTR and Logger on a four year contract with Petrobras. And then we also did the cut off, you know, ex a new contract with the same client for three years. Yeah.

So we we have reviewed we have done four or five long term contracts. And in addition to that, we have sold two smaller two smaller boats, the tender and trailer. Yeah. So we’re taking the exposure now to to four boats or to that fleet in the spot market. Yeah.

And and, of course, that was what I think we said that we wanted to end, that we wanted to have three to four boats in that market. Because for also, because this is not only a it’s not a pure spot market exposure. It is boats that we that we will use for, for our our mooring projects globally. Yeah? So so like the Lhasa here, for example, and the master of mine, know they will go to Congo for a few months in in, in the fall.

So let’s say, October 1 or one by into December, they will they will, support of Soupsione project in in in Congo. So we are we have done what we hope to do and plan to do. And so and are happy with the situation, of course, on the the exposure on to, let’s say, what we can call an unpredictable spot market is is is reduced a lot, and and we are where we want to be. Yeah. So so that’s, I think, an important message.

And and, of course, of course, that will also hopefully, and, you know, not only hopefully, of course, it also increased the running of of that part of the fleet quite a bit compared to what we have been able to do so far in 2021. 2026, of course, this fleet will deliver higher, better numbers than what we have seen in 2020. And, yeah, the next one is, I guess, it’s kind of bragging a bit, but it’s also, I think, important to to understand, and that is the value of the of the global presence. Yeah? Towards it, it’s not it is very opportunities.

It varies rate levels. It’s various terms in each region. So so we have to have a global place in power, and the global presence is is very high value in this this market. Yeah. And, so here we see, and we imagine already, you know, we we move vessels from the North Sea to Brazil.

We move vessels from the North Sea to Canada. We move vessels from the North Sea to Vienna, and we move vessels from the North Sea to Australia. Yeah. And the more we are doing that is, of course, that is better paid than jobs than what the most we are able to do in the North Sea. We also, on the last page, mentioned that we we we also do, of course, projects globally.

And and and model and examples, we have a project now in Congo in in in Porta Four. There’s a project here where we will use six vessels amongst four or four encounters. So

Unidentified Participant, DOF Group: it is I think this is

Manfossa, CEO, DOF Group: you know, it’s difficult to understate the importance of of, to get utilization and to go maximize income to have this, placing forward globally and, of course, placing forward also on the the subsea project side. Yeah. And and and I think that is is is, what, let’s say, a different from a lot of, other players in this in this industry.

Unidentified Participant, DOF Group: So then we go to next.

Manfossa, CEO, DOF Group: As we said, you know, the regions have had high activity and and delivered a very good quarter two. Yeah. It’s also good good coverage and good project portfolio for for for those guys in quarter three and going forward. Yeah. So so good earnings, good utilization, and and good performance on on the projects.

Yeah. And and I guess, you know, part of the plan with the was to to to integrate somewhat somewhat of votes into to to to the regions and and operate them, under the you know, within broader offering than, than only a boat. Yeah. So so today, we have, we have two I classes, in the Atlantic Region. We have one, I class in Brazil, and we have one, the I class in North America, all working.

Yeah. So it’s it’s it’s it’s starting to ramp up. And, these projects is just some examples. Yeah. We did, sat diving projects, in Malaysia.

A good project we did, interesting, you know, a cave repair project here in the in the North Sea with the Skoni and Bantou. We did that now in in June into Duloy. And and then we used Skane Hera, which is the Sankan, Lavikrein for a pure subsea project in the North Sea. Also, then we actually have to say that the empiricals have been sold out for our own board. So we also executed, you know, a short term project for very short term charter on a third party board.

And so it’s a good quarter in the regions, and we see a lot of tender activity in the regions. We see see a lot of opportunities, and we we see a nice, let’s say, pipeline of work. And and and so we are, have to say, you know, we are getting optimistic on on on ’26. So it it looks quite okay.

Unidentified Participant, DOF Group: So then it’s the backlog,

Manfossa, CEO, DOF Group: and and so as you saw, we have, including the the order intake of the balance there, we are at 4,200,000,000.0. And that, of course, excludes the four contracts we expect to sign soon in Brasilia. So it will be be higher than that. So for the one or a year, we have we have here seven seven seven, and I guess in reality, it’s a bit higher than that because there are there are some variation orders, and there are so so it’s so I would say perhaps 85 plus to 85 to 90% of the expected revenue is cobalt already. Yes.

So it’s there’s an uncertainty on on, the last two quarters are relatively moderate. Yeah. And if you look at let’s say, it’s it’s, you know, it’s it’s a few gaps on, you could say, apart from the spot tanker, there’s a few gaps on for for I think, the CSB side. Yes. So it’s relatively low risk, but of course, still a few jobs to bag in.

For next year, we have 1.2 in the bag, and that’s also with order four. And, of course, that is, I think, midpoint on, you know, guidance this year. You are talking 62% or something. So suppose the and, of course, with the deals we are expecting, what we we probably are on the same level, background wise as we was a year ago for 25. And, hopefully, we will be able to start ’26 with more than 70% backlog, and that that, of course, indicates it will be quite a good year.

So I’ll leave it like that. And as you hear, we are pretty optimistic on continue bagging work around the globe.

Maarten, CFO/Financial Executive, DOF Group: Yes. And we already mentioned high level numbers. And as we’ve said, they are really good, both on turnover and on EBITA level and also further down the P and L. Going a bit more into details over the last few quarters to see where contributions come from. We see that there is a big leap from last quarter to this quarter, although it has been gradually improving quarter by quarter over the last five quarters.

Very happy to see the yellow contribution on the screen. Dof Denmark fleet, 82% utilization, dollars 45,000,000 worth of EBITDA contribution. And as announced also stated, the legacy Dof apple to apple comparison one year if we compare to one year ago, it is a 35% improvement, close to $50,000,000 which is also very, very strong performance. And that is not one single contributor. It is some come from the vessel chip owning part of the group, some come from NorthConn, some from DovCom and a very strong contribution from the subsea regions.

On the next page, we see the on the left hand side, we see the leverage that we have been focusing quite a lot on over the last few years and periods. It’s continuing to drop. We saw a dump in that graph when we did the transaction with Doftenmark. There are no amendments or adjustments in this to account for the fact that of Denmark only contributes with parts of the year in EBITDA and the full debt from Q4 twenty twenty four. So we expect that the number in reality, if you had annualized or included the full twelve months on Loftenmark contribution, the NOK 2,100,000,000.0 would be within the target of 1,500,000,000.0 to $2,000,000,000 And of course, we see with the current performance that we are heading into that range also with yes, with no adjustments.

On the gross debt development, there are really no big events this quarter apart from the delivery or the charter party commencement of the REM inspector that we took on hire from REM and that went on hire to Equinor in Q2. That is the addition on the IFRS 16 lease debt. And that’s only visible on the gross, so the interest bearing debt, the yellow. Now the white figures are not on the blue because it is chartered directly out. We all we don’t we have a sublease that the net is this element out on the on the net interest bearing debt.

Other than that, on the debt side, it was normal amortization on the new facilities and the regular payments of lease debt in the quarter. And we also had some ROV leases commencing in the quarter for subsea equipment. If we we still have a very healthy cash balance going from $427,000,000 at the end of last quarter to just below $400,000,000 at the end of this quarter. And it is a very strong operational cash flow in the quarter despite the improvement in for the increased activity that affects changes in working capital, but not to a larger extent than the increased activity. So all in all, a very good quarter.

Although not visible here since this is management reporting, there was USD 30,000,000 dividend from Dovcom paid in the quarter, so visible on the legal account that is excluding Dovcom on the proportional or from proportional consolidation. We had a CapEx payment of 59,000,000 during the quarter. That is primarily installments on the new build to the Sea Dragon project, the Canada vote that is to be delivered in the 2027. We do expect that to be financed in the relatively near term. So this is funds that we will, call it, get back from financing, yeah, within a reasonable time.

And again, that we mentioned the other big cash flow items from the quarter is the dividend that we paid in June of $71,000,000 And of course, we’re happy to announce that there is a new dividend declared to be paid on September 4. So last day, including those flights, will be the August 26, again, $0.03 0 per share, bringing the total paid and declared dividends from the Dov Group in 2025 to $148,000,000

Manfossa, CEO, DOF Group: Yes. And then on regarding what major changes to revenue as it was 1,900,000,000.0 to €2,000,000,000 EBITDA, as mentioned, we have narrowed the guidance to seven forty to seven seventy. Of course, that is a reflection that uncertainty is lower, but also a reflection that, as I mentioned, someone in Brazil will need the boats to stop for some weeks to to mobilize and do accept and test and and so on. And and that means that, of course, they will be also earnings for a period in in quarter four. Depreciation’s been changed.

It was a bit as a reflection of the above and then the next changes on CapEx and, of course, an increase here of €20,000,000 which is also done in consequence of all the time contracts signed in Brazil. Yes, so I think we leave it like that. Then then we are on next page, which is then outlook. So one more time, guidance seven forty to seven seventy. We experienced still good markets around the globe.

We have a very nice backlog for this year and next year. We have a lot of deals in the pipeline, and we we expect to build the backlog going forward and and and have enough to bid on. Yeah. So it’s a it is looking good. Yeah.

And and our pictures down here, we are trying to tell the story. If you start on the left hand side, there are six bolts. And, of course, it is why we don’t think part of why we don’t think 2025 is the peak. You know, the first one is the Ram Inspector that we took on Almatona to Equinor late in quarter two, which, of course, Dan will have a full year in ’26 and contribute. The running side, we have a picture of the Nitroi and, you know, pipeline.

The Nitro and our system tutorial where we where we, of course, you know, have have communicated earlier that there is a quite a high rate increase when they start to mobilize for the new contracts later this year. And and then you have a picture of the Enca, and as we mentioned, the red one, five red ones where we where we see nice uptick in rates. And then you have a picture of the gray Yenka, which is lift around our system with logo that will go go for long term contract in in Brazil leaving leaving what you can call not a very good Northeast spot market this year. So I’ll leave it like that. So so it means that we are we’re not going for ’26, but, of course, we we we see we see ’26, let’s say, shaping up quite nicely for us.

But, of course, there is still a bit to do on the backlog. Then the next picture is the Solvola, which represent four four RSV still to be signed in Brazil, which we expect to happen soon. Then the next one, the gray one, is an I class scan the I class where we have four. I mentioned that they are very well, but also also that we know we finalized the installing subsequent on all four of them. Installed the two on the last picture.

So what we expect, those boats also on average to to deliver more in ’26 than in ’25. Yeah. And, of course, we don’t have to stop them to move the equipment, next year as we have done that this year. So all in all, we are happy with quarter two, and we look forward to second half, and we look forward to ’26. Then we will have a Capital Market Day on the September 9 in Oslo in as we had last year at Pareto Securities offices.

And and we will talk, you know, more about the the strategy going forward. We will focus on Brazil. We will also focus on North America, which has is a region that has been growing a lot lately. You know, we have a we have a huge additions in Canada through the top down market acquisition, but we also see exciting markets in in Turiname, and in Trinidad and so on. So the the deep dive on that and if you all are right now.

So we we invite you all, and hope you are able to attend that on the ninth September. So that was the final slide, and then we are open for questions, please.

Moderator/Host: Great. As mentioned, you can still still submit the questions through a webcast q and a function, but we’ll kick off kick off with some of the ones that have come in. The first one relates to the project pipeline for the next summer. What is your initial assessment of the project pipeline, and how does that compare to this year?

Manfossa, CEO, DOF Group: Well, for the summer twenty six?

Moderator/Host: Yeah. The project pipeline for the 2026. How is that looking now? And how does that compare to this year?

Manfossa, CEO, DOF Group: Because it’s it is I would say that the expectation for next year are more or less the same as we had for this year. Yeah. There is it is opportunities on the same level. Some of them, of course, still has to be one. But I think the starting point on the outlook comparing ’25 to ’26 more or less are all the same.

Yeah. And and and and, of course, of course, amongst the CSV fleet are already mainly booked for for 2026. Yeah. So it’s so our expectation is that is that the market will perhaps in ’26 p b on on on the same level on the service side as we saw in 2014. And and that we have you know, we in our schedules and, you know, over due delist, there is there is, I guess, the same at least the same level of opportunities that we had last year.

Moderator/Host: Right. Thank you. Next question is, has there been any progress on the RSV and newbuilds in Brazil since it was last discussed on the q ’1 call?

Manfossa, CEO, DOF Group: Of course, there is progress. It was process like that take time, and and, of course, we are still we are we are discussing with. And negotiations ongoing and kind of was still a gap done between us and that, but but the gap is narrowing compared to what it was a month ago. Yeah. So but still still a way to go before that is completed.

Moderator/Host: Okay. Considering the current backlog with new contracts in Brazil and elsewhere, are there any vessel segments where you will need to add vessels either through hiring or buying new vessels?

Unidentified Participant, DOF Group: It’s a very good trust, Julian.

Manfossa, CEO, DOF Group: And if you look at it, I think the segment on CSVs, let’s say, from two other DVs, I ramboats with one or two ROVs up to up to the two fifty ton class. It is, I think, it’s if charter has taken a few options that they expect them to take, we are so I would say call it sold out in that segment. Yeah. So I suppose we we ideally, we would we would love to like to have a few more votes in that segment, but it would be will not decrease any risk here. So if you are clever and do it the right way, it might be that you will see that the the we will need to sharpen in a vote of you to to follow on this.

Yeah. So but we have a few projects in discussions where we where we see we might lack a boat or two. But on the same time, of course, it’s not it’s somewhat by the board of ship of them to to have a part of the fleet sold off. Yeah. So what’s the the seven hours we expect to win normally one four and three.

Of course, that that, of course, that the cost reduced availability in that part of the fleet.

Moderator/Host: Alright. Martin, could you give an update on how you see the refinancing of Com with the debt that is due early next year?

Maarten, CFO/Financial Executive, DOF Group: Yeah. We can. It is, as you you said, there is $78,000,000 repayment to in OSCOM to international lenders in in OSCOM for, yeah, January next year. I think we we have all all through this year communicated that we plan to resolve that that prior prior year end and as soon as as possible. And I think, yeah, update on that is that that is still the plan.

We are planning to to repay it through the fall at at some point. And, of course, yeah, we will we will link that to discussions we had during the spring on the potential bond loan, and that is still something that we are considering. And we also we mentioned it on the CapEx guidance earlier that we’re also doing financing on the growth CapEx on this the Sea Dragon or the new build. And we need to yes, view these things together.

Moderator/Host: Thank you. What do you expect to be the impact of your increased CapEx on your EBIT margin? And will CapEx be normalized in 2026?

Maarten, CFO/Financial Executive, DOF Group: Yes. We can do the first the second thing first, 2026. Of course, we’re not guiding 2026 yet on details. But if you take if we take a very simple look at the building years on general fleet, we will see that assuming that all vessels are docked every fifth year, it is a bit lower amount of dockings in 2026 than in 2025. So all else equal, it will be a little bit lower.

And, yeah, there are no there are limited amounts of there are no growth CapEx other than the the remainder of the of the new build for 2026. And, of course, that is that is known known to us today, but it is a bit too early to detail the guide on CapEx. But maintenance CapEx is a little bit lower than this year. On impact percentage impact of increasing CapEx, OpEx is depreciated. I guess that is the reason for the question.

And vessel CapEx usually depreciated over the remaining lifetime of the vessel, while ROVs are depreciated on its assumed economic lifetime of twelve years. So it is a bit detailed question. But I would say that the duration of the depreciation on these items is at is so long that it has a very limited impact on depreciation and thereby EBIT for the coming period. But over twelve to twenty year period, it is, of course, the full value of the CapEx impact on the EBIT.

Moderator/Host: Great. Thank you. The next one on working capital. There has been a buildup of working capital in H1. What do you expect for H2?

Maarten, CFO/Financial Executive, DOF Group: Of course, the biggest driver capital when you assume that your clients pay on pay on time or continue to pay in the same pattern as they have done historically is is the turnover. And if we do the implicit guiding from for turnover for second half, it is slightly above turnover for first half, but less than the annualized or the double of second quarter. So I would without the detailed rundown on this, I would say flattish for second half is to be expected.

Manfossa, CEO, DOF Group: All

Moderator/Host: right. If we assume a stable activity level going forward, would you say okay to extrapolate on the Q2 levels for lease payments and lease debt levels?

Maarten, CFO/Financial Executive, DOF Group: Yes. That’s two different kind of leases. So if I assume that this is the IFRS 16 vessel charter that is recognized as leases on the balance, That depends on the number of vessels that we have chartered in. That is the vessels that is currently on that list is the Steel Explorer, the Avila Phoenix and the Rem Inspector. So as long as they are all on charter, the payments will remain the same.

But yes, depending on when they roll off, whether there are new vessels on charter or but provided the same amount of vessels on charter, that will remain stable from now onwards. On the more financial lease, meaning that we have financed subsea equipment with financial leases, there is a big or there is three ROVs delivered in the quarter where new leases have been established. So those payments are we can expect to increase a little bit, but it’s not material in the big small things.

Moderator/Host: All right. Then on the backlog, are you able to provide any direction, on the margins in the backlog?

Manfossa, CEO, DOF Group: It is good. Perhaps well, there is a big difference between between straight bustle chart and, you know, a subsidy. They contribute to subsidies for. So so so, you know, we we we really prefer to talk about, let’s say, what we deliver in EBITDA than what the margin is. Because because if you if you do a big project, the the margin might be 40%.

Yeah. And if you do a bus and charter, the margin might be 70%. But in the end, you normally make more money if you utilize the bus from the project on on a a a straight shot. I guess so. But I guess, you know, we had these pictures on the last the second last page where we have, of course, rate increases.

So so let’s say if you keep all else equal, the margins should be higher in the backlog than what we delivered so far in ’25 since we see rates are increasing. But, of course, it’s but then, of course, I do I can’t tell if the mix in the backlog are are similar. Yeah. So if there is more subsea projects, subsea scope in the backlog was the margin, we go the other way. But if the mix is the same, the margin should come up.

Yeah.

Moderator/Host: Alright. Moving on then to backlog on the I class vessels and specifically for the remainder of the year. Do you have many days left to sell here?

Manfossa, CEO, DOF Group: You could say, as it looks now, we have two of them or as we see it fully booked for a minor review. Yeah. Then the two and one is so far booked into October. Yeah? But, of course, there are still a few opportunities around here that could bring that that gap, you know, going about here.

But as I said, two short out, one at the moment, so to to to two part time. And then the fourth one is is booked and then, of course, this is I don’t remember all the yeah. I do normally, but the more and more than this, it looks like it’s booked to mid September, and then it had for dry dock in October. And then we have no work for her so far in in in November and December, but we have, let’s say, close discussions with a few clients that could go on November with Sapphire. So the meeting is also on four votes.

We we have, roughly speaking, November and December But as I say, I don’t expect those boats to sit idle for prior November and December. Yeah.

Moderator/Host: Alright. Then you’ve you’re now moving left to unlock or from the North Sea to Brazil. Do you see potential to do more such moves into Brazil going forward?

Manfossa, CEO, DOF Group: Because he he he he has still a lot of opportunities in Brazil. Of course, you know, all the accounting. So, of course, you you you need a new tender if you want to do. But, of course, we we have all the projects further discussion in Brazil where we where we and, of course, that also relates to the question you had if you are short of votes. You know, we have we have hope that we will be awarded we’ll Then we would need to to take votes from outside the the Brazil market.

And, course, that could be it’s not impossible that that could be, let’s say, served by one of our bank account last year in in in the North Sea if we if we decide to So, yeah, so it’s not the last vessel that will go from from Norway to or from the North Sea to Brazil. But but but as I said, it might happen already. It might happen fast. It might happen that we have to move their own Christmas party.

But there’ll be funding awards.

Moderator/Host: Sticking with Brazil as the topic, do you fear becoming overly dependent on the country given that it’s such a big portion of the quarter backlog and current sales?

Unidentified Participant, DOF Group: I agree. No. I don’t I don’t think so, because we’ve been

Manfossa, CEO, DOF Group: in Brazil for twenty five years. Yeah. It’s it’s the biggest, subsea market on the globe. It is, you know, a a pipeline of work, new field development that is very large and driven on to our way of strategy on on Brazil building, Brazilian flag, very good local organization. No.

I think it’s I think it’s a positive, not not the negative. So and, of course, if you look at I do only suppose it’s it’s a fair portion, but, of course, it’s I I I’m not afraid of that all yet. So we will continue to do deals globally and take the deals we think is gives us faster earnings.

Moderator/Host: Alright. Some competitors have indicated a softness in the market, and you highlight a global presence as an important lever to mitigate that. Are you able to elaborate a bit on which markets you expect to be stronger or continue to be strong going forward?

Manfossa, CEO, DOF Group: And, of course, it’s it’s it’s interesting. Yeah. Because if you if you look at the you can take the PSV market as an example. Yeah. Do you see and it would be don’t do PSVs in Brazil, so I’m not into all the but, of course, you see you see very strong market and a very strong pipeline on on good rates.

Yeah. And then you see, of course, the the North Sea spot market this year have been what you can call very weak. Yeah. And, of course, you see the churn rates in the North Sea market dropping. You could say it’s it’s and I I think as a consequence of the lower activity in UK, you can also say that that the North Sea and Ghani, it been a disappointment if you sum up so far.

They had some good month or two in in in second quarter, but has been been not been, I think, up to what people expected yet. But then at the same time, of course, you see of course, you see orders fixing modes in Brazil at at what you could call perhaps the highest rate levels I’ve seen in my career on term contracts flying campus. Yeah. So so it’s it is it’s kind of a market that you see, you know, is not and as I said, it’s not similar globally. It’s and and why why do you see, you know, all the big all the air gunners in Brazil, you know, on the bigger the four the three biggest losses, 200, two fifty, and two seventy, of course, you saw you saw three bidders.

Yeah. And and the wood, it has to do with the local presence. It has to do with the flag. It has to do with, you know, that you need to know what you are doing, and, you have to be be local, and, you have to know the rules and regulation, and the taxes are important. So I think and I I think that will in a normal market and, of course, in a meat market, that is that that is one one you see who is good, but who is not that good yet.

And and and you see that also. You see that it’s the same pattern in in in, you know, in Canada where where you see, you know, fewer players in the same battle in Australia, you know, you you need something more than an office in in, let’s say, in in in Milligan and and, to to be able to to perform basis like that. Yeah. So so it it is you know, it might be a bit, let’s say, you could just say, but I think I think, you know, the more complex a job is and and the the longer it is from from the North Sea, the less competition you see. And and and I I think it is very natural explanation why it is like that.

And then, of course, you know, how long you can see such a right right difference between North Sea spot and Gernberg elsewhere. I don’t know. But I think it’s it’s I don’t know how to say, but it might be structurally a very value value. You see a lot of the supplier in the North Sea are not able to compete at Australia because they don’t have the infrastructure to do. And, of course, it is a global market, and and, of course, it is it is I remember back then, man, we only had an office that many years ago, you know, back in early two thousand, we only had an offices in the North Sea.

And, of course, you you you didn’t see more than 20% of the leads, the big guys that doing. So it it is like that. I think that’s the short explanation.

Moderator/Host: Alright. Thank you. That concludes the q and a session. So thank you all for your questions, and thank you to Mons and Maarten for the presentation and the answers.

Unidentified Participant, DOF Group: Thank you very much for listening to us, and

Manfossa, CEO, DOF Group: have a nice evening, And welcome. Don’t forget the Capital Market Day on September 9 and also. Thank you very much.

Maarten, CFO/Financial Executive, DOF Group: Thank you.

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