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Moreld As reported a robust revenue increase in its Q1 2025 earnings call, showcasing an 18% rise from the previous quarter, reaching NOK 2.9 billion. The company experienced a significant stock price surge of 8.66% following the announcement. According to InvestingPro data, Moreld’s trailing twelve-month revenue stands at $625.8 million, with EBITDA reaching $53 million. The company expressed cautious optimism in its guidance, reflecting market uncertainties.
Key Takeaways
- Moreld’s Q1 2025 revenue increased by 18% from Q4 2024.
- EBITDA reached NOK 428 million, with a strong performance from Ocean Installer.
- The stock price rose by 8.66% following the earnings announcement.
- Guidance was cautiously optimistic, with potential for future updates.
- The company is preparing for an uplisting to the main stock exchange list.
Company Performance
Moreld As demonstrated strong performance in Q1 2025, with revenue climbing to NOK 2.9 billion, an 18% increase from the previous quarter. InvestingPro analysis shows the company maintains a "GOOD" overall financial health score of 2.7, with particularly strong relative value metrics. The company’s three primary segments—Apply, Ocean Installer, and Global Maritime—contributed to this growth, with Ocean Installer leading the way, representing 65% of EBITDA. The company continues to benefit from its specialized vessel capabilities and strong contracts with blue-chip operators.
Financial Highlights
- Revenue: NOK 2.9 billion, up 18% from Q4 2024
- EBITDA: NOK 428 million
- Cash Balance: NOK 924 million
- Net Interest Bearing Debt Ratio: 0.3x
Market Reaction
Following the earnings announcement, Moreld’s stock price increased by 8.66%, reflecting investor confidence in the company’s growth trajectory. The stock’s last close value was NOK 12.7, with a notable increase to NOK 13.8 post-announcement. Based on InvestingPro Fair Value analysis, the stock appears fairly valued, with analyst targets suggesting up to 54% potential upside. Discover more insights and 12+ additional ProTips with an InvestingPro subscription, including detailed valuation metrics and growth forecasts.
Outlook & Guidance
Moreld provided a cautiously optimistic outlook, increasing its EBITDA guidance to a range of NOK 900-950 million on the lower end and NOK 1.1-1.2 billion on the upper end. InvestingPro data indicates analysts expect the company to become profitable this year, with an EPS forecast of $0.34 for FY2025. The company remains vigilant about market uncertainties and plans to update its guidance based on future spot market tenders. Access the comprehensive Pro Research Report for detailed analysis of Moreld’s growth prospects and financial outlook. Moreld is focusing on contracts starting in 2026 and beyond, with high bidding activity across maintenance and installation contracts.
Executive Commentary
CEO Geir highlighted the company’s proactive approach, stating, "We have an extraordinary high activity on bidding." He emphasized caution in updating guidance, saying, "We want to be cautious in increasing our guiding until we see that we have won some more of those jobs." Geir also noted the strength of ongoing projects: "We are working on very good, very strong projects."
Risks and Challenges
- Market Uncertainties: Potential volatility in the spot market could impact future earnings.
- Vessel Capacity: Limitations in vessel capacity may constrain growth opportunities.
- Economic Conditions: Broader macroeconomic pressures could affect project demand.
- Regulatory Changes: Shifts in regulatory environments might impact operations in key markets.
- Competition: Increasing competition in the subsea and EPCI markets could pressure margins.
Q&A
During the earnings call, analysts inquired about Moreld’s conservative guidance approach, vessel capacity limitations, and ongoing tender processes. The company addressed potential dividend and share buyback strategies, indicating a focus on shareholder returns while navigating market challenges.
Full transcript - Moreld As (MORLD) Q1 2025:
Geir, CEO, Moral: Good morning, everybody. Welcome to Moral’s first quarter twenty twenty five presentation. I’m pleased to say that Moral has a very strong start of 2025, driven by high activity levels across all business areas and close to full utilization of vessels and personnel. The first quarter profit was also driven by the phasing of major projects and profit recognition of projects that were initiated in the previous quarter or in quarter four twenty four. And before I continue, let me give you some brief introduction of Moraoud.
It is very relevant in this quarter. We are a company engineering based with a workforce of about 3,000 people. Our operations and our revenue and profits mainly comes from the North Sea and Mediterranean Western Africa. We do have offices in more countries, but those are the main areas for our income. And that are also areas where we see a strong future even with the current conditions in the world economy.
We have three companies in the group. We have MOR ELD Apply, maintenance modification company. Morelde Apply has long contracts with blue chip operators that are in practical terms exclusive, very good forward looking and very stable income. And then we have the subsea and installation company, Ocean Installer. That is a more of a surf and EPCI company with very strong income applied, Muralda applied stands for about 30% of our EBITDA.
Ocean Installer is 65% of our EBITDA. And Mural and Ocean Installers projects are of a nature that can the startup and the finalizing of those projects depends on external factors. And that’s something I want you to be aware. For example, if there is a project or vessel that we are working on and there is a drilling rig moving something, we always need to wait for that drilling rig. We sometimes need to wait for weather and other events, and that is very relevant for this quarter where we did see that startup of operations in Western Africa on the project that you see on this picture were delayed for various reasons.
The last company is Global Maritime, as an engineering offshore engineering expert. I’m not going into more details on that now. Okay, so back to the figures. Very strong revenue, 18% higher than quarter four twenty twenty four. Very pleased with that NOK 2,900,000,000.0.
We have increased our personnel base by about 400 persons to take off all that work. The EBITDA, fantastic, SEK 300,000,000 up from last quarter at SEK $428,000,000, which is something we are obviously very satisfied with. And the profitability is driven partly by the finalizing of several projects for Ocean and Storr that was started in the previous quarter. Trond, CFO, will come back to more details on that later on. In the last quarter, we said we were going to refinance the company and we have done so.
We have done refinancing. We have taken we have a cash balance now NOK $924,000,000. With the refinanced bond, we have an interesting debt of 1.4 close to NOK 1,400,000,000.0. The net interest bearing debt is a factor is increased to 0.3x. Tron will explain why there are good reasons for that.
When it comes to the backlog, we we have now been kind of eating of the backlog. We have in the last quarter, we have had an order intake of 1,300,000.0. You may think, oh, that’s low. To that, I’m going to come back on more details, but we are all having an all time high bidding, which is a so the year as such will end up, we are sure, with significant awards of contracts. And I will just discuss that a little bit more in detail later on.
The main recent events this time, we have issued a new bond, as I said, 130,000,000 bond. One important aspect with that was to have the possibility to pay out dividends. That is now in place. I’m very pleased with that. And I’ll come back to that later down.
The previous bond on $225,000,000 has been fully redeemed, and Trond will explain more on that. Let me tell you a little bit more on vessel charters. That is a prerequisite for Ocean Installer in order to have capacity and facilities available vessels available to execute their work. We did execute an eighteen month option now in this quarter. And we because we need to make sure that we have vessel capacity for the future projects that we are have won, but also future projects that we are bidding.
So therefore, we not only secure future charters, but we also make sure that we have options to call for that are fixed priced. That’s very important for the company’s bidding activities. Yes, it’s good to pay out dividends now. We will pay out if well, we are proposed to pay out NOK 0.42 for this quarter. That will be finally approved on the AGM next week.
And if approved, I need to say, then we will try the share will be traded ex dividends on the May 21 and the payout will be a week later or around the May 26. The next quarterly dividend is expected to be roughly on the same level and then in August. And I did have a talk to the Chairman yesterday and he’s clear that he also wants to see that kind of dividends for the next three quarters. Okay, a little bit more of each of the companies. As I said, Applied is going very well.
I think me, one of the more important parts with the Morrill Applied is that they have managed to enter stronger into the onshore market. That opens up some nice opportunities. And also, means that we have been invited for some long term contracts for bidding on onshore activities this year that are nice opportunities that we have some good hope for winning. I’m going to come back on the tender activity later down. So I’ll wait I’ll go to the next company because the tender activity is key for us, but I need to do that in in in on a later slide.
Ocean Installer, I think it’s no surprise that that is the main driver of of these significant results that we see. $329,000,000 NOK, very high utilization and especially on the big project that we executed for Total in Angola. And let me give you an example of how profits are recognized and how we ended up booking all the profits for that project this year. The vessel that you see here started to work to pick up goods already in November. It picked up various items and sailed down Angola.
When we when we came to Angola, we we did not get access to the port. This was just before Christmas last year. And that is not unusual, but that happens. We cannot predict it, but it happened. So we waited outside for one and a half weeks and then it went into this year.
And that is how things are working in contracts like that. We needed to pick up more equipment on that port and it ended up then starting its operations on the site in January. And it finished it before this quarter was ended. So it was a very good project. It went all very fine.
So we managed to do very well on it. I’m very, very proud on behalf of the people in Ocean and Storo, and that is one of the main drivers for this strong quarter. Global Maritime is stable. It’s more sales of hours, engineering hours, sometimes larger projects. That business was going as expected in the quarter.
Okay, so here is a slide that is very important for us now. The backlog that we see is now about around 8,000,000 or nearly 9,000,000. We have currently an extraordinary high activity on bidding. We are about an all time high level of bidding that is in Norway for applies large maintenance modification contracts. It is also for Ocean Installer large EPCI SURF contracts internationally.
We expect to contribute, what should I put, to a meaningful backlog increase this year for the company based on this activity. Obviously, can’t go into details. This is confidential, but it’s a very strong development. So with that, Ron, I’ll give the word to you.
Trond, CFO, Moral: Thank you, Geir. Okay. I’ll continue with going through the financials, starting off with the group financials, and I will also cover the three segments afterwards. So as Gerd mentioned, Moral delivered a very strong result for the quarter, driven by high activity levels and profit recognition on large projects. And this is also a quarter with historically lower seasonal activity for the group.
So with that, we are very, very satisfied with the result for the quarter. Revenue came in on 2,900,000,000.0 and EBITDA at NOK $428,000,000. And also note that this EBITDA number is exclusive of IFRS 16 adjustments, meaning that the cash vessel lease cost, which is a significant cost component for the group, is included in this EBITDA number. So a significant portion of Mural’s operations consist of large scale projects, where revenue and margins may vary from quarter to quarter and depending on project phase and the level of pass through of equipment and material. And due to the phasing of profit recognition, there was a steep incline in the margin compared to the previous quarter due to a catch up effect, as Geir also mentioned, on one of the larger projects that we are executing.
This catch up effect amounts to NOK 80,000,000 of EBITDA in Q1. Leverage ratio slightly increased to 0.3 times, mainly due to one off costs related to the bond refinancing we concluded in February, but also an increase in working capital. In terms of EBITDA guidance, we are on track to reach our EBITDA guidance. And with a strong Q1 result, we have also slightly revised our guiding upwards, but remain cautious due to the general macro uncertainties. So over to the financial performance for Apply in the quarter.
Apply has continued a positive trend from last quarter, reaching revenue of SEK 1,100,000,000.0 and EBITDA of 95,000,000. EBITDA margin increased to 8.5% compared to Q1 last year, revenue is up 48%. Applied has experienced a significant growth over the last two quarters, reflecting increased activity in the Draupno project portfolio as well as a high activity for Boliden Odda on the zinc plant upgrade project. The increase in EBITDA margin compared to the previous quarter is mainly driven by a lower share of pass through revenue from equipment and materials and the amount of equipment and materials and pass through will vary from quarter to quarter. Ocean Installer, as Geir also mentioned, delivered a very strong result in the quarter, partly driven by the degree of completion of major projects and profit recognition that we have already talked about and the catch up from Q4 last year.
And as already mentioned, the catch up effect in this quarter is an EBITDA effect of million. Revenue for the first quarter amounted to almost SEK1.6 billion, while EBITDA reached SEK329 million. This also represents a significant increase compared to Q4 when the two key vessels were on long intercontinental transits combined with the startup of several new projects. Global Maritime delivered a revenue of SEK205 million in the quarter and an EBITDA of SEK5 million. Revenue increased by 7% compared to the first quarter last year, while EBITDA was considerably lower.
This is mainly due to the Hywind Scotland project, which started during Q1 last year and was a key contributor to Global Maritime’s high profitability in that quarter and also for the remainder of 2024. So over to the balance sheet, starting with the development in the net working capital. As you may aware, the group operates with a capital efficient model with a high degree of customer prepayments. At the end of Q1, we had SEK290 million, SEK291 million of prepayments on the balance sheet, which is down from SEK447 end of last quarter and that is following then substantial progress made on the larger projects during the quarter. Current level of working capital is less negative than the last twelve month average, but within the indicated normalized band that we have indicated on this slide.
So on the debt side, obviously post the IPO, we have a very low debt level. Gross interest bearing debt, that includes the $130,000,000 bond that we refinanced back in February and which also opened up for dividends as mentioned by Geir. The gross interest bearing debt also include lease liabilities accounted for under IFRS 16. That is mainly the vessels and the two CSVs that we have on long time charter, but also some office leases are accounted for under IFRS 16 liabilities. Cash balance at the end of the quarter was SEK $924,000,000, down from SEK 1,500,000,000.0 at the start of the year.
Net interest bearing debt excluding IFRS 16 liabilities is $448,000,000, which is a leverage ratio of 0.3 times, up from 0.1 times from the last quarter, mainly driven by the one off costs from the refinancing paying the premiums and the make whole, but also an increase in the working capital. So I will conclude by going through the main developments on the cash flow starting as I mentioned, we have SEK 1,500,000,000.0 of cash at the start of the year. We have SEK $480,000,000 of EBITDA excluding IFRS 16. We have a negative change in net working capital of SEK $567,000,000, which ties back to what I mentioned on prepayments. We have a reduction in prepayments, but we also have some timing effects between Q4 and Q1 related to supplier payments, but also payments on the receivables side as well as a large milestone invoice for work performed in Q1 that was executed and been invoiced after quarter one.
Net cash used in refinancing SEK371 million of cash outflows that mainly consists of what I already mentioned paying the premiums and the make whole, but we also raised $15,000,000 of less bond than we had in the previous bond. So we have used around SEK 160,000,000 to 170,000,000 of our own cash as part of the refinancing. So September of cash at quarter end. On top of that, we also have $200,000,000 of untapped credit facilities within our super senior facility. With that, I hand it back to you, Gerd.
Geir, CEO, Moral: Thank you, Tron. All right. I want to say a few words on our EBITDA guidance for this year. The strong quarter one supports an increase in our guiding. We already know that the quarter two will also be strong, good trading, good projects.
What we so based on those events that we see, we take the lower side of the guiding from 900,000,000 to $950,000,000, 50 million up. We also increase the upside by 100,000,000, SEK 1 point 1 billion to 1,200,000,000.0. And you can always ask, could we have increased it more based on the fantastic results. To that, I want to say that we still have days that are not sold for the vessels at the end of the year, quarter four mainly. That is normal situation.
But we don’t want to assume that we have a full coverage of those vessel days at this point in Europe. We need to have that open. And I’m sure everyone says it’s market uncertainties, blah, blah, blah. Yes, that is, of course, a part of it, but there is opportunities out there, but we need to secure them, and we haven’t done that yet for the last part of the year. So therefore, we are keeping that guiding at the level that I just said.
And then we’ll need to come back to further updates on the guiding later on. It is also depending on a very strong tender line, of course, pipeline. But that is more something that will is a longer term part. The tenders that we are now working on predominantly are on contracts that will run this year, but run down this year and start up again in next year when it comes to the oil and supply. And for Ocean Installer, the tenders we’re working on, the large tenders are for next year onwards.
But there is spot market tenders out there for this year for Ocean Installer, and that is something we are really hoping to win and then we can also have a relook at the guiding based on the outcome of that. Okay. Think that is the end of the presentation. I just want to finish off with a couple of upcoming corporate events that we want to highlight to you. The first AGM, as I said, will be conducted on the May 20.
So all of you that are shareholders have been inviting invited for that event. Please participate and make the possibility to vote and to be active. The key topics, we have been through it already, but of course it’s the dividend approval. But it’s also authorization for share buybacks. I think that is important.
I want to highlight that and share capital increases. For share buybacks, partly we are also looking at incorporating a share option program for employees. We are still working on that, so it’s too early to say the details about it, but that’s something we want to do for several reasons, but it’s positive for our employees to have that in place in the future. We will elect new board members that this that will that you can find in call for the meeting. And we will also convert the company to an ASA company.
I think one very important part to the right hand side here is the uplisting of the company. That is something we have been working for all ever since we started the listed or being listed on the Euronext growth. We always had the intention, and we have said that, to uplist to the main list. That is very, very likely to happen in quarter two, so in this quarter, of course, pending on regulatory bodies. But that is definitely the plan now.
And in the end, I want to remind you all that the lockup period of more than 60% of the shares expires on the June 19. And that is, of course, an important event for the company. And we think and hope that that will also increase liquidity in the company’s shares. With that, I thank you for your attention and thank you very much, Olivier.
Olivier, Moderator/Analyst, Moral: Yes. Then we can move on to the Q and A. So first, if we have any questions from the audience? No? Okay.
Then we can move directly to the online questions. We got quite a few. But I’ll start with one for you, Geir, and that is linked to the guiding. So you beat the FactSet consensus for Q1 with over NOK 200,000,000, but guidance is only increased by NOK 75,000,000. Could you please explain why the guidance isn’t raised even further?
Geir, CEO, Moral: I think I maybe I answered that already, but as I said, the jobs that Ocean Installer is going to win that will take us to the higher part of the guidance is on the spot market. And the spot market, I need to say, has shown signs of being a little bit softer now, but there are very strong opportunities out there still that we are working on. We do not we want to be cautious in increasing our guiding until we see that we have won some more of those jobs that we need to do in the last quarter of the year.
Olivier, Moderator/Analyst, Moral: With such a strong first quarter, how should we think about the phasing of EBITDA in the remaining three quarters? Should we expect Q2 to be a soft quarter with relocation of vessels and limited margin on new projects?
Geir, CEO, Moral: Yes, that’s a good question, of course. It’s as I said, the timing of when we take the profits for the especially if the ocean installer work is always a little bit difficult to project. I think that is not so easy to answer. But as Trond said, we have already we are seeing good activity levels in this quarter. So I’m not sure if you have more details there, Trond?
Trond, CFO, Moral: No, but obviously, we have better visibility in the short term on Q2. So obviously, we yes, we have good visibility on Q2, but I don’t think we should go into kind of any indications or guiding on the quarters.
Olivier, Moderator/Analyst, Moral: When it comes to the cyclicality in Ocean Installer, could we say that the results in Q4 twenty twenty four and Q1 twenty twenty five is an average of the two quarters representative for Ocean Installers run rate going forward?
Geir, CEO, Moral: I hadn’t thought about that one before. I think Trung can answer, but I want to say one thing on that question, which you remember last quarter, I did say that we have now established a business model where we are taking our vessels from in Ocean Stolar from the North Sea down to Western Africa and Mediterranean. That is something that started this year and partly only last year. We have seen very positive effects of doing this, but I think being very kind of exact on how that will work year on year, I don’t think that I think that’s too early to say and it is also depending a lot on which kind of projects do we win. So I would be careful in anticipating a copy at this point in time.
Trond, CFO, Moral: Yes. No, I agree with that. Obviously, the catch up effect in Q1 could kind of be moved back to Q4 kind of to normalize. But I agree with Geirits. And it depends on the kind of projects that Ocean and Staller is executing.
And also when the key vessels are in transit between the North Sea and West Africa.
Geir, CEO, Moral: And let me add one. I like that question a lot. It’s a very good question. I think going forward with the project large projects that Ocean Installer are doing, we must we do expect that there will be quite large variations on quarters. And I would almost say that looking at individual quarters and then anticipating how the rest of the year would be based on one quarter, that is kind of something I would not recommend.
Is for the whole group since Ocean Installers represents two thirds or more of the EBITDA. You need to look at it on a little bit more longer basis, it’s just a quarter on a quarter basis.
Olivier, Moderator/Analyst, Moral: Very good. Then we can move on to some questions on the backlog and the bidding. So it seems like Ocean Installer is set with two key vessels on long term contracts. Why not increase to three or four vessels to increase the capacity and set up the company for growth?
Geir, CEO, Moral: Yes, that is something we definitely have thought about. And yes, spot on. It’s an assessment on what we see of the future market. But I think even more important, the availability of that kind of vessels. That kind of vessels are not very available at all in the market.
We have certain requirements that we need. You can find the same vessels with cranes, just to be a little bit more technical, but having the equipment or the carousels as they are called to enable the kind of operations that we need to have them for, it’s very scarce availability. So it’s something we are assessing, but it’s kind of type of vessels that are hard to get hold of in the market.
Olivier, Moderator/Analyst, Moral: You mentioned that you’re bidding for many contracts now. Which can we say something about which contracts and customers we are approaching? And based on your track record with these customers, what would you consider likely in terms of success ratio and order intake from these tenders?
Geir, CEO, Moral: Yes. Of course, I know the answer to the question, but it’s this is also very confidential. I think for the project for Ocean’s Dora, I don’t think I can share that. But I think it’s not for Applied, we are bidding to, I think, all the major oil company the operating companies in Norway at the moment. Don’t think that’s a big secret in this.
And those are large contracts, long durations. But you know, we are in the middle of the bidding and I cannot share which companies or what kind of contracts it is unfortunately.
Olivier, Moderator/Analyst, Moral: Regarding those contracts, why not increase the range of the guidance for this year based on the possible contracts you might get?
Geir, CEO, Moral: Yes, that’s easy to answer. Those contracts are being bid for start up from 2026 onwards and not from the start either. So there will be no effect on those new contracts this year.
Olivier, Moderator/Analyst, Moral: In terms of the more long term outlook, what are you thinking on the subsea markets from 2027 and beyond?
Geir, CEO, Moral: Yes, that’s a good question, of course. If I knew it, I would have been a rich man now. But now it’s how should I say, it is if we look at the larger our large competitors, they are very positive, very forward leaning on EPCI type of SURF projects, and we are as well. We are working on I can only see what we are working on, and we are working on very good, very strong projects for those years. So we seen, I think it’s right to say that possibly the spot market is a little bit more uncertain these days, but that is on the very short term.
But on the longer term, the SURF and EPCI project that we’re working on with OceanStaller, that’s a very strong market.
Olivier, Moderator/Analyst, Moral: Finally, some questions related to the dividends and share buybacks. So I’ll direct those to Trond. So according to your dividend policy, the company aims for a distribution ratio between 4060% of adjusted net profits over time. What adjustments are typically made to the net profits?
Trond, CFO, Moral: Typically adjustment we will make to the net profit is, for instance, amortization of excess values as part of the M and A activities we have done. That would be other kind of one off costs. If we had kind of refinancing costs, such kind of costs, we will adjust for those or normalize for those kind of costs.
Olivier, Moderator/Analyst, Moral: And finally, will the company consider share buybacks?
Trond, CFO, Moral: Yes, absolutely. We will consider share buybacks and that is also why we have the separate we are asking for a proxy on the Annual General Meeting taking place next week. So the Board is asking for a proxy to do share buybacks going forward.
Olivier, Moderator/Analyst, Moral: That was the final question. So with that, we conclude the Q and A.
Geir, CEO, Moral: Thank you very much.
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