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Moreld As reported robust financial performance for the full year 2024, achieving significant revenue and EBITDA figures. The company is expanding its operations and refining its strategic focus, despite a recent dip in stock price. With an "EXCELLENT" InvestingPro Financial Health score of 3.93, Moreld's strategic initiatives, including new market entries and successful projects, illustrate its strong competitive position in the energy sector.
Key Takeaways
- Full year 2024 revenue reached $9.1 billion, with EBITDA at $1.075 billion.
- The company successfully completed an IPO and refinanced existing debt.
- A new dividend policy will begin in Q2 2025, with a payout ratio of 40-60%.
- The stock price fell by 2.63%, closing at $16, amid broader market trends.
- Moreld is expanding into the Mediterranean and West Africa with subsea operations.
Company Performance
Moreld As demonstrated strong financial performance in 2024, with revenue reaching $9.1 billion and EBITDA hitting the upper range of guidance at $1.075 billion. The company has reduced its leverage ratio to 0.1x, reflecting improved financial health. These results underscore Moreld's strategic focus on expanding its operations and enhancing its competitive edge in the energy sector.
Financial Highlights
- Full year revenue: $9.1 billion
- Full year EBITDA: $1.075 billion
- Q4 revenue: €2.4 billion
- Q4 EBITDA: $128 million
- Cash balance: $1.5 billion
- Net interest-bearing debt: $146 million
Market Reaction
Moreld's stock price experienced a decline to $1.40, with InvestingPro data showing a strong 23.08% return over the past six months. The stock's technical indicators suggest overbought conditions, with the price currently sitting just 5% below its 52-week high of $1.51. Discover more insights and 5 additional ProTips with an InvestingPro subscription.
Outlook & Guidance
Looking ahead, Moreld projects its 2025 EBITDA to range between NOK 900 million and NOK 1.1 billion. With analysts forecasting EPS of $0.26 for FY2025 and a consensus target price of $1.88, the company shows promising growth potential. The company's order backlog stands at NOK 9.9 billion, with 80% coverage for 2025. Access comprehensive analysis and valuation metrics with InvestingPro's detailed research reports, available for over 1,400 US stocks. Moreld anticipates major contract awards in the maintenance and modification sectors, driven by strong tender activity and new offshore licenses awarded by the Norwegian government.
Executive Commentary
"We are an asset light company, group of companies operating in the energy business," said Geir Ostiger, CEO. This strategic focus has enabled Moreld to maintain a strong presence in oil, gas, and selected offshore wind markets. Ostiger also noted, "We expect major awards in the maintenance modification market in the second half of twenty twenty five," highlighting the company's growth prospects.
Risks and Challenges
- Market volatility and economic uncertainty could impact financial performance.
- Competition in the energy sector remains fierce, requiring continuous innovation.
- Regulatory changes in key markets could pose compliance challenges.
- Fluctuations in oil and gas prices may affect profitability.
- Supply chain disruptions could impact project timelines and costs.
By maintaining a diversified portfolio and expanding into new markets, Moreld As aims to navigate these challenges and capitalize on emerging opportunities in the energy sector.
Full transcript - Moreld As (MORLD) Q4 2024:
Geir Ostiger, CEO, Morrell Group: Good morning, everybody. Welcome to Morrell's Fourth Quarter twenty twenty four Presentation. My name is Jair Ostiger. I am the CEO of the company. And with me, I have Trond Rosnes, the CFO of the company.
We are pleased with our operational and financial performance in the quarter. We have seen robust activity levels, considering the low season for subsea and marine operations, and we report increased contribution from maintenance and modification projects. We have also strengthened our balance sheet significantly following a successful IPO in December and hence, debt reduction. This positions Morrell well for long term growth and shareholder value creation. For the full year, more or less pro form a revenue was $9,100,000,000 In the Q3 presentation, we guided on an adjusted 2024 EBITDA ranging from NOK 1,000,000,000 to NOK 1,100,000,000.0.
And I am pleased that we ended the year in the upper range of the guidance at NOK $1,075,000,000,000. Before I continue, let me give a brief introduction of the Morale Group since we are kind of the new kid on the block. We are an asset light company, group of companies operating in the energy business, primarily oil and gas, but also in selected offshore wind opportunities if acceptable margins are achieved. Morad Apply is a maintenance and modification company, forty six years of history serving the Norwegian continental shelf and more recently also onshore projects. Ocean Installer is a subsea installation company serving Norwegian and international customers and projects.
Finally, Global Maritime is a well trusted marine engineering specialist with an international footprint also. If you look at the EBITDA contribution, Ocean Stolar stands for about two thirds of the EBITDA, apply one third, little bit less and Global Maritam, six percent. So our highlights for quarter four. The revenue sits at EUR 2,400,000,000.0. So that reflects our robust activity levels in Q4.
And as I said, considering the low season and multiple vessel transits to Western African projects, we are pleased with the revenue. And we also see a positive development on the maintenance and modification projects in Norway and especially, of course, that is related to Applied. The EBITDA of $128,000,000 you could argue that is a low level. However, with these movements of vessels and moving to projects in West Africa, we are pleased with that EBITDA, and that is also on the higher range of our expectations. On the debt, our debt is now NOK 146,000,000 at the end of the year with a quite significant cash balance of NOK 1,500,000,000.0.
With an interest bearing debt of NOK $16.46, it means that we have reduced our interest bearing debt to EBITDA to almost zero, which is not too bad. Our backlog is NOK 9,900,000,000.0. You can see that this year's 2025 backlog is now NOK 7,000,000,000. So we have roughly 80% of our expected revenue covered already. And let me be clear, there is a very high tender activity ongoing at the moment and will continue throughout 2025.
It's been an eventful quarter. The most significant one, obviously, being the IPO and the listing of totally USD 115,000,000 after quarter end. I promised you that we would refinance and come into a position where we could pay dividends in the last presentation. We are keeping the promise. We have now issued a new bond to refinance the debt.
And we went into the market in January, and that was a very successful event. We have now refinanced and will finalize all the parts of that. Ron will come back to it later on. And that is, of course, paving the way to pay down the existing $225,000,000 debt, and then we are in a position to pay dividends. I'll come back on that too.
Let's not forget, we I talked about a sale of the Capnor company in the last quarter. That divestment was concluded in October. We had a closing then, and the sale generated NOK208 million net proceeds. Okay. So dividend, let's go.
We have a solid balance sheet, and we definitely do have the capacity to return shareholder value very soon. And the board has resolved to approve an updated dividend policy. I think that was last night. So we will pay out quarterly dividends starting for from second quarter twenty twenty five. It, of course, formally needs to be approved by the general meeting and new general meeting.
And thereafter, we plan to have quarterly financial statements in February, March sorry, February, May, August and November each year and then pay dividend accordingly. On the ratio side, we expect to pay out a distribution of 40% to 60% of the adjusted net profits over time. And I also want to mention that the Board may approve share buybacks when we see that being relevant. And in line with the new policy, the Board of Mora will or intends to pay dividends in of NOK 0.42 per share in second quarter, and that relates approximately to NOK 75,000,000 total payments. And just for the sake of good order, the AGM is expected on the May 20 year.
So a little bit more on the performance of each of the companies. Morel d'Aplay has a very robust performance. There are large in the maintenance and modification agreements or contracts that we have that are also exclusive, by the way, we see some very good projects. There are also projects within those contracts. And they are ongoing this year, so it's a very busy time for the company.
One of the projects is the Draupner maintenance project, which is a compressor station that has a significant portion of the gas exports from Norway to Europe. So this is a very highly important project where trust is key, and we are very pleased to have that project awarded. And that's going very well. We have also stepped into onshore operations lately, the last year, year and a half. And that is also an area where we see interesting opportunities for the future.
We have larger projects in the in the metallurgical industry at the moment, as an example. For 2026, there will 2026 sees the startup of several large contracts that will be tendered this year on the NCS. So that is 2025 is a year of major tender activities and also very important for Morel. Okay. Let's go to Ocean and Stoller.
I have in the headline mentioned the transit to new markets. And let me explain a little bit here. The Norwegian continental shelf, when it comes to subsea activities, has too harsh weather conditions for the majority of activities. So what we are doing in the company, we are moving our vessels down to the Mediterranean or to the Western Africa and executing projects there. And that business model works very well.
That means that in the quarters, quarter one and quarter two, where we're moving those vessels up and down, we will see a lower booked revenue because of the movements. However, it is still very, very good business for us to do those moves. And Trond will come back a little bit more on the details of and the impact of it. We had a very good order intake for the company of 1,100,000,000.0 following several awards in this quarter, and this was also a significant upswing as opposed to what we picked last year in the same quarter. So I've talked about the two vessels to West Africa.
We also have a third vessel now engaged in pre commission activity in the Barents Sea for Equinor. Right. So let's move to Global Maritime. Global Maritime did a very large project this summer, towing the Highwind Scotland turbines in back and forth to Scotland. That was highly successful.
On this picture, you see a crane. That crane is about 200 meters tall, lifting off the turbines of these constructions, changing out some bearings and then putting them back on sea. That is a type of project that, that company is good at. Very specialized and also with, I would say, respectable margins. What we see now is that there is a very strong upswing in contracts for the company, especially in Marine Warranty, and the backlog has increased significantly.
So we are looking I'm pleased with the development of the company. Right. So I mentioned the order backlog from our blue chip customers. We are looking at strong backlogs. With options, we are looking at NOK 12,500,000,000.0, and you can see the split per company.
I'm not going to go into more details there today. But again, please note that the tender pipeline is very strong, and there are some very, very large contracts up for tendering during 2025. And we expect major awards in the maintenance modification market in the second half of twenty twenty five. And I think it's no secret there is the contracts with Equinor, AKO BP (NYSE:BP) and Oc and Ashi that is coming up in this period. Okay, Tron, I hand it over to you.
Trond Rosnes, CFO, Morrell Group: Thank you, Ger, and good morning to you all. So the full year revenue for 2024 came in on $9,100,000,000 and EBITDA at $1,075,000,000 dollars which is in the higher end of the $1,000,000,000 to $1,100,000,000 guidance also mentioned by Geir. And also please 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. And we are also, as Ger mentioned, we are presenting the the pro form a number, which means that Ocean Installer that we concluded in the July is also included for the first half. So we are showing off Ocean Installer for the full year of 2024.
But as reported, as
Christopher, Analyst, SBIR Bank: you will
Trond Rosnes, CFO, Morrell Group: see in our Q4 report from 01/2024. Q4 was concluded with the revenue at billion dollars and EBITDA at $128,000,000 The profitability in the quarter is in the higher end of the implicit full year guiding, but it is lower compared to the previous quarter, Q2 and Q3, as you can see. This is driven by key assets being in transit between the North Sea and West Africa as well as profit recognition phasing on large projects. I'll come back to some more details on that, especially on the Oceanus dollar. Capnure divested in the quarter added $2.00 $8,000,000 to our cash balance for our 67% shareholding.
And leverage ratio significantly reduced to 0.1 times following the new equity from the private placement, the proceeds received from the mentioned Capnur transaction as well as strong cash flows from our operations. So moving over to Aply. Full year revenue for Aply came in at close to billion dollars and EBITDA at $318,000,000 with EBITDA margin just above 8% for the full year. The revenue in the quarter was $1,200,000,000 dollars which is up 36% compared to the last quarter. It's been a busy quarter, as Ger also mentioned, with high activity where we have been executing multiple maintenance and modification projects on the NCS.
EBITDA ended on $85,000,000 which is on par with the strong second quarter, but margin are somewhat lower mainly due to a larger share of equipment and materials with lower gross margins in the revenue mix. Ocean Installer delivered a strong 2024. Pro form a numbers for the full year is a revenue of billion dollars and EBITDA at $730,000,000 with an EBITDA margin of just above 16%. The revenue for Ocean Installer in Q4 was as expected, but lower than previous quarters and ended at the $1,000,000,000 The Q4 EBITDA of $48,000,000 which is a drop in EBITDA compared to Q2 and Q3, but is well within expectations and the underlying guidance that we get for the full year. But when compared to the strong Q2 and Q3, there is some elements to bear in mind.
Project phasing, meaning several projects in Oceanus Dollar were in the startup phase, where the profit is not recognized until a higher percentage of completion is achieved. As a rule of thumb, we can say that we don't start profit recognition on larger projects in Ocean Installer until we go offshore. We had two key assets on extended intercontinental transits, as I also mentioned, including preparations, and both vessels had transits of twenty one days. And in addition, there is some smaller seasonal variations between quotas with Q2 and Q3 typically being stronger than Q4. Turning over to Global Maritime.
Global Maritime has concluded 2024 with a record high EBITDA of $65,000,000 following the successful execution of the Highwind Scotland project. Global Maritimes revenue in the quarter was $213,000,000 and the EBITDA was negative with minus million. There is typically lower demand for Global Maritime Services during the winter season, so with a negative result in Q4 was as expected. The group operates with a negative net working capital. The current level of net working capital is lower than the last twelve month average and outside the indicated range of the normalized working capital.
There is a large swing, as you can see, from the start of the year and at the end of the year. There is a combination of timing and timing of invoicing and increased prepayments from customers that we have benefited from towards the end of twenty twenty four. And going forward, we expect some reversal of the negative working capital, which ties to the increased completion progress on our larger projects, which ties back to what I just talked about on Ocean Installer and the Q4 results. Gross interest bearing debt includes $145,000,000 of senior secured notes and following the USD 80,000,000 redemption at December. We have lease liabilities accounted for under IFRS 16.
And during the quarter, the lease liabilities have increased by approximately net 300,000,000 from Q3, which is the net effect of lease amortization and the execution of the eighteen month option on the North Sea Giant vessel that we announced earlier this week. Cash balance at $1,500,000,000 net interest bearing debt when we exclude the IFRS 16 liabilities of $146,000,000 and then the leverage ratio, as I mentioned also, of 0.1x. And as part of the refinancing in Q1, we will settle the remaining $140,000,000 senior secured notes on February 21, which also includes paying the make call on the existing debt. And for the benefit of you all, the existing notes has its first call date on the fifteen June twenty twenty six. So showing the cash development from the start of the year to throughout 2024.
We see a strong underlying operating cash flows from the reported EBITDA And positive working capital development, an Oceanus dollar is included from January. We have paid interest on the mentioned senior secured notes of $232,000,000 We had net cash outflow from acquisition of $494,000,000 That also includes the acquired cash. We had cash inflows from divesting Rossofjo and Capnur in 2024 of $258,000,000 And we had net cash from bond issued in June of $154,000,000 And Lastly, the net proceeds from the equity raised in December of million, which does not include the unused overallotment, the Green Shoe, of around million that came in January. And total cash balance, as mentioned, $1,500,000,000 and we also on top of that have unused credit facilities of $200,000,000 so in total available cash of 1,700,000,000.0. That concludes my walkthrough of the financials.
So I hand it back to Gerd, who will conclude our presentation.
Geir Ostiger, CEO, Morrell Group: Yes. Thank you, Trond. So we are absolutely having a promising and good outlook for 2025. It is supported by a good order backlog or solid order backlog, but also with the activities that we see in the markets, not the least. We have seen and do see activity pick up again now in this quarter.
And as Trond mentioned, we are now moving to the execution phase of quite a few of those two big vessels that is now in Western Africa. And that's going to be a very positive impact to our EBITDA in quarter one. On the market side, we are very positive on the new licenses that have been awarded by Norwegian government to on the Continental Shelf. Moralt has now the ability to take satellite field hookups, both on the subsea part and on the surface part of the installations. That is a good place to be.
And not the least, and hence, we are maintaining our guidance that we had also in the last quarter for 2025 at an EBITDA, excluding IFRS 16, on between NOK 900,000,000.0 and NOK 1,100,000,000.0. And as I said, that is supported by what we see of the markets going forward and our opportunities to win contracts. With that, that concludes our presentation. Thank you for listening in or being here. We will now have time for some questions.
So questions, please.
Moderator: Any questions from the audience?
Christopher, Analyst, SBIR Bank: Christopher from SBIR Bank one. Three questions, if I may. I know you acquired Ocean Installer last year, but could you say on a pro form a basis how large the backlog for the combined company would have been one year ago for 2024 versus the 7,000,000,000 you have secured for 2025? That's the first question. Secondly, you mentioned you are doing work for Baker Hughes (NASDAQ:BKR).
Could you explain a bit more what you're doing on that kind of project? And thirdly, when do you expect working capital to normalize? Is that already in the first half? Or is it during 2025? Thank
Geir Ostiger, CEO, Morrell Group: you. Okay. Let me start with the second question, what is Ocean and Storra doing with Bekaheus. Ocean and Storra has been doing light vessel well intervention with Baker Hughes. That has been a successful collaboration.
I can also say that we have signed an MOU a few just a few days back, where the companies, Ocean Store and Baker, will look deeper into a future collaboration. So and that is also then on light well intervention, but we know that there are opportunities beyond that with Baker Hughes. So it's I think it's a very promising collaboration we have with that company. Would you say something about auto backlog?
Trond Rosnes, CFO, Morrell Group: I can say something about auto backlog. So I think it's fair to say that if we go one year back and look at the order backlog at the end of twenty twenty three, it was around half of what it is now. So let's say around $2,500,000,000 lower than the current backlog for Ocean Installer. And I will can also take the working capital question, obviously. If we look at the current project portfolio, I would say that we expect a normalization within the next six months.
But obviously, it's quite tricky to kind of guide and guide on expectations there because it also depends on what we're kind of winning off new projects. We are always targeting kind of front loaded milestone payments from our customers. So but based on what we know now, based on the Protea portfolio, I would say within the next six months.
Moderator: Any other questions from
Bjorn Arnaud, Analyst, Pareto Securities: Hello. Bjorn Arnaud from Pareto Securities. So to what effect do you feel on apply the merger with Ocean Installer? Do you see that it's already generating more business for Apply? Or is it still to come?
Geir Ostiger, CEO, Morrell Group: Yes, that's a good question. We do see that the opportunities of being and becoming a total provider of satellite field hookups is going to be very strong for the future. The majority of exploration activities on the Norwegian Continental Shelf is around existing installation, where Ocean Installer can execute the subsea work and Applied can do the work on the installations. And the combination there, we have done already analysis of it, and we see that we can cut down three to six months of first oil. And that, of course, has any tremendous value for the operators.
So that is a very good potential that we see. Another one, if I may, is that we are already now utilizing resources at Global Maritime in Ocean Installer in order to help them to take a larger part on bidding for new projects. So we are starting to cross move resources to optimize the operations of the Mural Group already.
Moderator: And then we can go through the online, the questions that came in from the web portal. Can you please elaborate on the market outlook for your key segments?
Geir Ostiger, CEO, Morrell Group: Yes. I think it's the company, especially Apply, has got very long contracts with the blue chip operators in Norway. And one of those contracts the biggest contract in Norway is the VEM contract that Equinor is now having out for bidding this year. It is not kind of a win or lose situation for Morrell because there are April has part of it, Duncan Solutions has part of it, Weir part of it, Wood Group has part of it. So that is a very important contract for everyone.
And it will be distributed. And how the mix is, that's something we don't know. That's Equinor's well kept secret, of course. But the duration of those contracts is very long. How long?
I cannot tell, but I would guess something between five or seven years. And when you get one of those contracts awarded, that builds up the backlog significantly. We are looking at a $1,000,000,000 per year at the moment at that contract. So therefore, the order backlog could increase significantly this year based on the three contracts that are coming out for bidding.
Moderator: Yes? Yes. One last question. It's a question regarding the news from this week of the North Sea giant option. And that is if we can disclose anything on the pricing of that on the day rate or if that's still confidential or not agreed.
Geir Ostiger, CEO, Morrell Group: Let me first say why did we do it. We extended it because we see projects going in 2027, '20 '20 '8, '20 '20 '9 that we need to ensure we have capacity for and we need so we need to call the option already now for 2028 because of projects we're working on. We are not allowed to share anything on the charter party prices, unfortunately. But there are very good reasons for doing it, that's for sure.
Moderator: Yes. I think that concludes our Q and A session.
Geir Ostiger, CEO, Morrell Group: Okay. Thanks a lot everyone.
Moderator: Thank you.
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