Earnings call transcript: Moreld Q2 2025 sees stock dip despite strong EBITDA

Moreld, a company active in maintenance, subsea installation, and consultancy, reported its second-quarter earnings for 2025, showcasing robust financial performance but experiencing a notable stock decline. The company achieved revenue of NOK 2.6 billion and EBITDA of NOK 363 million for Q2 2025, yet the stock price fell by 4.98% in pre-market trading, reflecting investor concerns over future guidance and market conditions. According to InvestingPro data, the company maintains a GREAT financial health score of 3.16, with particularly strong momentum in recent periods.

Key Takeaways

• Moreld’s Q2 2025 revenue reached NOK 2.6 billion.
• EBITDA for the first half of 2025 was NOK 791 million.
• Stock decreased by 4.98% in pre-market trading.
• Strong bidding activity in the subsea market.
• Future guidance projects EBITDA between SEK 1 billion and SEK 1.2 billion for 2025.

Company Performance

Moreld’s performance in the second quarter of 2025 was marked by significant contributions from its three key business segments: Maintenance and Modification, Subsea Installation, and Consultancy. The company’s asset-light business model and strategic use of charter vessels have allowed it to maintain a competitive edge in the industry. The subsea market, in particular, has shown renewed strong bidding activity, contributing positively to Moreld’s financial outcomes.

Financial Highlights

• Revenue: NOK 2.6 billion for Q2 2025.
• H1 2025 EBITDA: NOK 791 million.
• Leverage Ratio: 0.3x.
• Net Interest Bearing Debt: NOK 367 million.
• Cash Balance: NOK 945 million.

Market Reaction

Despite Moreld’s solid financial performance, the company’s stock fell by 4.98% in pre-market trading. This decline could be attributed to investor concerns over future guidance and the broader market conditions. InvestingPro analysis indicates the stock is currently in overbought territory, with impressive returns of 67.33% over the past year and 12.23% in the last week alone. The stock’s current price of $1.97 sits near its 52-week high of $2.07, suggesting strong momentum despite recent volatility. InvestingPro subscribers have access to 10+ additional exclusive insights about Moreld’s market position and valuation metrics.

Outlook & Guidance

Looking ahead, Moreld has set a full-year 2025 EBITDA guidance of SEK 1 billion to SEK 1.2 billion. The company is optimistic about its 2026 backlog, which is approaching 50% of the anticipated contract volume. Additionally, Moreld is exploring potential mergers and acquisitions to further strengthen its market position. InvestingPro forecasts support this positive outlook, with analysts expecting both sales growth and a return to profitability in the current year. For detailed analysis of Moreld’s growth prospects and comprehensive valuation metrics, investors can access the exclusive Pro Research Report, available to InvestingPro subscribers.

Executive Commentary

CEO Geir Ostiger emphasized the strategic importance of having employees as shareholders, stating, "We strongly believe having employees as shareholders is a very good thing." He also highlighted the company’s careful approach to guidance, noting, "We are careful in our guiding and want to be sure we can realize our projections."

Risks and Challenges

• Market Volatility: Fluctuations in stock price could impact investor confidence.
• Competitive Pressure: Increasing competition in the subsea installation market.
• Economic Conditions: Broader economic factors could affect project funding and execution.
• Contract Awards: Dependence on securing future contracts to maintain revenue growth.

Q&A

During the earnings call, analysts inquired about Moreld’s backlog reduction and the potential for maintaining current contract levels. The company’s openness to M&A activities and plans for an employee share ownership program were also discussed, reflecting Moreld’s strategic initiatives for future growth.

Full transcript - Moreld As (MORLD) Q2 2025:

Geir Ostiger, CEO, Morrell: Welcome to Morrell’s second quarter and 2025 presentation. My name is Geit Ostiger. I am the CEO of the company. And next to me is Trond Rosnes, the CFO of the company. The 2025 was very good indeed for the company.

We had strong financial results and we also reached some very important milestone for the group in this quarter. Let me we’ve had quite a few new investors since the last quarter. So I want to give some more information about MREL before I continue. We do have three different segments. The segment all the operations here are based on engineering, and the segments are maintenance and modification.

Second one is subsea installation. You can see the boat in the middle of this slide. And the third one is consultancy, high level marine consultancy. The by far biggest contributor to the result, to net profits is Ocean Installer at two thirds. Then Apply, as we call the company of maintenance modification, about one third, just less than one third, and Global Maritime has a smaller part of about 5%.

The business model of the group is asset light. So we do not despite the fact that we do have large assets, big boats, we have we are building equipment, building facilities, like equipment for us facilities. We don’t own our own shipyards. We don’t own we are using subcontractor for fabrication. We do need big boats, construction vessels for our operations subsea.

We don’t own those either. We charter those vessels for longer periods of time and we also have options to extend the charters that we can call upon. That is to make sure that we can serve the big projects that we have and also bid projects for the future. And that model has served us very, very well indeed. So there is a slide here on more details about the company.

You can look at that later on. I’m not going to go into more details on that just now. Now back to the good results. So the first half year, we’ve had 5,500,000,000.0 of revenue and NOK 2,600,000,000.0 in the second quarter. How is that possible?

We have seen a very strong contribution from projects on the North Sea, especially with our applied company, but also projects subsea projects in Western Africa been contributed contributing very strongly indeed. That gives us an EBITDA for the half year of NOK $791,000,000, which is which we are very, very happy about, of course. It is a strong performance also in quarter two of NOK $363,000,000. I think it’s I need to comment on these strong results. We are we have had large projects, especially subsea installation projects being finalized in quarter two.

That means that we have been able to recognize profits that is of, I would say, an extraordinary character having so many projects being finalized. Later on, we will also see at the future operations and in quarter two, going forward, quarter three, quarter four, we will also see that we are starting up more projects on that on the subsea part, but they will and they will not be profit recognized as we see it now until 2026. So that’s a very important detail to have with you. Now the interest bearing debt is about the same as it was last time. Tron will go into more details there.

On the backlog side, we are eating up of the back on the backlog, which is expected. Large We contracts that are now about to expire on the maintenance modification part for Applied. That is to be expected. We are seeing nearly all the large operators going out for tenders now. Those tenders will be being bid by many companies, also our competitors, and several companies will win those bids in the near future.

We think that by the end of the year, these large bids on maintenance modification will be awarded. And we do think that we will take at least our share of those bids. I say there were some other important highlights. And of course, the uplisting to the main board at the Oslo Stock Exchange was very important for us. We have seen a positive impact on the share price, we see that this was a very good thing for the company and for the shareholders.

We also listed the bond, 130,000,000 senior secured bond that we have at the site or the day after, I think it was. Going forward, Ocean Installer was awarded a a good project with Boranasi in Norway recently for the Baldur phase six project. We have had a Baldur phase four previously. Don’t mix it up with that one because that was finalized in the previous quarter. This is a new Baldur project that is now starting up.

So we have started already activities on that project. That’s going to be a good project for the future. On the dividends, we are paying out 0 0.42, again, same as last quarter. And the stocks will be traded ex dividend on the August 18. We do see in the future that we will continue with the same level of dividends, and Trond will come more back on those details.

Okay. A little bit more on on each of the companies we have. So more to apply, as I said, this is in the middle of large bits that is that is shaping the future for moral apply definitely. There is one main contract that we still have that is not out for bidding. That is the FLX contract.

That it’s very important for us. That is a modern contract, which we do see is working very well, a contract regime, I should say. And in the continuation, we are, as I said, and I want to stress this, comfortable we that we will keep the level of contract that we have with and the three companies that are out for bidding is Vor sorry, is Aker Solutions, it’s Equinor and it’s ConocoPhillips. And we do definitely believe that we can maintain our activity at least also in the future when these big contracts are awarded. There is a good activity on the maintenance modification for Applied.

As I said in the last quarter, we are still working on a large compressor project that is important for the export of gas from Norway to the continent. That’s Strapnoch, Very, very intense project. That’s gonna continue all the way this year and as we see it also a little bit into next year on some additional work that is there. It’s a very good project. And and there is also and that goes for several, operators throughout type, ex new small, findings or or, fields that are are gonna be tied back to installations and in the in the coming year and that more the apply is gonna be also participating on a few of those.

Now let’s move on to Ocean Installer. Obviously, very strong results as as this is the the main engine, if I can say so on on providing results for the group. It says here we have high utilization with five vessels. I did say in the start we have two main vessels. But the thing is, Mooreland is also taking quite a few vessels every year from the spot market.

And that is an important capacity that we really rely upon and that is that that we see is always available. And that enables us to take larger projects and sometimes we even do projects without those too large construction vessels. We can take them standalone on vessels from the market. I did mention the Baldert, so I’m not going into more details there. What I want to explain is a little bit on the phasing of projects.

So the three projects that I talked about that was finalized and profit recognized in the first two quarters or the first half, that we don’t we cannot decide when those projects finalize. That is based on events on the fields, events on the platforms that we’re working towards. This is out of our control. But it so it’s a little bit of a coincidence that we had all these three large projects being project profit recognized in one half year. Now we have started working on some other big projects, one of them being the Balder six that I set, and that will not be profit recognized very much at all this year.

That will be next year and also quite late next year for some of it. And that and that phasing of projects, I want to stress because that’s that is an explanation of the net profits of the group that will vary depending on when these large projects with a large EBITDA is has the profit recognition and the phasing. That’s something we that’s the nature of the business. And we will, as much as possible, inform you of how we see this will also be in the future. But it’s something I want the investors to be very much aware of.

And therefore, we are now saying that the activity is still strong in the next two quarters for Ocean Installer, but the profit recognition will be less. Global Maritime has been has had, I would say, some some not satisfactory results over the last half year. It is now improving. They’re working more focused, and the margins are now up to 3.8% EBITDA. That’s not good enough, let’s be fair.

We want it to be at least 8% for that company. We have we are bidding for some quite nice contracts now. And so the outlook is strong. There is more activity also at the moment. So we are happy with the development of this company now.

So I touched upon backlog already. 2025, 3,300,000,000.0. And twenty six billion, we have some quite nice contracts there already, as you can see. We are closing up to 50% of the anticipated volume of contracts now for next year. So we are quite happy with that.

And the good thing is that there is good tender activity in the market for especially for subjectivities, not only for the applied part and the and the maintenance qualification is extreme because of these large frame agreements. But we also see that despite there was a little weakening in in the subsea market bidding the first and into the second quarter, we now see that there is very strong activity again, which is very important for Ocean Installer.

Trond Rosnes, CFO, Morrell: Right, Ron, over to you. Yes. Thank you, Ger. I will cover the financial part, and I will also comment on what Geir also mentioned about the dividend, but I’ll come back to that as well. Moral has indeed delivered a strong result for the quarter.

EBITDA is positively influenced by timing of project milestones, partly offset by pass through revenue and project mix win within Applied. Revenue exceeded NOK 2,600,000,000.0, and EBITDA ended at NOK $363,000,000 for the quarter. For the 2025, revenue reached NOK 5,600,000,000.0, while adjusted EBITDA was $791,000,000, as Ger also mentioned. And as we have mentioned in earlier presentations, when we are presenting the EBITDA, this EBITDA number is the EBITDA exclusive of IFRS 16 adjustments, meaning that the cash vessel lease cost is which is a significant cost component for the group, is included in this cash EBITDA proxy number. Leverage ratio maintained at 0.3 times.

Net interest bearing debt has been reduced by approximately 80,000,000 in the quarter. As Geir also mentioned, we are on track to reach our full year EBITDA guidance and with a strong Q2 results. We have revised the floor in the guidance upwards from SEK $950,000,000 to SEK 1,000,000,000, meaning that the updated guidance, therefore, is giving us a range between SEK 1,000,000,000 to SEK 1,200,000,000.0 for the full year 2025. If we look into more details for Moral Apply, the high momentum from Q1 continued into Q2 with Moral Apply reaching revenue of approximately 1,200,000,000.0. Revenue was 31 percent higher compared to Q2 last year, mainly due to a high degree of pass through revenue with limited markup.

The second quarter was characterized by high activity on the major maintenance and modification contracts, the installation contract for the Boliden zinc plant onshore project that we also talked about in Q1, in addition to the execution of the Eirin, the important Eirin tieback project for Equinor. The EBITDA dropped from above 9% in Q2 last year to 55.2% this year. For the 2025, the EBITA margin was 6.8% compared to 8.6% for the 2024. The reduction in the EBITDA margin in the quarter was primarily driven by a high share of past revenue that I already mentioned, but also a lower gross margin contribution due to a project mix and partly by the revision of the incentive mechanism on one of the company’s major frame agreement. The new mechanism will reduce and postpone the payout of certain efficiency bonuses to the second half of the year.

The order backlog declined from NOK 4,200,000,000.0 to NOK 3,500,000,000.0 during the quarter. Order intake was around SEK $550,000,000 with the execution phase for eMod project at the Gudrun field as the largest award in the period. As Geir also mentioned, securing future backlog for Applied is a key priority and multiple key bits on long term multibillion frame agreements were submitted during the quarter, where decisions is anticipated in Q4 this year. If we continue with the financial performance for Ocean Installer, they delivered another strong quarter, partly driven by completion of major projects, both in Norway and internationally. As expected, as Ger also talked about, when projects are executed and closed out successfully, we are able to recognize profits and release unused contingency, which positively affects the numbers.

And revenue for the 2025 amounted to SEK 1,250,000,000.00, while EBITDA reached SEK $291,000,000. Sorry, some hiccups. Okay. We expect activity levels to remain high for Ocean Installer in the second half. Just to reiterate what Geir also talked about, there will be more projects in early phase and less projects completed in the 2025.

Due to this, we expect the EBITDA recognition in the second half to be lower than in the first half due to this recognition phasing effect. Order intake for the quarter was approximately 800,000,000, with the order backlog at the end of the quarter declined to approximately 3,200,000,000. Ocean Installers tender pipeline at the end of Q2 remains strong with numerous processes due to be decided within the 2025. Global Maritime. Global Maritime’s revenue in the quarter ended at NOK $213,000,000 and EBITDA at NOK $8,500,000 Revenue was 9% lower compared to Q2 last year, and EBITDA remains lower compared to Q2 last year.

The decline in margins compared to the 2024 is primarily due to the Hywind Scotland project that we executed in 2024 and which also was a key contributor to Global Maritime’s high profitability last year. Activity in the company’s global business lines of Marine Services and Marine Warranty remained at high levels during the quarter, with Marine Warranty, in particular, delivering strong revenue volumes and profitability. And combined, these two businesses showed revenue growth of more than 10% compared to the same quarter in 2024. If we look at the net working capital development, as we have talked about before, Morrell operates with a capital efficient model, where the working capital on a normalized level is negative. We have indicated with a band on this slide, the range we estimate the normal level to fluctuate in between.

And the main driver for the negative working capital is front loaded milestone payments on larger projects. There are high degree of customer prepayments, means that the group operates with a negative working capital. And obviously, the net working capital is then the negative net working capital is then a liability on the balance sheet. At the end of Q1, we had 100 sorry, at the end of Q2, we had NOK 128,000,000 of prepayments on the balance sheet, which is down from NOK $291,000,000 in the first quarter. And this follows what we have just talked about.

We have closed out several of the larger projects in Ocean Installer during the quarter, which also have a knock on effect on the level of prepayments. Gross interest bearing debt, that includes the 130,000,000 of senior secured notes we issued earlier this year. It includes also the lease liabilities accounted for under IFRS 16, which is the vessel leased, mainly the two CSVs we have on long term charter, but it also includes the office leases. Cash balance at the end of the quarter was $945,000,000, up from NOK $924,000,000 in Q1. I will come back to the cash flow bridge on the next slide.

Net interest bearing debt at $367,000,000 when the IFRS 16 lease liabilities has been excluded. And as already mentioned, that is a leverage ratio of 0.3 times maintained at the same level as for Q1. Finally, on the cash flow bridge between Q1 and Q2. As mentioned, coming into the quarter, we had a cash balance of $924,000,000. We have generated EBITDA profits, the cash EBITDA of $351,000,000, that’s the reported cash EBITDA.

We had a negative change of 94,000,000 in our working capital, where the majority is connected to the reduced prepayments, but also partly offset by some other timing effects in our working capital. We have CapEx of 24,000,000 in the quarter connected to I’m IT improvement initiatives, but also the ERP upgrade projects we are working on in Applied. We have paid taxes of 61,000,000, of which the majority is connected to withholding taxes related to the Gira Sol project. And we paid SEK 75,000,000 of dividend back in May. And we have some other outflow, which is mainly linked to currency fluctuations on our USD deposits.

As mentioned then, that gives us a total cash balance of NOK $945,000,000, increase of NOK 15,000,000 compared to Q1. If we exclude the prepayments from our cash balance, the increase is net of 184,000,000. With the untapped credit facilities we have of around NOK 200,000,000, the available liquidity at the end of the quarter was 1,100,000,000.0. And let me just close off my session with a comment on the dividend, as also mentioned by Geir. We announced this morning that we declare a dividend of SEK 0.42, ex dividend date, August 18, payable on or around August 26.

We expect to pay out the same dividend in November and in February next year. And those three dividends are connected to the net income of 2024. So we expect the level to remain at the same level. What then about any increase? Okay.

So when we have finalized our 2025 accounts and also dependent on our outcome in terms of our guidance, there could be a possibility that we could increase the dividend, but that is something we will have to come back to when we have finalized our 2025 accounts and will obviously also will have to be decided finally by the general assembly. With that, I hand the word back to you, Gehr. Yes. Thank you, Tron.

Geir Ostiger, CEO, Morrell: Yes, and it’s one add on the dividend. We have in our policy stated that we will distribute a certain part of the net profits. And obviously, that stands so that also underpins what Trond just said. Okay. Let me finalize the presentation by looking at a little bit more at the guiding.

We are or should I say, realistic, careful in our guiding. And therefore, we haven’t upped the we have taken or higher the lower part of the guiding. We haven’t upped the top part of the guiding. The reason being that we simply want to be fairly sure that this is realized, can be realized. Now it is so that in the latter part of the year there is still open spaces in the schedule for the large enabling construction vessels of Ocean Installer.

And we could have increased the guiding if we had had filled those up, but we haven’t. We can we may still fill those spaces up. And and of course, then we need to relook at at the top of the guiding, but we haven’t done that. And that or should I say, that carefulness is something that we we want to maintain. There are opportunities out there, but we haven’t closed any contracts for those open spaces yet.

Well, we have closed spaces, but not sufficient to increase the guiding. So I just want to finish off with stating that we need to come back on that guiding on the next quarter. And hopefully, of course, we can take it beyond the 1,200,000,000. So with that, thank you for listening, and we have now time for a Q and A session. So is there any questions come up there?

Moderator, Morrell: Any questions from the audience?

Erik Aspenfossa, Analyst, SP1 Markets: Hello there. Erik Aspenfossa, SP1 Markets. I have at least one question. The backlog has come down a little bit now. I guess that’s partly due to the current tenders out for Applied.

But I guess most of it is due to Ocean Installer. So my question is given the high tender activity that you see, when could we kind of expect those or the timing of new potential contracts for Fortuna Stalla coming in? And that, I guess, would also be for work mainly next year?

Geir Ostiger, CEO, Morrell: Yeah. Yeah. That’s a very important question, of course. We are we are in in the middle of bidding for several projects, also also large projects and very large projects. It’s always hard to say exactly when will bids be finalized or awarded, but we do expect that in the next four to five months, we will have closed some of those bids already.

But there are also some bids that will be a year ahead.

Moderator, Morrell: Then we can move on to the online questions. So there are some questions here on more the growth prospects and the long term picture of the business. So Geir, you indicated earlier that you expect a fair share of the MMO work that is currently being tendered. So does this mean that we should expect that Marella price revenue will remain at the same level? Or are there any opportunities for top line growth in that business?

Geir Ostiger, CEO, Morrell: When it comes to the bids we are in at the moment, let me be precise. We expect to maintain the same level of of contracts at least. That that is precisely what I said. Is there an upside? Yes, there is an upside.

Of course, there is parts of those bits we we have been invited to where we have not been participating before. But I cannot I do not want to speculate and I do not have any information that I can share. I don’t have information as of yet on those processes, unfortunately.

Moderator, Morrell: Over the next years, what what other growth avenues are you looking at for the group? Is M and

Trond Rosnes, CFO, Morrell: A an

Moderator, Morrell: alternative or other prospects?

Geir Ostiger, CEO, Morrell: Yes, that’s an interesting question. In the last quarter, we were in an uplisting process, and then we had to really maintain the same kind of operational activity as due to the uplisting and the requirements there. Now we are, of course, done with the uplisting is done, and we develop our future outlook. We are working on this. We will be more clear on what we are our intentions are.

But will not say no to any M and A activity anymore. There is a possibility.

Moderator, Morrell: Moving on. There has been launched a share buyback program. This is a question for Tron. Could you say something more about that buyback program and if we can expect there to be an increase in any buybacks going forward?

Trond Rosnes, CFO, Morrell: Yes. No, it’s correct. We launched a buyback program some weeks ago. It’s currently ongoing. What I can say is that we currently don’t have any plans to increase it, but that is something we will have to also evaluate going forward.

Geir Ostiger, CEO, Morrell: Let me add one thing. I strongly believe having employees as shareholders in a company, owners in a company, I strongly believe that is a very good thing. So I am proud and I’m very positive that we now have are in a position that we can launch a program for our employees and that will happen in the near future. So that I think that is good news for the company. It’s good news for the shareholders.

So I really look forward to doing that.

Moderator, Morrell: And with that, we can conclude the Q and A session. Thank you.

Geir Ostiger, CEO, Morrell: Thank you very much, Oleg. Thank you.

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