Earnings call transcript: Multiconsult Q1 2025 sees strong revenue growth

Multiconsult AS reported robust financial performance for the first quarter of 2025, driven by significant revenue growth and a strong order backlog. The company’s net operating revenue reached NOK 1.523 billion, marking an 11.4% increase year-over-year. Earnings per share were NOK 4.86. Despite these solid results, the company’s stock experienced a decline of 3.34% pre-market, following the earnings announcement.

Key Takeaways

• Multiconsult’s net operating revenue increased by 11.4% year-over-year.
• EBITDA surged by 40%, reaching NOK 190.4 million.
• The company maintained a strong order backlog of NOK 4.749 billion.
• Stock price fell by 3.34% in pre-market trading.

Company Performance

Multiconsult demonstrated strong performance in the first quarter of 2025, with significant growth in net operating revenue and EBITDA. The company reported an organic growth rate of 4.2%, supplemented by contributions from mergers and acquisitions. The calendar effect also positively impacted the results, providing an additional 6.1% growth. This growth highlights Multiconsult’s resilience in a competitive market, particularly in the energy and defense sectors.

Financial Highlights

• Net Operating Revenue: NOK 1.523 billion (+11.4% YoY)
• EBITDA: NOK 190.4 million (+40% YoY)
• EBITDA Margin: 12.5% (+2.5 percentage points)
• Earnings Per Share: NOK 4.86
• Order Intake: NOK 1.696 billion
• Order Backlog: NOK 4.749 billion

Market Reaction

Despite the strong financial results, Multiconsult’s stock price fell by 3.34% in pre-market trading, reflecting investor concerns or profit-taking after recent gains. The stock’s decline contrasts with its impressive performance over the past year, delivering a total return of 33.93%. According to InvestingPro data, the company maintains a "GREAT" overall financial health score of 3.29 out of 5, with particularly strong marks in profitability and price momentum. The stock’s movement might suggest market apprehension about future growth or external economic factors.

Outlook & Guidance

Multiconsult maintains a stable outlook for 2025, supported by a robust project pipeline and strategic focus on green transition initiatives. The company anticipates a competitive pricing environment and aims to sustain a billing ratio around 72.5%. Expansion efforts in the Nordic and Polish markets are expected to drive future growth.

Executive Commentary

CEO Greta Bergle highlighted the strong demand across all business areas, stating, "We have a strong demand for our services in all business areas." Bergle also noted the competitive landscape for 2025, emphasizing the company’s strategic positioning: "We are expecting that the 2025 year will be quite a competitive one."

Risks and Challenges

• Geopolitical uncertainty could impact market stability and investment.
• Competitive pricing pressures may affect profit margins.
• Challenges in the housing and real estate markets could limit growth.
• Employee cost increases might strain operational budgets.
• Maintaining high billing ratios remains a critical focus.

Q&A

During the earnings call, analysts inquired about the company’s employee cost management and billing ratio expectations. Multiconsult’s management clarified their strategy to focus on existing market presence and M&A activities, emphasizing a balanced approach to growth and cost control.

Full transcript - Multiconsult AS SE (MULTI) Q1 2025:

Greta Bergle, CEO, MulticonSult: the first quarter twenty twenty five for MulticonSult. My name is Greta Bergle. I’m the CEO. And with me today is also our CFO, Hauperg. Before I start going through the figures, just a short reminder of who Multi Consult is.

We are a multidisciplinary engineering and architecture company with more than one hundred years history. We have our main presence in Norway, but we also have businesses in Denmark, Sweden, UK and Poland. We operate in four segments: Regions Oslo, which is also where the headquarters is Regions Norway, which are all the offices outside Region Oslo Architecture that contain our four architecture companies: Link, Norway, Sweden and Denmark and the architect company, iLab. We have four business areas: Building and Properties, Mobility and Transportation, Energy and Industry, water and environment. And our portfolio consists of fifty-fifty when it comes to public and private clients.

We have more than 15,000 projects on an annual basis. We are almost 4,000 employees. And over the last few years, we’ve had a solid profitable growth and profit development. As the key figure shows, we’ve had a good start of this year. Good operational resulting in a revenue of NOK1.5 billion and an EBITDA of 12.5%.

Note that the comparisons year over year varies a lot over Q1 and Q2 depending on when the Easter break falls. The results were influenced by positive rate development and increased capacity, slightly lower billing ratio of 72.1 from a very high level at the first quarter of twenty twenty four. We experienced some variations between our different business units, and Ove will give you some more insight into this. It is pleasing also to see the great improvement within the Architectural segment, but it is still vulnerable due to market uncertainties. Looking into markets and sales.

We’ve had a there has been a good sale in the quarter, and the variations that we see compared to last year are within are something that we consider normal. Please note that the first quarter in twenty twenty three was unnormally high as we registered a sale of €1,000,000,000 in relation to two large hospitals developments in Oslo. We have won many frame agreements with the Norwegian Defense State Agency recently, both in Norway and Denmark. And please remember that we don’t regulate our order backlog until a call off has been made on these frame agreements. We have reported sales over €2,000,000,000 in these frame agreements this quarter.

This means that we’d expect to see less fluctuations in order reserves going forward, but many more smaller sales. Part of the Building and Property continues to be unpredictable, but there is high activity in all the other business areas. People and organization. We are now 3,963 employees, an increase of just over 5%. We see that we get good feedback on employee surveys, and it means that people are happy working in the organization.

But by far, the biggest news this year, this quarter, was the information that I have announced my decision to step down from the CEO role. It has always been my goal to ensure that this transaction occurs at a time when the company is stable and in a stronger position than when I assumed leadership. I firmly believe that given our current standing and the robust leadership teams that are established in the whole of the organization, the new leader will have all the necessary prerequisites to be successful in driving MulticonSult forward. I also want to emphasize that my leadership remains fully committed and operational until the successor is in place and well integrated into the role. We also announced yesterday that Lina Janikke Maseus will take the role as Managing Director for our architectural company, R Lab.

She comes from a position within the leadership team, and she has been part of R Lab since 2025. It’s always gratifying to see that we have talented internal candidates who are being promoted. I’m also delighted when I see how our projects and our people are being recognized for their achievements. They win prestigious awards and are nominated to represent Norway in challenging international competitions. This bodes well for the future.

And with this, I hand you over to Uwe.

Ove Hauperg, CFO, MulticonSult: Good morning, and thank you, Greta. Then we’ll have a closer look at the numbers for Q1 twenty twenty five. The net operating revenue for the quarter ends at 1.523 That is an increase of 11.4% from last year. In this, the organic growth was 4.2% And the M and A activity from three, purchased last year via Research and site partner, Petty Odd Rasmussen, added an additional 1.2%. The calendar effect on top of that is positive by 6.1% or SEK 82,900,000.0.

There was an impact of four more working days this quarter compared to the same quarter last year due to the Easter effect. The main drivers behind this growth are a higher number of employees, that is 191 or 70 FTEs. You see this in the graph as increased capacity and increased billing rates, and that is part of other revenue effects and then, of course, the calendar effect. The growth is partly offset by a lower billing ratio. We see differences in billing ratio between the different geographies and business areas.

There’s also been higher focus on competence networking activities in this quarter in Multiconsult Merge. We also see the effect of time off, the two first working days in January for many of our employees. Based on the reported project performance in 2024, the expected normal level of net project write downs is unchanged and below 1% on net operating revenues also for 2025. This quarter, we had a legal expense of SEK 9,000,000 reported as write downs related to the Sutra project. These are costs in the relations to preparations for the Kortrad planned for September year.

And bear in mind, accounting risk for this project is considered to be unchanged. EBITDA in Q1 is 190,400,000.0, that is an increase of close to 40% from last year. And the margin is 12.5%, also an increase by 2.5 percentage points from last year. EBITDA is impacted by increased employee benefit expenses and, of course, other operating expenses. We see this done right in the graph.

But the discontinuation of the temporary employers’ contribution resulted in reduced costs at the level of NOK 5,000,000 compared to the first quarter of twenty twenty three and 2024. We had a good order intake this quarter SEK 1,696,000,000.000 and also a solid order backlog SEK 4,749,000,000.000. The reported profit was NOK 134,800,000.0, a good increase from last year and also earnings per share increased to NOK 4.86. Looking at this development over time, we see the first quarter in black. And here, you also see the effect of the calendar days.

The first quarter, we see an increase of 11.4% in net operating revenue, but also a continuous increase in rolling twelve months, top left on this graph. To the right, the increase sorry, the change in the billing ratio by 1.4% negative, but increase in the number of employees by 5.1% and the increased billing rates caused EBITA to be 12.5%, as you see down left. Then a closer look at our four segments. Starting to the left at the regions also. All numbers are Q1 twenty twenty five compared to Q1 twenty twenty four.

Net operating revenue in this quarter SEK 5 and 63,700,000.0. That is an increase of 10.5%. And the main drivers for the growth is the improved billing rates, increased capacity and also the positive calendar effect in this segment, 36,900,000.0. Also offset by a lower billing ratio, as commented on the first page, and approximately half of the legal expenses related to the Sutra project. So a small technical change compared to previous year.

There is a move in the organization from this region to non allocated of 15 full time equivalents. Operating expenses increased by 6.1% and EBITDA ended at 88,700,000.0, that is a solid margin of 15.7%. Then going one step to the right, the regions Norway. Net operating revenue, $637,000,000, increase of 13.9%. And the improvements are with the same reasons as regions also, but a higher increase in capacity, 58 full time equivalents and positive calendar effect of 39.6.

Also in this segment, we had half of the costs related to the Sutra project and the reduced billing ratio. Operating expenses increased by 12.9%. That is caused by the employee benefit expenses, the other operating costs, but also integration costs of one acquisition and liability cases in this quarter. EBITDA ended at 81,400,000.0, and that is a solid margin also in this segment of 12.8%. Then segment architecture.

Net operating revenues NOK217.4 million increased by NOK23.1 million or 11.9% and the EBITDA at million, an increase by NOK16.1 million, and that means the margin increased from 2.6% to 9.7%. Calendar effect positive by SEK 7,600,000.0 and the currency effect on net operating revenue is positive of SEK 1,700,000.0 and on EBITDA of 800,000.0. Then some small comments per company and starting with Link Norway. We see improved results compared to the same quarter last year due to the improved billing rates, the calendar effect and also our onetime settlement agreement. The market conditions is still still differ based on geography and business area and remain challenging in part of the country, especially in the Oslo market.

Like previous quarters, the Oslo market is characterized by late project start ups. The total capacity in number of FTEs is unchanged from last year. We will still have some temporary layoffs during this quarter. Link Sweden. We are faced with weak results this quarter due to changes in the project portfolio in Northern Sweden and the Stockholm market.

This is causing net operating revenues and billing ratios, but with the ability to keep a more favorable rates in the remaining portfolio. In Lindtemark, the improvements in performance continues with improved billing ratios, improved billing rates and a solid cost control. In addition, there has been a positive write off effect in the project portfolio. And based on the attractive competence, Linktemark has the ability to attract new customers and wind tenders in a still demanding market. Arlab has significantly improved the performance since the same quarter last year caused by improved net operating revenues and improved billing ratio and reduced costs.

Unfortunately, still some few temporary layoffs in this quarter and the market situation has improved compared to last year, but the international uncertainty is causing some private developers to delay their project start ups. In total, this segment, reduction of 16 FTEs compared to last year and 4.6 FTEs temporary layoff at the end of the quarter. Then the last segment, International. Net operating revenues increased by 14.5% to 110,000,000. Currency effect positive by NOK 4,000,000 and the calendar effect is this segment is negative by SEK 1,200,000.0.

This increase is primarily driven by organic growth in Multiconsult Pulska and the acquisition of VEA RESUS in ETERIO. EBITDA for the quarter SEK 6,600,000.0, an increase of 26.2%. The improvement in performance was mainly in Iterio this quarter. We had a bit slower start in MulticonSurf Porska this year. The currency effect positive on EBITDA by NOK 300,000.0.

Then I guess you all are ready for the financial position. Starting to the left on the cash. We started the year by positive cash of NOK 165,000,000. We have created cash from operation in total NOK $2.00 2,000,000, including IFRS 16. We have a negative change in working capital as expected.

This is a seasonal effect, a bit higher than last year due to the cutoff dates. But this is invoiced in April, and we don’t see any change in the risk in our portfolio. Cash from investment, 24,000,000. We had two new drilling vessels drilling rigs, sorry, not vessels this period. We have one new last year, but two new rigs and a truck.

And we also had a net effect from financing activity, an increase in interest bearing debt of 177,000,000. Ended the quarter with a positive cash of SEK $240,000,000. You see downright that the net interest bearing debt is SEK $260,000,000, that is SEK 81,000,000 better than last year and the gearing ratio of point four means that we still have a strong obviously, very strong financial position. Then the last on cash is the free cash flow. We see the light blue graph on net cash from operating activity that is minus SEK 22,000,000 and also then the investment activities just explained on minus SEK 24 in the green line.

So this quarter, a net negative effect of SEK 46,000,000, but Rolling 12 close to SEK 600,000,000 positive SEK $598,000,000. So with that, Grete, I hand it back to you.

Greta Bergle, CEO, MulticonSult: Thank you, Ove. We maintain a good growth in the revenue by split on the various business areas And in line with our strategy, you can here see that the growth is largest in Energy and Industry and Water and Environment. And overall, there’s an increase of 10 year over year. In light of the geopolitical and market situation we are in, I would like to say a few words about this before I go more into detail on some of the sales we’ve had this quarter. In our strategy work, we prepared for greater uncertainty.

And we have seen that the pace of change has increased also since we presented our strategy on the Capital Market Day. We stand well in this strategy. We have a strong demand for our services in all business areas. We have a strong market position and we have a leading position within defense. A brief reminder of the strategy.

It has four main parts. The first one is to maintain our position in big project large and complex projects to form a basis for growth. Within the green transition, we have three areas. I’ll get into more detail on this afterwards. And then we have the fifth one, where we’re looking at increasing our impact in The Nordic and in Poland.

Looking at some of the sales we’ve made in this quarter, they fit very well into the ambitions that we’ve set out. And I’ll go into more detail with the energy transition ones, But you can see that we have also now three very good projects within that being a driver for urban transformation and development. And the middle one, Hoehnefos Station, is a cooperation where both Multiconsod and ALAB is now working with the rail property developers to see how we can develop a sustainable town around the station areas. We are also involved in a number of projects where we’re looking at both mapping and restoring nature. Looking a bit more into the depth of some of the projects.

One project we just got this quarter was the electrification with Equinor of three of their fields: Hampen, Tampen and Balgrane. On these projects, we do all the activities in connection with the onshore facilities cabling, landfill, substations. And another very significant project in this quarter is the carbon capture project in Oslo. From this point, 17% of the CO2 emissions for Oslo is occurring at the moment. So this, of course, will help a lot on the journey for Oslo to be a zero emission city.

And again, Multiconsult and Link as subcontractors to Aker are working on all the traditional engineering disciplines in this project. And it is very pleasing then to say that we’re also working at the other end of this that we have already finished or we are involved with the Phase one of the Northern Light Carbon storage project, And Equinor has now decided to take on the next stage. And again, Multiconsult and Link are working with Aker on providing our services in this very exciting project. And we are seeing that we are involved with one of the most challenging, but also, of course, very interesting projects in Norway. In addition, we also won in this quarter a large project for a hydropower plant in Nepal.

Here, we will work with three local partners to provide the services to make sure that develop a plant that will help improve the power situation in Nepal. And finally then, the outlook. We experienced a stable outlook supported by a solid pipeline and new frame agreements. We see investments increasing in defense and the energy sectors. There are also some positive signs within Healthcare.

The challenging market in housing and real estate continues. There is still geopolitical uncertainty. It will hit it hits the whole world, but we are still unsure to say something about how it will affect MulticonSurf and our industry. But we are sure that we do sit with a high volume of ongoing projects, a diverse portfolio and a high order backlog. And with that, just a reminder for the dates today is the first quarter.

On the August 19, we come back and present the second quarter. And then again, on the November 4, we will present the third quarter. And that finishes the session here, and we open up for questions.

Moderator/Analyst: Yes. Thank you. We have a question from Magnus Rasmussen in SEB. Or there’s quite a few questions from him. Let’s start with the employee benefit expense increased more than 8% on just 2% higher FTE count.

Should we expect that to continue in the coming quarters? And can prices keep up with that, that apparent wage increase? Yes.

Ove Hauperg, CFO, MulticonSult: Also explained on Norwegian call, the employee cost increase need to be calculated based on the number of employees, not on the full term equivalents. Also an increase this quarter was SEK 191,000,000 on the number of employees, but just 70,000,000 on the FTEs. So that is the starting point. The difference between salary cost and the billing rates has been commented, I mean, over a period of time. But we have been able to adjust our cost base and also been able to have a high billing ratio to compensate for that and delivering in line with the expectations that we have communicated.

Moderator/Analyst: Good. Permanent employees growth was 5.1%, and FTE growth was 1.9%. Permanent employees is the new definition. Why such a big difference?

Ove Hauperg, CFO, MulticonSult: Yes. This is based on the number of available hours. So if we have a lot of new employees coming in late in the quarter, then there will be a huge difference between available hours and the number of employees at the end of the quarter as an example. So that is baked companies calculate, sorry, on available hours.

Moderator/Analyst: Over to EBITDA for the quarter. It’s down EUR 29,000,000 year over year adjusted for calendar effects. Is that driven by lower billing ratio? And should we expect lower billing ratio also in the coming quarters?

Ove Hauperg, CFO, MulticonSult: Yes. On the calculation, you are roughly right. Our calculation is that the billing ratio accounts for EUR 25,000,000 of this EUR 29,000,000. And on the way forward, Grete, I hand it over to you. Yes, thank

Greta Bergle, CEO, MulticonSult: you. The billing ratios that we saw in the first quarter and the second quarter of twenty twenty four are the highest that we have ever reported. And it was, to a large degree, a result of the portfolio we had at the time. 72.1% is still a high billing ratio if we look at the history. And we are expecting to remain at that level.

And I think we left twenty twenty four at roughly 72.5 when we took year over year, the whole year. So I think that’s the level that we are aiming for.

Moderator/Analyst: Thank you. And then there was a question from Benck Johannsen in Aberguesen, I’ll call here. In your outlook, you comment on margin pressure or pressure on prices. Can you elaborate a little bit around this?

Greta Bergle, CEO, MulticonSult: Yes. There is a certain slowdown in several of the markets where we operate. And history shows us that’s when we start competing on rates. We are, however, in four within the four business areas that we operate in, the margins the rates are quite different, more competitive in some. So we are able to allocate resources into more profitable markets.

But we are expecting that the 2025 year will be quite a competitive one.

Moderator/Analyst: Good. And the last question from Benck to Haendelsten. In your strategy communicated on the Capital Markets Day last year, number five or 0.5 was related to M and A. What is your view now? And has it changed somehow related to locations?

Greta Bergle, CEO, MulticonSult: We haven’t changed our we haven’t changed that. And our main aim is to grow where we already have a presence. The only place in the strategy we showed also Finland, but we are mainly expecting that growth to come through other M and A that we make.

Moderator/Analyst: Good. And that’s it for all That’s it.

Greta Bergle, CEO, MulticonSult: Okay. Then we call it a day here in Oslo. And thank you all for listening, and have a nice day.

Ove Hauperg, CFO, MulticonSult: Thank you.

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