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Reach Subsea ASA reported significant financial gains in its Q1 2025 earnings call, driven by robust market conditions and strategic innovations. Revenue increased by 22% year-over-year, reaching NOK 700 million, building on the company’s impressive 36.16% revenue growth over the last twelve months. The company’s stock price surged by 12.03%, reflecting investor confidence in its continued growth and technological advancements in the subsea industry. According to InvestingPro data, the company has maintained profitability over the last twelve months and demonstrated strong returns over the past five years.
Key Takeaways
- Revenue for Q1 2025 rose to NOK 700 million, a 22% increase from Q1 2024.
- EBIT jumped by 130%, reaching NOK 68 million.
- The stock price increased by 12.03% following the earnings announcement.
- Reach Subsea launched the Reach Remote one, an uncrewed surface vessel, and is preparing for more remote operations.
- The company is expanding its geographical reach and focusing on remote and robotic operations.
Company Performance
Reach Subsea demonstrated strong performance in Q1 2025, with revenue climbing to NOK 700 million, marking a 22% increase compared to the same period last year. The company’s EBIT soared by 130%, highlighting effective cost management and operational efficiency. Reach Subsea’s growth is attributed to its leadership in marine robotization and strategic expansion into new markets.
Financial Highlights
- Revenue: NOK 700 million, up 22% from Q1 2024
- EBIT: NOK 68 million, up 130% from Q1 2024
- Pretax profit: NOK 67 million, a significant improvement from a loss of NOK 9 million in Q1 2024
- Cash position: NOK 327 million
Market Reaction
Following the earnings announcement, Reach Subsea’s stock price rose by 12.03%, closing at NOK 6.9. This increase reflects investor optimism about the company’s future, bolstered by its advancements in remote and robotic technologies. With a current P/E ratio of 9.95 and an attractive dividend yield of 6.09%, the stock offers compelling value metrics. The stock’s performance is notable against its 52-week range, with a high of NOK 10.65 and a low of NOK 6.04. Want deeper insights? InvestingPro subscribers get access to over 30 additional valuation metrics and exclusive Fair Value analysis.
Outlook & Guidance
Reach Subsea is poised for continued growth, with plans to scale up its Reach Remote fleet and explore new markets, including defense and surveillance. The company aims to maintain its technological edge in marine robotization, targeting sustainable and profitable growth. InvestingPro analysis reveals an overall financial health score of "GREAT" (3.27/5), supported by a conservative beta of 0.33. Future revenue forecasts indicate continued upward momentum, with projections reaching NOK 299.02 million by FY 2026. Discover 12 more exclusive InvestingPro Tips and comprehensive analysis in our detailed Pro Research Report.
Executive Commentary
CEO Justin Allendahl emphasized the company’s commitment to innovation, stating, "We are proving how the entire subsea industry can evolve through robotization." This sentiment underscores Reach Subsea’s strategic focus on remote operations and efficiency improvements.
Risks and Challenges
- Market volatility in the oil and gas sector could impact revenue streams.
- The transition to remote operations may face technological and logistical hurdles.
- Geopolitical tensions in key regions like the Black Sea could affect operations.
- Compliance with new regulations, such as CSRD and ESRS, may require additional resources.
- Competition from other technology-driven marine service providers could intensify.
Q&A
During the earnings call, analysts inquired about the timeline for Reach Remote vessels’ commercial operations and the potential for cost savings through robotics. Executives confirmed that the Reach Remote vessels are set to begin commercial operations in summer 2025, with expectations for increased efficiency and cost-effectiveness.
Full transcript - Reach Subsea (REACH) Q1 2025:
Justin Allendahl, CEO, REACH Subsea ASA: Good morning, and welcome to our First Quarter twenty twenty five webcast for each Subsea, ASA. Our report and presentation were released this morning, and I am Justin Allendahl, CEO and I’m here with our CFO, Birgitte Wendelbouj Johansen. I will start with the key highlights and achievements from the quarter. And additionally, I will provide an update on the current status of the Reets remote ongoing pilot program. Brigitte will then cover our financials in details.
Please submit questions via the webcast player and we will address them in the Q and A session after the presentation. We are continuing our steady progress and are very pleased to report another record quarter in terms of activity and operating results, all driven by strong market conditions and our established geographical footprint. The financial performance of the quarter documents our solid project execution and continued growth with a revenue increase of 22% and an EBIT increase of 130% compared to the same quarter last year. We have a solid outlook with a backlog of billion, but mostly for 2025. And on top of that, a strong prospect list onwards.
We want our team to reach for performance always, but most importantly to reach home safe and healthy. And we are pleased to report continued zero lost time incidents also this quarter. A big thank you again to our dedicated offshore and onshore teams for their excellent work. Let’s take a closer look at the key factors behind our recent results and what’s ahead. The overall utilization of our current eight vessel spreads delivered a strong 93% this first quarter.
Our order backlog, as mentioned, and tender volume are to the same levels compared to same cut off last year. We operate a competitive and strategically aligned fleet that supports our long term growth ambitions. This fleet and our commitments, however, also represent flexibility as we are navigating the continued global shifts. The weakening Vigor and new build 76 scheduled for delivery 06/2007 will serve as growth enablers and transitional assets to a greener future with dual fuel capacity. As we still expect to see market growth, we continuously evaluate opportunities to expand our chartered fleet, considering both project based and long term charters.
The rich remotes now joining our fleet are also key growth enablers, introducing new methods for performing a range of subsea tasks. They also represent transitional assets into a more efficient robotic future. More on that in a bit. Now let’s take a look at our fleet’s activities over the past quarter. We have kept the fleet busy through the quarter and strong utilization across all vessels.
We can reach as spend the first quarter in the Black Sea and is now performing UXO inspections campaigns in cooperation with RAINMETAL in the Baltic. A campaign which also Olympic Tourists joined. You can read about this campaign in the report. Havelasubsee continued operations in the Gulf Of Mexico before returning to the North Sea, supporting ocean bottom node activities for PXGIO. Dibsugnus finished the Nexans cable installation project at the Revolution Win in The U.
S, delivering ROV and survey services before returning to IMR operations in the North Sea. And she is now back with Nexans for cable repair and trenching. Govelectra completed IMR and survey scopes in Trinidad and is now on transit back to Europe. Olympic Triton provided IMR and light construction support in the Ivory Coast throughout the quarter. North Maria was idle throughout the quarter, however, without commitment to reach subsea for the majority of that period.
As mentioned, Olympic Torres joined Viking Region, Germany for the UXO campaign last part of the quarter. Before that, she completed IMR operations in the North Sea. And finally, offshore SOVEO performed hydrographic mapping for an offshore wind farm in Australia. So let’s move to Reach Remote. Finally, the latest and greatest on the Reach Remote program, where we have reduced the technical risk significantly through the last month pilot project.
The learning curve has been steep, but we have proven with great success, operational robustness and capabilities. Reach remote integrates marine robotics with subsea robotics. And in January, we took official delivery of the first Reach remote vessel. Following the delivery, we had installation and testing of ROV and other sensor packages and tools throughout the quarter. In parallel to the Reach Remote project, our technology department have developed our in house Reach Horizon system.
Reach Horizon is our platform serving as the central hub for managing and overseeing operations remotely. It provides operators, surveyors, experts, management and clients with 20 fourseven access to the field projects from any location, whether in office or at home. During the first quarter, the platform continued to improve and prepared for the 100% uncrewed operations that was about to start with Reich Remote one. Learnings are now continuously being transferred to the second vessel, which will join the fleet for commercial operations in July. Reach Remote ’1 have delivered impressive results during the pilot.
Let’s hear from the operation.
Operational Team Member, REACH Subsea ASA: The experience from the client and the feedback to me is very positive. I think that they are actually quite surprised how how little we have to deal with the remote factor. So we’re dealing, of course, with the problems, but but the the general part the problem. So to me, it is quite astonishing how the pilot project evolved from initially something that was supposed to be a test, something that was supposed to be just okay, us going and testing, see if it if it actually works, into actual offshore operation where we’re performing a task and we’re gathering the data. And the discussions now are not about why did the, USB didn’t work or why we had to go, but about the data quality and how and then, actually, we are already starting talking about the efficiency and how we can perform versus the traditional vessels, how we can what what environmental limits we will be facing towards the traditional vessels.
So so so the speed of this transition from the test phase into through the presentation phase into actual potentially commercial phase is is absolutely astonishing.
Operational Team Member, REACH Subsea ASA: And finally, we we got to go offshore with a little bit more sea state than we had in the stage two testing in Horton. It is good to to really push the system to its maximum.
Operational Team Member, REACH Subsea ASA: When we give access remote access to the client representatives, they’re sitting back in their homes, in their gardens, in their kitchens, in their living rooms, and they said the same that it actually after a few while, you can actually forget that you’re in completely different space. Apart from the motion part, I think that is that is something that everybody underlines. It’s like, there is there is no motion. Something is wrong with this vessel.
Operational Team Member, REACH Subsea ASA: So yeah. No. I’m not gonna retire yet. So I can I can can sit there on land and fly it out of here for till I’m 18? No problem.
Operational Team Member, REACH Subsea ASA: We are now proving that we can do anything. We can we’re that we can do anything that a traditional vessel would would be able to do with the small 24 meters remote and with the ROV. So once we prove that we can pretty much the sky is the limit, I think the next step is going to be obviously to prove that we can continue doing so for a long, long period without major problems. And then the next step is going to be outperform the traditional vessels.
Operational Team Member, REACH Subsea ASA: But we will still need people. Absolutely. So yeah. We’re not Don’t worry. This is still work for everybody.
And we we definitely need more people that wants to join this adventure. Just call me. Yeah.
Justin Allendahl, CEO, REACH Subsea ASA: The past month with the Reach Remote pilot has been remarkable. Watching her perform exactly as intended through our Reach Horizon program has been more captivating than any Netflix series. What began as a high risk venture has now seen a significant reduction in both technical and operational risk. It works. It’s not just about Reach Remote one, we are proving how the entire subsea industry can evolve through robotization.
We have previously shared that commercial projects were lined up awaiting the outcome of the pilot. And with the pilot nearing completion, we are now kicking off the first project on Shell Aumannanger. She will be mobilized for it shortly and there is more to come. The success of this pilot also reinforced the business case for scaling up the Reach remote fleet. This is just the beginning.
With the Reach remote fleet, Reach subsea is increasing both flexibility and capacity. It’s about striking the right balance between human expertise and advanced technology to drive value now and into the future. And with that, I will hand over to Birgitte for the financial update.
Birgitte Wendelbouj Johansen, CFO, REACH Subsea ASA: Good morning. First, let me remind you to send the questions in the chat on the live webcast. A new year, first quarter of twenty twenty five has just been released. It’s been a strong start with high activity and in general the results are very good, all time high for the first quarter both on revenue and EBIT. Revenue was almost NOK700 million compared to NOK575 million in the first quarter last year.
The increase in revenue is linked to high project activity as well as increased reimbursable sales in projects. EBIT was NOK68 million in the first quarter, more than double from 1Q last year and our best operating result ever in a winter season. Pretax profit for the first quarter was NOK67 million compared to minus NOK9 million last year. Our financial results include an unrealized currency gain of about SEK17 million related to our IFRS 16 charter party commitment. And for comparison, we had an unrealized currency loss last year.
In January, we took delivery from the yard of our USV, the Reach Remote one. She had mobilization and further investments from our side after delivery during the first quarter. We still have another USB, the Reach Remote two, that will be delivered later this year together with other investments. And therefore, our cash and liquidity position is very important to monitor. Cash for quarter end was NOK $327,000,000.
And our net interest bearing debt excluding the IFRS 16 leasing commitments is still cash positive. These graphs illustrate Reach’s financial development the last seven years on a rolling twelve month basis. We’ve had a substantial revenue growth, a result of increased activity with new technology and assets and expansion to new business segments and regions. Our M and A activity has contributed strongly to our performance and ability to offer integrated projects to our clients. By increasing the capabilities on the vessels, we have grown both our revenue and profits steadily over time.
Our annual revenue has increased by more than 130% over the last two years. We are focused on a sustainable and profitable growth and our operating result and pretax profit has to a large extent improved in line with the revenue growth as you can see on the graph. Let’s look at the revenue mix split between segments, sectors and regions in the quarter. Our first quarter turnover from Renewables and Other sector is quite steady on about 37%, while projects in the oil and gas sector represented 63%. We also split our revenue in our two major market segments, Data and Solutions.
And the split here is not 100% academic, as we experienced that quite a few projects includes both segments. Solutions refers to a service project where we do installments, maintenance, repair, decommissioning, etcetera. And data is where we deliver a data package to the client, typically a survey of a pipeline, seabed, cable route positioning, inspection and so on. The last year we’ve had the substantial investments in technology development within the monitoring survey and data, which we expect to see the results of in our financials in the coming years. In Q1, about 85 of the turnover came from solutions due to a few larger service contracts, including a high number of vessel days, while 15% came from data.
We also present our geographical distribution of turnover to illustrate our strategic expansion to new areas, as well as meeting new and existing client needs. In the first quarter, activity in Europe, including Norway, represented about 30% of our revenue compared to 64% last year. Over to our balance sheet, we continue our sustainable growth also into 2025, balancing cash and working capital and debt with a robust equity level. Our Board has proposed to the General Meeting to pay dividend according to our policy for the financial year of 2024. We have a cash and working capital position of just above million, and taking delivery of Reach Remote and other investments will increase our debt to financial institutions.
Our commitment related to active charter parties, hence our IFRS 16 leasing liabilities, has been reduced in accordance with reduced remaining time of the charter parties. Our equity share is well above 30% of the total balance sheet. REACH is well positioned for the remaining investments in REACH remote and vessel and equipment mobilization for our fleet in order for us to have all vessels ready for integrated subsea and survey projects, as well as the planned scale up for the remote units. We use the sustainability and ESG focus as a foundation for a profitable growth, in line with our strategic goals and KPIs. In 2024, we started preparing for CSRD and ESRS reporting by doing the double materiality analysis and identifying risks and opportunities from inside out and outside in perspectives.
Based on the outcome of our analysis, we have updated our ESG KPIs, as you can read all about in the reports. On environment and safety side, we
Moderator/Unidentified Speaker, REACH Subsea ASA: have had a good start of the
Birgitte Wendelbouj Johansen, CFO, REACH Subsea ASA: year with no major spills and no accidents or LTIs. We are investing heavily in remote operations and a modern environmentally friendly fleet. And as part of working more and more remote, we rely on digital security. And therefore, we have put cybersecurity higher on the agenda together with the ISO 27,001 certification. We work continuously with improvements focusing on compliance, but also nature related risks, impacts and opportunities, and are establishing our own REACH Academy for internal development for our colleagues.
Thanks for listening. Juste, and I give the word back to you for a summary before we continue with the Q and A session.
Justin Allendahl, CEO, REACH Subsea ASA: Thank you, Birgitte. In summary, REACH Subsea is well positioned to capture opportunities ahead. With a strong global presence, we bring recognized subsea expertise to a dynamic and evolving market. The outlook remains promising, driven by investments in energy and infrastructures across all sectors. Strategic growth initiatives are well underway and nearly our entire fleet is mobilized on value driven projects, supported by our growing remote capabilities.
We are consistently delivering strong margins with a solid operational track record, efficient project execution and optimized asset utilization. Technology innovation is at the core of our strategy and our leadership in marine robotization and remote operations continues to drive efficiency. Financial strength and sustainability remain our priority and our performance enables smart investments, disciplined expansions and a shareholder focused growth path. We are set to deliver exceptional services, strong results and accelerate the shift towards next generation subsea operations. And with that, let me conclude the presentation with our saying everything within reach.
Please continue to submit your questions in the webcast player, and we will return shortly to answer them.
Moderator/Unidentified Speaker, REACH Subsea ASA: Yes, we have received quite a few questions. You can keep on submitting questions while we speak. The first question is, well, congratulation on the strong results. Thank you for that. What’s the status of the EU funding?
I can start with that. It’s the EU funding, we discussed that also in the last presentation in the last quarter, and it’s related to regional number three and four, which we have not ordered yet. So if and when those are being ordered, there would be a a EU funding, which is still active. It’s not no changes since the last last information we’ve given to the market. The next one, when will the range remote ships start generating revenue?
I can take that as well, Justine, if you want. Yeah. It’s the first one has started generating revenue already on the pilot project. As Justine mentioned in the presentation, it’s lined up for projects during the summer, And regional number two will be delivered in during the summer, and we’ll start with commercial operations just after the summer vacation. So August, September, around that.
How much sales potential does the onshore service area offer? And how would you like to expand expand this further? Because they would like to Yeah.
Unidentified Executive, REACH Subsea ASA: It’s it’s hard to say. We we are building a a new sort of industry here with a combination of offshore robotics and onshore services. So it’s hard to say how this will evolve. But, definitely, we are we are building more efficient operations, and then the margins will be, of course, higher because we are extremely more efficient in the long term for our clients. So we’re offering something something good.
So but it’s also hard to say to put numbers on because we are making the pattern. So that’s the
Moderator/Unidentified Speaker, REACH Subsea ASA: Yep. Are are the margins from q one sustainable, and will we see further improvements? Well, we don’t guide on future margins. What we said in Q4 is that some of the project margins we expected and all the activity we had in Q4 slipped over to q one. So, of course, there was a lag there from from q four.
So can you just have to wait and see for the markets in q two and q three and so on? Yes. The same one. When do you think bridge remote one and two are on commercial contracts? You want to say elaborate then further on that, Thursday?
Unidentified Executive, REACH Subsea ASA: Yeah. It it’s and I think you answered the on the on the last question. But the the this summer, they are, yeah, finished with a pilot and then on to commercial work and for the yeah. In in June and August and and onwards from from there. So we just have to decide where to send them.
That’s the that’s the thing. Yep.
Moderator/Unidentified Speaker, REACH Subsea ASA: New question. Your order backlog is flat year on year. What are the implications for your 2025 revenue? I guess it’s the same there. We don’t guide on the revenue, but it’s correct that the backlog is is quite is quite flat.
Unidentified Executive, REACH Subsea ASA: Yeah. But it it’s yeah. It it one of our strategies is it’s sort of easy to to build a big order book with low margins, but that’s not what we are doing. We are sort of a bit selective on the on the quality order book. And I think it’s quite balanced with our capacity.
So and then mostly, it’s most of it is in in ’25. So
Moderator/Unidentified Speaker, REACH Subsea ASA: Yep. What are your thought well, what what are your thoughts on additional Reach remote orders? Are are there any deadlines to be aware of?
Unidentified Executive, REACH Subsea ASA: I yeah. I can I can answer? Now we got yeah. We have this long long term plan or and and the the scale up. Up.
So in mid summer now, and we are very comfortable and and this yeah. So we’re gonna scale up in the next two months. Yeah. We plan to order in in mid summer. So that’s that’s been the been the plan for for many well, a couple of years now.
So it’s so a good thing with the with a with a good pilot and and showing that the things are working and that’s just just fantastic. And we’re gonna yes. En encouraging to to go into the to the scale up and and building an industry. That’s just fantastic. Yep.
Moderator/Unidentified Speaker, REACH Subsea ASA: How will Reach Remote be priced in your offering? Is it day rate or lump sum?
Unidentified Executive, REACH Subsea ASA: That is a combination, of course. Day rates, lump sum, we’re gonna use the the rates remote as a tool in our in our our daily work, and it’s a combination of of day rates and and lunch on projects and and so on. So same mix that the offer industry is is quite used to. So
Moderator/Unidentified Speaker, REACH Subsea ASA: Yep. Quite quite a few subsea vessels from the traditional vessel owners are now settling idle. Do you see opportunities for the current uncertainty to secure more capacity at the drafting rates?
Unidentified Executive, REACH Subsea ASA: Yeah. I in the short term, there are some turbulence due to some politicians and geopolitics and and so on. But, yeah, there are always opportunities in the in the offshore market, and and we are we are a part of of the the the whole the whole industry. So, yeah, opportunities are there. In turbulent times, it’s quite good sometimes.
Yeah.
Moderator/Unidentified Speaker, REACH Subsea ASA: Should we we expect the reef remote vessels to work through the North Sea winter season, or will they be stacked or relocated to more benign waters?
Unidentified Executive, REACH Subsea ASA: Yeah. We challenged the the the of course. And, well, in the in the North North Sea, the winters are tough. But some reallocation during wintertime, we have to test that. This will be the first winter that we have done, the first ones in in in operation.
So and, also, we are we are sort of in in our long term planning is the global footprint. So we might move one of the the vessels to to, for example, Australia or or so we we we just have to to make the scale up plan now, and and it’s yeah. Back to the we are waiting for these these milestones, and then the the the great milestone now is yeah. The pilot is just fantastic, and then and then we can we can make new plans. So exciting times the next months, Begita, and and also the the rest of the team if they are looking at this.
But they said, yeah, it’s gonna be quite quite interesting. And and the window windows and the window on different positions and places on the planet. Yeah. We we have coped with that for for a long time. So it it’s, yeah, it’s gonna be interesting to to really test it.
So looking forward to the winter. Do
Moderator/Unidentified Speaker, REACH Subsea ASA: you see any initiatives from from the oil companies to cut costs due to oil price uncertainty?
Unidentified Executive, REACH Subsea ASA: Yeah. Yeah. We see the same turbulence and and capital discipline and so on due to a lot of political geopolitical and trade wars and so on. But and cutting cost is is always on the agenda. That’s nothing new, and that’s why we as a company is always driving to make to to do our service more cost efficient and and especially fuel efficient.
That that’s that’s a part of the whole cost picture. So, yeah, cost focus is always always on the agenda.
Moderator/Unidentified Speaker, REACH Subsea ASA: Yep. How are you planning to make the increasing remote operations and its onshore working conditions interesting and sought after versus offshore operations for all employees involved, that is both offshore and onshore employees?
Unidentified Executive, REACH Subsea ASA: Yeah. That’s a good question. It’s nice to be on the on the on the sea, and there are a lot of workplaces there. But they they will not disappear in the in the in the near future or the next decades. So we have to find the the interesting onshore work, and technology is the is the driving thing here.
And and the yeah. I think the next generations, they are they are more onto onto this than we are. That’s but it it’s gonna be interesting workplaces, yeah, in many locations. So it’s and and and we see the we see the young ones today. They are really into this.
So this.
Moderator/Unidentified Speaker, REACH Subsea ASA: Yeah. For sure.
Unidentified Executive, REACH Subsea ASA: The combination of offshore and onshore, this has all always been there. Yeah. It’s a good workplaces offshore on on vessels and and rigs and and so on. But there there is a future there with the with the robotics and so on. But the offshore will will will not disappear.
It’s also like like the sea, the the risk is still a future there.
Moderator/Unidentified Speaker, REACH Subsea ASA: Yep. How how much CapEx will it be on ratio mode three and four if ordered?
Unidentified Executive, REACH Subsea ASA: It’s around the same same CapEx amount as the first two ones. I think we have a half a billion in CapEx on the first two ones in yeah.
Moderator/Unidentified Speaker, REACH Subsea ASA: Yeah. And do you have any exposure exposure towards the offshore wind projects in The US? And, how is the financial impact?
Unidentified Executive, REACH Subsea ASA: Yeah. I I don’t think we are exposed directly. We have a vessel going over there this summer. But, yeah, the the the offshore wind in The US is a is a story to be seen, I guess. So no implications for us as I can see.
It’s well, it’s interesting to observe how things are shifting with the politics. That’s Yeah.
Moderator/Unidentified Speaker, REACH Subsea ASA: Finally, may it reach remote be used in the defense market?
Unidentified Executive, REACH Subsea ASA: Yeah. It is a good tool for for all in yeah. Yeah. Traditional or or market, and and the defense market is also yeah. It’s it’s a tool.
When you’re talking about defense, we are not going into any any armed stuff. So so it but it marketing robotics and and subsea robotics, it’s a it’s a good tool for for surveillance and and unarmed defense, of course. But
Moderator/Unidentified Speaker, REACH Subsea ASA: Yeah. Good. That was all. Thank you very much for watching, everyone. See you in three months.
Unidentified Executive, REACH Subsea ASA: Yep. Exciting months. Yeah. See you then.
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