Good morning, everyone, and welcome. My name is Reuben Segal. I'm the Group CEO of ABL Group, and I'm joined this morning by our CFO, Stuart Jackson. The two of us today will go through our Q1 results and give you a little update on some of the changes that we've done during Q1 of 2024 versus last year. Like I said, I will start with a quick overview and a summary of the results in Q1. Stuart will then take you through the more detailed financials as well as give you a detailed update on some of the reallocation of our costs, which is different than the way we reported our adjusted EBIT last year. And then I will round up with an operational summary and outlook at how we see things going forward in 2024. As usual, the disclaimer is there. I draw your attention to it.
Also, for anybody online, if you have any questions, please put it into the chat box. And anyone in the room as well, please feel free to ask questions at the end of the presentation. So jumping into the figures. Q1 started off in a very solid manner. Across most of the organization, we continue to see growth. We continue to see good revenues, and good operational performance. The key area still where we are trying to continue to push is within OWC. We did mention last year that we saw a slight, slight pause in the renewables industry during the back end of 2023, and we see that going into 2024 as well. But generally, overall, it was a very good, solid performance for the start of the year. We closed the quarter with revenues of just below $69 million, which is a slight uptake on Q4 2023.
It is also a 50% increase year-on-year versus 2023 Q1, predominantly driven by AGR. But also we saw solid organic growth across the rest of the organization, including OWC. Also, we'd finished the quarter with adjusted EBIT of $3.7 million. Rather than being focusing too much on that adjusted EBIT, I will let Stuart take you through that a little bit later. We have now reclassified the way that we account for our LTIP, predominantly, and some other related taxation. But Stuart will take you through that a little bit later in the presentation. If you compare the reclassified Q1 versus Q1 2024, you see an increase from $3.2 million up to $3.7 million. So a good, solid increase, predominantly driven by the acquisition of AGR. But nevertheless, solid performance across OWC across Longitude and ABL as well, and also within AGR.
However, one point to note. As we always do in 2020, beginning of each year, we have the annual inflationary pay rises across the whole group. These kick in on the 1st of January. And what we see is that during the rest of the year, we catch up with the revenues, and the increased charge out rates and so on and so forth. So that has the usual Q1 impact. And again, Stuart will take you through more details later on in the presentation. From a cash perspective, we closed the quarter at just below $20 million of net cash. It was an increase of $2.3 million over Q4. So good, solid performance on the cash side. And we also closed out our new RCF of $30 million. So it was a nice, stable way to end 2023 and also a good, solid start into 2024.
As we mentioned in the last webinar, we announced a semi-semi-annual dividend of 0.4 NOK. This is a solid increase of 17.5% year-on-year in dollar terms. That is, of course, subject to our AGM coming up. So overall, it was a solid performance. It was a good growth on revenues. It was a solid EBIT start to the year. So at that point, I'm gonna hand across to Stuart to take you through the financials.
Thank you, Reuben. Good morning, everybody. Before I jump into the normal quarterly presentation, I want to spend just a couple of minutes explaining some of the changes to the numbers, which we highlighted at the end of the Q4 presentation. So we're now putting those through as we go into 2024. First, I want to come to guidance and just to, you know, emphasize here, there's no change in terms of our outlook on the market. And Reuben will come to that as we come to the end of the presentation. This is simply the way in which we cut the numbers and present the numbers. Our guidance we've had in the market for some time has been to have a 10% adjusted EBIT margin through the cycle. We didn't actually adjust that after we did the acquisition of AGR back in April of last year.
But we've, you know, continued to refer to that being a structurally different margin business. So if you look at the volume of activity in AGR relative to the rest of the business, that's about a $1.2 million negative, a 1.2% negative impact in terms of our guidance in the market. There are two other aspects which we've changed in terms of the guidance, which are changes to the way we present our numbers going forward. The first is around our LTIP costs. So in the past, we've had stock options which have been associated with M&A activity. And because it's M&A, that's been adjusted out when we've come to adjusted EBIT margins. Going forward, we have now a new LTIP program in place, which is an annual program. And therefore, we will no longer be adjusting that out to arrive at adjusted EBITDA.
And that has a $1.1 million percentage impact in terms of the guidance in the market. And finally, a smaller item just in terms of withholding tax, where we have unrecovered withholding tax in certain jurisdictions. We've now put that into the gross margin of the business rather than have it going through the tax line. So in terms of a, a like-for-like business, you know, our margin that we've indicated here of 10% historically, a like-for-like should be about 7.5%, going forward in the business. And then just, in terms of how that impacts us around the group position, but also the segments, 'cause it's important to understand the segment margins that are impacted here. There's one additional change we're making at the same time, and that's the way in which we treat the incentive payments.
Historically, what we've done is take all incentive payments into the corporate costs. So they haven't followed where the people sit within the business. The majority of people sit within our business segments. So the adjustment we've made for 2024 and going forward is that the bonus provisions and the LTIP provisions will follow where the people are. So those costs come out of corporate, and they go up into the business segments. And then if I add to that the LTIP adjustments and the withholding tax I've mentioned, you can see on the right-hand side how that impacts us both in terms of the position for the full year of 2023 on the bottom right. And then the top is the Q1 position for 2023 on a comparable basis.
So where we were at 8% reported margin in Q1 of last year, a comparable basis now would be 7.1%. And there's further detail provided in the appendices if people want to update their models. Turning then to the regular quarterly review. So here are the four business segments we have. So no material change in terms of the revenue split across those businesses. We've seen solid performance from the ABL part of the business and also from Longitude. The AGR position, this is comparison to Q1, where we didn't have AGR. So it's not a like-for-like comparison. But we do see a solid result from AGR, following on from where we were in Q4. Obviously, as Reuben has highlighted, OWC is the one where we have a step down in terms of margin delivery in Q1 of 2024.
That's simply related to the pause in the market that we highlighted in the middle of 2023, which has rolled into 2024. In overall terms, that's 12.7% margin coming from the business segments. We have 7.3% coming through our costs associated with our corporate costs. And that provides 5.4% in terms of margin for the overall business compared to the 7.1% I was indicating for Q1 of 2023 on a restated basis. And a little bit more detail about revenue and EBIT and EBIT margin. In terms of the revenue level, clearly AGR is the change compared to this time a year ago. But in terms of the underlying business, we've seen growth in both the ABL sector and also the Longitude sector, both of those up 12% year-on-year. And improved margin across the businesses, with the exception of, obviously, OWC, as we've highlighted.
OWC, while it's a step down at the moment and we'll probably see some of that roll into the second quarter of this year, we do see a significant uptick in the tendering activity in OWC at the moment. So we are starting to see the first green shoots of that market coming back to us as well. The only thing to highlight, I guess, would be the OWC margin impact of it. So in terms of the EBIT margin, we were at $1.4 million last year, and we're at $0.3 million this year. So that's a significant impact in terms of the overall down underperformance compared to the 7.1% this time last year. On the income statement business, both at a revenue level and operating cost level, about 53%-54% change on both. So no material changes there.
Not much change in terms of depreciation amortization. So we ended the period on a, a clean EBIT margin, EBIT, EBIT position of $3.4 million compared to $2.7 million year ago. There's some adjustments around FX, primarily on unrealized revaluation of instruments denominated in non-functional currencies. So our profit before tax is at $2.2 million in this quarter compared to $0.3 million 12 months ago. And you see at the bottom, the adjustments are coming through to get to adjusted EBIT margin. So for this quarter, it's primarily down to the amortization of the PPA intangibles. From a cash flow perspective, profit before tax flowing out of P&L is at $2.2 million. And then we have adjustments for the non-cash items. Changes in working capital positive in this quarter. But we also see in terms of our interest tax and FX line a negative there.
I think you should really take those together together, 'cause that's the revaluation of items associated with other currencies. And within particularly in this quarter, we've seen a continued depreciation of the Norwegian krone, but also the impact of the Egyptian pound in terms of the revaluation that's happened there. From a cash flow perspective, we're at $2.3 million coming from the operations. The most significant item after that would be in terms of the financing activities. So this is the inflow of $2 million of cash coming from employees exercising share options during the quarter. After revaluation for FX purposes, our cash at the end of the period is at $30.9 million. And if you take off the debt sitting on the balance sheet, we're at $19.4 million in terms of a net cash position for the group. So a significant cash position going into the second quarter.
During the quarter, we also concluded the refinancing of our debt. So we repaid the term loan we had with Nordea. We replaced that with an RCF facility with HSBC at $30 million. So that increased the available liquidity within the group, which can also with the cash will help us when we come to look at acquisitions going forward. The other item to highlight here would be, I guess, around our working capital ratio on the bottom right. So you see that sitting at 45%. This is a measure of where our working capital is relative to the last six months of revenue that we've had. So, a continuation of the decline in that respect. And then finally, in terms of the dividend payment, going to the AGM in a few weeks' time, the proposal is 0.4 NOK per share to be paid out as a dividend.
In terms of position relative to the last dividend, it's a 17.5% increase in terms of NOK per share. You see on the right-hand side, you know, the change over time in relation to our dividend per share, but also the change in terms of dollar value being paid out. So there's a 100% increase since we introduced regular dividends back in 2020, but a 200% increase in the dollars going out to shareholders, predominantly being driven, obviously, by more shares being issued over that period, but also changes in terms of the currencies over that period as well. With that, I'll hand back to Reuben to take us through the business operations and outlook.
Thanks, Stuart. Okay. So how do we see things going forward? First of all, in terms of the headcount, as you've seen every quarter over the last couple of years, we've been trying to continue to push the company for growth. And there is no exception to that. We want to continue growing the organization. Across Q4 and going into Q1 and going forward as well, we continue to push for growth. We continue to push recruitment. But we've taken a position with OWC in particular to be a bit more steady, a little bit more cautious because of the bumps that we're seeing within the renewables industry. That's not to say that we won't continue to grow. It's just that we will continue to do it in a slightly more controlled manner in line with the market. But we do continue to see growth across all segments.
Within AGR, ABL, and OD and Longitude, that growth continues. In Q1, there is compared to Q1 last year, we are continuing to see very solid performance in terms of recruitment for freelancers as well as for recruitment for permanent employees. At the same time, if you look at Q1 to Q4 last year, we have, like I said, taken a little bit of a cautious approach on OWC to see why we get through this, this period. Talking about OWC and the renewables industry, because obviously you've seen our figures, our Q1 results are better than Q4. We said that we the way we see things going forward within the renewables industry is that there has been a pause. That pause has definitely been there in 2023, and it's gone into 2024. But we do see shoots coming back.
As Stuart mentioned, we're starting to see more bidding. We're starting to see more opportunities. And that's global. That's not only within Europe, but that's across the whole globe. So if you look at the way we see things going forward, and particularly the auction round this year, we will see the record number of auctions. And we are growing OWC not for the short term, but for the longer term of ABL Group. That's why we did what we did last year. We continue to see the growth this year over Q4 last year, and we continue to take it forward on a longer-term basis. So we're very positive for the overall long-term outlook of renewables. We will get through this short term. We will be controlled in our recruitment, but we will continue to grow. And that's our intent.
The number of new offshore projects to be installed, the number of new rounds that are going forward, gives us a positive outlook for the long term of renewables. And then if you look at the oil and gas side, this continues to be very positive, very strong. If you look at the OPEC side, and particularly the rig market and the rig counts, both in jackups and floaters, but in particular the jackups where we play, we continue to see increased utilization, increased day rates, increased number of rigs going to operation. And that's where ABL predominantly plays in the OPEC side of the rig count. But then if you look at the E&P spending, this is all E&P spending in oil and gas. But if you look particularly in the offshore side of the business, we continue to see strong growth in Australia, very strong growth across Brazil.
We see the markets like Namibia and West Africa coming online. And again, ABL is predominantly offshore-focused in oil and gas. So the outlook for the oil and gas sector for the next few years and for the rest of 2024 continues to be very solid, very strong, and ABL Group continues to take its market share. So very nice position for us going forward. So finally, to summarise, for us, Q1 2024 was a solid quarter. For three parts of the group in ABL, OWC, and Longitude sorry, in ABL, Longitude, and AGR, we saw solid performance. We saw solid growth. We saw solid EBIT margin with the restatement of our numbers. And OWC, quarter on quarter, continues to improve, continues to grow.
But at the same time, we will be cautious, and we will take it in the right manner for the growth of OWC going into the second half of this year. We still expect that Q2 will be as rocky as Q1, as rocky as Q4, and rocky as the end of 2023. But going into the second half of the year, we hope that these projects will kick in and continue to grow. We will continue to look at M&A activity. We want to grow ABL Group. We've always said that. We continue to say that. We have a very solid oil and gas position. We have a very solid maritime position. And OWC and the renewables sector will continue to come back towards the end of this year. So for ABL Group going forward, we expect to see the group continue to grow, but in a controlled manner.
I just want to make that point clear. And like I said, we will, subject to the AGM approval, have the dividend of 0.4 NOK, in around about June-ish time for payout. So I think at that point, we will end the webinar. Thank you very much for everyone. And, if you have any questions, we're myself and Stuart happy to take them. Yes?
Yeah. Just over the past couple of months, we've seen kind of a change from Saudi Aramco. Do you think, do you see this impacting your business in a meaningful way, considering that they have suspended 22 jackups, and also we're switching more towards onshore gas?
From an ABL perspective, very little change. If you look at the way that Aramco work, and if you look at the way people do business within Saudi Arabia, our contracts do not get affected by the rigs coming out of Saudi Arabia. In fact, quite the opposite. Every time a rig comes out of Saudi Arabia, it's actually positive for us. We get more work out of the back of it. Things that take place within Saudi offshore don't impact us day to day 'cause they take care of it themselves. So for us, any movement in and out is good movement. Anything that takes place only within Saudi Arabia doesn't really impact our business.
A lot of the growth that you see in our Middle East operation comes out of the UAE, India, Qatar, and we do have work in Saudi, but not to the same extent 'cause of the nature of the business. If you look at the onshore opportunities in Saudi, that's actually better for us. It's not an area that we have been predominantly focused on. If you look at the NEOM projects going on, as well as the onshore side of renewables, there's a lot of opportunity in Saudi Arabia. I actually see Saudi as what you see going on on the plus side of oil and gas side, just means we have more opportunity onshore renewables. For me, it's a positive.
Regarding OWC, you said that margins are probably in the same area in Q2 as they were now in Q1.
Yeah. It's not gonna be a flick of the switch. I've seen our bidding. I've seen our pipeline. I've seen our backlog. I've seen the way the market is coming. I see the opportunities which are coming. And there's a lag from bidding to winning to executing. And that doesn't happen overnight.
Yeah.
You can see that. It's not only with us. You can see it across all parts of the renewables industry. So although we want to continue a solid performance, we want to continue growing, we want to continue, improving that margin. There's no golden bullet that says overnight we will get back to where we were. So I'm just giving that caution that in Q2, we want to continue to solidify and improve the margin, but there's nothing to say it's gonna double overnight.
Yeah. But could we expect them to be back into the kind of low double digits towards the end of the year?
I'm trying to do that now with the restatement of our numbers, because the way we've restated the numbers. So I don't wanna say yes off the top of my head because we've restated the EBIT margins with the replacement of the LTIP into there. What I would say is that as the year goes on, we want to continue to get that margin up. I think if you remember, our margin, the old version was 3% at the end of Q1. It is an improvement going into Q2. And we want to continue that improvement throughout the rest of the year. But I don't want to stand here and say it'll be double-digit by October, particularly with the restatement of our EBIT margin. Any other questions? Yes?
So we have a question from Martine Kverne at Nordea. How should we understand the development in AGR margins going forward?
Yeah. So if you remember, and again, with the reclassification of our numbers, Stuart might be better to answer some of that. What I would say is that when we first bought AGR, we were down at the very single digit numbers. And we have taken that back to where we said we wanted to be. And I think generally we're where we believe AGR will play. It doesn't mean we stop. It doesn't mean that we won't try to get better margin. But at the same time, I think AGR is in a place which is not a bad position. Again, I'm not sure how the numbers play out versus the re-adjusted EBIT versus the old adjusted EBIT. But I think AGR is a better position.
Like the progression of AGR through this year, when we acquired it was about a 2% margin on the old basis, then 4%, then 6%. So we saw progression all the way through sorry, it's 4, 6, and 8%. Saw progression all the way through the quarters. We've restated, you know, how that's cut, and that's taken about a 0.75% change downwards in terms of the overall margin. So at 6% for this quarter, we're broadly in line with where we were before.
Yeah. I think that's not far off a ballpark of where we would expect AGR to continue operating going forward. But like I said, it's not to say that we will accept that and just say that's the end. We will always try to improve our margin. But it's not in a bad place right now. But quite a good place.
Another question, from Martine Kverne. Which markets or areas would you like to strengthen your presence or competence in regarding your M&A strategy?
Without giving away all our cards in one go, you know, what we would like to do is to be a market leader. I think that's the best way to play this. When you're a number 3 or a number 4 in a market, it's very, very difficult to control rates. It's very, very difficult to control margin. And it's difficult to control growth. So what we look to do, and it may not be a particular market, it may not be a particular country, it may not be a particular segment, what we would like to do is to solidify our position in the markets that we are, in the countries that we are. So we look at opportunities that will allow us to do that.
Of course, you know, when you're a market leader in marine warranty, for instance, in the Middle East, it's very difficult to take that forward. And there are very, very limited opportunities. So what we want to try and do is to be a market leader in all segments, all business lines, all regions, all countries. And that means there's a lot of opportunity out there. If you look at where renewables is playing, if you look particularly where oil and gas is playing, it's for us to try and find those niche opportunities, and build on what we have. It's a little difficult for me to give you all the answers without telling you what the M&A activity is going on in the background. But we want to solidify our positions where we are weaker. Let's put it like that. I yeah.
I have to be a bit careful what I say.
We have another question here. In challenging markets, shouldn't we see a lower percentage of freelance work as you utilize the fixed workforce more? And can you elaborate on the margin you make on the fixed versus the freelance work?
Yeah. So actually, if you look at our freelance, you've got to look at the four segments rather than and, and four segments across the four regions. If you take the Middle East, our freelancer mix is about 50%. In fact, it's even more. It's about 55% comes purely from freelancers, the nature of the work. If you take OWC, the freelancer market can go up at certain times of the year because of the nature of the work. It's not a simple we get more work, we use more freelancers, reduce the freelancers. It's not as simple as that. Each, each, each segment of the business has a different freelancer mix. In engineering, we have very few freelancers. Everybody's full-time. Everybody runs at very, very high utilizations.
In the maritime sector, we do have freelancers because it's, it's a particular person in a particular place that allows us to do a scope of work so we don't have an office. So it's not as simple as saying our freelancer mix goes up and down as an organization. You have to really look at it as the four segments. You look at it as countries to decide that. What we show is our freelancer mix as an overall position of headcount. So you don't get to see all the granular details into that. But right now, the intent, particularly across OWC, is to push, push the permanent employees utilizations up, which of course means the lower use of freelancers, which is happening in OWC. You can see that specifically in OWC. There was another part to that question.
Yeah. So the second part was, can you elaborate on the margin you make on the fixed versus the freelance work?
Without giving away all our secrets of what we pay everybody, the margins are good. I mean, if we use a freelancer, there can be good margins, particularly in oil and gas. If you use a freelancer in renewables, it can be lower margin. Again, there is no one set answer. If I use a freelancer, it's not always about the margin. It's about being able to gain position. I'm not gonna set up an office in Tahiti tomorrow. There's no particular reason to set up an office in Tahiti. But if we get a job in Tahiti, we will use a freelancer. So that's not necessarily about us making the margins on it, it's about us being able to win work with using freelancers. In some places, we do make more margin on freelancers. In some places, we make more margin on permanent employees.
So it again, there's no one set answer. It sounds like I'm trying to avoid the question. It's just that there is no one set answer. It depends on where we are and the type of business that we're in.
One more question from the same investor. How much firepower do you now have for M&A in U.S. dollars?
Stuart can give you the answer to that. I think the total we have quite a bit.
Yeah. So we're, we're sitting at $19.4 million of net cash. And we have just under $20 million in terms of availability under the RCF. So it's about $40 million of cash.
Yeah. So, you know, we're in a strong position with our own cash and with the RCF. Of course, the RCF is not necessarily there for us to be freewheeling. It's to allow us to, to be more nimble in our operations. But it, it does put us in a nice position to do M&A without worrying if we have the resources behind us. Well, but we'll use it carefully and wisely. I think there was a question in the room as well.
Yes. It was also about AGR, a little bit more soft question. It's just how I mean, you've owned it for a year now. How does the integration work? And do you see, I mean, how do you see it work together with the rest of the business?
Yeah. You know what? When we first got AGR, it was a different business line. It was a step out away from the three traditional businesses that we had. It took us about six months to really understand it, get them together, working together, integrating together. Then the second half of the year, you started to see the margin going up as they started to work better with ABL Group. What I would say today, I think we announced the contract down in West Africa with it. What we're starting to see is a lot more interaction between AGR with OWC because the AGR freelancer model that they have, we want to adopt in OWC. We already are winning work in OWC using the freelancer model that AGR has.
On the client side, we're starting to see good opportunities, particularly in West Africa where AGR for the well side, ABL for the FPSO side, that is happening more and more and more. There were some good opportunities just yesterday. Compared to where we were a year ago of course, we didn't have them a year ago. But compared to what we did in April, big, big difference. What I hope we will be continue that integration, continue that working relationship, continue the growth of AGR, and more opportunities will fall out, particularly in the energy transition side. I think that is also very key. The CCUS opportunities, geothermal opportunities, we can only get them because we have AGR. So it's a win-win at the moment. We just need to build on that win-win. Yep. Any other questions?
There are no further questions online.
Okay. None in the room. So thank you very much, everybody, for joining. Of course, if you ever have any questions, you can always reach out to Haakon. And otherwise, we will see you for our Q2 webinar. Thank you.