Good afternoon, and welcome to the presentation of Akastor's Q2 results. My name is Øivind Polske, CFO, and I'm here together with our CEO, Karl Erik Kjelstad. We are happy to have with us also this time, HMH from Houston, represented by Tom McGee, CFO, and David Bratton, SVP Finance. Karl will start by taking you through the key highlights before the HMH team will then take you through their quarter. I will then go through the Akastor consolidated financials before Karl will wrap it up. Towards the end, we will open for questions through the webcast solution. Please note that questions can be posted at any time during the presentation. I will leave the word to Karl. Please, Karl.
Thank you, Øivind. Good afternoon, and also a good morning to our US participants, thank you everyone for joining us. We are quite pleased with our Q2 results, we remain optimistic on the outlook for the remainder of 2023. Let's move to slide number 2. As you see from this overview, the equity value of Akastor per the end of Q2 was about NOK 15.7 per share, this is slightly above the values in the Q1. As before, the key relevant value indicator for Akastor is not our EBITDA result, our net profit, as some daily business papers, for some reasons, focus on. The value of each of the investments we hold, as most of our companies is joint ventures together with different partners.
In fact, Akastor's reported revenue and EBITDA results are of minor relevance since it represents less than 10% of our values. Key for understanding the value development for Akastor's investments are our largest investment, HMH, and HMH results that is not consolidated into our numbers. Also, the focus on the development in Akastor's net capital employed, that reflects the value development of our investments. This is well understood by the analyst community, but seems to be in less degree to be understood by some of the business papers that we are pleased with, cover us over quarterly earnings regularly. By that somewhat frustrated comment, I conclude what I can call the educational part of this presentation and revert to the Q2 results and relevant issues that has impact on the value development of our investments.
In the quarter, the sale of all of our shares in AGR to ABL Group was closed. Akastor now holds around 5% of ABL that is listed on Oslo Stock Exchange. The transaction was completed above book value and generated an accounting gain of approximately NOK 100 million that was booked in the Q2. HMH continued to be our most valuable investment. The book value of our shareholding in HMH is equal to slightly above 65% of our total net capital employed, with a book value of about NOK 3 billion per the end of the quarter, corresponding to NOK 11.4 per Akastor share. In the quarter, HMH delivered a strong results, with EBITDA increased year-over-year and compared to last quarter, following increased service business.
The company saw continued order intake growth for the fifth consecutive quarter. We expect that the service activity to HMH will continue to increase going forward, driven by the seen increase in rig activity. For AKOFS Offshore, AKOFS Seafarer is delivering excellent operations following its planned yard stay in May, while Aker Wayfarer is preparing to commence its new 4-year contract with Petrobras and is currently doing the acceptance test for that job. In the quarter, the seller credit of $20 million towards Odfjell Drilling, that was a part of the sale of the preference shares instrument in the 4th quarter last year for $95.2 million, was settled and reduced the net bank debt in Akastor. Following this, the borrowing structure remains our only direct exposure towards Odfjell Drilling.
We continue to be very pleased with the NES Fircroft investment and the performance of NES Fircroft. The company is delivering strong revenue growth of 16% year-on-year and an EBITDA growth of 15%, resulting in an EBITDA of $30 million in the quarter, demonstrating NES Fircroft's strong business model and the outlook for the business remains promising also going forward. The DRU arbitration process is well on track, with arbitration outcome expected in the second half of this year. I'm pleased to introduce HMH CFO with EVP, Thomas McGee, that will take us through HMH's Q2 earnings and key priorities going forward. Tom, the floor is yours.
Thank you. Good morning, everyone.
We had a good quarter, and as you can see, we've continued to experience growth in order intake. That's the fifth quarter we've seen an increased order intake. Obviously, we'll talk in more detail, that's largely aftermarket. Some of this activity is related to two key reactivations within the quarter, and we'll talk a little bit more about the impact of that. Increased EBITDA year-over-year. Let's dive into this. Couple points: one, you've heard us talk about pre-positioning inventory, and you've seen a draw on our RCF to do that. We did pre-position some inventories. Our customers were indicating, desire to increase their purchasing. That worked, and so we feel quite good about that.
When you lay this across last year's Q2, remember that we had the Valaris project cancellation embedded in that quarter that produced an extraordinary gain. Our customer will not allow us to disclose the magnitude of that gain, but I would just say that we're comfortable saying we had very strong year-over-year growth between Q2 of this year and Q2 of last year. I'd touch on just to open up a little bit on what happened this quarter, and it really is interesting. I mean, we do have a forecast that we do. We have a budget, we do at the beginning of the year, and we have a rolling forecast. A month ago, this forecast was strong.
Three weeks ago, it got even stronger, and then it just spiraled into the end of the quarter. What's interesting there is, obviously, with the pre-positioning of inventory, we were able to respond to increased customer purchasing. There was a significant increase towards the end of the quarter in customer purchases, which I think really from our core customers, ties to restocking, potentially restocking and also reactivations. When you see day rates climb over touch $500,000 a year, we do think we've seen a little bit of a, maybe a change in mentality and a little more aggressive purchasing from our customers.
That said, I do think some of that ordering towards the end of the quarter was a little bit, I won't say one-off, but maybe will not repeat in the Q2 at that same level. I mean, so I do think I would temper the optimism a little bit, but clearly, we did reach an inflection point. We think the run rate we're at is higher than it has been. We call that we caution you not to extrapolate in fully this quarter, but I would say we definitely hit an inflection point in this quarter. Something changed, and we feel very optimistic.
I think when you look at the order rates and look at the implied revenue, from a conversion there, you can do the math and see that we remain very optimistic on the aftermarket for the rest of the year. You also saw a little bit of cost cost of that progress as well, and I think that will continue to make an impact on EBITDA in the second half of the year as we manage that cost more aggressively. Finally, on the cash side, and David will touch a little bit more on this you do see us a little bit tight on that front, given the build of inventory for the aftermarket, but also given some of the project work that we've talked about.
We think that will resolve itself by the end of the year. We'll get some very large payments second half of the year. That explains the overall cash story. We think it'll start to align by the end of the year. We continued to execute on the synergy plan with wave two, the ERP implementation. I will caution you a little bit that when we go live on the other part of the ERP system, we will have some noise. It'll probably be end of Q3, beginning of Q4, similar to what we had when we went live with the PCS side of things. Those are opportunities where you may lose a little business, you may have some business pushed out.
It gets to be pretty noisy, and so we would just guide you to expect some choppiness around that. I don't think it's going to be something that's too significant. second finally, we talked about the cash flow, and then I'll just say that we're looking at a potential refinancing as we approach better results and strong markets and potential for use of cash. That, I will wrap it up and turn it over to David to talk through some of the details on the numbers.
Thanks, Tom McGee. On the next page, we'll go through the total company results and then move into the segment details. Revenue for the quarter was $189 million, up 4% year-over-year and 2% quarter-over-quarter, driven by increase in spare and overhaul repairs, partially offset with a decrease in projects due to a non-repeat of last year's project cancellation fees. Adjusted EBITDA in the quarter was $34 million, up 8% year-over-year, driven by aftermarket services, partially offset by non-repeat of last year's project cancellation fee, and up 78% quarter-over-quarter, driven by services increased order trend. Adjusted EBITDA rate was 17.9% in the quarter. Orders for the quarter were $222 million, up 30% year-over-year and up 11% quarter-over-quarter, driven by aftermarket services strength, following the increase in offshore rig count and recertification activities.
We continue to experience strong growth in our aftermarket orders, highlighting the continued strength in the offshore market. On cash flow. Free cash flow in the quarter was negative $1 million, driven by increase in project-related working capital, partially offset by improved collections. Cash flow is expected to improve in the second half of the year on the back of project deliveries. We end the quarter with $43 million cash and cash equivalents on hand. I'll walk you through the segment results in more detail. In aftermarket, $138 million in the quarter, up 35% year-over-year and up 12% quarter-over-quarter, driven by increased spare part output in the period. Aftermarket order intake was $158 million in the quarter, up 16% year-over-year, driven by rig reactivations and SPS orders.
Down 3% quarter-over-quarter, driven by non-repeat of large digital technology orders signed in the Q1 of 2023. In projects, product, and other, revenue in the quarter was $51 million, down 18% quarter-over-quarter, driven by a phasing of the project progress. Moving on to net interest-bearing debt. We end the quarter with net debt of $175 million. Leverage in 2Q was below targeted capital structure at 1.6 times, which allows us to stay within all covenant requirements for minimum liquidity, gearing ratio, and interest coverage ratio. Current RCF draw relates to increased market activity, as well as our GMGS project progression. As we approach the end of the project fulfillment, we expect the RCF draw to decrease.
Overall, we're proud of the HMH team's performance this past quarter, and we continue to be optimistic about the macro trends in the market. With that, I'll turn the call back over to Tom.
Thank you. I just to touch on this real quickly, we're in dialogue with our banks regarding, as you can see when things mature regarding extension of the RCF. Looking at potential refinancing, I'll just make two just quick points. One is, obviously, we'd like to reduce costs, and secondly, we'd like to increase flexibility. I think both are possible in today's market, so we'll be exploring that. With that, we're going to wrap it up. Again, we're very, very happy with the performance of our team on the aftermarket side. Did a great job getting ahead of the market and pre-positioning inventory and drawing the RCF to do that, and we delivered this quarter.
We expect to see good results through the remainder of this year as our customer base continues to sign higher and higher day rate contracts. If you look at the cash flow forecast coming out of our the equity analysts regarding our customers, they're quite healthy, and we're quite happy about that. Thank you, and we'll turn it back over to the Akastor team.
Thank you, Tom. I will take you through the Akastor financials, starting then at slide 9 with our net capital employed. HMH, as already mentioned, remains our largest investment. Through Q2, we saw the carrying value of HMH increase, primarily driven then by FX effects, as HMH is a US dollar company, with 50% of book equity then translated into NOK in our Akastor accounts. Our book value of AKOFS was reduced in the period, driven by net negative profit in the period, partly mitigated by FX effects and equity funding committed in the period. The negative net profit in Q2 was affected for AKOFS by Wayfarer being out of operations for most of the quarter.
Negative bottom line is expected, however, also going forward as a result of current contracts and the capital structure of the company, as also mentioned on the last call. The net capital employed of NES, DRU, and DDW increased through the quarter, primarily driven by US dollar NOK fluctuations. Other net capital employed, as shown on this slide, includes the value of our smaller financial investments, including now then also our investment in ABL Group. ABL had a carrying value of NOK 94 million per end of Q2. The other segment also includes pension accruals and various provisions related to previous transactions. The values within other decreased by NOK 62 million during the quarter, driven by an accrual related to equity funding of AKOFS carried out in July of approximately NOK 50 million, required as a result of Wayfarer downtime in Q2.
If we turn to the next slide for an overview of the net debt movement in the period. Net bank debt decreased by NOK 123 million in the quarter, driven by the settlement of the seller's credit towards Odfjell Drilling in the period, partly offset by non-cash FX effect related to our U.S.-denominated debt, as well as corporate cash flow in the period, which included a NOK 26 million equity funding of AKOFS Offshore. The reported total net bank debt per end of quarter was NOK 1.069 billion, which included the net debt position within DDW Offshore of NOK 235 million per end of period, in line with the previous quarter. Net interest bearing debt per end of the quarter was NOK 531 million, including our interest-bearing positions toward AKOFS and HMH.
Adjusted for the Odfjell position, which was settled in the period, interest-bearing receivables were more or less in line with last quarter, with only smaller deviations as a result of peak interest and the FX. On to the next slide for the external financing facility overview. The net draw on our corporate banking facilities was NOK 0.8 billion per end of June, down from Q1. There was no draw under the subordinated liquidity facility from Aker Holding per end of the quarter. The AGR loan was, as mentioned last quarter, fully settled upon closing of the AGR transaction in April. During Q2, we established a smaller asset financing facility with DNB, with security in the ABL shares. This facility was drawn by NOK 45 million per end of Q2. Per end of the quarter, our undrawn corporate facilities was NOK 375 million.
In addition, we have the cash position of NOK 244 million per end of quarter. This cash position was in July, used to reduce the draw on our financing facilities. Please have a note that our facilities will be reduced by a total of $13 million in 3Q, as a result of mandatory prepayments on the DDW term loan and the corporate revolving facility, following proceeds received from Odfjell late in Q2. Our net leverage, compared to our net capital employed, continued to be low. However, Akastor depend on realization of assets to improve liquidity and reduce the refinancing risk in 2024. There are ongoing processes on this basis, including then the DRU arbitration, and based on this, we still expect to reduce debt and increase liquidity in the second half of the year, and we'll plan our refinancing on this basis.
Over to our consolidated P&L on this slide. As before, and as Karl has also been through, please bear in mind that near all of our holdings, including HMH and AKOFS, are not consolidated, and thus our consolidated revenue and EBITDA represent a very minor part of our total investments. With that in mind, DDW Offshore delivered revenues of NOK 52 million in the quarter, increased compared to both last quarter and year-on-year, driven by the utilization of the fleet. DDW delivered a positive EBITDA of NOK 14 million in Q2, significantly higher than 1 year ago, due to the improved utilization. Other includes corporate costs in period, with around NOK 5 million in costs related to the DRU arbitration. This decreased compared to last quarter, driven by the hearing conducted in Q1.
With that, consolidated revenues and EBITDA came in at NOK 64 million and negative NOK 4 million respectively. Also worth mentioning, profit from discontinued operations contributed positively with NOK 105 million in Q2, related then primarily to the effects of the AGR sale. Over to the next slide for a closer look at our net financials. Net financial items came in at a net negative of NOK 4 million in the period, where the Odfjell Drilling contributed negatively by NOK 10 million, split then between positive NOK 5 million cash interest on the seller credit agreement until settlement, and a negative non-cash effect related to the warrant structure of NOK 12 million. Negative effect from other investments of NOK 22 million relates to share price development in our holdings in ABL, Maha Energy, and Awilco in the period.
Net foreign exchange effects were positive NOK 50 million in Q2, driven by the strengthening of the US dollar NOK, which has positive accounting effects on our dollar holdings. Share on net profit from equity accounted industries contributed negatively, with NOK 78 million, consisting then of our 50% share of net profit in HMH and AKOFS Offshore. AKOFS contributed negatively with NOK 101 million, lower than the last year and previous quarter, driven again then by Aker Wayfarer being out of operation, while HMH delivered positively in the period. I'll pass the word over to Karl for the last section. Please, Karl.
Thank you, Øyvind. Let me round off this presentation with some ownership agenda reflections. First, a snapshot of our portfolio that now consists of investments in eight companies, in addition to our DRU claim. As mentioned, we closed the AGR transaction in the Q2 and now hold ownership, in addition to ABL, as well in Maha Energy and Føn Energy Services, directly through Akastor. Let's move to the next slide. HMH, where operational performance has been well covered by Tom's presentation. We in Akastor are excited for the outlook for the HMH business. We believe the company is very well positioned to continue to take part in the upturn, driven by the increased focus on energy security worldwide, demonstrated by the increased rig activity and rates for rigs.
As HMH owners, our key focus, together with our co-owner, Baker Hughes, is to support the HMH management's efforts to grow the business, both organically and through M&A. Akastor, together with Baker Hughes, are targeting to make our investment in HMH liquid through an IPO as soon as the company is ready and the equity market is offering interesting valuations. We plan to position HMH in the equity market as a company with a track record of robust recurring revenue base, delivering double-digit margins with increased dividend capacity and growth potential. As a part of the IPO preparation, we will, as Tom mentioned, assess the potential refinancing of the bond to reduce cost of capital and increase flexibility. We believe the company itself will be ready for a potential IPO in 2024.
That, of course, remains to be seen whether the equity market is offering attractive valuation for the old service sector in general and for HMH specifically. Let's move to the next slide. For AKOFS, the key focus is to deliver high-quality operations with high revenue utilization. Through the quarter, Seafarer and Santos were on contract for the full period, while Wayfarer ended its contract mid-April and remained out of operation through most of the quarter. While it was preparing for the new 4-year contract that we expect to commence in the Q3. As last year, AKOFS Seafarer was mobilized for coiled tubing operations in the period and delivered excellent operations post mobilization. For the Q3, revenue utilization ended 93%, affected by 3 weeks yard stay with a contractual 80% utilization.
Santos delivered a utilization of 70% in the period, affected by certain issues related to the ROV system of the commencement late Q1 this year. Total revenue for the Q2 for AKOFS ended at $28 million with an EBITDA of $3 million, both down compared to the previous quarters as a result of Aker Wayfarer being off-hire between contracts. When it comes to our ownership strategy, all AKOFS vessels now have longer-term contracts, this is an important prerequisite for exploring different structural solutions, including potential structural combination between AKOFS and other players in the industry. Such opportunities are something to Akastor together with our co-owners are exploring. Next slide. NES Fircroft. NES Fircroft is a clear global leader within its niche, as mentioned, the company continued to deliver very strong growth.
We are pleased to see that the growth the last 5 months are strong and also in the non-oil sectors, as the company continued to focus on the non-oil business, exemplified with the acquisition of Evolved Science in Australia in the quarter, which fueled the EBITDA growth. We expect to see continued organic growth going forward, as well as potential add-on on M&A in specific niches and areas globally. NES Fircroft is, as mentioned before, near being exit-ready, with different alternatives being explored, including a potential listing. Finally, next slide. We are pleased that we, in the quarter, completed the monetization of our investment in Odfjell Drilling. DRU is, as mentioned, on a legal track, where we are waiting on the award from the arbitration tribunal, and the outcome is, as mentioned, expected this year.
Going forward, we are targeting further realization of our holdings with our within our financial investments, such as monetizing our shareholding in NES Fircroft. For HMH, the target is, as mentioned, to do a separate listing of the company as soon as the company is ready and the equity market is attractive. With that, we are through the presentation, and before we wish you all a pleasant summer, we will open up for Q&A. I guess, we will pause for a minute or two to provide the opportunity for questions. Thank you.
Yeah. Thank you. We'll be back in just a few minutes. We'll start with a question to the HMH management from Mark Elsrud in Nordea. What is your best estimate on timing of the bond refi, and do you currently consider private or public markets most attractive? Tom, I'll let you-
Okay.
Comment on.
Thank you. I would always, I'd say, for the answer to this type of question is it depends. I think we're in the process of evaluating all alternatives. I mean, with our shareholder group and management team, we're consistently evaluating. We're always evaluating a variety of alternatives. I think the timing depends on price and terms. Is, does public or private market? I mean, I think the public market in Norway is where we are today. You know, we understand it. We're experienced this year. That's an advantage. There is a private market, both in globally and in the U.S. that does provide an alternative. I think at this point, we're evaluating alternatives, and it will depend on price and terms.
Thanks, Tom. We have a second question from Frederick, in F2 Funds. "Regarding Akastor, are you currently engaged in strategic discussions regarding the company and its assets?" Karl, I'll leave that for you to comment on.
We like to comment on specific discussions when they are concluded, since M&A is a rather black-and-white subject. We are actively exploring different opportunities for the company, and I think I will leave it with that.
Thanks. With that, I think we are through, and it only remains to wish you all a good summer, and thank you for your attention. We welcome you back for our presentation of the Q3 results on October 26th. Thank you very much.