Hello everyone, and welcome to this Q1 2025 Presentation for DOF. We will run through a presentation with highlights and performance of the quarter before we round off with a Q&A session. You may submit your questions in writing through the Q&A function in the webcast, and that function is open already now. With that, I leave the word to Mons Aase, CEO, to take us through the first part of the presentation.
Thank you, Eirik, and good morning, good afternoon to all of you. The first slide is DOF at a glance. Today we have operating 77 vessels. Backlog at quarter end was $3.1 billion. We are going to talk quite a lot about the backlog later on, and I guess the short version is that we hope that within the next few months that will be closer to $5 billion than to the $3.1 billion we see today. Operating globally continued to grow, so now we have more than 5,600 people employed, and you see the revenues here. Last year's good increase in growth in revenues, but also good increase in EBITDA. I think we leave it like that and move to the next one. What we do, we are an offshore service provider. We own vessels, and we provide a very large range of services globally.
Our sales are mainly services from our regions around the globe. We do that in oil and gas, and we do that also in renewables. Below here is showing how we distribute EBITDA between the assets and the regions. As you see, it's been steady growth in both segments the last few years. I guess on the next one, I think we have, you know, and of course we were very proud, very proud earlier this week. One of our main clients, Eni, actually had on their front cover on their first quarter presentation, they had a picture of three DOF vessels. We had to show it. This is from a project called Baleine where we executed in the fall, where we installed this, you know, this FPSO you see on this picture.
We did full project management engineering, and we used four in-house vessels to execute the project. A typical, one of the large mooring projects we do every year around the globe. We had to show you that, and I hope you like the picture. It is a very nice picture. Next slide, please. This is quarter one performance, and the EBITDA came at $158 million, and that is slightly above our own forecast. A few million dollars above our own forecast, so a good steady start to the year. Compared to last year, you know, if you exclude DOF Denmark for a moment, so you know, comparing apples to apples, we increased EBITDA from $140 million to $131 million in quarter one 2024 compared to 2025. A steady nice growth, and then DOF Denmark level $27 million.
Of course, we have had on the DOF Denmark fleet, we have had long utilization in the first quarter. We are down in the 60s on utilization, and of course, partly due to a few of the subsea vessels, you know, being stopped for installing ROVs and mobilizing all our equipment, and also then what you call a relatively slow spot market for some of the end candles. We said before that we expect the contribution from the DOF Denmark fleet to gradually increase through the year. I guess we saw that already in April that we are moving in that direction. On our utilization at 73% compared to 87% last year, of course, the main explanation is that we had in the 60% utilization on the 22 Denmark fleet. Backlog at $3.1 billion, and we have a slide on the backlog.
We're going to talk a bit about that. Then we also narrowed our guidance from $700 million-$790 million because it was $720 million-$800 million. I think that is, you know, because we have executed a good first quarter. We have built backlog, so the uncertainty is gradually reducing, and that's why we are able to narrow the window. Net debt against EBITDA of 2.4. Of course, that only includes five-month earnings on the Denmark fleet. Of course, you know, it is lower if you can include 12-month earnings on them. I think we were on the midpoint of the guidance. Martin will talk more about that, but I think we are around 1.8. Martin will also talk a bit more about the refinancing, and it was done then in the quarter, and I will leave it to him to go more into that.
Perhaps the most important bullet on this is that we will have annual general meeting next Tuesday, next week, and hopefully they will approve the first quarterly dividend to be paid on 5th of June. Looking forward to that, and I'll also talk a bit more about dividend and what we plan around that later in the presentation. Other numbers, you see that Martin will talk more about that, but as we said, a good start to the year with $158 million in EBITDA, and also then, you know, quite a lot to, it's not the peak. We will continue to grow that, and we look forward to deliver higher EBITDA numbers the next few quarters coming. We move to the next page, which is a pretty busy slide.
On the left hand is recent awards, and the two first ones implemented, and you know, it's, as you remember, we had, we terminated, he was working, not working, but not getting paid in Mexico. We terminated the contract due to lack of payments and moved it to, you know, he's in the U.S., and we have installed ROVs in March, and we started working. She is back working now and been working in April and May. That of course will help in second quarter compared to first quarter. We are following, we are chasing through lawyers, of course, the people that forced us to cancel that contract due to lack of payments, so let's see, but that will take some time to see if we get them over money.
We won a very large SURF project in Congo, and we will use one I- class, perhaps two, and also four of our own anchor handlers. It is a very nice project securing utilization, but also of course securing good earnings for our subsea business as well. I think I'll leave it like that. It is quite a few contracts building backlog for the year, and as I said, you know, the risk in the backlog is reducing every week and starting to look better and better. The market is good, it is picking up, a lot of opportunities, a lot of bids, short term, long term, and looking good, yeah, I would say, looking quite promising.
Then we moved to the right-hand side of this slide, and there we have pictures, this is from Canada, so it's a big field development done by Sinamus, where you see pictures of one of our M-class vessels that are towing out one of the structures. Of course, that is part of the reason why we, it's an example of why we say DOF Denmark gradually improved earnings. In first quarter, two of the Ms were in spot market or idle to be upgraded for this contract, and they commenced now late April, early April, you know, the new long-term contracts. That's two vessels transferred from spot to long-term contracts. Perhaps I guess the most exciting on this slide is the Brazil tender update.
I do not know if you how good you can remember our last presentation, but on that presentation we had a picture of 13 boats on that. Now you see we have a picture of 14 boats. The reason for having 14 boats is that because that is the number of boats we expect to sign up on these two tenders. Seven boats on the end candle tender and seven boats on the RSV tender. As such, there is not signed anything, so it is still uncertain, but that is what we are working against, and that is what we believe in.
Of course it's a major award of 14 boats out of the total fleet, and of course we are talking then contract values, you know, between $1.9 billion and $2 billion, yeah, commencing then in either in December 2026, February 2026, or October 2026. It's backlog, you know, into 2030 for 14 of our boats on this tender. Of course also the rate levels are, I would say, at historically very good levels, yeah. That perhaps is the most important update on the backlog slide, that this is what we believe in, and then we will, as I said, be closer to $5 billion than $3 billion in backlog, and of course backlog then, and of course then that shared between 2026, 2027, 2028, 2029, and 2030. It really lifts the backlog out in time.
Hopefully, you know, timing when we will have them signed, I think we will perhaps already sign, start to sign a few of them in the next few days. It is getting closer and closer. We will of course provide updates as soon as we have them, and as soon as they are signed, we will of course announce the contracts. Yesterday or the day before, we bid on long-term, whatever, you know, it is almost a subsea infrastructure project in Brazil to maintain all the infrastructure for Petrobras in Brazil or subsea. We bid vessels, four newbuild vessels on a 12-year contract for Petrobras.
It is, and of course, you know the importance of the Brazilian flag, the Brazilian tonnage, and let's say the advantage that gives, not only for the Brazilian-built flag tonnage, but also of course for international-built vessels. It has been, of course, a very important part of our strategy in Brazil. How the tender will end, we of course do not know yet. There will be negotiations, so we might be awarded, we might not be awarded. If we are awarded, the boats will be delivered in 2030 and onwards. It is years until they deliver, and it will likely be financed with very favorable, you know, local government-supported financing as we have had and showed you before on the boats we have built in Brazil before.
The cash flow for the group in the short term, you know, the discussions with the yard, there will be no payment to the yard in 2025, no payment to the yard in 2026, only small payment to the yard in 2027, and then a bit more in 2028 and 2029 and 2030. It's, as I say, it's just bid. We came second, and we just have to see how it goes, and you know, it will have no influence on cash flow or dividends or nothing, you know, in the foreseeable future. Of course, then they come on, of course, it's pricing away, of course, that they will contribute to stronger earnings, and of course, hopefully through time increased dividends from the group. I think I leave the backlog slide, and we have a new backlog slide.
Here is, as I said, most of it, yeah, here you see, of course, for execution, the remainder of this year, we at quarter end, we had $1.1 billion, and of course, that is around 73% of the expected earnings for the remainder of the year, and as I said, we are building backlog more or less every day now. If you add $2 billion to 2026, 2027, 2028, and 2029, if you do a max on $400 million more on 2026, you will have grown to $1.3 billion backlog for 2026 already. That is also why we are saying, you know, the visibility on the earnings with 14 new long-term contracts, and of course, we have a few other long-term contracts as well in the pipeline. Hopefully there will be more than those 14.
The visibility will be so strong that we think we can be in the upper end of the guidance, on the depth guidance between $1.5 billion and $2 billion. We think we can stay there for a few years as we also build backlog for not only 2026, but for 2027 and onwards, yeah. That of course means that we think there is room for increasing the dividends. First we have to build that backlog, and as I say, hopefully within the next month or so, and then we will of course see, and hopefully we can gradually increase dividends going forward. To repeat ourselves, first dividend had to be approved on the ADM, and then paid in early June. X date 21st May, and then payment 5th of June.
I guess it will be, it's here to say $0.3, but of course it will be paid in, and so I think we will convert it on the day of, or on 21st of May when it's going exit. That was that, and we jump to the next one, and Mr. Martin Lundberg, our CFO, will do the financial highlights.
Thank you, Mons. Hi everyone. On the highlights in Q1, we certainly have this big refinancing, refinancing most of the restructured debt, doing an important consolidation of the debt across the different silos and former debt structures. We did one large facility, $1 billion and $25 million, plus an RCF, a revolving credit facility of $50 million.
This is in a new structure that we call DOF Offshore Holding or ship owning, as you would call it within the segment reporting. It is 49 vessels in the fleet, and it is the vessels outside of Brazil. So it's not Norskan, it's not DOFCON JV , and it's not Skandi Salvador owned in one of the regional or in the DOF Subsea Brazil region. It is a five-year loan on a seven-year tender. It is well priced, 290 margin with the ability to go down to 275 if we go according to plan in terms of leverage reduction. Covenant standardized and on the overall group level.
Yeah, I think in all in all, an important thing to get done, first of all, in order to be able to pay dividends, but also to be able to simplify the group structure to be more efficient in cash management and to remove other restrictions on the old facilities, either for more simple administration and also a bit of cost and lost ability to do hedging transactions for currency exposure and interest exposure. Do the next, yeah, Mons touched on the high-level performance on EBITDA, $158 million towards $114 million for last year. Apple's to Apple comparison is without the $27 million from the DOF Denmark fleet, so $18 million improvement or 15% improvement from the similar fleet from last year. Development is continuing through this quarter, and it's also an improvement from last quarter.
Yeah, we have touched on it. It is a bit of a step up from the DOF Denmark fleet compared to the $7 million in the two months of Q4 that we included, but we still believe that there is a lot of potential in that fleet, and it is not representative for the long-term development. Yeah, other than that, I think it is the business as usual quarter. We will come a little bit back to the cash flow, and if you flip to the next slide, we always have a view on this leverage. It is something that we have been focusing on and is focusing on. As you see from the graph, we are already almost down at the level that we were before the DOF Denmark transaction.
If we do this calculation based on the current net interest bearing debt and mid-range guided EBITDA, we are at 1.8, so within the range that we have targeted. It only includes the $7 million in Q4 and the $27 million in Q1 of EBITDA from the DOF Denmark fleet, so it will continue to improve substantially going forward. On debt, all the numbers look small compared to the big refinancing. Net proceeds from the refinancing is $1 billion and $16 million repayment. Yeah, roughly $100 million above that. It is a bond loan, the old recovery tranche of the bond loans from prior to the restructuring that was repaid, releasing all the restrictions in that facility.
We had a little bit of normal amortization and a small currency effect on the balance, but taking the balance down with just over $100 million on the gross level. As we have informed the market, we also did a few investor meetings on contemplated bond transaction during the quarter. It was not something that we had to do, and when the market sentiment changed and the volatility in the market increased, we put that on hold, and we will continue the discussion when and if we will do that going forward. Yeah, this is a more close view on the cash flow, and we did the debt part on the former slide, so here I'll focus on the operational side. As you see, there is a buildup of working capital.
I would say that's pretty normal for Q1, and it has to be seen in connection with the very big release and very good operational cash flow from Q4. Activity levels is a bit slower, especially on the big projects during December, January, February, and then it picks up again in March, and that it builds a bit of working capital towards the end of the quarter. Yeah, we'll benefit from that in the cash flow going forward. On CapEx, that it is according to plan. We have had these ROV deliveries and mobilization of new equipment on some of the blue vessels as we have alluded to earlier. Next, please.
Yeah, so this is guiding. I guess we have said most of it already. The revenue guidance, as we have said before, is always difficult to guide very accurately on the revenue.
We just lifted that from 1.8 to 1.9 , so lifting it with $1 million on midpoint. More important is the EBITDA guidance, $730 million-$790 million compared to the $720 million-$809 million. I said why we are doing it. It's because we had a good start and gradually more solid backlog. We are able to narrow the guidance. All order here is unchanged. I think it's not, you know, we have read it before, and we leave it like that and move to this last slide before the Q&A session. Just to repeat on our outlook, we guide through year $730 million-$790 million operational EBITDA. We have a strong backlog, and it is, I would call it, very high tendering activity. You know, we expect, of course, that together with the backlog and that we will perform good going forward as well.
As we have said, we expect significant, and then we are talking probably close to $2 billion in extra in the new backlog if we are lucky and if we get what we are working on signed. Hopefully, we will announce new contracts pretty soon. The pictures here are just pictures of one anchor handler representing the anchor handling tenor in Brazil where we hope to get in seven boats. It is one RSV, which we hope to get in seven boats. It is one DOF AMT class, which has just commenced a five-year contract, and it is a picture of one I- class and one ROV representing that we are now moving global ROVs onto the DOF Denmark fleet and getting them into the subsea market and gradually getting earnings not only on the boats, but also on the subsea.
I would say it's moving according to plan, and the market is still very good. We have, you could always say we have never had so many long-term contracts in the pipeline as we have today. I am optimistic, and then it is the Q&A session. You rather read the questions we have got and Martin and me try to answer as good as we can instead of the plan.
Yeah, that's the plan indeed. Just as a reminder, you can continue to send in questions now throughout the Q&A session, and we will go through as many as we have time for. Starting then with a question on the clients, how do you see the recent turmoil and uncertainty impacting the clients in your talks with them every day?
We haven't seen any change in behavior from the clients.
That's the short answer on that.
Very good. Second question then, with the tier one subsea players sold out for the next two years, are you expecting their lack of capacity to open up new opportunities for DOF?
Yeah, I do think, of course, now the, as the actually overall Scandia said, you went on long-term charter with Subsea 7 just the other day. Of course, we have the dialogues with all tier one players. I think we think there are opportunities to do more business with them. Of course, we also think that, you know, them being very busy on these large inter-large projects. Of course, we see that that gives opportunities for us on smaller projects like the one we just showed in the presentation, this Congo work, you know, $100 million+ job for us.
We think they have less attention on that, meaning it's more space for us in that space. That is the answer to that question.
All right. Can you talk about the key factors and vessels that will decide if you end up in the high end or the low end of the EBITDA guidance?
Of course, you could say, you know, the remaining uncertainty here is, of course, the earnings on two of the large subsea boats where we still have, you know, several months to sell. I think we have nine, 10 months left to sell on those. That is, it is utilization rate level you get on that.
I have to say I'm getting gradually more optimistic that we will be able to, I'm more optimistic now than I was when we deliver a full year now, per se. Of course, it is execution, and then it is, yeah, how good the project execution is, you know, how clever we are on doing, you know, executing the project. If we are good on that, of course, we will have good margins and a lot of contingency to release when the projects are coming to an end. That's important. Of course, we still have too much exposure in the spot market. We also have an important factor, of course, which is how clever we are to keep that part of the anchor handling fleet going. Of course, we have said that has been, we have to reduce that.
You know, now two of the AMSA have gone to Canada, and then we, as you saw from the backlog slide, hope to have two of us going to Brazil later this year. I think that it is execution, it is to build, you know, fill the backlog we have not filled. It is also then how clever we are on, you know, and how good the spot market will be for the handful of anchor handlers we have in that market. As I said, uncertainty is lower now than it was three months ago.
Right. On the two else potentially going to Brazil, that is a good segue to the next question, which is of the potential 14 vessels to secure long-term work in Brazil, can you share how many of those are currently in Brazil with Petrobras?
Will you cover all the slots with your own vessels, or will you need any third-party vessels for that?
We cover all slots with our own vessels, and you know, most of the boats are in Brazil, and a few are not.
All right. Final question on currency sensitivity. Can you talk a bit about that, and specifically if the NOK were to strengthen significantly against the U.S. dollar?
Yes. On currency sensitivity in general, DOF is a dollar company working in the dollar industry. Most of the transactions we do are in U.S. dollars. We have a bit of work in Australia in local currency and a little bit also in Canada in local currency, but the big revenue currency is U.S. dollars. We also have a little bit in NOK , but I'll get back to that on the second part of the question.
All the debt, so 100% of the debt is now in U.S. dollars, and that is what is hedging solid the primary currency exposure of the group. It is naturally hedged towards the debt and the fact that the results and the cash balance and the equity is also a dollar size. On the NOK, of course, we have a bit of local cost in NOK with our head office and quite a bit of activity in Norway, but we also have a few contracts in NOK, like a couple of long-term anchor handler contracts with Equinor. There is not a big exposure on the NOK.
Right. Thank you. There are quite a few questions on the new build RSV tender in Brazil, and I guess we can just say in general that it is difficult to answer detailed questions on that at this stage.
Are you able to share any details on the potential for an award, and do you expect any cost of the vessel to be recuperated from incentives from the government or Federal?
It's, of course, you know, we bid, of course, it's a long process until there will be any awards under this standard. We need to be careful on what we say and don't say. Of course, Petrobras have communicated that they want eight boats, and you know, we are coming second with four boats, and then there was one that came first with four boats. Of course, we don't know Petrobras' budget. There is a lot of uncertainty. I think what we said previously in the presentation is what we can say. We have bid four boats. Petrobras have communicated their want date.
We came second, and it's 12-year contracts commencing in 2030. The first payment, if we are awarded to the yard, is not before it's a relatively small amount in 2027, and then shared between 2028, 2029, and 2030. Of course, as we have on the NOOC fleet, on the John 20 fleet, we expect to receive a very nice long-term government financing if we are awarded. I think we leave it like that. You know, it's far too in my view to go into any more details.
Okay. Thank you. Moving on then, a question on the anchor handling market. This segment, especially for the large anchor handlers, has seen significant consolidation in the recent years. Are you starting to see this consolidation impacting the market positively for you, or is it still very competitive on tenders?
Of course, it's a very complex question to answer, yeah, because the anchor handling market is kind of not one market, yeah. It is, you know, you have the spot market in North Sea, as I said, has the dynamics. You have what we call the global mooring market or project market for mooring, which has one dynamic. You have the term market in Brazil. Of course, if you looked at the bid of the new build, not the new build, but the anchor handling tender in Brazil now, you know, there were eight boats bid in total on the higher hand lots, and six of them were DOF, yeah. There you have limited competition. If you look at the global mooring market, like, you know, the E&I, we have one front page where we had four boats on it.
It is, you know, it's also not only boats, but it's engineering, it's project management, it's track record. So of course, there you also have one or two or three bidders, yeah. It is, so I think, you know, so I think it's, and of course, on the rig moving in North Sea, of course, there are fewer players now than it was, but it's still a handful of players bidding on most of the moves, yeah. Of course, it's different competition if you go to Australia or to West Africa than what you see in the North Sea. I think it is more consolidated, but it varies from region to region, and of course, from scope. The more complex scope, the less bidders. Of course, then you also have the. I think you leave it like that.
It probably, that answer did not make any sense, but I think it might be that we put it up for a capital market and we really do a deep dive into the global anchor handling market and look at vessel classes and see how that is split, yeah. Also, of course, in the spot market between Norway and the U.K., of course, it is much higher spec boats on the Norwegian side and on the U.K. side, yeah. It is, I will leave it like that, yeah, before I expand the whole afternoon on it.
All right. Thank you. Can you elaborate on the relationship between increased earnings and reversal of impairments on vessels?
Yes, I can. It is a quite close relationship between the two as long as there are, call it, remaining value to be reversed on the vessels. The relationship is quite simple.
DOF is using a value-in-use model. It is the cash, we value the cash flow based on the estimated and the earnings under, if any, firm contracts to value the vessels in that model.
Thank you. Are there any special items that explain the increase in net interest expense in Q1?
Yeah, there is one, and it's linked to the refinancing, and it is a bit technical. I'll do my best. When you do loans, you do, and you pay fees, upfront fees to the creditors. You capitalize them, and you amortize them over the duration of the loan. As we did with this DOF Denmark facility, when you break the loan during the duration of the loan, you have to expense the full remaining value of those capitalized costs.
There is a $10 million balance that was expensed in Q1 in relation to all the facilities that we refinanced. It's a non-cash effect, and there is a footnote related to this on the guidance page.
All right. Thank you. On the Q1 call of Petrobras, they highlighted that they will analyze possibilities around reducing the costs to keep the CapEx at the current level. Have you heard anything about this, and do you have any concerns about the five-year plan and potential CapEx revisions down?
Of course, I'll be spending the week now with our team in Brazil. They have fewer than I've been here in Norway, and I think we see no weakness in the market in Brazil. On the contrary, you saw from the backlog slide that we are on the brink of beginning mooring for long-term contracts.
There is also quite a lot of tenders we are working on in addition to that, and that are going in the next few months, yeah. I think we will see a steady stream of new awards and new opportunities in Brazil going forward.
Thank you. Do you still expect to divest some of the lower-end anchor handlers during 2025?
Our strategy is, you know, if I may say it in one half minute, yeah. Our strategy is to be number one on the globe on what we call mooring. Where we need high-end anchor handlers with and without crane, you know, heavy engineering, good product execution. We also want to be number one in global IRM, yeah. And then, you know, be number one in surf in the NISPI one, you know, number one among the TF2s in surf. That is the strategy.
In the high-end, in the mooring side, of course, that also includes floating offshore wind, but then that starts to kick off. That means that we, into that strategy, we do not need, you know, vessels with 190-ton bollard pull or. Of course, the low-end anchor handlers, OFPSVs, are sales candidates and will be sold when the timing and the price is right. That is the short and, you know, sweet plan for the group going forward. The most important role is backlog and backlog and backlog. The answer is, yes, we will sell some of the boats.
Thank you. You mentioned other long-term contract opportunities excluding Brazil. Are you able to share any flavor on what those opportunities might be?
Of course, when the tender is not public as they are in Brazil, you know, I think it's, but of course, it's an opportunity elsewhere, North America and other places. You know, it's a continuous look, yeah. So yeah. I think the most important message is that we are now, we think rate levels are very good, and we push hard now to secure backlog as long as we can, yeah. I think that is a message, and I would not mention it if we were not optimistic on a few awards in addition to those we have shown in Brazil. We will let you know as soon as we have signed.
All right. Thank you. Moving on then to the final question of today, and that is, some of your competitors have reduced guidance, and it seems like smaller projects are being moved into 2026.
Can you give some color on the market opportunities for the subsea and anchor handling vessels that are still available for this year?
Yeah, of course, it's, I don't know, I don't want to share any secrets, yeah, but as we said, as we said, when we started the year, of course, we had a very high backlog for the, let's say, for the red fleet. On the red fleet now, I think we have, we probably in total can count on one hand the number of months we have in gaps on DOF's, yeah. Two opportunities, of course, we see, we see, of course, we are filling the gaps. Of course, we have opportunities, we have opportunities in Africa, we have opportunities in North America, in the U.S., in Guyana, we have opportunities all over the place.
You know, it's, of course, it's not that I want to sit here and share with you all our tender list, and I have probably 10-15 different opportunities for every boat available in the fleet, yeah. It's, but I can, that's why we, of course, we are leaving having the guidance as well. If we are lucky and clever, you know, the utilization on the fleet for a month or a year will be very good, yeah. If we are unlucky and not clever, utilization will be a bit lower, but still at a very nice level.
Very good. That was the final question of today. There were some additional questions on the RSV new builds.
To those of you who have submitted those questions, I just repeat what Mons said, that we have shared what we are able to at this moment, and if there are any updates we are able to share, we will, of course, do that in due course. With that, thanks to all for your questions, and thanks to all for listening in, and thanks to Mons and Martin for the presentation.
Have a nice weekend, and to those of you who are Norwegian, have a happy 17 May. Thank you very much.
Thank you.