Welcome to Odfjell Technology's Q4 presentation. My name is Gert Haugland. I'm the SVP for Finance and Investor Relations in Odfjell Technology. I'm joined by our CEO, Simen Lieungh, and our CFO, Jone Torstensen. Today's presentation can be found on our website, and I ask you to please take notice of the disclaimer on page two. Simen will start by presenting the key highlights and talk about the market outlook, our newly acquisition, and dividend. Jone will thereafter go through the financial figures before we conclude with a Q&A session. You can submit your questions through the webcast portal or by using the dial-in. I now hand it over to Simen.
Thank you, Gert. Thank you for calling in. Good morning. I will go straight to the highlights. As we have indicated in previous investor calls last year, we also said that we expected a stronger second half than the first half, we have made a strong finish to 2025. We delivered solid operational performances across all segments and generated EBITDA of NOK 213 million, with a solid cash generation. Even more importantly, we materially improved our working capital and liquidity during the quarter. More details will follow when Jone, CFO, will present the numbers in more details. Post-quarter, we signed a strategic acquisition of Kaseum and Razor, strengthening our interventional platform and improving the margin mix going forward.
I will come back to that acquisition somewhat later in my presentation. On key financials, we have a stable revenue, strong EBITDA and cash conversions. Revenue Q4 was NOK 1.4 billion, reflecting a stable activity levels. EBITDA came in at NOK 213, as I said, or NOK 222 millions, adjusted for one-offs, which was related to our improvement program last year. Over the last 12 months, we have delivered NOK 5.5 billion in revenue and NOK 801 million in EBITDA. Backlog stands at NOK 11.5 billion. Q4 contracts awarded were about a little more than NOK 318 million. The key message is stable top line, stronger profitability, and improved cash conversion.
On market, we, we see a quite strong market going forward. Norwegian Continental Shelf has been strong all the way. It's actually a very, in a way, has been very stable over time, and it still is. There's a lot of tendering activities going on, you know, there has been some slower awards, but they are quite active, and we are active in many of those tenders. Internationally, we see that 2026 will be an interesting year to position for the future growth, as we expect, with the coming late 2026 and into 2027 and 2028 and onwards. This is reflected by information we get from many players, clients, other, you know, informations sources.
With the expected decline in production, in a way, here in Norway and also globally, we expect that clients will more actively improve their spending on production over and fulfill the gap with tapping loss in production with new field developments. We see that coming up. Internationally, we see selective growth areas, especially in the Middle East and also Americas. We have, as we have told earlier, we have established ourselves in Houston, US, with focus on Gulf of Mexico and South America. We see actually more activity coming up and more interesting type of work we are tendering for.
We remain focused on operations, efficiency and cash generation, and building a stronger intervention platform on, and also within plug abandonment. CapEx will moderate from 2026, and the Razor Kaseum acquisition strengthens our margin profile and growth profile potential into 2027. I'll come more, more into that going forward. Related to our strategic acquisition of Kaseum and Razor, we have many times indicated that we are looking for such a bolt-on type of mechanism to build a stronger platform for type of intervention and P&A activities. The strategic rationale for the company is very clear by doing this.
Behind us, we have acquired earlier McGarian with whipstocks for sidetracks and slot recoveries. We have also invested in a good company called Reelwell, for wired-powered drill pipe. All these are sophisticated technologies for doing oil field increased oil recovery and intervention activities. Kaseum and Razor adds into that picture. Kaseum and Razor represent the structure strengthening or intervention plug abandonment offering. Kaseum brings proprietary wireline intervention technology, whilst Razor is a service and rental tool company, providing the same in a way, business model as we have with our own well services business area. This acquisition represents a high growth, high margin intervention platform. Kaseum develops and manufactures proprietary wireline tools protected by patents and strong IPs.
Razor, on that side, provides the service capability, deploying those tools into intervention and plug abandonment operations. The market rationale is very supportive. Aging offshore assets are driving structural growth and intervention and decommissioning activities. We have spoke about that for quite a long time, and we are kind of approaching that market, and we see a very strong market over the next decades. Operators prefer lighter and more cost-efficient wireline solutions, where these companies are well positioned, very well fitted with our own capabilities as per today. Financially, this is immediately EBITDA accretive and strongly cash generative. Financially, this is immediately, sorry. The business model is a tool-based model with short investment payback and payback periods and limited capital intensity.
Together, Kaseum and Razor Oiltools form a scalable platform that can be accelerated through Odfjell's global footprint. We operate in more than 30 countries, whilst Kaseum and Razor Oiltools has a limited global operations. Our network with clients and relations gives quite significant tools or platform for stepping up and creating synergies by doing this acquisition. Transaction, we have indicated, said that we will finance this transaction with a tap on the existing bond of NOK 600 million. The transaction is structured with 70% ownership at closing in Q1 2024. Phased acquisition of the remaining 30% through a call and put options over the next three years.
The enterprise value is GBP 38.5 million, with GBP 27 million paid at closing when the financing is concluded. Funding, as I said, will be done through existing facilities and a bond tap with no covenant changes required. This phase structure provides immediate control and earnings accretion while preserving financial flexibility. Also this model with 70% and 30% left, creates a quite strong motivation and I would say motivation for the owners and the organization within Razor and Kaseum to sit with the company and work together with us to create more values over the next few years. This is quite crucial.
We have spent quite a lot of time with the two organizations to motivate them and make them understand how we in Odfjell Technology will work together with them, and create the necessary values for what they expect going forward. Their current run rate within Kaseum and Razor are strong. They are already in a way above what they expected for 26, and we see that as a quite interesting way to also to step up in with our own networks, providing more opportunities for increasing sales and deploying their tools and equipments. We will organize the two acquisitions by letting we will keep the name, we will keep the organization as is.
We will identify now synergies. We will identify sales synergies, potential, some cost synergies, but we are quite clear that the two organizations will report into Odfjell Technology, and over the next few months and year, we will make a more kind of a close integration based on a win-win basis. We have time for that, and that is quite important. We kind of, we'll find our way forward, and I'm personally quite excited about how we could work together on the next coming periods. Regarding backlog, I said that currently we are also entertaining several tenders in the market within all business areas, and we, of course, expect to win some of them to continue to build an order, a stronger order backlog.
There has been some slow activity regarding awards, but the number of tenders are actually quite high, we don't see it's gonna drop down. We see the opposite. It's gonna be even more. We expect from going forward that we will improve that backlog, hopefully increase it. We do kind of, we are optimistic to kind of review on that part. Regarding dividend, we have had commitment to attractive shareholder returns supported by strong operating cash flow and low leverage. Since listing, we have returned NOK 565 million to shareholders and established a consistent quarterly dividend program.
At the current levels, this implies around approximately 10% annual direct yield, supported by strong cash generation and clear commitment to delivering reliable returns to shareholders. However, I like to indicate now, because I've said that sometimes on many conferences and calls last year, if we make a bigger acquisition for good reasons, and Kaseum Razor is a good reason, we might pause dividend one or two quarters. This is in order to preserve covenant headroom and balance sheet flexibility, and we expect to pause maybe now Q1 and possible Q2. This is due to acquisition payment timing related to Kaseum and Razor acquisition. I, as I said, I have earlier indicated that such a pause might happen due to those good reasons.
I see clearly that acquiring Kaseum and Razor is certainly that good reason. I keep my word intact, and we expect, as I said, to pause dividend two quarters, starting from Q1, maybe also Q2. Back again to the normal, I would say, promises that we will continue to pay dividend when we feel that we have balance sheet and flexibility to do so. Remember that Odfjell Technology is a relatively young company. Balance between paying dividend and growth is also very critical. Together with the board of directors and administration, we have agreed that we will go that balance. We are looking for growth, we also looking, when we can, to share extra back to shareholders.
This case, I think we just now, with this acquisition, we need to protect our balance sheet and make sure that this acquisition goes well, and it certainly looks so, and that will bring us to a different platform going forward, based on both growth and size. With that, I leave the rest of the financial information to Jone, the CFO. Thank you.
Thank you, Simen. I start with the financial slides. Steady activity level in Q4, we saw improvement across key financial KPIs. Stable revenue around NOK 1.4 billion. EBITDA in Q4 2025 is NOK 230 million, up from NOK 202 million in Q3 2025. This confirms the second half improvement we have communicated in previous quarters. The EBITDA margin has also improved compared with earlier quarters. Adjusted EBITDA in Q4 is NOK 222 million, including restructuring costs of NOK 9 million. The improvement program is on track with restructuring costs of NOK 26 million year to date. This program will continue into 2026. Free cash flow, available liquidity, and working capital all improved significantly in Q4. We go to Well Services. It's a strong quarter for Well Services, with increased activity and improved EBITDA.
EBITDA is NOK 176 million, compared to NOK 148 million in Q3. The improvement is driven by strong activity, especially in Norway and Europe, improved product mix, increased product sales, and improved cost efficiency. EBITDA margin is 32% in Q4 2025. High tender activities are go-going globally, as Simen said, with focus on high-margin business opportunity. CapEx is reduced compared to previous quarters. The next is operation. The activity level is steady, predictable, and solid. Order backlog remains solid, operation continues work closely with customer to execute and deliver efficient solutions. EBITDA is NOK 50 million, compared to NOK 62 million in Q3. The margin level is steady, around 8%, due to good performance and high bonus achievements. Finally, project and engineering. EBITDA is NOK 11 million versus NOK 10 million in Q3. EBITDA margin has improved in Q4 compared to Q3.
P&E is currently aligning capacity with its activity level to secure optimal utilization going forward. In addition, P&E actively positioning to expand the external client base across FPSO, Protos, MODUs, and other growth opportunities. We go to the cash flow. Strong Q4 operating cash flow with disciplined capital allocation. Working capital has improved to NOK 210 million compared to Q3. CapEx is reduced compared to previous quarter. Cash flow from operation activity is NOK 309 million compared to NOK 169 million in Q3. Cash hand balance, including on raw credit facility, is increased to NOK 240 million compared to Q3, and dividend is paid in Q3 . This is the development in revenue at the sale since we started the company. Revenue started, I will focus on 25.
Revenue started 25 below the strong, revenue started, sorry. The revenue has been stable through the year with growth in each quarter. EBITDA improved in the second half compared with the first half of the year. What is what we said in the previous quarters. The improvement program in 2025 delivered a strong contribution to financial performance, generating approximately NOK 100 million in saving and improvement. These savings were primarily driven by structural resource reduction, supported by NOK 57 million from performance-related bonuses and margin improvement across region and product lines. EBITDA and competitive edge impacts passed in 2025, with further improvement in 2026. We will continue the program into 2026, focus on high return initiatives, further reduction in cost base, and strengthen the balance sheet. Simen mentioned financing.
You know that the current facilities is a bond of NOK 1.1 billion pre-tap and the LCF of $50 million. What we're doing now is to using the existing bond. The amount is NOK 600 million, the total outstanding will be NOK 1.7 billion. Maturity is in August 28th, terms, no changes to existing terms and conditions. Use of proceed is to acquisition of Razor Oiltools and general corporate purposes. The process timeline is book building and pricing actually today and maybe tomorrow, if needed. The facilitators are DNB, Clarksons, ABGs. To summarize, we have a strong Q4 delivery, earning and cash generation. We've done a strategic acquisition, which improve our margin mix and technology. The performance program is on track, will continue into 2026, we still have a disciplined growth approach going forward. Thank you.
Thank you, Jone and Simen. I think, we'll open up for a Q&A session. We'll start with calling questions, if there are any.
This time, if you would like to ask question, please press star one-one and wait for your name to be announced. To cancel your request, please press star o ne-one again. One moment for the first question. Our first question comes from the line of Tommy Eklund from Carnegie. Please ask your question.
Yeah. Will Odfjell continue the current business model that Kaseum had, where you sell tools to the market, to all players in the market? Thank you.
The answer is yes. We will not influence on that or make any negative impact on that. That has been one of the criterias. Kaseum will operate as they do today.
Thank you. Once again, to ask question, please press star o ne-one . One moment for the next question. Our next question comes from Truls Olsen from Fearnley Securities. Please go ahead.
Hi, good morning, guys, congratulations on what seems to be a attractive and interesting acquisition. Can you talk a bit more about how that call and put option is structured? Just starting there, I have one other question as well, which is more on your operations, I'll come back to that.
Georg, maybe you can take that, and I can take the overall.
The option on Razor Kaseum?
Yeah, yeah.
Yes.
The, the, the thirty percent.
Yes. We have a call option the first three years, and they have a put option on, in year three. We have agreed to basically, I think the intention is very clear: to have the current founders with us for the next three years and then buy them out at a agreed multiple. That's the intention.
That's based on the 100% value of GBP 39 million, or is there upside to this for the owners, obviously?
No, there's a agreed multiple based on the figures the last 12 months when we get to the buyout phase.
There is an incentive in there for the two organization and ourselves to increase values, and that will be helpful for their potential exit.
Yep, yep. Okay, okay.
Yeah.
Understood. Thank you. Then, just on P&E, you talked about aligning to current capacity. Can you talk a bit more what that entails and how we should think about that segment going forward?
Well, we, our long-term focus has been over the last few years, to establish a credible model for when we're approaching P&A activities, which we certainly see that will come, and is already in the early stage. We have, you know, talked about P&A for many, many years, but finally, we see that market itself and the maturity of the fields are now in such a condition that plug abandonment is something clients have to do. What they're after is of course a very efficient way of doing it, and just not kind of a copy what has been done earlier.
Our ambition is to find models where we are more efficient and more kind of a, maybe, more like a one-stop shop for the clients and focus on the efficiency and safety. With Kaseum Razor, we get tools for downhole wireline type of services. Together with what we have done before, we have now also acquired earlier whipstocks, cutters, and we also go into the into the so-called powered wire pipe, which also can be used for plug abandonment activities and downhole operations. With these two companies, with Razor and Kaseum, which we have followed for quite a while, we will certainly start to integrate business models.
They will operate separately as they do today, but when we, when we see projects, opportunities where we will combine OTL's business areas, which is operation, which is well services, which is project engineering and well engineering. When we can combine that with what we have acquired earlier, together with products from Kaseum and Razor, maybe also together with a high-end, high-end service provider, we think we can make a quite interesting approach to future plug abandonment to make sure that we are entering those businesses with expected, quite interesting bottom line delivery. We have said we have time for this.
We will spend time to make our models, but we certainly think that Kaseum Razor will add on a significant edge to win those contacts going forward. That is also underlined in the meantime, and expect from all those so-called integrated services, KSM and Razor will operate as they do today.
Thank you, Sim, for that detailed answer, if you will. I was actually more thinking about your projects and engineering segment, so.
Oh, I thought you said P&A.
It's still a good-
Sorry.
Details on the P&A side.
Sorry.
Yeah.
I thought you said P&A.
Yeah.
I just, it's just a letter between A and E, okay? With P&E, you know, has been a little slowed down because of all the SPS and slowdown in that side of the market. However, I think I hope during 2026, there are several interesting projects that we are working with that will probably generate more activity within P&E. Meaning that it could be modification projects, it could be supporting some rigs that want to come into Norway, and our competencies by having that kind of experience is very relevant. There are rigs out there now with no new builds, but there are converses, and that's the typical market for P&E.
I'm quite optimistic that during 2026 and 2027, we will see a ramp up of activity within that business area.
Okay. Perhaps so much slower this year and then gradually increasing in 2025-
Yeah, it could be slower, it could be slower this year, but don't expect too much, slower. It's so mething will probably happen second half.
Understood. Good. Thank you, Sim.
Yes.
Thank you for the question. We also have one question from the line of Jonas Shum of Clarksons Securities. Please ask your question.
Hi there. Thank you for taking my questions. On your slide seven, in terms of the market outlook, you elaborate a bit on the P&E segment, but just to understand kind of your wording here, you're suggesting flat activity entering 2026 and then positioning for growth in later in 2026 and 2027. If you compare that to 2025, you had kind of an improving trajectory. When you see flat activity entering 2026, do you then take into account kind of your run rate as you ended 2025 or are you comparing to kind of first half of 2025 versus first half of 2026?
Well, I didn't hear you very, t oo little, kind of, way here, but I understand you're asking for a prediction in 2026. Is that right?
Specifically because of your wording, suggesting that the activity levels will be flat entering 2026. I'm just wondering about, is that compared to your run rate, like from the last part of 2025, or is it compared to the first half of 2025?
It's, I think we can say that we expect the last part of 25, as we hoped for, was a better half. This, that run rate we expect coming into to 26 and more. Normally, we see normally a drop in Q1. That's why we kind of say it's a little flat into Q1, due to the fact that we operate in a harsh environment, typically, Q1 is a winter season, the weather are more rough, so we normally see a drop in Q1. Rest of the year, we actually see a better performance normally.
It's not gonna be a kind of a big step up because the market activity in 2026 is not coming until late 2026. We see the number of rigs active coming up, second half 2026 and into 2027. That goes for jackups, that goes for also the water assets. Of course, we see already in the Norwegian continental shelf and also the UK sector is quite active already. These international markets, we expect a ramp up. That goes for maybe South America and goes for Mexico and West Africa. I think that the 2025 second half is an indication of what to expect going forward into 2026.
When we take the late 26 and go into 27, with, as we said now, with the contribution of Kaseum and Razor's delivery, which is quite strong regarding both EBITDA and cash conversion from EBITDA to free cash, we expect better numbers, especially the, I would say, the second half of 26, and that will hopefully run into 27 with the same run rate.
Okay.
If that wasn't answer.
Thank you. That's fair. Yes, that's clear. Thank you.
There are currently no more questions from the phone line. Please continue.
Okay, we have a few written questions, and we'll take a few of those. The first is from Lukas Daul, who is asking if the dividend pause imply that we target our one multiple net debt EBITDA, a leverage ratio. I think we don't have one as X as a target. I think we're happy to keep it between one point a dividend position. But I think what we're seeing in the next two quarters is, you know, there's some uncertainty around what the leverage ratio will be, and we're being prudent in what we're communicating today.
Yeah.
Lukas is also asking, you know, what revenue we're expecting from these companies we're acquiring, and when the numbers will be included in our numbers. Maybe I can answer that.
Please, please do.
I think, first of all, I think the numbers will be, I think the completion of the deal will be done first half of March, so we should include some of those figures already in Q1, but not a substantial amount. When it comes to the growth rate, I think the two companies, Razor and Kaseum, have a growth rate which is much higher than our own. We don't think that's something that's gonna slow down with the collaboration with Odfjell Technology. You know, the, the focus is gonna be to scale the business. I think that's one of the, you know, the main drivers behind the transaction. I don't think we never guide, and we won't guide on the exact numbers here either.
No, we can't do that. But as you said, Gert, that these two companies, we will slowly work together, and we are quite occupied that they shall operate as they do today. What we certainly see the one plus one be more than two, is when we approach plug abandonment type of projects. That's where we see the upside, and significant upside, to be able to win and execute those kind of operations with a profitable bottom line. This is clearly communicated to the two companies, and they're quite excited about the possibility to increase their footprint globally together with us. Of course, to continue with the good relations they already have with their own clients.
That's very important. That's an answer. Thank you.
Yeah. We also have a question from Victor, who is curious about how we see the OTL valuation, I think it's something we shouldn't have too much of opinion on. We and I think a lot of the smaller oil service companies are seeing fairly low multiples. I think again, this transaction we're doing now is one way of trying to improve it. You know, we wanna improve our earnings quality and are looking for, you know, a bigger size, and looking for something that can be scaled up and create substantial growth and just improve the margin picture also. This is what we're getting through the Razor Oiltools acquisition.
I think, you know, if you look at the EBITA multiple on this transaction and comparing it to OTL, yeah, we're a little higher, but it's a big difference. We should still say that it is quite a big difference if you go and dig into the numbers. The capital intensity is very different. There is a very low CapEx when you look at Kaseum and Razor Oiltools. Kaseum has no CapEx. Razor Oiltools have a very limited CapEx and have been able to grow without spending too much on CapEx.
I think also, if you look at the EBITA level, the growth rate, and the free cash flow generated by these entities, they're quite big, quite different from OTL. It would be more fair to look at the free cash flow multiple or EBITA less CapEx. You see a big difference. This is very accredited to us. I think this is one of those steps that we can help us improve our valuation.
Absolutely. Good answer. That's it from my side. Smile.
Yeah. I think, we don't have any more questions, and we will conclude the Q&A.
Thank you.
We thank everyone for joining the call, and, hope to you join our next quarterly call also. Thank you.
Thank you. Bye-bye.