Welcome to Odfjell Technology's Q1 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, Eirik Knudsen. Today's presentation is available on our website, and please take notice of the disclaimer on page two. Simen will cover the key highlights and market outlook, backlogs, and dividends, and Eirik will thereafter go through the financials before we open for our Q&A session. You can submit your questions through the webcast portal or by using the dial-in numbers. Over to you, Simen.
Thank you, Gert, and welcome to the call. Let me start with the highlights of the quarter. In March, we closed the acquisition of Kaseum and Razor, two technology and service companies providing proprietary wireline intervention and P&A plug abandonment tools and services. This established our intervention and plug abandonment platform, a scalable footprint in a part of the market with a strong structural drivers. We secured a 5.5-year contract on Ekofisk with ConocoPhillips recently. This adds material to our firm backlog. We have also established an alliance with Halliburton in Norway to complete our offerings within intervention and plug abandonment services. I will come back to that somewhat a little later. Last week, we also secured a two-year contract with EnQuest in the U.K. for platform drilling on the Magnus field. Operations is expected to begin third quarter this year.
This also gives us an opportunity to add on type of Well Services, engineering services, modifications services and so on, on top of the platform drilling activities. These wins are important to build our backlog. On the financing side, we completed a NOK 600 million bond tap at 225 basis points, and we paid the drawn portion of our revolving credit facility. We ended the quarter with approximately NOK 1 billion of available liquidity. I will return to each of these points later in the presentation. Revenue in Q1 was NOK 1.37 billion, on the same level as to 2025, last year average. Adjusted EBITDA was NOK 204 million, with a margin of 14.8%.
The reported figure reflects acquisition costs and 33 days of Kaseum and Razor of ownership into the numbers. The CFO, Eirik, will go into more details later in the presentation. Backlog stands at NOK 11.6 billion. Q1 contract awards were NOK 1.7 billion, with the ConocoPhillips contract at Ekofisk as the main driver. Last 12-month revenue is approximately NOK 5.6 billion. Last 12-month adjusted EBITDA is NOK 832 million. The latter does not include any contribution from Kaseum and Razor. On the market side, the market backdrop is more or less the same as from 2025 into 2026. However, we see a general move in the global energy market, that 2027 onwards will be a stronger and more a market with more activities, both onshore, mid-water, and deep-water activities.
Also, we see the same stable, high level of activity in the harsh environment areas like North Sea, U.K., Norway, and also more up in Atlantic Canada. South Africa is also ramping up in 2027 with the South African and Namibian activity. This is typical harsh environment markets. In the North Sea, activity is steady and tendering is elevated. Internationally, operators remain disciplined on spend, but we see an increased activity both in the Middle East and offshore Americas. Demand for plug abandonment and intervention work continues to build. Aging fields and decommissioning commitments are the structural drivers, and we see this carrying into 2027 and onwards. Our position is strongest in that respect in the North Sea, U.K., and Norway, where we have secured multi-year contracts in place.
Through Kaseum and Razor acquisitions, we are scaling our intervention and plug abandonment platform. This, together with the said alliance with Halliburton in Norway, makes us a fully-fledged provider of these kinds of services . Our recent contract with ConocoPhillips on Ekofisk will be the pilot in this respect. In Well Services, we continue to invest in differentiating technology, powered wired drill pipe being a current example, and i n to this example, we actually see more an increased interest from several major clients in the world. Capital allocation stays disciplined, and CapEx is modulating from recent levels. Finally, comments to Kaseum and Razor. The integration of the two companies is on track, and the focus is now on delivery. Little more comment on the backlog. Backlog at the quarter end NOK 11.6 billion, t hat includes options in platform drilling activity.
Of that, NOK 7.3 billion is firm. We work with most of the major energy companies in the regions where we operate, and these are longstanding relationships. Q1 order intake was NOK 1.4 billion spread across wide range of customers from super major awards, and two very large awards, and through a long list of smaller contracts. The backlog is important, and the backlog gives us a stable and very predictable platform going forward. Regarding dividend, our dividend policy is unchanged. However, as previously communicated, we are pausing the dividend payment in Q2 and Q3. Reason being is that we are a company with growth ambitions, and we have strong ambitions to build and have a robust balance sheet going forward.
We see a lot of type of opportunities where we will secure that we are never stressed on the balance sheet and in any commitment to anybody. The Board of Directors, together with the administrations, have advised us, and we have decided to pause the dividends for up to two quarters. We have a clear view that we will come back to pay dividends later in this year, late second half. We have so far paid out NOK 624 million to shareholders which has delivered a yield of 11% in 2025. Total return per share up to 216% since listing. Our ambition is to return capital to shareholders remains central as a part of our capital allocation strategy.
Now, I think I'll leave it to Eirik to go into more the financial information.
Thank you, Simen. In general, we had a stable activity level in Q1 with a good financial performance given the acquisition activity in the quarter. Revenue in Q1 was NOK 1.37 billion, stable quarter-on-quarter and up 3% compared to Q1 last year. EBITDA in Q1 2026 was NOK 188 million. Reported margin is 13.7%. However, this includes NOK 60 million in one-offs mainly related to acquisition costs for Kaseum and Razor. Adjusted EBITDA is NOK 204 million, giving a margin of 14.8%, which is broadly in line with previous quarters. Kaseum and Razor were only consolidated for 23 days in Q1, contributing approximately NOK 11 million in EBITDA. On a full quarter basis, that run rate is approximately NOK 45 million, which will benefit the following quarters.
Cash from Operations was NOK 45 million in Q1. This is lower than Q4, as expected, as Q1 typically builds working capital as activity increases heading into the year. Liquidity is above NOK 1 billion after NOK 600 million in bond tap in Q1, followed by acquisition of Kaseum and Razor and repayment of the draw down RCF. Finally, on the OFO tax case, the Gulating Court of Appeal ruled in our favor in April 2026, and the Norwegian Tax Authority has one month to appeal. The next one is Well Services. Q1 was a solid quarter for Well Services, with revenue of NOK 525 million, up year-on-year, driven by strong operational activity and contribution from the Kaseum and Razor acquisitions. Compared to Q4 2025, revenue was lower following a particularly strong Q4 2025.
EBITDA came in at NOK 154 million in Q1 2026, compared with NOK 176 million in Q4 2025. The EBITDA margin was 29% versus 32% in Q4 last year. The quarter-on-quarter decline mainly reflects temporary and non-recurring Q4 effects, including equipment sales. Excluding these effects, the underlying business activity remains solid through Q1. Geographically, Norway remained the largest market, accounting for approximately 50% of the revenue, with strong performance also from the U.K. and the Middle East Asia regions. Kaseum and Razor contributed NOK 21 million in revenue and NOK 11 million in EBITDA following transaction completion on 9th of March this year. Meaning, Q1 only included a limited contribution from the acquisitions, with the full quarterly impact effect from Q2 onwards.
We also continue to maintain a disciplined approach to CapEx, keeping investments targeted and aligned with operational requirements and high margin priorities. The next business area is Operations. The activity level is steady and predictable. Operations remains the stabilizing backbone of the group. Q1 revenue was NOK 640 million, in line with Q1 last year and slightly lower compared with Q4 last year. The quarter-on-quarter development was mainly driven by contract mix effects and some rigs shifting into maintenance mode during the quarter. EBITDA came in at NOK 42 million compared with NOK 50 million in Q4 last year. EBITDA margin was 6.5% compared with 7.7% in Q4 and 6.8% in Q1 last year. The lower profitability in the quarter mainly reflects lower bonus achievements.
At the same time, the improved Equinor bonus scheme increased earnings quality and predictability going forward. Furthermore, two significant commercial wins in Q1. We secured a 5.5-year contract with ConocoPhillips and a three-year contract with EnQuest, strengthening the backlog and providing strong future visibility. The next business area Projects & Engineering. Revenue in Q1 is NOK 142 million, stable quarter-on-quarter. The reduction compared to Q1 last year reflects the very high SPS activity on the offshore drilling rig in the first half of 2025. EBITDA is NOK 60 million compared to NOK 11 million in Q4 2025. The EBITDA and the margin improved to 11.5% as we have accomplished to align capacity with the current activity level. Lastly, we expect the activity to strengthen later this year as commercial leads will materialize.
Cash flow in Q1 is significantly impacted by the Kaseum and Razor acquisition. Operating cash flow was - NOK 3.5 million compared to a + NOK 383 million in Q4. Working capital increased by NOK 124 million in Q1 versus a release of NOK 210 million in Q4. This is normal seasonal pattern as activity builds through the year. It's also driven by paid Social Security and other taxes in this quarter. CapEx was NOK 61 million, down from NOK 77 million in Q4. Capital discipline and CapEx spending will remain a focus going forward. The Kaseum and Razor acquisition resulted in a net cash outflow of NOK 334 million.
The NOK 600 million bond tap placed in February funded the acquisitions with a net change in debt of NOK 390 million after the RCF repayment. The total liquidity is therefore NOK 1 billion, including NOK 489 million in undrawn RCF. This slide show the development in the revenue and EBITDA over time. Q1 2026 revenue is NOK 1.37 billion, stable compared to Q4 2025 and up 3% versus Q1 2025. Q1 2026 adjusted EBITDA is NOK 204 million, including NOK 60 million in one-off costs. Excluding those, the underlying EBITDA is broadly in line with recent quarters. Q1 is traditionally the weakest quarter of the year, so delivering NOK 204 million is a good starting point for the full year. Then, over to our improvement program.
The improvement program delivered in 2025 good results, approximately NOK 100 million in improvements and savings through structural cost reductions, bonus improvements, and margin improvements across selected regions and product lines. We are continuing with the program also in 2026. Already in Q1, we can see the effect. Projects & Engineering has improved margins through structural cost reductions and adjusting the cost base to the activity level. The focus in 2026 is on increased margins and cash conversion through a further enhanced operating model, higher return initiatives, and clear targets and accountability across the organization. The ambition is to accelerate earnings growth, strengthen the cash generation, and further improve the balance sheet. To summarize, Q1 was a transition quarter. Reported figures reflect the Kaseum and Razor consolidation and one-off costs. Looking forward, three things position us for the rest of 2026.
Our earnings base is broader. Kaseum and Razor are consolidated for the full quarter from Q2, adding intervention and P&A capability in a structurally growing segment with a margin profile accretive to the group. Revenue visibility has improved. Firm backlog stands now at NOK 7.3 billion, supported by the multi-year ConocoPhillips and EnQuest awards. Structural P&A and intervention demand is also growing. The balance sheet is stronger. NOK 600 million bond tap completed. The RCF is fully undrawn, and we have more than NOK 1 billion of available liquidity. Capital allocation remains focused on cash conversion across the group. We are therefore of the opinion that the building blocks are in place for an improved performance through the remainder of 2026. This summarizes our presentation, we do now open for questions.
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. If you wish to ask a question via the webcast, please type it into the box and click Submit. Please stand by while we compile the Q&A roster. Once again, to ask a question via the phone, you will need to press star one and one. There are no further questions on the phone. I will hand back to management for web questions.
Yes, we have a few questions. We'll start with one question regarding Kaseum and Razor . Could you please give us some details on the Kaseum and Razor acquisition regarding the company's actual expected annual revenue and margins?
Yeah, I can briefly talk to that. For Q1, and as also noted in the report, the full quarter revenue was approximately NOK 72 million, and the full quarter EBITDA for the Kaseum and Razor was approximately NOK 45 million. That leaves with attractive EBITDA margin of more than 60%. We don't guide on any future numbers for these two companies, but I think that's a good starting point from what we can expect going forward.
Yeah. We have another questions on the dividend level. The dividend level going forward will remain subject to our inorganic growth ambition, is the statement, that makes it potentially a very volatile sub-term this year. Have you considered a level that is sustainable alongside your growth ambitions? How does your market outlook impact the specific growth and margin trajectory in each of your three segments in 2026 and beyond? Are you now done with restructuring one-offs?
Yeah. I can start that to alter it. Just to go back to the dividend question. We have said last year, and I repeat it many times, that Odfjell Technology is a company where we are building a platform for growth. These latest acquisitions, both within investment in powered pipe , in whipstocks with McGarian we bought earlier and with the Kaseum, Razor now, build as a stronger equipment for providing also technology into the services we are looking for. Forcing the dividend, two quarters now, we do it because we want to have robustness and predictability in our balance sheet. There's no point for us to kind of stretch, and this is what we have also discussed.
We force it for the good reasons, we expect to come strong back on the development of the new platforms, the new business areas we are looking after. That's also why we have established an exclusive alliance with Halliburton here in Norway to be a fully-fledged provider of type of late life activity, downhole activity, plug abandonment activity, intervention activities, and all that kind of thing. So, we can provide tools and equipment and technologies into those services, integrated services. When we finally go through the next two quarters and go back to the dividend distribution, we will again make it as a predictive and a stable distribution.
If in the future it comes potentially new opportunities where we again decide to go to pause or do something different, we will do it for the good reasons. But we have no more ambitions or plans to do more acquisitions, w e're just gonna build on the platforms we have now established. We have just won a big contract with Conoco on Ekofisk, which is a huge field operation, including all the type of service I talked about here. This should be the pilot for providing the services that is expected for the next, I would say, almost decades of activities in that respect. With the are you now done with restructuring one-offs? I would say yes. For the time being, absolutely yes. We are done; we are still working with improvement programs. We are gonna do that continuously.
That's our DNA to be to kind of make organizations at all time fit for purpose. Yes, we are done with restructuring one-offs as we have done over the last years, but we still continue to have continuous improvement programs. That's the answer to that part.
It seems OTL had some difficulties growing outside of Norway and U.K. Would you say this statement is correct, or maybe it is just a cycle's rhythm? If correct, what would you say we need to improve our position internationally?
I think the statement here is that we, when we launched OTL, we had something like 60% of our business in Norway and 40% outside Norway. We are about today, about 50/50. We see now that we don't expect a significant growth with Operations platform drilling outside Norway, U.K. Some potential projects could come, but it's not, we don't see in the future, in the close future, any big growth there. However, within Well Services and also with Kaseum and Razor, we see significant growth potentials both in U.S., Americas South, and in the Middle East especially, maybe within mentioned Kuwait, Saudi Arabia, and that region.
We expect to have growth and distribution of those tools or services internationally with expected I would say ambitious growth targets.
I think we have one last question regarding working capital. Should we expect the same seasonal pattern as in recent years with negative contribution from Q1 to Q3 and then a release in Q4?
I think that's fair to assume. I would also like to note that in this quarter in particular, we were impacted by a new legislation when it comes to payment of taxes on salaries in Norway. We have to, now, from January on, we are paying taxes on salary every month in conjunction with salary payments. That means that in this quarter, we actually paid the full quarter on of the [Non-English content] in Norwegian in addition to the two months that we also had to pay for last year, so t hat was in total five months to pay this quarter. That impacted the working capital somewhat, and we expect the working capital to improve going forward and into the remainder of the year.
Yeah. There are no further questions. I think we'll conclude the web cast here. Please reach out to me if you have any additional inquiries. Thank you for participating in today's call. Thank you.
Thank you.
Thank you.