Yes. Good morning, all, and thank you for joining this presentation of Soiltech's first quarter results for 2025. Soiltech announced a strong quarter with strong performance across all key financial metrics. Presenting today will be Jan Erik Tveteraas, the CEO of Soiltech, and joining him, Tove Vestlie, the company's CFO. My name is Nicolai, and I will have the pleasure of moderating this session. Please note that if you have any questions to the management, please use the chat function at the bottom of the screen, and then we'll get back to them during the Q&A session after the presentation. With that said, I'll leave the word over to you, Jan Erik and Tove.
Hello, and good morning, everyone. Before we begin, I would like to remind all parties that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. Our comments today also include non-IFRS financial measures. Additional details and reconciliation to the most directly comparable IFRS financial measures can be found in our first quarter press release, which is on our website. With that, I will turn the call over to Jan Erik.
Thank you, Tove, and good morning to everyone. First of all, I will start with saying that business is going well. 2025 will be a good year, and we are optimistic about the years ahead as well. We are very busy, which is a good sign. Let's have a look at this quarter. We start with the numbers. If you look at the revenue side, we managed to get the highest revenue ever in a quarter. We surpassed the level of Q4, where we had NOK 80 million, and now we are at NOK 86 million. We remember those who remember the third quarter last year, we managed to get above NOK 70 million for the first time. We are in a period with quite rapid growth. We got an adjusted EBITDA of NOK 18 million and a profit before tax of NOK 6.7 million.
Tove will review these numbers compared to last year, etc., later in this presentation. If I can then go over and summarize what contributed to these numbers, I would say that we've had a strategy for complementing our fluids treatment business with solid waste handling or cuttings handling business for some years. It takes some time to get into this market, but now I feel that we have managed to start gaining a strong foothold here in that segment, and we are starting to build a track record, which is important in relation to the clients and future opportunities. This quarter, we had all the solid waste handling business was 40% of the total sales, which is a steep increase from previous quarters.
We have developed a system which we call a Soiltech Smart Transfer System, which means that we are tailor-making the solid waste containment and transfer solutions on the rig to each rig, and this has been very well received by clients. I think one key reason is that we are getting contracts in this segment. We will come back to that a little bit later on too. We are also all the time chasing new segments within the offshore and onshore waste handling, and we managed to also grab into one segment that we did not do so much before, which is the onshore waste handling, and that also contributed well in this quarter.
Basically, what onshore waste handling is, is that once the waste arrives onshore, we are taking care of it, and we are containing it in transport carriers or skips, and we are delivering it to the onshore waste treatment facilities on behalf of the client. This is an interesting add-on business, which we hope that we will get more of in the future. Also, we were very concerned, also focused on the uptime of our projects, and we had 100% uptime across all projects, meaning that we get 100% of the revenue that we could earn according to a contract. Yeah, a good quarter for the operating organization in Soiltech.
Then moving on to the new contracts that we did announce in the last quarter, these are key contracts because they are quite large, and they constitute, for some of the projects, the whole range of services that we have. Due to the preparations for these contracts, we saw in this quarter there was a high activity related to mobilization activities and also the hiring of field personnel for these new projects. We need to make sure that we have the right people to operate these projects. Solid waste handling and cuttings transfer on the rig is different than fluids treatments. You need people with experience, not only from fluid treatment, but also from solid sanding. You need to capture these people ahead of projects. There is a lot of training activities also ongoing associated with this.
We are investing in some cost and people in this phase while we are growing and while we are starting up new projects. I think this is important for investors to be aware of. A quick look at the three contracts we announced in the last quarter. The solid waste handling operations on Grane for Equinor, they started during the first quarter. Also, I'm happy to inform that the Transocean Barents in the Black Sea for OMV started now in the second quarter, and it's still going well. We are also very active when it comes to installing the equipment on the Deeps ea Bollsta, which traveled from Namibia via Las Palmas and now is in Norway, preparing for contracts here in Norway. This is also active, and we have a lot of people on the rig or have had to install our equipment.
Summarizing a little bit the atmosphere in Soiltech, we feel that we have a very solid momentum. We continue to gain market share, which is our target. We see that the pipeline with the leading counterparties is growing. We are active on the tendering side and also in approaching our clients with proposals. I would say that now we have managed to have a full service delivery, all services across the segment of drilling waste management. This has given us opportunities and will give us opportunities going forward. All right, that we can go to the next slide.
I thought we should just highlight some of the things which are important for Soiltech at the moment, which because they are complicated projects, they contain most of the services that we have, and they are not at least also strong cash flow contributors to Soiltech once they start up. Transocean Barents we talked about, it has started up. It has the full portfolio of our services. It's fluid processing, it's cuttings containment and transfer on the rig, and it's also transporting our cuttings to shore on the PSV supply boat. If you look at the picture to the left, you have a little picture of how big this operation is. You can see the tanks with Soiltech name on it. We have on a single PSV, we have 16 of these tanks.
We also have personnel on board to make sure that the handling of the waste, the transfer of the waste from the rig to these tanks are going well. If you go down to the picture below, you see a picture from Deeps ea Bollsta, which is a project that has not started. What is interesting here is that you see these green frames inside there, you see the cuttings holding tanks on the rig. When these tanks are filled up, the cuttings are being transferred from these tanks via a hose over the side of the rig and into the tanks that you see on the above picture. All of these tanks that we have on the rig are also owned by Soiltech.
You can see the piping beneath, which is the piping that connects all the tanks, but also is going to the shaker and collecting the waste there and is being pumped by our system, very strong vacuum systems into these tanks and then out again into these rigs. Sometimes the rig also has a skip and ship system, which is another system. You might want to have some backup when you are doing drilling operations, backup in terms of cutting storage solutions on the rig, because if you get into bad weather, you need to be able to store the cuttings and not stop the operations. If you cannot for some reason offload the cuttings onto the PSV. I can also be happy to say that we had a successful delivery here with our first offloading to the PSV and delivering the waste on shore then.
That's Transocean Barents. Moving on to the Deeps ea Bollsta contract with Northern Ocean for Equinor. It's well underway. It's scheduled to start in the second half of 2025. We have the same scope here, except that we do not have the scope for the transfer on the PSV. This is a long-term contract. It's a two years plus five one-year option. This will be an important contract for Soiltech once it starts and it's on track. Also, I would like to give you an update on our activities in Saudi. I would like to mention there that we have transported our Cuttings Treatment Technology unit, the CTT unit, to our yard that we operate together with Esthederm in Saudi. What we are doing now is that you can see it on the right-hand side there. It's a picture taken in our workshop at Fogos.
We are in the process of putting it up. It's more or less ready. We're going to do some last final commissioning on it, and then we are going to start with our own testing of cuttings volume in the yard, which is very interesting. This is a new technology compared to the technology which is used in the market today, which is a thermal technology using heat to kind of burn the cuttings and take out all. What's new on this one for Soiltech is that here we are doing a treatment of the cuttings, meaning we are taking out the oil of the cuttings so that it can be safely disposed of. This is an international requirement. It's also in the Middle East that you are not allowed to dispose of drill cuttings with an oil on cuttings content above 1%.
This is something, if we are successful, we'll have very good upside for Soiltech. I'd like to say that we need to see the results of the testing first, but we're very eager to get started. There is no news on the contract side since the last quarterly presentation, so we don't need to go into more details on this slide. On the other side, we are definitely working on other prospects, and we're optimistic that we'll be able to increase our portfolio, but I don't have any news here. We can skip this slide, and also the next, there's no news at all. I'd like to give the word back over to you, Tove, to do the financial review of the numbers.
Thank you, Jan Erik. I'm very excited to take you through Soiltech's strong performance this quarter.
I would also like to say that all the numbers disclosed today are presented in NOK. We are very proud to report a record high Q1 revenue of NOK 85.6 million, which is up 53% year on year. The strong performance was driven by a significant growth in the demand of our solid waste handling services that Jan Erik mentioned. If you look at then revenue by service, we categorize our services into four segments, with two of these segments accounting for over 90% of our total revenue this quarter. Fluid treatment with the STT accounted for 55% of the revenue, down from 62% in Q1 2024. However, in absolute revenue, this increased from NOK 35 million to NOK 47 million. Solid waste handling stood for 40% of the revenue, a significant increase from 24% in the same quarter last year.
The strong performance in solid waste handling stems from a higher number and a larger scale of contracts. As Jan Erik mentioned, our Smart Transfer System has been very well received by clients. Additionally, the project-specific onshore waste handling, which is a part of the solid waste handling segments, accounted for around 10% of the revenue in Q1. Please note that the level of activity on the onshore waste handling will vary from quarter to quarter based on the client's needs and our ability to sell in this service. However, we see this as a market with future potential. If we look at revenue by country, Norway accounted for 87% of the revenue, up from 62% in Q1 2024, and the international share accounted for 13%, down from 38% last year. The reduction in international revenue reflects timing of contracts activity.
We expect international revenue to increase over the course of the year, particularly with the OMV Petrom contract in Romania ramping up. If we then move on to the adjusted EBITDA, this came in with NOK 18.1 million, up 84% year on year, with an EBITDA margin of 21%, up from 18% in Q1 2024. The adjusted EBITDA margin of 21% was slightly lower than the full year 2024 margin of 23%, primarily due to ongoing recruitment, as Jan Erik mentioned, and onboarding of field personnel, and also overtime during mobilization and startup of major projects as Grane, Transocean Barents, and Deepsea Bollsta . We expect the margins to improve in the second half of 2025 as these projects reach steady state operations and the newly hired staff becomes fully trained and the operational efficiencies are realized.
We had a profit before tax in Q1 of NOK 6.7 million, up from NOK 3.1 million in Q1 2024. Profit before tax margin was 8%, up from 5% in Q1 last year. This is a result of the high activity in the quarter. If we then move on to the balance sheet, so if we then move to the next slide, our equity ratio remains strong at 48%, though this will decline slightly in Q2 following the inclusion of new lease agreements entered into in 2024 and the delivery of the equipment happening now in Q2 2025. Now turning on to the liquidity. In Q1 2025, we generated NOK 8.3 million of cash flow from operations. Cash outflow from investing activity was NOK 9.3 million, mainly for investments in solid waste handling equipment.
Cash flow from financing activities consisting of interest and installment was NOK -12 million, with no drawdown on loan facilities during the quarter. Cash at the end of Q1 was NOK 21.4 million. The mobilization activities happening now in Q1 impacted the cash position. This cost will be reimbursed by client in Q2. I'm sorry. Included in the unused portion of the loan facility of NOK 39.6 million, our total available liquidity at the end of Q1 was NOK 61 million. Net interest-bearing debt came to NOK 163 million at the end of Q1, compared to NOK 159 million at year-end 2024. The NIBT EBITDA ratio at the end of Q1 2025 was 2.26, down from 2.7 at year-end. This ratio remains comfortably within our covenant threshold of 4. Thank you for your attention. I will now hand it back to Jan Erik for a discussion on the outlook.
Thank you, Tove.
We already touched upon the outlook early in this meeting. I would say that we are in a favorable position to continue the growth. We have, and this is a result of hard work from our people over many years, not only to 2025, but we have managed to build a solid track record in this industry, which is very important. We have a lot of clients, a lot of very demanding clients, which challenges us every day in every operation. We need to deliver clean water, which is below the oil content requirements that they demand from us. We have been mentioned on that every day. We have to be good on the rig, make sure that we can handle the waste in time so that we do not stop the operations.
We are on a critical line when we receive the cuttings over the shaker and we transport it on the rig and then onto the boat. We cannot make any mistakes. We put a lot of money and time into the training of our people. We have managed to get the position that we are in. We have earned our place in the market for drilling waste management. That gives us a very good position to work with new projects and continue the growth that we are aiming for going forward. We have seen the volatility in the oil price lately, and of course, we question ourselves, will this have any impact on us? It is very hard to say if it will or not in the future.
What I can say is that we have not seen any impact or any signs of this as of now. We haven't got any signals from our clients that there are any changes in their plans, etc. I think I have been in this market for a long time, many years, and it goes up and down. I think we are quite far away from the oil price levels yet to have any major impact on the activities of Soiltech, which are obviously linked a lot to the rig market activities. We are in a market, a very good market. We have all our activities at the moment in Europe. The projects that we are working on are some exploration and some development drilling, mostly development drilling, which is good. It's long-term projects.
I would say that, and also additionally, not forgetting that about one-third of our revenues is coming from producing assets from the contract that we have with Equinor. These are our contracts that will not be impacted by the oil price. The production there will go on. We see that when we have been moving our way into this market, we always know that we must offer better solutions, technical solutions to our clients, and more cost-effective solutions. We have built up a portfolio, and I would say reputation for being innovative in the market. We are always looking for how we can reduce the waste, which we are doing in our fluid treatment, because instead of transporting all the fluid waste to shore, we are treating it on the platform so it can be discharged. This is one thing.
Also, recycling of the waste is important. We see, for example, in Saudi, the focus is on how can we reuse the water, all the fresh water which is being used in the process of cleaning tanks, etc. We're looking for a way to see if we can contribute to the recycling there. I've already recycled brine, which is a substance which is being used in relation to the completion of wells. This is a focus area. These are things that our clients want, and we plan to take advantage of those. Finally, I would also say the question of dividend is an issue or a question that comes up from our shareholders, which we appreciate, and we're getting questions about this and being addressed to our board. These questions are always taken seriously.
What I would like to just state is what the board's opinion is on this. This is that Soiltech is evaluating the dividend in context of the growth opportunities that we see in the market at all times. Currently, we see strong and good growth opportunities. We need to make sure that we have our powder dry, so to speak, that we have been able to retain sufficient financial capacity. Having said that, the message from the board is that the board will continuously consider whether a dividend is appropriate at any given time. Thank you. That concludes our presentations. I will hand the word over to Nicolai if there are any questions.
Perfect, Jan Erik. Thank you so much. With that, we can open up for the Q&A session.
As a reminder, if you have any questions, please post them through the Q&A chat function, and we will try to cover as many as possible. Starting off, what will be the revenue and profit effect from the newly started projects in the coming quarters?
Tove, would you like to?
Yeah, I think we addressed this in the last quarterly report saying that with looking at these projects, when they all come in steady state, they will generate more or less approximately NOK 100 million per year. It is a little bit uncertain yet when, as we said, Grane and Transocean Barns have started, Bolster has not yet. When all of them are in steady state, they will generate approximately NOK 100 million in a year.
Yeah. Perfect, Tove. Another question. It is a bit long, so here it is.
Trying to understand a steady state gross margin, I'd like to ask about the Q1 impact of pre-hiring and training of personnel for growth projects and the impact of such in the Q1 reported operating cost. How much of the Q1 reported operating cost of NOK 52.8 million relates to the yet revenue-generating projects? Again, the question is, how much of the Q1 reported operating cost of NOK 52.8 million relates to the yet revenue-generating projects?
I think if I can try and give some initial comments to that, is that when it comes to the margins, as Tove said, if you start with the EBITDA margin, what we're looking at once we are in steady state, we are targeting 25% EBITDA margin. In order to achieve that EBITDA margin, this will also roll into the gross margins.
The gross margin that we had, Tove, what did we have during the quarter?
38%.
Yes. Last year, we were at
42%.
Yeah, 42%. We are aiming at, I think the best way to answer this is that our target will be to come up with across above the 40s in the margin and targeting towards the 42% that we had last year. I would say that if instead of if you can do the maths, I would say that maybe 3% or 4% currently of the operating cost is related to this hiring and mobilization activities. Because without those things going on, we would have been on the same margin that we had last year, approximately, if that is an answer that you understand.
Perfect, Jan Erik. Thank you.
The next question is, the Equinor frame contract is now just over 12 months from expiration unless the prolongation options are used. By what time do the customer need to exercise their prolongation option? When can we expect to know whether the contract will be prolonged or not?
This is a good question. I just would like to go a little bit back. We've had this frame contract with Equinor. We first got that in 2013 for nine years. We had that until 2022, when it was renewed for another up to 12 years. It goes until 2024. The way it is, like you said, there are two years options that Equinor has to extend the contract.
When we signed the last agreement in 2023, it was only Soiltech and one more company, TWMA, that got the waste management contract with Equinor. Previous companies that had it, including Halliburton and Schlumberger, did not get the frame agreement. The way that our competitors come in is that they cannot go through this agreement. They have to go through the integrated services or other ways to come in. Definitely, this puts Soiltech in a good position within their system. They have to exercise the options approximately two or three months ahead of, from the top of my head, ahead of the expiry. Under this agreement, all the contracts that you see have different start-up times. We are getting very good feedback from Equinor.
I do not see any reason why we will not, just to comfort you, because I understand the question, why we will not get the extensions on these contracts. I would not worry on it based on the contract volumes that we have with them. The new contracts that we have got with them just recently is a proof of that. We just signed up with two very large contracts in the last quarter with Grane and Statsfield.
Okay. Thank you. Next question. The presented numbers indicate an unlevered free cash flow of approximately NOK 7 million for the quarter. Is the unlevered free cash flow expected to be positive in the coming quarters?
Absolutely.
I think also here I would highlight what I mentioned earlier, that we have had a lot of mobilization expenses in Q1, which will then be reimbursed by clients in Q2, which will then increase the cash position.
Okay. Perfect. The last question here. Are there any targets to reuse the waste generated from the new thermal process in KSA, reuse of the water, oil, and solid materials?
Yes. I think it's key to this project is the possibility to reuse the output from this process. We are able to reuse the water. We have already shown that in Norway that we are able to reuse it back in for reuse in the drilling process. Also, we are talking to Aramco to use it for cleaning purposes. They are doing that, cleaning tanks, etc., and for all other purposes.
This is the process that we have discussions with Aramco now is ongoing, how that can be recycled. That is the wet fractions. Also, the oil that is being recovered, what you say, the oil-based mud, which is being extracted from this process, is something that also we have tested before and that can be reused building new drilling fluids and drilling mud in the process. This we have evidence. This is also our plan. Finally, we can say the cuttings or the crushed stone, which is coming after this, is also something that if we can remove the oil on that cuttings, these cuttings can also be recycled either in cement, which we have tested and got positive feedback on, or in road fills. Using a cement is interesting because the sand that they have in Saudi cannot be used in cement.
You need to import a stone to use in the cement process. This is really key for us, of course, that we will try to be successful on the CTT.
Yeah. Perfect, Jan Erik. I think we reached the end of the questions. Thank you all for contributing, and thank you for letting us host your quarterly presentation. With that, I'll leave the word back to you, Jan Erik, for some concluding remarks.
Yeah, thank you very much to everyone for listening in. My last message here is that I feel that we are in a very good position. We have an extremely good team here. This is very motivated to continue the growth story for Soiltech. We are very motivated to get the margins up at the level where they should be.
We think that we should be able to see more contracts coming in in the Soiltech portfolio. Thank you.