Good morning, everyone, welcome to this Fourth Quarter Presentation for Vow. I will start with some highlights. Cecilie Hekneby, with me here today, will take you through the numbers. I will come back and give you a market update before we spend a bit more time than normal on the strategy, as we have completed our strategy work, and we'll go through the update with you on that. My name is Gunnar Pedersen. I'm the CEO of the company. Fourth quarter delivered all-time high revenues. This is driven particularly by strong performance in Maritime and also in Aftersales. Our operation has improved across the board, with better project deliveries, higher activity levels, and strengthening margins in the key segments.
Our Industrial Solutions is progressing and delivering in line with our expectations, but the results are still impacted by the previously announced non-cash impairment. This reflects updated assumptions also on a more cautious outlook following the strategic review. Our liquidity position has strengthened significantly. The covenants for fourth quarter was waived, and the covenants for the first quarter, 2026 have been waived, and also, we have come to a new structure for the covenants for Q2 and onwards for 2026. I should mention that in terms of liquidity, we do expect fluctuations resulting from milestone payments and the delivery activities into the projects. Our order intake remains strong, with NOK 545 million in the quarter and a backlog of NOK 1.7 billion.
There's another NOK 400 million worth of options, which is giving us a very solid visibility going forward. Subsequent to this quarter, we have signed a contract for four new cruise vessels, valued at EUR 27 million. Aftersales continues to grow, supported, of course, by the expanding installed base and also improved operational performance.
Cecilie will take you through the numbers, the detail on the numbers, and I'll be back to talk about the market afterwards.
Good morning. I will give you an update on the financial numbers for the fourth quarter, starting with the key financials for the group. The reporting currency is in the Norwegian kroner. In the fourth quarter, we had high activity and saw an uplift in revenue. Reported revenue for the quarter was NOK 347 million, compared to NOK 265 million one year earlier, as you can see on the graph on the left-hand side, positively impacted by all-time high revenue in the Maritime Solutions and Aftersales segments. Revenue from the two circular solution projects developed according to the updated assumptions from Q3, while revenue from heat treatment strengthened the Industrial Solutions segment in the quarter.
Moving on to the graph in the middle, we see positive numbers again, with adjusted EBITDA for the quarter of NOK 16 million, although negatively impacted by warehouse write-downs of NOK 10 million. The graph on the right-hand side shows the development in the order backlog. At end of the quarter, the backlog amounted to NOK 1.7 million. It is steadily increasing and gives good visibility. Total revenue in Q4 was at NOK 347 million, up NOK 82 million from Q4 2024. Revenue in the Maritime Solutions segment of NOK 171 million is all-time high, following progress on large newbuilding contracts and up NOK 53 million from Q4 2024. Aftersales has revenue of NOK 64 million in the quarter, which also is all-time high and up NOK 12 million from one year earlier.
The 23% increase from Q4 2024 is related to high activity and an increasing volume of vessels in operation that give scale advantages. Revenue in the Industrial Solutions segment is up NOK 16 million from Q4 last year. Revenue development for the two circular solution segment is developing in line with the updated assumptions from Q3, and positive development in heat treatment adds to the segment. The full numbers for the Maritime Solutions segment are impacted by the catch-up effect in Q2, still up 25% year-on-year. Aftersales is up 14% year-on-year, while the Industrial Solutions segment is down NOK 119 million year-over-year, heavily impacted by the updated assumptions for the two circular solution projects that led to the reversal of revenue in Q3.
Let's move-- Click. Really carefully. Okay. Sorry. Let's move on to the operational key figures for the fourth quarter. Gross profit of NOK 79 million in the quarter is up NOK 3 million from Q4 2024. Gross profit in the Maritime Solutions segment is up NOK 11 million, with gross margins up from 19% to 20%. Gross profit in the Aftersales segment is up NOK 7 million, with gross margin increasing from 33% to 38%. In the Industrial Solutions segment, gross profit is down NOK 15 million from one year earlier. In Q4 2024, the gross margin was 37%, compared to 18% this quarter. COGS in the quarter is impacted by write-downs of inventory in both the Maritime Solutions and Industrial Solutions segments in connection with the annual close and detailed review of inventory, amounting to NOK 10 million, and increased allocation of recovery hours in projects.
Recovery hours are up NOK 6 million, following improved time tracking and hourly rate precision, as explained in the Q3 presentation. While reported employee expenses are in line with reported numbers one year earlier. Gross employee expenses, including recovery hours, adjusted for the non-recurring items, amounted to NOK 79 million in the quarter and is up NOK 7 million from one year earlier. Other operating expenses, adjusted for non-recurring items, amounted to NOK 25 million, up NOK 3 million from Q4 2024. Included in this increase is a NOK 2 million lower government grant in the TIA this year compared to one year earlier. The non-recurring cost of NOK 1 million in the quarter is related to closing of one test facility in France.
Adjusted EBITDA in the quarter of NOK 60 million is at the same level as one year earlier, including the non-cash warehouse write-up of NOK 10 million. I'm pleased to see that the underlying performance is improving. The financial performance in the quarter is heavily impacted by the announced non-cash impairment. All companies must perform an annual impairment test to assess whether assets carrying value exceeds its recoverable amount. We have had a thorough process, resulting in recognition of a total impairment of NOK 119 million. In the Maritime segment, an impairment of NOK 23 million was recognized related to intangible assets associated with MAP technology, that is Microwave-Assisted Pyrolysis, as this technology has been discontinued and replaced by the new EAP platform, Electrically Assisted Pyrolysis.
In the Industrial Solutions segment, the impairment amounted to NOK 96 million, comprising impairments of intangible assets of NOK 38 million and goodwill of NOK 58 million. The impairments reflect updated assessments of recoverable amounts following revised expectation for future economic benefits across projects and operation, driven by changes in underlying market assumptions and updated financial projections. We continue to see significant long-term potential in the Industrial Solutions markets. As with early stage and emerging markets, visibility and on the pace of technology adoption remains limited, and we have taken a more cautious approach. Depreciation in the quarter of NOK 12 million is NOK 1 million higher than in Q4 2024. Over the last years, the group has invested substantial amounts in terms of acquisition and R&D, a significant share of project will commence amortization from 2026.
We expect an increase of approximately NOK 4 million in increased amortization during 2026, increasing by another NOK 7 million during 2027. We have now implemented a revised capitalization policy under which only expenditures deemed strictly necessary will be capitalized, supporting a more prudent and disciplined balance sheet approach. Financial items in the quarter of negative NOK 10 million are NOK 6 million lower than in Q4 2024. Interest cost on bank loans amounted to NOK 11 million, down NOK 4 million from Q4 last year. There was a foreign exchange loss of NOK 1 million in the quarter. We report in Norwegian kroner, but most of the contracts are in euro, and about 60% of the project costs are in the contract currency as a natural hedge. Fluctuation in foreign exchange rates may, however, have an impact on key financial figures, and we are looking into alternatives to mitigate the risk.
Following the sale of Vow shares in Vow Green Metals in June last year, the share of net loss of NOK 3 million and a gain of NOK 1 million is recognized in the full year numbers. Result before tax ended at negative NOK 127 million. Adjusted for the non-cash impairment of NOK 119 million and the non-cash warehouse write-up of NOK 10 million, result before tax is NOK 2.5 million, showing improved operational performance. It's a bit difficult to get this one to work. Well, subsequent to the reporting period, we obtained a waiver for the first quarter of 2026, yesterday, we agreed on a new covenant structure, for the second quarter 2026 and the following periods.
We have close and constructive dialogue with DNB, and I'm particularly pleased that the peak interest that has been added to the loans now is being terminated. We will, in a short moment, move over to the cash flow. Yes. Looking at the cash flow development, we started 2025 with NOK 229 million in available liquidity following the private placement in December 2024. This was reduced to NOK 49 million in available liquidity at the end of Q3. Cash collected in Q3 was used to resolve overdue payables, improving the overall financial position. During the fourth quarter, liquidity improved significantly following large milestone payments, and we ended 2025 with NOK 136 million in available liquidity.
I will continue to closely monitor working capital, and we will see fluctuations over the next quarters, driven by project execution and timing of milestone invoicing and collections. This was a walkthrough of the key financial development in the quarter, and now Gunnar will give you a business and strategy update.
Thank you, Cecilie. I will start by having a look at Maritime Solutions. The cruise market continues to strengthen with improved profitability and high occupancy levels on board the cruise vessels, which also then drives demand for the new builds. Fourth quarter saw all-time high revenue in Maritime Solutions, driven by higher delivery volumes and progress on new building projects. Our order intake is very strong, and the backlog provides long visibility, with deliveries now stretching well into the thirties. The shift from legacy contracts to new contracts with more updated terms is improving margins and stability as well. We expect to see continued good performance into the fourth quarter.
No sound. Okay.
We have also signed three major contracts, demonstrating continued strong demand from European shipyards, as well as our strong position in that market. The backlog is strong for Maritime, around NOK 1.6 billion, giving us long visibility. On the upper right-hand graph, you can see how the backlog is expected to turn into revenue over the years. We have some technical issues, I'm going to do these slides once again. Okay. Thank you. We will do Maritime Solutions market update once again. The cruise market continues to strengthen with improved profitability and high occupancy levels on board the cruise vessels, supporting a sustained demand for new builds. Fourth quarter showed all-time high revenue for Maritime Solutions, driven by higher delivery volumes and progress on the new building contracts.
Our order intake is very strong, and the backlog provides long visibility, with delivery stretching well into the thirties. The shift from legacy contracts to new contracts with updated terms is improving margins and stability. We expect good performance also into the first quarter of 2026. On the contract development for Maritime, so in the fourth quarter, we signed three major contracts, which demonstrates continuous strong demand from the European shipyards, but also our strong position in the new build market. The backlog for Maritime is around NOK 1.6 billion, which gives us long visibility, as I said, well into the thirties. On the upper right-hand graph, you can see how this backlog is expected to turn into revenue in the coming years. The percentage being the percentage of the backlog that we expect to become revenue.
I should also add that, sometimes you see a little bit change in this if the yards needs to delay a project or move deliveries. The legacy contracts are declining steadily. You can see that on the bottom right-hand graph, Already by 2026, the majority of revenue will come from new contracts that are less vulnerable to inflation and with better margins. To help you read the numbers correctly, the share of legacy contracts, if you look at Q4, 56% of the 2025 total revenue came from legacy contracts, whereas 44% came from new contracts. Into 2026, you can see that we are in the 30s somewhat range when it comes to revenue from legacy contracts. This slide illustrates our position in the global cruise market, both in terms of deliveries and also the long-term pipeline.
On the left, on this chart, you can see the number of vessels that we have delivered equipment to and also what cruise line we delivered to. You can also see how many vessels we've had commissioning activities on. We delivered main systems for 18 vessels, and we commissioned. Scanship, our Scanship subsidiary is a trusted technology provider to not only the leading cruise operators, but also to the yards. We are working closely with all the major European shipyards that you can see on the center map, this is basically where the cruise vessels are built. To the right, you can see the number of vessels that are under contract. That would be the dark blue ones.
How many are under option, the kind of green color on those, and then the gray, which is the number of contracts that we have actively placed bids for. It's lined up in time with the year that the vessels are expected to be handed over from the yard to the cruise owner, to the cruise line, to go into operation. Typically, we deliver equipment 18-24 months before. It can be earlier, it can even be in the same year, depending on what type of equipment, and that is, of course, what also makes it a bit tricky to read this as how the revenue is going to play out. Subsequent to the quarter, we signed a contract for four vessels to be delivered from 2029, so handover date from 2029 through 2031.
Those are not shown on this graph. The growing installed base is also an important driver for Aftersales, supporting revenues going forward. By that, we'll switch to Aftersales. Our Aftersales activity has delivered record sales in fourth quarter, with strong performance across all its segments. Margins improved further, driven by scaling effects and improved operational efficiency. To put it simple, we delivered more with the same organization. We entered 2026 with high activity, including mid-life upgrades and preventive maintenance agreements. The growing global fleet, equipped with our systems, continues to drive demand forward. Overall, Aftersales demonstrates healthy margins and a solid outlook going into first quarter. Industrial Solutions. I haven't said this, but on the lower right-hand side, you can see the percentage it makes up of the revenue for 2025. For my time, that was 52%. To, it's 23%, I think, for Aftersales and 25% then for Industry.
Industrial Solutions. After the major adjustments that we made in Q3, both revenue and margin trends are now developing in line with our expectations. The two circular projects are developing as expected. Commissioning is ongoing. We successfully produced first biocarbon in the fourth quarter, which is an important milestone. We expect the two ongoing projects to be concluding sometime in 2026, which will reduce our risk exposure and support improved margins going forward. Large pyrolysis reactor from C.H. Evensen, that you can see on the photo on your right-hand side, was delivered in the fourth quarter and is expected to go into operation sometime in 2026. Within heat treatment, we've seen a slight pickup after a soft third quarter.
The galvanization market is soft, but the aluminum industry is promising and picking up. On the contract side for Industrial Solutions, the order backlog now stands at NOK 112 million, the composition reflects our more selective and controlled approach going forward. We continue to see positive momentum with our key customers, particularly, I would say, with Arbion Industries, where cooperation continues to mature. Of course, this supports also our long-term potential. We're also seeing encouraging developments in our collaboration with the Murfitts Industries within the end-of-life tires processing segment. FEED study has been completed, also the permitting process is progressing with some clear milestones passed over the last couple weeks. Within heat treatment, the market softened in Q3, the pipeline has strengthened again.
Across all these subsegments, our focus remains on prioritizing the right opportunities and securing that projects fit our new and more disciplined profile. We have touched on strategy and a strategy revisit in earlier presentations, and we will spend a little more time on that this time as we have come to conclusions. Not all the action plans have been completed, but the direction and so on has been concluded. To summarize our starting point, I think we can say that the cruise market remains strong, supporting continued growth in our core maritime segment. Our order backlog provides visibility well into the 2030s, giving a solid foundation for long-term planning. Our pyrolysis technology is moving into a commercial demonstration phase, passing some important milestones for Industrial Solutions.
The circular solutions part of industry develop at different speeds, and we are aligning resources and capital accordingly. We see a significant long-term potential, both within maritime and also within selected industrial applications. Simply put, we believe that the starting point and the path forward can be defined by clear focus, strong position, and disciplined execution. At the start of the year, we implemented a new organizational structure to support our updated strategy. We now operate three business units: Maritime Solutions, Industrial Solutions, and Aftersales, each with crystal clear profit and loss responsibility. This creates clearer accountability and faster decision making. We have strengthened and streamlined the management team, and we have introduced a new operating model focused on delivery excellence and project control. The finance function has been reinforced to improve cost control, margin focus, and cash discipline.
Finally, we're gradually separating industry from maritime to position Scanship as a pure-play maritime solutions company over time. Overall, these changes sharpen execution, and they give us a stronger foundation for profitable growth. For Maritime Solutions, this is the backbone of our business, and we continue to hold 70%-ish market share in the global cruise newbuild segment. The market remains robust. Cruise operators report strong profitability and high occupancy, which fuels continued investment in new vessels. Our strategic intent is straightforward: defend our leadership position, improve margins, and also expand value creation throughout the vessel lifecycle. We continue to innovate and are now refining our onboard pyrolysis solutions, which strengthen the environmental performance of our cruise customers and support their decarbonization ambitions.
With a strong installed base and a solid order backlog stretching well into the thirties, we have excellent visibility and a clear runway for continued growth. Going forward, our focus is operational excellence, predictable deliveries, and ensuring that every new contract contributes positively to the profitability. Aftersales. Aftersales is becoming an increasingly important part of our business model. It strengthens customer relationships, it provides high-quality, recurring revenues. We now serve around 200 cruise vessels worldwide, as the installed base grows, the addressable Aftersales market grows with it. This business unit consolidates all global Aftersales activities under one leadership team with full profit and loss responsibility. The offering includes spares, consumables, services, and upgrades, as well as new digital solutions being developed in close collaboration with our customers. The cruise fleet continues to expand, environmental regulations remain tight.
These are both drivers for steady long-term growth in this segment. Excuse me. Our strategic intent is to increase recurring revenue, improve margin stability, and enhance customer lifetime value. Industrial Solutions. Well, in Industrial Solutions, the priority is disciplined commercialization. We will focus on applications with clear commercial traction and strong strategic relevance. We are applying very strict capital discipline, emphasizing an asset-light model, partnerships, and also milestone-based commitments. The immediate commercial focus is on three areas. One is turning biomass into biocarbon, the other one is turning end-of-life tires to recycled carbon black and tire pyrolysis oil, and the third one is growth within heat treatment. The markets for these applications are growing but maturing at different speeds. We are therefore prioritizing where we deploy capital and engineering capacity. As an example, pyrolysis of sludge for PFAS treatment remains a relevant future opportunity.
As the market matures, this could become the next focused application, but this remains to be seen. Our strategic intent, to become a leading supplier of systems, our core pyrolysis technology, supported by engineering services. Given the revised strategy, we have decided to initiate a strategic review of our subsidiary ETIA's food safety activities.
Some concluding remarks. The strategy is now sharpened, and the organizational foundation is in place. The path forward focuses on value creation through disciplined execution. We have set clear priorities to strengthen and defend our maritime leadership, to commercialize pyrolysis technology using milestone-based capital allocation, scaling recurring revenues in Aftersales, improve execution, margins, and cash generation, and allocating capital selectively with strict return requirements. These priorities will guide how we think about projects. It will guide our investment decisions and also our organizational focus for the coming years. To conclude, we are building a stronger, more focused company with clear accountability, disciplined capital allocation, and a firm commitment to profitable growth.
That concludes our presentation. I believe we are now ready for questions.
Thank you, Gunnar and Cecilia. You are absolutely right. We have quite a few questions from our online audience. We'll start from the top. There's a question asking for a further elaboration of the opportunities in the land-based industries part. You commented on some of the projects that we heard about before, there are a number of other projects or opportunities that been heard about before. What, how do you see the future for those?
I think our core technology within pyrolysis and our systems has a great potential, but we see that, these markets are developing at different speeds. It is about adapting to the maturing, of the markets, and don't go in way too early or in the prospects that, will never become profitable for our customers. It's trying to understand the market.
On that topic, within Industrial Solutions, are the projects you're pursuing now directly profitable for your customers, or are they reliant on carbon credits or subsidies from governments to be profitable?
It's a very good question, and we try to focus going after projects that do not rely on carbon credits and such, and the regulatory part. We are through our early studies, FEED studies, we know a lot about how much investment is needed. We know the value of the products coming out of it and what the business case looks like for our customers, and that gives us a solid background to determine where we want to focus our efforts.
The two projects in Industrials will be finalized in 2026, you say. Can you be a little bit more specific, and are there still uncertainties related to the completion of these?
No, there are plans. They are following plans, and they are in the commissioning phase. It's not all just up to us as a supplier of some parts of the system, but also the other remaining systems for each of these plants. Also, of course, these are new systems at industrial scale, so we do expect to learn along the way, find issues, resolve issues, and so on. But there is a plan. The plan is being followed, and we know when the schedule is for those to complete. Yes.
There is a very specific question related to margins for maritime. Why is the maritime margin for Q4 down compared to Q3, even if the amount of legacy contracts is significantly down?
For the Maritime Solutions segment, the write-down that we had to make in the quarter impacts the COGS and the margins. If you adjust for the write-down, the gross margin would have been 23% instead of 20%, which is up from 19%, and the EBITDA margin, excluding the write-off, would have been 16%, up then from 11%. That's a major impact for the margin development in the quarter. This is also a non-cash effect that had to be made in connection with the annual close and a thorough review of everything in the inventory.
Turning to Scanship, you mentioned that it's tricky to draw the relationship between the revenue and number of ships going into service for a particular year. How then should we expect Scanship's revenue to trend in 2027 and 2028?
We are not guiding very much on on the revenue, but there is another graph showing how the backlog is turning into revenue, and you can see that about 24%, I think it was, for one year. We're not completely sold out. There is still room to fill up with some more orders. Some new orders have been signed and are not in those numbers. It's filling up.
There's a question related to this. Given the updated strategy, what can you say about the financial targets for the business, for instance, with regards to growth and margin, EBITDA margin going forward?
We are not ready to guide on that yet, at least. We are building this company step by step and improving the financial status. Yeah, are starting to see effects of all the measures that have been implemented since this summer.
Why is it important to separate Scanship as a pure maritime player?
I think following the structure, the new structure we have put in place, it's kind of natural that Scanship becomes a pure play maritime company. It's-- If you go on board a cruise vessel, if you go to a yard, if you go to a cruise line, Scanship is the brand that they recognize. It's what they expect to see on anything from, you know, your, the bid, your invoice, everything. Maintaining that brand and building on that for that part of the industry, and then also separating the industrial activities into a separate company, makes it easier. Follows the organizational structure, decision lines are shorter, and it's really easy to see the impact of the different decisions made in the business.
Thank you. There are two more questions, and greetings from Wuppertal. The questions from Wuppertal is: What will be the connection to Kongsberg Maritime, and what are the plans for connections to China going forward?
In terms of Kongsberg Maritime, no specific connections for the time being. I know from my history in Kongsberg Maritime, that the cruise industry is a segment that is of interest to them. However, I'm not up to date on what their strategies are for that segment. That will be for Kongsberg Maritime to communicate. The final part was related to the Chinese market. Yes, we work with the Chinese market. We have had deliveries to a couple of cruise vessels being built at Waigaoqiao, Shanghai. That relation is still there, we are following the development in that market.
Thank you. There are no further questions from the audience, so we hand it back to you for to round up.
Well, thank you, and thank you for watching this. I think, what we can say now, as a kind of a summary, is that we think we have a very strong position with the new strategy. We have very clear focus, so now we really look forward to some disciplined execution of the new strategy. By that, thank you, everyone. Have a wonderful day.
Thank you.