Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong contract inflow of $368 million in Q2, leading to a total backlog of $611 million.
- Early sales rate increased to 94% from 77% in the same quarter last year.
- Successful completion of the PGS transaction on July 1, 2024, with substantial synergies expected.
- Significant growth in Digital Energy Solutions, with revenues up 62% compared to the same quarter last year.
- Continued strong performance in the OBN business, with a gross margin of 34% on proprietary activities.
Negative Points
- Total revenues decreased to $215 million from $241 million in Q2 2023.
- EBIT dropped to $28 million from $39 million in the same quarter last year.
- Proprietary revenues fell to $100 million from $113 million in the same quarter last year.
- High nonrecurring transaction costs related to the PGS acquisition, amounting to $6.2 million in Q2.
- Lower early sales of $49 million compared to $66 million in the same quarter last year.
Q & A Highlights
Q: PGS vessel utilization continued to be an issue in Q2. Now that the vessels are your assets, are you taking any concrete measures to improve the vessel utilization going forward?
A: Yes. This is part of the rationale for the transaction. We haven't been able to work together very closely until July 1. We see substantial synergies, such as utilizing PGS vessels for our own projects and combining sales teams. We are optimistic about increasing utilization going forward. - Kristian Johansen, CEO
Q: I know it's still early days, but anything you would like to highlight after you completed the acquisition of PGS early July?
A: The cultural integration has gone well, and the professional organization on both sides is strong. We see more positives than negatives and substantial synergies. We will provide more details at the Capital Markets Day. - Kristian Johansen, CEO
Q: In Q2, you booked approximately $90 million in merger-related costs. Can you give an indication of how much is remaining for the coming quarters?
A: It shouldn't be much in terms of integration costs. There may be some noncash costs and severance expenses, but I expect a few more million dollars charged mostly in Q3. - Sven Larsen, CFO
Q: Can you give some indications of the reporting structure before the Capital Markets Day?
A: We are evaluating structuring up different segments like multi-client, streamer vessels, OBN, imaging, and NES separately. We will provide more details later. - Sven Larsen, CFO
Q: Is it still your plan to switch from dividends to buybacks following the PGS acquisition?
A: We will likely keep a base level of dividend but potentially use buybacks more actively than before. - Sven Larsen, CFO
Q: Can you confirm that you intend to have a net cash balance sheet at the earliest possible time?
A: We will prioritize reducing net debt but do not aim for an all-net cash balance sheet. We feel comfortable carrying some debt but less than we have right now. - Sven Larsen, CFO
Q: Can you give us an indication or some comments on Multi-Client projects?
A: We expect investments to be significantly higher in the second half of the year. We are in the phases of signing up some big Multi-Client projects that will start in the second half. - Kristian Johansen, CEO
Q: You had CapEx, excluding Multi-Client investments of approximately $20 million per quarter in the first half. What is driving that?
A: It's on the OBN side. We invested in a new streamer set this year, costing a little more than $20 million in total. - Sven Larsen, CFO
Q: Can you provide an update on PGS backlog by the end of Q2?
A: We will come back to the combined backlog figure at the Capital Markets Day. - Kristian Johansen, CEO
Q: Lots of good news on acquisition here in the presentation, but a little on Multi-Client projects. Can you give us an indication or some comments on this area, please?
A: We expect investments to be significantly higher in the second half of the year. We are in the phases of signing up some big Multi-Client projects that will start in the second half. - Kristian Johansen, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
