Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 8% in Q2 2024 compared to Q2 2023.
- EBITDA increased to NOK221 million in Q2 2024 from NOK212 million in Q2 2023.
- Strong order backlog of NOK13.4 billion.
- Significant cash position with NOK846 million available.
- Positive market outlook with expected high demand for well services globally.
Negative Points
- Lower EBITDA margin within well services due to market activities and rig moves.
- Impact of non-renewal of certain contracts, affecting EBITDA.
- Cash balance decline of NOK21 million compared to Q1 2024 due to working capital fluctuations.
- Limited market growth in the North Sea, requiring focus on international expansion.
- Uncertainty in concluding advanced bids in Brazil and other international markets.
Q & A Highlights
Highlights from Odfjell Technology Ltd (LTS:0ABV, Financial) Q2 2024 Earnings Call
Q: The lower EBITDA margin within well services, is it fair to expect that this was a one-off effect in Q2?
A: The well services margin has been lower due to a combination of market activities and rig moves. This period has seen a lot of rig moves and SPS, impacting activity levels and margins. However, this is a periodic issue and not a long-term concern. We expect margins to normalize as operations ramp up again. - Simen Lieungh, CEO
Q: Is the governing party in the UK expected to have an effect on your business in the North Sea?
A: No, we do not see any link between the governing party in the UK and our business in the North Sea. - Simen Lieungh, CEO
Q: Will Odfjell Technology call the bond at the first opportunity in August?
A: We are well-prepared and in tight connection with facilitators. We will call the bond at the most profitable time. - Simen Lieungh, CEO
Q: Can you comment on the development and outlook of the new US office?
A: The US office is established, and key personnel will move there by late September or October. The main target is to be closer to decision-making processes for tenders and awards, especially for offshore South America and West Africa. We are optimistic about the opportunities this will bring. - Simen Lieungh, CEO
Q: Can you elaborate on the contract that was not renewed in Q2 and its impact?
A: The CCS system contract with Equinor was not extended as they no longer needed the equipment. We are working to find a replacement for this equipment and are in discussions with various clients. The impact is being managed through other activities and operations. - Simen Lieungh, CEO
Q: What are the expected growth projections for the next 12 to 24 months?
A: We expect significant growth starting late 2025 and onwards, driven by new contracts and market opportunities. Our focus is on long-term growth, particularly in international markets like South America, Southeast Asia, and the Middle East. - Simen Lieungh, CEO
Q: How do you plan on future levels of dividends?
A: After the refinancing process, we will update our dividend program to be more long-term and predictable. Our ambition is to have a steady and potentially increasing dividend program. - Jone Torstensen, CFO
Q: Is the lower EBITDA margin within well services a one-off effect in Q2?
A: The lower margin is due to market activities and rig moves, which are periodic. We expect margins to normalize as operations ramp up. - Simen Lieungh, CEO
Q: Will the governing party in the UK affect your business in the North Sea?
A: No, we do not see any link between the governing party in the UK and our business in the North Sea. - Simen Lieungh, CEO
Q: Will Odfjell Technology call the bond at the first opportunity in August?
A: We are well-prepared and will call the bond at the most profitable time. - Simen Lieungh, CEO
Q: Can you comment on the development and outlook of the new US office?
A: The US office is established, and key personnel will move there by late September or October. The main target is to be closer to decision-making processes for tenders and awards, especially for offshore South America and West Africa. - Simen Lieungh, CEO
Q: Can you elaborate on the contract that was not renewed in Q2 and its impact?
A: The CCS system contract with Equinor was not extended as they no longer needed the equipment. We are working to find a replacement for this equipment and are in discussions with various clients. - Simen Lieungh, CEO
Q: What are the expected growth projections for the next 12 to 24 months?
A: We expect significant growth starting late 2025 and onwards, driven by new contracts and market opportunities. Our focus is on long-term growth, particularly in international markets. - Simen Lieungh, CEO
Q: How do you plan on future levels of dividends?
A: After the refinancing process, we will update our dividend program to be more long-term and predictable. Our ambition is to have a steady and potentially increasing dividend program. - Jone Torstensen, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
