Argeo ASA (ARGEO) Earnings Call Transcript & Summary

Welcome to this presentation of Argeo's results for the first quarter of 2025. My name is Odd Erik Rudshaug. I am CFO in Argeo, and currently also interim CEO. Together with me today, I have Jan Grimnes, who is Executive Chair in the company. We will start with financials and some key figures from first quarter, and note that all these numbers are in U.S. dollars. Revenue in Q1 was $11.5 million, up from $9.5 million in the same quarter last year and up from $5.4 million in Q4 '24. This revenue in the quarter came mainly from the contract we had with Total Energies in Namibia, which completed in the middle of March. EBITDA in Q1 was minus $200,000 compared to plus $2.9 million in Q1 '24. But we had a significant improvement from Q4 last year, when it was minus $5.7 million. We had a net loss of $4.2 million in the quarter compared to a profit in Q1 last year on $1.9 million. But Q1 was an improvement from Q4, when it was minus $8.5 million. Backlog at the end of Q1 was $14 million, but we expect this to increase to $164 million when we formalize this contract in South America. We move over to the balance sheet. I will start on the asset side. IFRS-16 right-of-use assets were $25 million in the end of the quarter. This includes the leases for 2 Hugin Superiors, bareboat charter for Argeo Search, and office leases. Property, plant, and equipment and other noncurrent assets were $57 million. So, this is mainly our vessel Argeo Venture, 1 Hugin 6000 AUV, the Argus USV, our Multi Client library, and some intangible assets. Current assets were $18 million in the end of the quarter, and this includes $4 million in cash. On the equity and liability side, lease liabilities related to the right-of-use assets were $23 million. So, this is both current and long-term leases. We had $20 million in interest-bearing liabilities, also both current and long-term, and $14 million in other current liabilities. Equity was $42 million in the end of the quarter. We move over to the cash flow for the quarter. So, we started the quarter with $1 million in cash. Cash from operation was minus $1 million. Then we had $10 million from financing activities, and this includes $13.3 million in proceeds from the share issue we did in Q1. We repaid $1.8 million in long-term debt and leases. And we paid $1 million in interest on this debt. Investments in the quarter was $5 million. So, this is mainly investment we did in this Multi Client program in Suriname. So, this left us with $4 million in the cash in the end of the quarter. So, I will now give the word to Jan, who will give an operational and commercial update.

Thank you, Erik. And I'll go quickly through the main events. As you heard, we have completed operations for Searcher in the quarter. But most important event is that we have been selected as a preferred supplier for combined ROV/AUV support vessel on a 4-year contract in South America. This will give us a good, long-term activity in this area. We also completed the Total Energies Venus project in Namibia. The customer is very happy with the data that they received. We have signed contracts both for Argeo Searcher and Argeo Venture in the quarter, one operating in South America and one operating in East Africa. The Suriname Multi Client project was completed this quarter. After Q1, the Board and the CEO had some discussions about the way forward, and we agreed that Trond Crantz stepped down as CEO. For the time being, Odd Erik Rudshaug, our CEO, is our interim CEO, and I'm more involved in day-to-day operations than before. The company is now ready to go into a new phase. So far, we have entered into 3 different verticals. We have commercialized hardware. We have developed our internal procedures and our own organization. And we now cover AUVs. We have developed good deployment systems. We have 2 vessels that we operate, and we're also moving into geotechnical services. Additionally, we have expanded our capabilities and are going now to integrate AUVs and ROVs in this future project in South America. So, looking ahead, what we are going to do is that we will offer combined AUV and ROV services, measuring the seabed, and it will also include geotechnical services, since most of our customers want to have samples from the seabed when we measure it. We have, for a long time, been developing EM systems to have new measurement to offer to the companies. This development will continue, and we will also start to commercialize and sell the tools that we are developing. Argeo Scope, which is our data processing and presentation platform will go forward, and we will focus on make it into a state-of-the-art presentation platform for our data and a tool that our customers can use to both view and operate on the data to make sure that we can grow faster and mitigate our risk. We will collaborate with other companies in our industries and make sure that we can position our products and software as industry leader in this field. Both vessels have been operating this quarter. Searcher has now completed its project, and Venture is still working East of Africa and is expected to end this project sometime in June. What's very good to be able to present is that our HSEQ is very, very good. This is an area that all our customers are very concerned about. Everybody in all our verticals are very aware of the mishaps, and we have had nothing happen in Q1. Then, to backlog and tender activity. We have a $14 million backlog. We are actively negotiating $150 million contracts, which brings us to $164 million. The tender activity is quite good. We are now chasing projects with a combined value of roughly $197 million. So, to summarize Argeo Q1, operational performance is very good. The company is actively bidding and discussing new projects for the remainder of the year. We do see a delay in marine minerals and wind energy because of the political climate right now, which means that in 2025, oil and gas will be our primary revenue stream, and we see a steady pipeline going into '26. And also, important to remember, we're well-positioned for a 4-year INR contract in South America, which will give you a good entry into this market. We're also working on securing other long-term contracts and frame agreements with recognized oil companies. So, thank you very much for listening in. I would then like to go to Q&A, and we are open for questions. Thank you very much.

We have some questions that have come in. The first one is about the Multi Client project in Suriname, and we are now processing the data. What we have seen so far is that the quality is very good, and we expect to begin sales and have sales in '25. We have a question about the backlog. As you have seen in the past, the time between a signed contract and project starts are very short in this market. And we are negotiating contracts currently. And that's why we use the wording, possible backlog. When will the contract in South America be signed? That's a question which is difficult to answer. We don't think it will take that long, but the oil company we're negotiating with has a clock of contracts, and we have started quite late in their batch. So, we are not -- or most probably not the first contract that they will sign. We also have a question about the organization. After our CEO stepped down, we are doing some modifications to the organization, and you will see the results of that during the first half of this year. We are actively searching for a new CEO and are well into that process. Let's see, Searcher is now undergoing some work in the yard. There was a question about Searcher, and she's ready for projects after that. There are no more questions. Yes. I think that concludes -- we had some questions here that are very forward-looking. And unfortunately, we don't give that kind of information. So, thank you very much for the questions, and see you after Q2.