HAV Group ASA ($HAV)

Good morning, everybody, and welcome to HAV Group's Presentation of Fourth Quarter and Interim Full Year Financial Results. Presenting together with me today is Pal Aurvag, our CFO. Today, we have the usual agenda. First, I'll give you some highlights of the quarter, then a presentation of HAV Group. I will give you more details about each of the business segments. Pal will take you into the details of the financials. And afterwards, we will also have a summary and an outlook on our perspectives for the future for HAV Group. As usual, we also have a Q&A session at the end of our presentation, and you can still send in questions using the link that was in the stock exchange announcement that we have sent out. The Q4 2025 was the best quarter, as we have guided in previously, was the best quarter in 2025. We had the highest revenue, EBITDA and margin of the year. The revenue was NOK 268.1 million and EBITDA, NOK 16.3 million. The Energy Design and Smart Control Systems continued to deliver strong results, and we have ongoing initiatives to strengthen performance in other business areas. We had an order intake of NOK 146 million, which gave a solid order backlog of NOK 1.143 billion at year-end. So far in 2026, we can mention contracts for ferry chargers to Fjord1 in the Energy Design and Smart Control Systems segment, contracts for 10 ballast water treatment systems in the water treatment systems segment and an extensive contract for upgrade of previously designed vessel in the ship design segment. 2025 has been a year that has proven that the investments and measures implemented over time have given the expected returns. Q4 was the fifth quarter in a row with positive EBITDA, resulting in a year with significantly improved EBITDA results versus previous years. We also experienced a 5% growth in revenue and the full year EBITDA margin was 2.8%. With the backdrop that 2 of the business segments were underperforming, this shows that we still have potential for further improvement. As mentioned, the order intake in the quarter was NOK 146 million and the order backlog, NOK 1.143 billion at year-end. This order backlog does not include service and aftermarket revenue. As you see from the bar chart on the right, the order backlog will be delivered in -- to be delivered in 2026 is already NOK 970 million. This gives a good visibility for capacity utilization and results in 2026, especially in the Energy Design and Smart Control segment. Yes. Before I give an update on the business segments, I will give a short presentation of HAV Group. HAV Group is an international provider of maritime technology. We are enabling optimized vessel performance and safety and operating costs throughout the life cycle of the vessels. And our vision is a sustainable future at sea. We have 4 maritime solution providers in our group. HAV Design deliver future-ready ship designs, giving value -- focusing on giving value to the shipowner in the life cycle of the vessel. Norwegian Electric System is a leading integrator of power, electric propulsion, automation and navigation systems for future ships. HAV Hydrogen is a supplier of hydrogen-based energy systems and Norwegian Greentech is an innovative supplier of water treatment system solutions to maritime and the aquaculture industry. We have approximately 160 employees and our market cap as per yesterday was NOK 403 million. These are the main industry segments that we are focusing on. Presently, HAV Design has most activity within offshore wind, ferries and aquaculture. Norwegian electric systems are represented in most of the segments, and we see a growing interest from the short sea cargo segment, where electrification is a main driver -- a key driver now for we're reducing fuel consumption and emissions in that fleet and also the aging fleet means that, that can be a very potential market onwards. Norwegian Greentech has got more interest now from the land-based aquaculture segment, which is driven by constantly stricter requirements for treating water, both in and out of the fish plants. And now we will give you a more detailed insight into each of the business segments. For the Water Treatment Systems segment, the revenue in Q4 was boosted by deliveries to aquaculture industry projects and was NOK 39 million. The EBITDA was minus NOK 0.1 million. Norwegian Greentech successfully delivered their first orders to land-based aquaculture in 2025, a market with growth potential for the company. The aftermarket revenue is continuously increasing on the back of a growing installed base. The order backlog increased in Q4 with new orders to sea and land-based aquaculture, ballast water treatment systems and freshwater production. Norwegian Greentech has received further orders in Q1, amongst others, water purification systems to isolated communities in Greenland and 10 ballast water treatment systems for different shipowners. They are also pursuing multiple opportunities in land-based aquaculture, where timing of awards for new plants remain uncertain, but where there is potential for orders with shorter lead times for upgrading of existing plants. Richard Schofield started as a new Managing Director for HAV Design in January 1. He has been working on implementing actions for securing orders and for strengthening competitiveness and building foundation for long-term growth and profitability together with his management team. The revenue in Q4 was NOK 25 million with an EBITDA of minus NOK 4 million. This financial performance was in line with expectations given the current activity level, but with room for improvement as the measures to enhance performance is giving results. HAV Design's strengthened marketing efforts are converting into a stronger pipeline, and we're pursuing several opportunities also in aquaculture to broaden our market reach. We have also launched a targeted approach to grow the aftermarket revenue. And in the first quarter, we signed a contract to upgrade a previously designed vessel, a good example of recurring business and the long-term value of our design portfolio. For Norwegian Electric Systems, or NES, Q1 was the strongest quarter in several years, with revenue up 66% and EBITDA up 80% versus Q4 '24. Full year 2025 shows solid growth with revenues of NOK 592 million and an EBITDA margin of 11.7%. Operational performance remained strong, supported by improvement initiatives implemented in recent years. On the commercial side, we secured a system integrator contract with Fitjar Mekaniske Verksted for a live fish carrier. In Q1, we also won a contract of more than NOK 50 million to deliver 2 ferry chargers to Fjord1. The solid order book provides good visibility into 2026 and the positive development seen in 2025 is expected to continue in 2026. The global electrification trend gives further opportunities for growth in Norwegian Electric Systems onwards. Electrification is a key driver for making vessels more energy efficient and for reducing emissions while the industry awaits large-scale adoption of alternative fuels. The bar chart on the left shows that electrification already is a technology that has been adopted by the shipping industry. And several reports forecast strong growth in the electrification market with projected compound and annual growth rates between 10% and 25% from now until 2033. NES see a great potential, both in increasing market shares as they already are in, but also in new markets as the short sea segment, where an aging fleet will require this technology, both for new builds and retrofits to reduce fuel consumption and meet stricter emission requirements. As we experience that the time for market for hydrogen-based energy systems is still unclear, we have, as previously said, scaled down the activity in this business segment temporarily. In the meantime, responsibility for maintenance of technology and expertise plus sale of the Seapod and other technology has been transferred to HAV Group's ship design business. The cost spendings in this segment will be at a minimum in 2026. Then I give the word to Pal, who will give you more details into the financials of HAV Group.

Hi, I will give you an introduction of the financial details. If we look at the details for the quarter, it was the best quarter in 2025, both related to turnover and margins. The quarterly figures are in line with previous guidance and considerable improved EBITDA compared to Q4 last year and also significantly improved full year EBITDA versus last year. And if I look at the figures, it's NOK 268.1 million turnover in the quarter, EBITDA of NOK 16.3 million, EBIT, 9.8 million; net finance, NOK 0.6 million; net profit, NOK 9.2 million and the corresponding EBITDA margin of 6.1% in the quarter. And then we also look at the full year. We are NOK 803.1 million in operating income, EBITDA of NOK 22.4 million, EBIT of NOK 2.7 million, net finance of NOK 1.8 million; net profit, NOK 4.5 million and an EBITDA margin of 2.8%. If we look at the balance sheet, and as previous quarters, the main changes in the balance sheet are driven by operational activities. On the asset side, the current assets increased by approximately NOK 98 million year-to-date, caused by increase in receivables by NOK 148 million and a decrease of the cash of NOK 50 million. On the liability side, the current liabilities increased by approximately NOK 90 million year-to-date, driven by an increase in advanced payments from customers by NOK 60 million. And the cash balance is NOK 200 million per end of the year. If we look at the cash flow statement and notice this is -- the first column is compared to the last quarter. There, we have a negative cash flow of NOK 68 million from third quarter. This is mainly driven by operating activities and this is caused by an increase in advance from -- increase in receivables and it's more temporary or natural fluctuations due to our project-driven business. The net cash flow from investment activities was minus NOK 3.2 million, and this is related to investments in R&D. The net cash flow from finance activities is 0.9% -- NOK 0.9 million, and that is related to repayment of the current debt. And the net change in cash this quarter then is minus NOK 72.3 million and the cash end of the year of NOK 199.1 million. And the net cash from financing activities is -- for the full year is NOK 10 million, and we are now -- have no long debt at end of the year. Then I will give the word back to Gunnar that sum up and have a market outlook.

Thank you, Pal. To sum up the presentation so far, Q4 was the strongest quarter of 2025, fully in line with our previous guidance. For the full year, we delivered significantly improved financial results compared with 2024. Our Energy Design and Smart Control Systems segment continues to perform well, and we expect substantial growth in the maritime electrification market in the coming years. We have a solid order backlog of NOK 1.14 billion, providing good visibility for 2026. This excludes service and aftermarket revenues, which come on top of the reported backlog. Finally, we are implementing targeted measures to improve operational and financial performance in the nonprofitable business areas. Looking ahead, the key global drivers are working in our favor. Stricter regulations and EU incentives make it increasingly valuable for shipowners to cut energy use and reduce emissions. And electrification is the fastest and most cost-effective way to achieve this, while the industry waits for a large-scale adoption of alternative fuels. This creates strong and growing demand for the technologies delivered by NES and the wider HAV Group. Despite the geopolitical uncertainty, the shipbuilding market remains stable, and our solid order backlog gives good visibility into 2026. Based on these market drivers and the improvements we saw in 2025, we expect continued positive development with revenue growth and improved margins in 2026. So that ends the presentation. I hope we gave you good insights in what has happened in Q4 and also some -- what we think about the outlook for this year. Now we see that we have got some questions from you that we will try to answer to the best of our knowledge in the Q&A session. So Pal, what are the questions.

Yes. Let's run through them. Yes. Let's see. Yes. Industry reports point to strong retrofit growth in Europe. Are you seeing increased tender activity from shipowner in your core segments?

I would say that we have a very sound tender activity from the different segments. As I mentioned earlier, we expect, for instance, in the short sea cargo segment that the amount of tenders and amount of shipowners either going for new builds or retrofits will increase since they also -- they are rewarded by taking measures to reduce fuel consumption and are also punished in the future, especially in EU, if they continue to give emissions in the level that they are doing today. So we are positive for the tender activity also in Europe this year.

Yes. And can you provide an overview of the difference and overlap between SIME, that's a competitor and HAV Group's offering, customer segment mix and business model.

Yes. SIME is one of our good competitors together with other in the electric integrator delivery segment. Most of them are quite similar with regards to offering. Some of them are in a larger group with -- as also NES is with offerings on the side. Particularly in regards to SIME, they have chosen to go deeper in the value chain. So they have some of the hardware that we have chosen not to have in our system. We are focusing on designing and integration rather than having the hardware. So we are more asset light. So the business model is a little bit different, but at the same time, not so different between the different integrators, I would say.

Yes, thanks. In competitive tenders of Energy Systems and ship design, where do you see HAV Group's main competitive advantages today?

There I would say that one of the advantages is, of course, that we have both the ship designer and the integrator. The designer always have a total picture -- have to have a total picture on all the different elements in the designing the vessel from the hull form to the machinery to power systems and everything. And based on what gives value to the shipowners in a life cycle perspective, designing the best vessel. When you are close to the system integrator, which takes care of the whole energy system and electrification, then you also have some advantages by cooperating closely between those 2. So I would say that is one of the key aspects to competitiveness against our competitors.

The Norwegian market is often seen as a technology frontrunner, but relatively small in volume. How important is the broader European market for the HAV Group's growth?

I would say that the Norwegian market has always been very, very important for Norwegian suppliers and Norwegian technology developers. That is that because we have a very strong shipping business with strong shipowners in very many different segments, and they are working closely together with Norwegian suppliers to develop technology. And technology developed together with Norwegian shipowners is the best technology that you can develop and also give us a good platform for exporting this. And after Norway, of course, Europe is the main and most important market also for the different business segments in HAV Group. So Europe is a big potential for us to go further into and expand our market shares in Europe in addition to Norway and other segments that -- or geographical markets that we are already in.

Yes. You are guiding for both growth in margin and -- growth and margin improvement in 2026. What especially will drive the margin uplift beyond energy design and smart control continuing to perform strongly.

Of course, energy design and smart control will be the carrier of HAV Group also in 2026. But we have invested also a lot of measures or taken a lot of actions in the other -- 2 other business areas in HAV Design and in Norwegian Greentech in order to utilize the possibilities they have in the existing technology, developing new technology and entering into new markets. I would say that it will be like a consolidation and also a growth -- starting of a growth for the 2 other business segments, but the backbone of the financial results also in 2026 for HAV Group will be Norwegian Electric Systems and the Energy Design and Smart Control segment.

The ship design still shows negative EBITDA due to low utilization. What needs to happen in the market for the segment to return to normal profitability.

We see good development in the markets that HAV Design is focusing on. We have been working very hard. And Jon also with regards to the new team, Richard, with his new management team have started new actions with regards to reaching out to new customers, be more targeted and precise in marketing the advantages of HAV Design. And that is, I think, the main things that needs to be done in order to increase the pipeline, increase new orders and also increase the activity level in HAV Design. So hopefully, during the year, we will see good results of this and that the order book will pick up, and we see a positive trend also within the ship design segment.

Water treatment is showing improved activity and new contracts after year-end, but profitability remains weak. What gives you confidence that 2026 will be different from 2025 for this segment.

Again, it's the long-term working into new products and new markets. The strong foundation or strong base of Norwegian Greentech was from the start of the ballast water treatment systems. Now we have added on freshwater production systems. We are entering into new areas within aquaculture on land-based aquaculture, and it takes time. As I said, especially land-based aquaculture, the lead time for new orders can be longer than we are accustomed to, but we see also there is a great market for retrofitting and upgrading of systems on the land-based aquaculture that is already existing. For instance, the small salmon production that we have or small fish salmon production that we have for the fish farms in the sea. There's a lot of them in Norway, and they also need upgrade because the requirements for water treatment, both inlet water and outlet water is becoming stricter. So hopefully, that market can fill up something in the meantime, while we are working with the more long-term markets within aquaculture on land.

Yes. Results have improved, but operating cash flow is negative and accounts receivable have increased. How do you view development in working capital? And when should we expect cash conversions to improve? Yes. The accounts receivable has increased, but that's more or less normal cycle in our project business. We expect improvement in margins for next year. And then it's for us natural that also the working capital will improve. We have no long-term debt at the end of this -- of 2025. So we expect that also, of course, related to improved margins, and we'll see an increase in working capital. Q4 was strong, but order intake was only NOK 146 million and book-to-bill 0.54. Is the quarterly noise? Or does it indicate something about the activity level going into 2026.

Quarterly noise, I think, is a good description because the order intake from quarter-to-quarter can vary quite a lot when we have this project-driven business with quite large orders. And in one quarter, suddenly, you can fill up the order book and the next one, it's a little bit slower. For 2026, the order book for Norwegian Electric Systems is already very, very high, and we need to fill up in the other ones. But we don't see any negative trends with regards to the sales pipeline. And we are working continuously to feed the pipeline. And hopefully, you will see that also in the order book in the coming quarters this year.

Yes. Has HAV Group eliminated all the debt and how much debt was reduced in Q4. Yes, we have eliminated all the long-term debt, and we reduced it by approximately NOK 1 million in Q4 and NOK 10 million in total in 2025. You highlighted that backlog does not include service and aftermarket revenue, while also pointing to aftermarket as an important margin driver. Can you quantify revenue and EBITDA from this in 2025?

Yes. Normally, the aftermarket has good margins, often better margins than you have for new sales. We see that the portion of aftermarket and service revenue is growing constantly. We have not published any specific numbers, so I cannot do that either now. But I can say that all the business segments, they are targeting aftermarket, both because it gives quicker returns in revenue, but also as you point out, that the margins are very good there. So we see a potential in all of the companies to increase even more the activity towards the aftermarket, and we hope to see a continuous growth in that business segment.

Why does HAV Design introduce new design series during periods of low activity?

Good question. Even though there has been fewer orders than we would like the couple of last years, we are working very heavily with customers and offering new designs to the customers. We have not been publishing a particular new series, but we are targeting the shipowners and the markets that we find attractive directly with our new designs. So if that will change in the future, I'm not quite sure. Richard has a lot of ideas on how to improve our market presence, how to be more targeted and how to get new orders. So maybe you will see some new ideas also with regards to that. But rest assured that we have not been sleeping in the meantime. We have been designing a lot of new vessels and offer them directly to the customers.

Why aren't Asia and other markets important for HAV Group.

Asia has been important, is important and will continue to be important. We see, for instance, that Norwegian and European shipowners are building a lot of vessels in Asia, in India, in Korea, in China. And we have also traditionally been following the European and Norwegian owners to Asia, and we will continue to do that. And we will also strengthen our presence in the important markets in Asia. So this is a focus that we have had and will continue to have onwards.

What type of margins do you expect on the backlog compared to -- with historical projects. What is realistic margin level for the next 2 to 3 years.

As for those who have followed us now in the last couple of years, you've seen that we have one type of guiding. We are guiding for what will happen in the present year. And now we have started guiding for 2026. And what we say based on especially the order book, but also the market trends is that you can expect a positive development both on revenue and margins for 2026. And that is what we have guided so far, and I cannot guide anymore either in this webcast.

What concrete measures are you implementing to improve margins in ship design and water treatment?

Key issue there is, of course, sales and to increase activity. Both those companies are efficient and organized and they have the technology. So we just need to strengthen sales. We have done that. We have done a lot on how we are approaching the customers, how we are approaching the market, how we present the technology. And I'm quite sure that you will see results from that in our order book in the coming quarters in 2026.

Do you consider any strategic review of some of or all your business segments in order to streamline and maximize shareholders' value going forward.

That would be a decision of our Board and not something that we will publish in a webcast. But in case something like that has been done, of course, that will be published. But we have no information about anything like that presently.

Yes. I think that was all the questions that we have received.

Yes. Then Pal and the audience, thank you very much for watching. Thank you for providing good questions. I hope you will continue to follow HAV Group, and we will do our utmost to deliver on what we are promising and to constantly work for generating value for our shareholders. Thank you very much.