Multiconsult ASA ($MULTI)

Good morning, and welcome to the presentation of the results of the first quarter 2026 for Multiconsult. My name is Grethe Bergly. I am the CEO. And with me today is also our CFO, Ove Haupberg. Before I dive into the figures, just a brief reminder of who Multiconsult is. We are an engineering and architect firm with a history going back more than 100 years. We report in 3 segments: Multiconsult Norway that contains our engineering business, Architecture that contains our 4 architect subsidiaries, LINK in Norway, Sweden and Denmark, and A-lab in Norway. The segment International contains Multiconsult Polska and our Swedish subsidiary, engineering subsidiary, Iterio. In the market, we operate in 4 business areas and all the subsidiaries and segments work across these 4 business areas. Historically, the split between private and public clients have been 50-50. And over the last few years, we have delivered a profitable growth based on a robust business model and diversified strong professional environment. Looking at the figures for the quarter, we had a good start of the year with a 5.5% growth, of which 4.4% was organic. And excluding calendar days, the revenue growth in the period was 8.4%. The billing rates increased compared to 2025. The EBITA of NOK 160.5 million represents a margin of 10% and adjusted for calendar effect, the EBITA percentage is 12.4%. We still have a challenge with cost increasing more than revenue, but it is a positive development as far as the gap over the last quarter has been reduced. The sales in the quarter was good, and our ambition and commitment to strengthen profit remains firm, and we work along the axis of the organization, effective business support and cost control. Ove will go in more detail when it comes to the figures later on. The sales and order intake. The sales in the quarter has been good with increased sales year-over-year and largely unchanged market condition, reflecting a stable underlying activity level. The increase -- the trend on increased on defense-related opportunities continues, and over a period now, we have seen that frame agreement is increasing as a preferred contract model and the level of frame agreements is record high for us as a company. Please note that the volume of frame agreements is not included in the reported figures as framework agreements are not included in the reported order intake or backlog until call-offs are made. The sales on our largest frame agreements have increased more than 200% since 2022, and it doubled from 2024 to 2025. And we expect the level of 2025 to continue into 2026. In relative terms, this represents at least NOK 1 billion to be added to the reported order backlog. In the large portfolio, the portfolio on large projects remains stable and maintain good activity through 2026. We have a 4.5% growth in number of employees. As a company, we have strong beliefs in employee share ownership as a motivating factor. And in this quarter, we have issued 6,600 shares to new employees and a further strengthening of employee ownership program was approved by the general meeting with the introduction of a profit sharing model. On organization, it's worth mentioning the certification of ISO 27001, which is information security and in line with what we see as a very high focus area and requirements from our clients. And it is always great to see how projects we participate in win awards and also the significance that our projects have in our society. Here represented by the unveiled foundation stone ceremony by our Prime Minister, Jonas Gahr Store. And with that, Ove, I hand it over to you.

Thank you, Grethe, and good morning. Then we have a closer look at the numbers for Q1 2026. EBITA for the quarter ends at NOK 160.5 million, that is a margin of 10%. And the EBITA adjusted is NOK 160.9 million, and that is including the effects of Sotra Link. The bridge down right illustrates the change from Q1 2025. And starting to the left on that bridge, we saw that the reported EBITA was NOK 190.4 million. And then we had legal costs and write-downs on Sotra Link of NOK 9 million and the EBITA adjusted last year was NOK 199.4 million. And going then further to the right on this, the net operating revenues increased by 5.5%, and that is explained by the increased capacity, growth in permanent employees of 4.5% or to 4,223. And the corresponding growth in FTEs is even stronger, 5.6%. We also had improved billing rates that is part of the revenue effects and also a negative calendar effect, NOK 43.1 million, that is due to 2 fewer calendar days compared to last year. And we also had a small negative effect on billing ratio of 0.3 percentage points. But as Grethe mentioned, reducing the gap compared to the gap in the previous 2 quarters. So the organic growth, 4.4%, and M&A activity on top of that, a growth of 4%, and that is adding up to the underlying growth of 8.4%. The operating expenses, we can see has an increase of NOK 7 million or 4.5% and also the employee benefits increased by NOK 106 million, a 9.6% cost increase, but the increase is 4% of FTEs, which means that the underlying cost increase is in line with ordinary salary adjustments. This brings us back to the EBITA of NOK 160.5 million in the quarter. We have got quite a lot of questions on the Sotra Link project. All information is provided in our stock exchange announcements given in the March the last few weeks. We also confirm that the net project write-downs landed well below 1% of net operating revenue also for this quarter, in line with last year. Then showing the results per quarter. Q1 columns is in the dark blue color and the results in the quarter is characterized by the numbers of available working days. Growth in net operating revenue from Q1 last year to Q1 this year, 5.5%, we see that top left, and also the rolling 12 months is positive by 3.6%. The change in billing ratio from Q1 last year to Q1 this year, minus 0.3 percentage points, that's on top right. And as commented, the gap compared to the gap last quarters has been reduced. Then the growth in permanent fixed employees, 4.5% is shown in the graph on the right. And in combination with other revenue effects, change in employee benefit and other operating expenses, that gives us the EBITA margin of 10%. In this graph, on right, we also have illustrated the onetime effect of quarter in 2025 of write-downs and legal cost of Sotra Link. We also see the onetime settlement from a client in Q3 '24 and the reinforced share ownership program in Q4 2023. Then for the first time, we have provided the information per segment in this presentation and starting with segment Norway. And this contains the previous segment Region Oslo and Region Norway, including Multiconsult Norge, the 4 ViaNova companies, , Sitepartner, Lifetec, and Multiconsult U.K. And in this segment, we see improved performance compared to the same quarter last year. Net operating revenue has increased by 9.1%. The billing rates are improved and the capacity, the number of FTEs has increased caused by the inclusion of ViaNova, and organic growth. The positive effects are somewhat offset by the negative calendar effect, that is NOK 38.7 million in this segment. And also the Q1 numbers last year included the legal cost of the Sutra Link project, NOK 9 million, as commented on the first slide. Then moving on to Architecture, the 4 -- sorry, the 3 LINK companies and A-Lab, and the performance in this segment is mixed. Although we see signs of improvement in the Scandinavian architecture market, there has been a challenging start to the year in many of our geographies in this segment, whereas other parts are performing better. In Q1, we have been in the process of adapting the organization to the market, causing a reduction in number of FTEs compared to Q4 '25, and there are 12.5 FTEs as temporary layoffs at the end of Q1, primarily driven by a lower billing ratio, the EBITA ended at NOK 9 million, a reduction of 5.4 percentage points compared to last year. And the calendar effect in this segment is negative by NOK 3.8 million. Then International. Also, as Grethe mentioned, this represents Multiconsult Polska and Iterio, our Swedish engineering business. Net operating revenue is in line with Q1 last year. There are signs of improvement in the Swedish engineering market, whereas the Polish market still sees competitive pressure affecting pricing. Increased employee benefit costs and other costs weakens the EBITA margin by 1.7 percentage points compared to last year. And the calendar effect in this segment, slightly negative of NOK 0.5 million. And then as always, the slide you are waiting for, the financial position. Starting to the left, we had a positive cash at NOK 37 million at the start of the year. And then we have a cash flow from operations positive by NOK 136 million. Then we also see the IFRS 16 effect. The change in working capital, negative by NOK 11 million, but that is due to improved invoicing activity and consecutive payments from customers. Bear in mind that the numbers last year was minus NOK 224 million. Also on investment activities, negative on NOK 15 million, that is investment in software and computer equipment. And also then cash flow from financing negative by NOK 15 million, and that is interest on loan. And then also including the IFRS 16 effects, we have a positive cash at the end of the quarter by NOK 126 million. Also to the right, our net interest-bearing debt, NOK 697 million, a gearing ratio of 1.87, still well within our financial targets. Then the last page from me, this is the free cash flow slide. And the definition of free cash flow here is cash flow from operating activities minus cash flow used in investments, but excluding acquisitions. And in the dark blue bar, we can see cash flow from operating activities, positive by NOK 180 million. And cash used in investment activity is minus NOK 16 million, shown in the green line, giving us a net positive cash flow of NOK 164 million. And the last 12 months, free cash flow on NOK 371 million, and that is the light blue line. And the change from Q1 last year is mainly related to the change in working capital. And then Grethe, I'm handing back to you.

Thank you, Ove. Looking at the market structure, the gross revenue in the 4 business areas follows the same trend as we've seen in the last quarters and development in line with the market situation. High activity in Energy & Industry, stable in the other 3 business, areas and the distribution between the business area remains fairly stable. In recent presentations, we have often highlighted examples of projects that we have won that support our strategic ambition. This time, I want to dive a bit more detailed into the strategic ambition of urban transformation. Urban transformation is complex and represents an area where our multidisciplinary excellence really provide -- proves its value. With Multiconsult Norway, LINK, and A-Lab working together, we develop new services. One great example of how synergies between engineering and architecture disciplines create new services and market opportunities is the work we are doing for -- the work A-Lab and Multiconsult is doing to develop a solution for Bane NOR to assist them in designing rail services on users' terms. Bjorvika in Oslo is a good example on how shared digital models can play a major role in area development. For more than 20 years, Oslo City Council and ViaNova have used a common 3D model to bring together map, data, planning information, property details, technical infrastructure, and building models in one platform, enabling new development to be assessed against what is already in place, enabling up-to-date view of reality, which again reduces errors, improves efficiency, and support better decision-making. The solution is now being applied on other urban projects and including Lilleakerbyen in Oslo. So the first quarter in brief, good start of the year. We remain focused on profitability measurements. There is a good sales in a highly competitive market. We maintain a solid market position and order backlog and the leading position in defense-related engineering and architectural services was strengthened. Then if we go to the outlook, the overall market remains unchanged with several new opportunities in the pipeline. There is continued uncertainty regarding the timing and investment decisions. Defense, energy, industry, and infrastructure remain the key drivers and building and property market is expected to remain challenging. But leaving the first quarter, we maintain a strong market position, a solid order backlog entering the remainder of 2026. As this is my last quarterly presentation as CEO of Multiconsult, I want to take the opportunity to express my gratitude for the trust given to me and a big thank you to all the people who have supported me on the way. Few leaders are given the opportunity to be part of the improvement journey that we have had since 2019 and that I have had the privilege to lead. It's been a team effort and the strength and the courage of the executive team has played a major role in the same way as the support from our previous Chair, Bard Mikkelsen; and our current Chair, Rikard Appelgren, and the rest of the Board. And I have enjoyed the perspective and dialogue with investors, which has contributed to the development of Multiconsult. But we must never forget that Multiconsult is above all built by people, people driven by professional curiosity, strong sense of responsibility, and the will to succeed together. On this foundation, the group is well prepared for the next phase. And I'm confident that Karsten Warloe has the qualities needed to lead the organization and deliver the group's targets and ambitions. So for me, a big thank you. Good luck to Karsten and some of you there. We will see you again in August. That completes the presentation and we open up for questions.

Yes. We have Magnus Rasmussen, SEB. You show a slight increase in the EBITA year-over-year adjusted for calendar this quarter for the first time in a while. Can we expect improvements to accelerate in the coming quarters towards your margin target in 2027?

What we have communicated is that we -- our target is to remain stable in 2026 and also then make the adjustments that we need to make sure that we are fit when we leave 2026 to continue into '27 with the profitability targets that we have set. I don't know if you want to...

Yes. But as you mentioned during the presentation, we are working on adapting our organization to the market to have a more efficient support organization and also look at cost in general. And we have already communicated some changes on that. I think the last communication was today, on changing the setup in Multiconsult Norway. So this is continuing and in line with plan.

Thank you. Martine Kverne, Nordea. She has 3 questions. Can you give some more color on the progress for reaching 10% margin -- EBITDA margin target? And what are the specific levels to get there? Question two, competition and pressure on margins. Have you seen -- how have you seen that evolve over the last year? #3, can you give any quantification of the total unbooked volume sitting in signed framework agreements that is not reported in the backlog?

I'll start with the last one, and the answer is no. But I did indicate, given -- if you go back with the volume we have, you could add NOK 1 billion. So that's in that area actually. When it comes to -- what was the first question? That was -- Ove, you remember?

That's some more color on the progress for reaching 10% margin.

Yes. Yes. Yes. We are working on that in all our business. We mentioned architecture with adoption that we've done there. We have 10 less FTEs during this quarter, and it's continuing, and the same goes for the rest of the organization. And as I said, it's already communicated, some changes in that. So we are working in line with what we have said on that now for the last 3 quarters.

And the last one was competition and pressure on margin. And how you have seen that over the last year?

I think we've communicated on in all the quarterly reports now that there are pockets of the markets where competition is high. And I think that's one of the areas we've seen is within Building and Property. The advantage we have is that we do not necessarily have to compete in the most margin pressured areas. We are also seeing that there are maybe less competition in smaller projects so that we are now trying to address different market segments to avoid the head-on competition.

Yes. [ Jeppe Borseth ], Arctic. Billing rates and salary adjustment this quarter. To what extent is it sustainable in the current competition environment? And how should we think about the pricing power going forward?

Do you want to do that? At least in Norway, we are seeing that salaries have increased higher maybe than the situation on competition should really allow for. And we need to see how we adjust our -- the mix of the employees that we have. But we are also a part of the society that we live in, and that's why this has been challenging for a while. And when then you get cost increase higher than that. So I think we are just really following the development, and we are looking at how we can adjust our organization in line with the projects that are available.

Yes. And this quarter, we have framework agreements that has regulations starting of the year. And as we have communicated before, the normal adjustments are 1st of July, in line with the salary increase the last year. So those mechanisms are still in place, but the pricing always depends on the market.

Thank you. Jeppe Borseth again came with another question here now. The billing ratio has declined year-over-year for 5 consecutive quarters. What are the key drivers behind this trend? And how are you addressing it?

I might see it a bit different. So the billing ratio 2 quarters ago had a difference compared to the last year of 1.1, the Q4 0.8, and this quarter 0.3. So basically, we are getting closer and closer to the previous year, and that is also showing that the improvement measures continuing are giving us some level on this. And that is also the plan going forward.

That completes the questions from the room.

Questions? Any questions in the room? No. Then we say thank you all for coming here for those who are sitting in the room with us, and thank you to all of you who are listening in. Have a nice day.

Thank you.