Reach Subsea ASA ($REACH)

Good morning, and welcome to our first quarter 2026 webcast for Reach Subsea ASA. Our report and presentation were released this morning, and I am Jostein Alendal, CEO; and I'm here with our CFO, Arne Joa. Our utilization has continued to lag behind our ambitions this quarter, and revenue remains far below our expectations. Arne will give you more details and cover our financials in a bit, but at the same time, we are continuing to make progress in the introduction and deployment of new technology as the Reach remote program continues its commercial rollout I will turn to what that means for our strategy and long-term development shortly. Please submit questions. We are the webcast player. We will address them in the Q&A session after the presentation. Our first quarter results are below target and not satisfactory. Lower vessel utilization remains the main driver this quarter. This can be explained by the market fluctuations we are experiencing. But the project start-up dynamics have also influenced activity level in the quarter. While we are seeing early operational improvements with all vessels now in operations, these do not have a material impact on the first quarter results. We are actively working to improve utilization across the fleet through tighter capacity planning, asset positioning and closer alignment with market demand. Additionally, we experienced some events during the quarter that affected the economic performance of both Reach Remote 2 in Australia and Reach Remote 1 in Norway. In parallel, we are actively progressing the large scale-up of reach remote building on our validated model and preparing the organization assets and operating structure for the next phase. Also for [indiscernible] from yesterday, we were awarded a landmark 2 plus 1 year IMR and light construction letter intent which once finalized, will substantially increase our order book and add a layer of financial predictability. With that backdrop, let's look at the long-term picture and how we are positioned for change. Looking at our vessel fleet as a whole for the period up to 2030. It provides a high degree of flexibility through a combination of owned vessels and charter arrangements with different durations and options. As Viking Vigor and NewBuild 76 joined the fleet at a later stage we will have clear choices to either extend the fleet and add capacity or to replace older vessels with more modern and capable tonnage. Looking at year ahead, this -- the fleet position may therefore change market development, utilization and where we see the strongest opportunities. Yesterday, as mentioned, we signed a letter of intent for 2 plus 1 year IMR arrangement, which will add Norman Jostein to our project charter fleet. Our order book continues to provide short-term visibility than the previous first quarter, but still acceptable when taking market fluctuations into account. However, the order book will increase substantially once the LOE is converted to our firm contract. Tender activity remains strong with an increasing share of tenders requesting USB capabilities. With remote vessels, 3 and 4 are scheduled for delivery in 2027, providing same flexibility to support either fleet growth or replacement of older manned tonnage. Further Reach remote units entering the fleet will support a gradual transition towards unman marine operations and marine robotics as we move towards 2030. We have developed Reach remote and our technology offering in a close connection with our conventional subsea operations. Our operational experience has been essentially developing and introducing new technology in a safe, practical and commercially relevant way. Deep offshore and subsea competence has enabled us to deploy solutions like Reach remote in real operating environment. And at the same time, the technology and remote capabilities developed through Reach remote have strengthened and enhanced our conventional operations. This integrated approach has been deliberate and necessary to validate the Reach remote model operationally and commercially. We are now at a point whether the Reach remote model has been validated and the opportunity to scale is clearly in front of us. As we move into the next phase, further separating these trucks is the natural next step, allowing both the conventional business and the Reach remote model to develop scale and perform at their full potential. Scaling Reach remote is important to achieve economics of scale and build entry barriers, where fixed costs are distributed across a larger operational base, improving unit economics, resilience and long-term profitability. With that context, let's take a closer look at what it delivers today and how we see it evolving going forward. The Reach remote journey started in 2019 as an idea to transform subsea operations through remote and crude solutions built on our conventional offshore experience. From the beginning, technology development and operations have gone hand-in-hand with practical subsea know-how as the foundation. In parallel, we developed Reach Horizon as the digital backbone, enabling remote situational awareness, decision support and scalable operations. Through 2025, we took delivery of the Reach remote vessels and validated the model through pilots and commercial operations. During this period, the program achieved the regulatory acceptance and the vessels are now approved for remote operations in Norway, Australia and most recently, the U.K. We will actually be the first in the world to operate an unmanned vessel from Norway in U.K. waters. Also during the last quarter, we have achieved an important milestone by operating within the 500-meter safety zones both in Norway and Australia, demonstrating safe and compliant remote operations in close proximity to offshore installations. With the model now validated technically, operationally and commercially, we are at a clear point where scaling is the next step. Reach remote 3 and 4 are progressing well, and we are now planning for the next phases of large scale deployment. Over the last year, we have built a substantial real-world operational experience with the Reach remote 1 and 2 in total. This now represents more than 600 Remote operational days. And this experience has been critical. It has allowed us to test, learn and refine how remote and crude operations actually work in practice, not in simulations, but in live projects. We have [indiscernible] procedures improved system business trained the teams and matured the interaction between the vessels and our onshore operations centers. Much of this value is not yet reflected in the financial results. The past year has been about learning, validation and building operational debt while carrying startup costs, inefficiencies and disruptions that naturally follow the introduction of new technology and operating models. What we now have goes beyond our single quarter's performance, our proven operating model experienced teams, validated systems and regulatory approved operations. This operational experience reduces, risk improves predictability and lowers execution uncertainty as they move into the next phase. As scaling accelerates the learning from the 600-plus operational days becomes a structural advantage and this is where we expect the value to increasingly translate into financial performance. During the quarter, we were awarded new contracts by Equinor and Reach remote 2 has continued to operate for bedside in Australia, reinforcing client confidence in the solution. Based on our order work and ongoing deployments, we are now seeing strong utilization for Reach remote extending into the coming quarters. In summary, while the first quarter results were impacted by specific events Reach remote 1 and the 2 continue to demonstrate clear commercial relevance. And the activity level we are seeing going forward supports our scaling ambitions. This is not only about learning across teams, organizations and people, but also about learning embedded in software. The digital backbone of the solution represented by the Reach Horizon. Reach Horizon is a key enabler for the reach remote and a critical part of how the mote operations are planned, monitored and executed. From the beginning, Horizon was developed as the digital backbone connecting vessels, sensors, workflows and onshore operation centers into one integrated operating environment. With the recent launch of Reach Horizon 2, the platform has taken an important step forward. Horizon 2 strengthens real-time situational awareness, decision support and data integration while improving usability and scalability across operations. While Horizon is an essential component for Reach remote 1 and 2 its value extends well beyond individual vessels. The platform is designed to support remote operations as a whole, enabling consistent execution across different assets, projects and geographies. This means Horizon is not only supporting uncrude vessels, but also enhancing how traditional subsea operations are monitored, control and optimized. As I note, any digital operating models become more prevalent in the subsea industry, we see Reach Horizon as a scalable platform that supports safer operations, better decision-making and improved operational efficiency. In that sense, Reach Horizon is not just a system supporting today's reach remote vessels. It is our core capability for the future of remote and autonomous subsea operations. Reach remote is now a proven and established operating model ready to move from validation to scale. The combination [indiscernible] operational experience, regulatory approvals, mature technology and capability teams provides a strong and robust foundation. With vessels in operation, Horizon version 2 in place and the next units progressing. The remaining task is execution at scale. The priority ahead is, therefore, to convert our validated model into higher utilization, improved predictability and sustainable financial performance. This Remote vessel matured into a proven and scalable solution. And with that foundation in place, we are taking the next step by organizing how the full Reach remote model will be established as a stand-alone company. [indiscernible] is clear, by separating the model, we create a structure that better support scale, allowing fixed costs to be absorbed across a larger operational base and strengthening unit economics and enabling broader market adoption. The new entity will operate as a dedicated technology company offering an integrated service combining large-scale marine and subsea robotic operations and the Reach Horizon digital platform. Together, these elements form unified remote and digit service model and taken together, this positions Reach for scalable growth in unmanned operations, robotic as a service and digital subsea solutions towards 2030. With this, I will hand the word over to Arne, who will take us through our financials.

Good morning, and thank you for joining Reach Subsea's First Quarter 2026 webcast. I will take you through the financial performance for the quarter before we move on to capital structure and liquidity. As shown on the highlights slide, first quarter 2026 was weaker than the same period last year. Revenue for the quarter was NOK 551.4 million compared to NOK 698.7 million in the first quarter in 2025. The decline reflects lower utilization across the fleet, combined with unfavorable currency movements, higher depreciation and compressed project margins. EBIT for the quarter was minus NOK 192.1 million compared to NOK 68.2 million in the first quarter last year. The negative year-on-year development is primarily driven by lower activity levels in the oil and gas segment, together with a largely fixed cost base as well as higher depreciation related to IFRS 16 assets and the 2 Reach remote vessels. Profit after tax amounted to minus NOK 191.2 million compared to NOK 54 million in the first quarter last year. Turning to the EBIT bridge from the first quarter last year to the first quarter in 2026, the decline in profitability is mainly explained by 2 factors: First, utilization and product mix, lower vessel days and a less favorable mix led to a significant negative contribution versus last year. Second, depreciation and foreign exchange higher depreciation from new assets and adverse currency movements further weighed on EBIT year-on-year. Looking at the revenue mix. Oil and gas revenues declined significantly compared to the same period last year. This reflects a more cautious client environment during the quarter, coinciding with a period of weaker oil prices. At the same time, renewables and other now represent the largest sector by revenue, marking an important milestone in our portfolio transition and underlining the growing importance of non-oil and gas activity in the business. Geographically, we continue to see a broad and diversified revenue base with solid contributions from Europe, the Americas and other international markets, reducing reliance on any single region. Overall, while activity levels were lower in the quarter, the revenue profile underlines the increasing diversification and resilience of the business, supported by a broader sector mix and expanding international footprint. Equity as of 31st March 2026 was NOK 131.8 million corresponding to an equity ratio of 31.6% compared to 39.8% in the same period last year. The reduction is primarily explained by the negative result in the quarter. Cash and net working capital are lower versus peak levels, but at a slightly higher level than the same quarter last year. The capital structure remains solid and provides the flexibility required to support both ongoing operations and continued development of Reach remote. With that, I will hand back to Jostein before we move to Q&A.

Thank you, Arne. To summarize our first quarter results. We are far below our ambitions primarily driven by lower vessel utilization and market-related timing effects. While the market fluctuations explain part of this, we are also addressing what we can control through title capacity planning, improved asset positioning and closer alignment with market demand. Importantly, we continue to see operational improvements across the fleet with all vessels in operations. At the same time, we are making clear strategic progress. Yesterday, we were awarded our landmark to 2 plus 1 year IMR letter of intent. And once finalized, this will add long-term backlog and represent an important milestone for Reach. This agreement adds a layer of financial predictability that we have not had before and strengthened visibility beyond the typical short-term order book. In parallel, we are now organizing how the full Reach remote model will be separated into its own stand-alone company. with more than 600 of remote operational days, regulatory approvals, a key markets and growing client confidence. We are moving from validation into our true scaling phase. Our flexible fleet structure, strong tender activity and increasing demand [indiscernible] and USB capabilities support this transition. Scaling Reach remote is key to achieving economies of scale, improving unit economies and building sustainable entry barriers over time. Taken together, while short-term performance remains affected by market dynamics, the combination of new long-term visibility, our flexible fleet and a proven technology platform positions Reach well for the next phase. We are progressing towards a structural transition into unmanned operations, robotics as a service and digital subsea solutions as we move towards 2030. And with this, I will round off the presentation. Please submit your questions through the webcast player, and we will be back soon to answer them.

Hello, everyone. Thank you for joining our webcast and Q&A sessions. We have quite a few questions coming in. So are you ready Jostein.

Got all done, I'm ready.

That's good. So the first question is about our tender pipeline being stable for several quarters at NOK 10 billion. The question is what is the conversion rate we are experiencing. And is the pipeline generally replenishing at the same rate it is converting or is the headline number masking a longer decision time line from our clients.

I think the conversion rate has been around 10%, 15% over the past years. We working on improving that conversion rate, of course. And yes, correct, some decisions are taking longer time. Yes, for the past past year, I can say. But conversion rate is -- we have been used to that 10% to 15%, but I think it will improve in the coming years. So, yes.

Thank you. There are a couple of questions on the letter of intent. So can you provide some additional color on how much the backlog may increase if the LOI or Nomanastein is firmed up?

Yes. When it's firmed, yes, it's going to be significant. Of course, it's a 2-year plus 1-year contract. So of course, that's the big numbers. But we will come back to that when it's firmed up. So hopefully, the vessel is on its way. So the guys are working on firming up the paperwork this week. So yes. So we will come back to that, as we said in the announcement of the LOI.

There's another related question. Will it be reach ROV or [indiscernible] board Norman, Jostein?

That will be the Omega. So we're going to work together with Omega and Solstad on this. And that's good cooperation and everything going to deliver to the clients here are really good services and products. So very impressed with both the vessel and the Omega setup on board. So this is looking good.

The stand-alone Reach Remote entity, can you describe the intended corporate structure, whether it would be wholly owned separately listed for open to external capital and the potential time line for completion of the separation. You can add some color.

I could add some color. Yes, it's open for -- we have seen a big interest from both industrial and financial partners and so on. So it's, of course, when you spin off something and build something and the speed of the scale up, of course, it's open for partners and so on. But we will soon come with more firm news on that. So we are working on in maybe a bit sooner because the speed is the partnerships and so on. So yes, the coming 2, 3 months, I guess there will be some news around that as well.

Very good. There is a question about our net interest-bearing debt at NOK 1.39 million and equity ratio and how we're going to protect the balance sheet going forward with [indiscernible] 2 coming. So I can say that we have flexibility in our fleet with options, and we're looking at the total picture. And of course, having a healthy balance sheet and good headroom to covenants, that's a key priority. There's another question about unmanned surface and subsea vehicles are seeing surging demand from NATO navies for tasks like mine countermeasures, hydrographic survey and critical infrastructure protection has reached received inbound interest from defense or government clients and is the Reach Remote platform designed or certifiable for dual-use applications, -- would you consider pursuing defense contracts? Or does that create reputational or operational complexity you prefer to avoid? Long question.

Yes, that was a long question. Yes, the thing is that, yes, we have shown the whole concept to different defense sectors, both national and international. So -- and that is very well suited for the unarmed side of defense. And yes, we are moving in the right direction there as well because that's the next after the oil and gas and the asset owners and so on. It will be -- the next client group will be the unarmed side of the defense side. So yes, certified in that area as well. So...

Thank you. Another question about the specific market, and that's the global subsea cable market is experiencing significant investment driven by hyperscalers with growing demand for cable survey, burial monitoring and repair inspection, is this a sector you are actively targeting? And how does your technology differentiate versus specialist cable operators?

I think our services is also targeted into any infrastructure and cables, of course, and has been a big part of our market on the pre-installation mapping and so on and also the inspection of cables. As we have shown with remote during the winter where we inspected cables for in the Norwegian fjords and so on. So any asset -- subsea asset and offshore asset is a market for us. So either oil and gas or cables or any other infrastructure.

So Good. There's a question about further scaling and building of recent 5 and 6, if you think it could occur, given the outlook you have for the IMR and subsea market.

Yes, there will be some decisions on the big scale up. And of course, the target there is more than 5 and 6. It's to 30 units within 2034. So yes, we are looking at the number of units we can deploy within the next next 8 to 10 years. So -- but we see the market is sort of accelerating. So as soon as the certifications and everything is also speeding up. So lately, we saw -- yes, we are allowed to also operate in U.K., and that's something really new [indiscernible] been the first time in history that we operate a Norwegian flag vessel unmanned vessel from Norway into U.K. waters. And you see that this is accelerating. So the market adoption is there together with the suffocation and regulatory bodies around the world. So -- but this -- it's going to be fun to play those barriers as we have done the past 12 months, we have broken a lot of barriers.

Yes. Good. There are a couple of questions again related to Reach remote stand alone. So you have partly answered already, but I think we can repeat it since it is important. So it's about the separation of the remote business, it implies a stand-alone listing of the entity and then also the timing and the separation of the regional business.

Yes, the timing is actually no. And as I said, for the next 2, 3 months, there will be a lot of movement deal. Question about listing, that is not firm or it's a way to go, but we I think [indiscernible]

That has been well covered now. A question about the recent surge in the oil price and the closing of the Hormuz Strait, if there's any effect the current demand for the services that we deliver those time.

Yes. We follow the day-to-day services we provide to the asset owners around the world. follows, of course, the oil [indiscernible] so maybe [indiscernible] starting in the '26 we see something else. So the world is changing rapidly. And and the behavior of inflates and so on. But we see a high sort of long cycle ahead of us with more investments and so the number of assets offshore and subsea will increase for the next years and decades, I guess.

Yes. There's a question about the dividend. We had some new messaging there. So the question is, do you expect to be able to pay out NOK 0.17 per share dividend that the Board approved this year? Or will it have to wait until 2027. I think the correct answer there, Houston is that it will be paid out the Board considers that we are in a position to do so. So it will be dependent on the numbers that we are delivering in the next few quarters.

Yes, we have to deliver that [indiscernible] side.

So yes. As a follow-up question to the [indiscernible] a question about the Reach scope in this contract?

Yes, we are the contract holder and also there are additional services on top of the vessel itself. And also, we are providing A lot of auto services to clients besides of pure IMR and light construction services. So also, we have the -- our monitoring services and so on, or asset owners gas fields and so on. So yes, there's going to be -- going to be exciting to offer our clients there, a lot of additional services and so on. So it's not just a pure services. It's a lot [indiscernible].

It's also a follow-up question to the backlog question about conversion rate, where you said Jostein you expected it to probably improved slightly. The conversion rates, so the question is why or is the competition going to be lower?

I don't think the competition is going to be lower. It's just we have to be better than our competitor just the game, I guess.

Yes. There is a question about historically what is the typical lag between a sustained move in the oil price above $80 to $200 and a visible uplift in our tender conversion and project start-up activity, are we taking multiple quarters given budget cycle and permitting dynamics or yes, you've been in the business for quite a few years, Jostein. So historically, what have you seen when you have seen sustainable in the oil price? How long does it take before it starts showing up ?

Yes, I'll try to analyze our clients' behavior for almost 20 years. And I don't know if I'm wise or so no. So it's hard to predict, but there are some big signs if they see predicted the oil price down, they behave and then it take maybe a slow move off, but it's hard to predict the world is quicker now than sort of 20 years ago. So the conversion from movement in the world to reaction is a bit shorter now than 10 years ago, so -- but I'm not Well, I'll try to analyze this for years, but it's hard to predict, although well, all our clients' behavior that's still.

Yes. There is an interesting question here about the remote market. And if it is accelerating, why don't we fill up the backlog on remote 1 and 2 for the next 3 to 4 years.

Yes, that's back to the same clients then and the slow sort of adoption. But we have seen for the past 12 months, the adoption has accelerated. So I guess when we go into '27, there will be actually more demand and also they will [indiscernible] a proven concept. And then as soon as you have done that, they are sort of, yes, willing to take it into use and so on. So we are here that now we have proven and we continue to '26 and then this, we will see a different world in the period from '27 to 2030, 2034, 2035.

Yes. There is another related question, slightly different angle. Given the weaker results from this quarter and the past year, do you plan to put more resources into sales and market capitalization extending Reach subsea into many new markets going forward? Or is the separation of the Reach remote concept, a reflection of this?

Yes, of course, we have to we are looking into everything to improve the day-to-day of course. You know Arne, there is fine line between Genius and idiots. And we might look like idiot for a short time here, but we are -- but that's just for a short time. So we have to improve the -- both sales and also performance on our day job, the robotic side of it, that's the real sort of the long-term future, and that's what we are building the foundation for now. As I said just time we have built subs NRE in operations. So -- but of course, we have to improve improve the -- both selling and performance and so on. So we missed -- during the past 6 months, we missed sort of the -- how is our clients behaving and so on. So are too many vessels later, and that's a bad thing, and we should be better on that. So learning on that and going forward and or pushing a little [indiscernible] 1 time here Arne.

Yes. Another question related to the oil and gas question or the increase in gas prices, but the presentation stated that revenue from renewables actually recently exceeded oil and gas, but given recent Middle East events, are there indications oil and gas will bounce thereby increasing the overall revenue. If Yes.

For us isolated, you saw we missed the oil and gas clients over the into -- but in the big picture, there is -- well, you see the backlog from the big companies and so on. So certainly an increase in activity in the subsea oil and gas world. So it's just up to us to be there and improve our sort of service to the oil and gas oil and gas clients.

Yes, good. I think we have the final question. It's related to Olympic Taurus and the original lease expire in April 2026 if it have been extended?

On?

Taurus -- Olympic Taurus.

Yes. Taurus will be [indiscernible] '26.

Yes. Okay. I think we have covered all the questions came into Q&A. So thanks a lot for many good questions and for participating.

Yes. Hope we gave an honest picture. And see you in August.