• Revenue: Increased by 24% compared to 2023.
• EBITDA: Grew from $88 million to $134 million in the subsea regions.
• Backlog: $3.25 billion, with expectations to grow significantly in the next 3-6 months.
• Fleet Utilization: 85% for the period.
• Debt Level: Reduced significantly, with strong cash flow aiding debt repayments.
• Cash Flow from Operations: $176 million, higher than EBITDA for the quarter.
• Net Debt: Maintained at levels similar to the end of Q1, despite new loans.
• Guidance for 2025: Revenue between $1.8 billion and $1.9 billion; EBITDA between $720 million and $800 million.
• CapEx: Expected between $270 million and $290 million, with $130 million to $140 million for maintenance.
• Order Intake: $2 billion in 2024, with a book-to-bill ratio of 1.4x.
• Cash Position: Strong year-end cash position despite high debt repayments.
• DOF Denmark Acquisition: Contributed $46 million in revenue and $7 million in EBITDA for two months.

• Warning! GuruFocus has detected 4 Warning Sign with FRA:UV3.

Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• DOF Group ASA (FRA:UV3) reported a strong backlog of $3.25 billion, providing a solid foundation for future growth.
• The company's revenue increased by 24% compared to the previous year, indicating robust financial performance.
• EBITDA from subsea regions grew significantly from $88 million to $134 million, highlighting strong operational performance in this segment.
• The acquisition of DOF Denmark is expected to enhance earnings from both vessel ownership and subsea services.
• The refinancing process is on schedule, with commitments from major banks, and the company plans to pay its first quarterly dividend of $0.3 per share in the second quarter.

Negative Points

• Fleet utilization was at 85%, which, while decent, indicates room for improvement.
• The company faced a significant non-cash loss on currencies due to USD debt in a BRL-denominated company, affecting the P&L.
• DOF Denmark's initial contribution was affected by one-offs and a weak spot market, resulting in lower-than-expected EBITDA.
• There is uncertainty regarding the integration of DOF Denmark into the DOF commercial model, which could impact future earnings.
• The company faces challenges in optimizing its fleet, with plans to potentially sell non-core or older vessels, which could affect operations if not managed carefully.

Q & A Highlights

Q: What are your thoughts on the Subsea 7 and Saipem merger and its impact on DOF? A: Mons Aase, CEO, believes the merger could be positive for DOF as it reduces competition in the industry, potentially opening up more opportunities for DOF in both sales and construction projects.

Q: Can you provide insights into the timing and pricing dynamics of the ongoing tenders in Brazil? A: Mons Aase, CEO, mentioned that while he has information on the pricing, he cannot share specifics until a final agreement is reached. However, he expects the results to be decent and at least on par with last year's levels.

Q: Why is the BRL-USD currency risk not hedged regarding your USD loan facilities? A: Martin Lundberg, CFO, explained that it's challenging to hedge this risk as it involves balance sheet and P&L effects in the local Brazilian entity. They are exploring options like changing the functional currency and implementing hedge accounting to mitigate these effects.

Q: Could you elaborate on your fleet optimization strategy in the short to medium term? A: Mons Aase, CEO, stated that the strategy focuses on high-end subsea construction and anchor handling. They plan to sell vessels that don't fit these categories, considering fleet age and market demand, to streamline operations and maximize cash returns.

Q: How do you plan to bridge the gap to the 2025 guidance for DOF Denmark? A: Mons Aase, CEO, acknowledged the challenge but expressed confidence in achieving the guidance through secured backlog and ongoing bids. He emphasized that detailed planning and execution are in place to meet targets.

Q: What is the expected timing for the ramp-up in DOF Denmark's performance in 2025? A: Mons Aase, CEO, anticipates a gradual improvement throughout the year, with significant progress expected by April or May, as they integrate DOF Denmark into their commercial model.

Q: Will the refinancing involve only banks, or will it include bond debt as well? A: Martin Lundberg, CFO, mentioned that they are still considering their options and will decide on the path forward after concluding the bank part of the refinancing.

Q: How do you see market trends outside of Brazil in 2025? A: Mons Aase, CEO, expects healthy activity levels and strong backlog opportunities in North America, Africa, and the Atlantic, with the UK being the only area of concern due to low activity.

Q: Does the guidance account for any vessel sales, and how might this affect dividends? A: Mons Aase, CEO, confirmed that the guidance includes all vessels. Selling low-yield vessels could slightly increase short-term dividends without impacting long-term payouts.

Q: Do you expect to secure long-term work for high-class vessels to mitigate market fluctuations? A: Mons Aase, CEO, aims to place some vessels on long-term contracts while keeping others in the project market, depending on opportunities and market conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.