Endúr : First Quarter 2023 - Report

Q1 Report 2023

HIGHLIGHTS AND KEY FIGURES

HIGHLIGHTS

KEY FINANCIALS

(NOKm)	Q1 2023	Q1 2022	2022
Revenue	484.7	611.8	2 492.2
EBITDA	50.2	50.8	230.0
EBIT	14.4	17.6	18.0
Adjusted EBITDA
EBITDA	50.2	50.8	230.0
Restructuring costs, transactions cost and other special items	0.9	-	0.7
Adjusted EBITDA	51.1	50.8	230.7
EBITDA-margin	10.4 %	8.3 %	9.2 %
Adj. EBITDA-margin	10.5 %	8.3 %	9.3 %
Cash flow from operating activities	(51.8)	63.6	266.7
Total assets	2 338.1	2 518.6	2 590.2
Cash and cash equivalents	44.8	322.0	314.8
Net interest-bearing debt (incl. leasing)	644.3	990.7	896.5
NIBD	599.6	668.6	581.8
Leverage ratio	2.6	3.2	2.6
Equity ratio	43.0 %	34.8 %	34.6 %

ADJ. EBITDA	REVENUE
NOK 51.1 million	NOK 484.7 million
+1 % vs. Q1 2022	-21 % vs. Q1 2022

ADJ. EBITDA MARGIN	CASH FLOW FROM OPERATIONS
10.5.%
NOK -51.8 million
+2.2 p.p. vs. Q1 2022

2	ENDÚR ASA - Q1 REPORT 2023

Q1 2023 Review

The Group's operational and financial results for the quarter are in line with expectations. Resources within Aquaculture Solutions are shifted towards planning and design for early-phase projects after the finalization of Salmon Evolution phase 1, while Marine Infrastructure has contributed with seasonally high revenue with very strong margins. Revenue and adj. EBITDA for Q1 2023 amounted to NOK 484.7 million and NOK 51.1 million (10.5 %), compared to NOK 611.8 million and NOK 50.8 million (8.3 %) in Q1 2022.

The operating result (EBIT) for the quarter was NOK 14.4 million, with a result before tax of NOK -63.3 million. On 16 March 2023 the Group successfully refinanced its net NOK 810.0 million bond loan. The refinancing was funded by the establishment of bank term loans of NOK

250.0 million and SEK 300.0 million, and a NOK 140.0 million private placement on 11 January 2023. In addition, The Group has secured a currently non-utilized overdraft facility of NOK 150.0 million. The Group's net financial expense for the quarter is heavily influenced by certain items related to the refinancing of The Group's former bond loan, hereunder; bond break fee of NOK 30.0 million, loss of NOK 18.9 million when terminating a NOK 300.0 million STIBOR-for-NIBOR and SEK-for-NOK swap and write-down of remaining bond fees of NOK 10.2 million. The mentioned swap served as a hedged for the Group's investments and cash flow in Sweden, now being replaced with the SEK 300.0 million term loan. The interest rate margins on The Group's new bank facilities are far more attractive than for the refinanced bond loan:

			Refinanced
Leverage ratio	Term loans	Overdraft	bond loan
NIBD / EBITDA <= 2.00	3.55%	3.05%	7.25 %
NIBD / EBITDA >2.00 and <= 2.50	3.60%	3.10%	7.25 %
NIBD / EBITDA >2.50 and <= 3.00	3.80%	3.30%	7.25 %
NIBD / EBITDA >3.00 and <= 3.25	4.05%	3.55%	7.25 %

The Group's cash flow from operations for Q1 2023 was NOK -51.8 million, caused by an expected increase in net working capital (NWC) of NOK

101.9 million, due to among other; end-invoicing of two large projects, VAT payments on unresolved variation orders and production ramp-up after winter season for Marine Infrastructure. The Group's liquidity situation is still robust with available liquidity in form of cash at bank and overdraft facility in total of NOK 194.8 million.

Net interest-bearing debt by the end of Q1 2023 was NOK 599.6 million, yielding a leverage ratio of 2.6 - well inside the corresponding covenant of 3.25.

At the end of Q1 2023, The Group had a total order backlog of NOK 1 470 million. The quarter provided a solid order intake of NOK 453 million, while processing several attractive leads and early-phase projects within Aquaculture Solutions.

Q1 2023 REVIEW

		Revenue
612	638	668
593

485

Q1'22	Q2'22	Q3'22	Q4'22	Q1'23
	Adj. EBITDA & Adj. EBITDA-margin
	58	67
51		55	51
	11%
			11%
8%	9%		8%

		Q1'22	Q2'22	Q3'22	Q4'22	Q1'23
			EBT & CF from operations
					129
	64	68	11
			8	2
				6
	-6				- 52
						-63
		Q1'22	Q2'22	Q3'22	Q4'22	Q1'23
			Backlog & order intake
			1 760	1 509		1 470
	1 182		1 310
				453
			289
	135	216	243
		Q1'22	Q2'22	Q3'22	Q4'22	Q1'23

3	ENDÚR ASA - Q1 REPORT 2023

Q1 2023 REVIEW

REPORTING SEGMENTS

The Group's operations are spread across three business and reporting segments; Aquaculture Solutions, Marine Infrastructure and Other.

Marine Infrastructure	Aquaculture Solutions	Other
BMO Entreprenør AS	Artec Aqua AS	Endúr Maritime AS
Marcon-Gruppen i Sverige	Endúr Sjøsterk AS	Endúr ASA
(incl. 10 subsidiaries)	Endúr Eiendom AS	BG Malta Ltd.
		Endúr Bidco II AS

Note that Installit AS was also a part of the Marine Infrastructure segment in Q1 2022. Installit with subsidiaries was sold to Deep Ocean in April 2022.

MARINE INFRASTRUCTURE
(NOKm)	Q1 2023	Q1 2022	2022
Revenue	252.2	204.8	1024.1
EBITDA	48.3	32.2	182.2
EBITDA-margin	19.2 %	15.7 %	17.8 %
EBIT	23.5	9.6	91.5
Order back-log	1 045	826	841

BMO Entreprenør recorded a stable revenue of NOK 98.9 million in Q1 2023, compared to NOK 103.1 million in Q1 2022. The company's EBITDA margin in Q1 2023 of 24.3 % was 12.0 p.p. higher than the same period in 2022, among other due to a larger portion of the production being carried out with inhouse resources, and in general, solid margins on ongoing projects and conservative progress estimates year end. The company's backlog per 31 March was NOK 640 million (2022: NOK 659 million).

Marcon recorded a very strong revenue growth of approximately 66 % in Q1 2023 compared to Q1 2022. The company's EBITDA margin in Q1 2023 of 15.8 % compared to 21.4 % in the same period in 2022. A large part of the revenue increase is driven by external deliveries of material and services, yielding inflated revenues and lower margins. In addition, the margin was affected by a relatively long winter period in the northern region of Sweden, increasing cost on current production. The company's backlog per 31 March was NOK 405 million (2022: NOK 158 million).

AQUACULTURE SOLUTIONS
(NOKm)	Q1 2023	Q1 2022	2022
Revenue	154.8	364.4	1 289.5
EBITDA	(3.6)	22.3	51.3
EBITDA-margin	-2.3 %	6.1 %	4.0 %
EBIT	(11.9)	14.1	18.3
Order back-log	230	730	304

Artec Aqua experienced a substantial reduction in revenues after the completion of Salmon Evolution phase 1. Revenues in Q1 2023 amounted to NOK 112.8 million compared to NOK 341.4 million in Q1 2022. The company's EBITDA margin in Q1 2023 of -4.0 %, compared to 6.1 % in Q1 2023. The reduction in EBITDA-margin is as expected due to shift in revenue mix and cost coverage only when producing above target price. The company's backlog per 31 March was NOK 100 million (2022: NOK 572 million). The reported backlog does not include the construction phase of Geo Salmo, estimated at NOK 1.6 billion.

Endúr Sjøsterk recorded a very strong revenue growth of approximately 82 % in Q1 2023, compared to Q1 2022. Q1 2022 revenues were unusually low due to an implementation of a more relevant method for measuring project progress. The company's EBITDA margin in Q1 2023 of 2.4%, compared to 5.0 % in the same period in 2022. The company reported a backlog of NOK 130 million per 31 March.

4	ENDÚR ASA - Q1 REPORT 2023

			Q1 2023 REVIEW
OTHER
(NOKm)	Q1 2023	Q1 2022	2022
Revenue	81.0	51.2	221.6
EBITDA	5.5	(3.7)	(10.7)
EBITDA-margin	6.8 %	-7.2 %	-4.8 %
EBIT	2.8	(6.1)	(20.8)
Order back-log	195.0	256.0	165.0

Endúr Maritime also recorded a substantial revenue growth of approximately 59% in Q1 2023, compared to the same period in 2022, as a result of improving market condition and a high hit rate on tender activities. The company's EBITDA margin in Q1 2023 was 9.3 %, 2.1 p.p. higher than the same period in 2022. The company's backlog per 31 March was NOK 195 million (2022: NOK 256 million) does not fully reflect the expected activity level in coming periods, as most orders are relatively small, have short lead times and therefore do not pass through the reported backlog.

The Other business segment also contains the holding activities carried out through the parent company Endúr ASA. As can be derived from the above table, overhead expenses are lower in Q1 2023 compared to 2022.

EVENTS AFTER BALANCE SHEET DATE

No material events have taken place subsequent to 31 March 2023.

RISKS AND UNCERTAINTIES

Endúr ASA is exposed to risks of both operational and financial character. The Board of Endúr ASA is conscious of the importance of risk management and works actively to reduce the total risk exposure of the Group. Please find a detailed review of these in The Group's Annual Report for FY 2022.

The Group has established guidelines for credit rating and assessment of creditworthiness of all new customers. For the public sector, credit risk is considered minimal and for Norwegian private customers, most contracts follow standards with requirements of providing security before fulfilment of contractual obligations, reducing the credit exposure for the Group.

Endúr's business model involves significant fluctuations in net working capital. Endúr is exposed to liquidity risk through its largely project based revenue generation, often employing a host of subcontractors. The failure of an Endúr client to make timely payments can in turn impact Endúr's ability to make timely payments to its own subcontractors. Diversification of project size, timing and customers affords active measures of liquidity risk mitigation, as well as, and more importantly, consistent profitable project execution. The Group's liquidity is impacted by seasonal fluctuations and fluctuations between different project phases. The Group management work closely together with the local management teams in the subsidiaries to monitor the Groups liquidity through revolving liquidity forecasts.

The Group is exposed to interest rate risk and currency risk primarily through its newly established bank financing facilities and its Swedish operations. The interest rate risk and sensitivity has been significantly reduced through the bank refinancing of The Group's more sizeable and expensive bond loan. The Group also has an active NOK 200 million fixed-for-floating interest rate swap. In order to reduce currency risk, NOK 300 million of the new bank financing is nominated in SEK.

Operational risk consists mostly of project risk and counterparty risk and is monitored both at subsidiary and group level. Project risk constitutes a persistent risk factor in and of itself and may be exacerbated by any resulting adverse liquidity consequences. From a portfolio perspective, and to the extent that the group's turnover is largely distributed across different projects and customers, both in the public and private sector, this lowers the group's overall project risk exposure.

OUTLOOK

The Group represents a full-service provider within Aquaculture Solutions and Marine Infrastructure in Norway and Sweden, servicing both public and private sector. Both segments represent fragmented niche and growth markets.

After a period impacted by market uncertainty related to the proposed taxation of economic rent for offshore fish-farming and deferred permit processes for land-basedfish-farming, the market for land-basedfish-farming seems to improve, both domestically and with increased abroad interest. After the finalization of Salmon Evolution phase 1, resources within Aquaculture Solutions are being directed towards design and planning for early-phase projects and new leads.

The outlook for Marine Infrastructure remains attractive with a high activity level, a strong backlog and continued material bid activity. While the construction market in general looks more uncertain due to lower spending on building projects and inflation, the niches in which The Group operates are exposed to an increasing maintenance gap for critical infrastructure and increased demand for renewable energy and green industry.

5	ENDÚR ASA - Q1 REPORT 2023