NRC Group ASA – Fourth quarter 2021 results

Today, 16 February 2022, NRC Group has released its financial results for the fourth quarter 2021.

The company will host a physical presentation at 09.00 AM (CET) at House of Oslo, Ruseløkkveien 34, Oslo. The presentation will be held by CEO Henning Olsen.

The presentation will be broadcast as a webcast on the following link:

https://channel.royalcast.com/landingpage/hegnarmedia/20220216_8/

The presentation will be followed by a live Q&A session. Investors, analysts and journalists are welcome to participate at House of Oslo or follow the presentation digitally, where questions can be submitted in written during the event.

Below you will find highlights and a summary from the report.

REVENUE

• NOK 1.6 billion (NOK 1.6 billion)

EBITA*

• NOK 50 million (NOK -10 million)
• EBITA* margin 3.1% (-0.7%)

ORDERS

• Order intake of NOK 1.9 billion (NOK 1.4 billion)
• Order backlog of NOK 7.8 billion (NOK 6.5 billion)

LIQUIDITY

• Operating cash flow of NOK 149 million (NOK 110 million)
• Cash position of NOK 626 million (NOK 610 million)

KEY FIGURES 2021

• Revenue of NOK 6.0 billion (NOK 6.4 billion)
• EBITA* of NOK 139 million (NOK 50 million)
• EBITA* margin 2.3% (0.8%)
• Order intake NOK 7.6 billion (NOK 5.3 billion)
• Cash flow from continuing operations of NOK 358 million (NOK 312 million)

*Before other income and expenses (M&A expenses)

Improved margins and strong order intake

Fourth quarter revenue was NOK 1,601 million compared to NOK 1,578 million for the same period of 2020. The revenue increased with 1% in the quarter. Adjusted for currency effects the actual growth was 7%, mainly due to strong growth in Norway, but also Sweden and Finland increased their revenues. Group EBITA* was NOK 50 million compared to NOK -10 million for the same period last year. The EBITA* margin increased to 3.1% from -0.7% in the same quarter last year mainly due to improved profitability in Norway. The order intake in the quarter was solid with NOK 1,872 million and a book-to-bill ratio of 1.2. The cash flow from operations in the quarter continued strong with NOK 149 million compared to NOK 110 million in the same quarter last year.

Finland had a revenue of NOK 706 million compared to NOK 740 million in the fourth quarter of 2020. Adjusted for currency effects the organic growth was 3%. The profitability was solid with an EBITA of NOK 59 million compared to NOK 62 million in the same period of 2020, leading to an EBITA* margin of 8.3% for the quarter, slightly down from 8.4% last year. The strong profitability is mainly explained by continued solid results in Rail Construction and positive results from sale of machinery.

Revenue from the Swedish operation amounted to NOK 398 million for the quarter compared to NOK 396 million in the same period of 2020. The organic growth in the quarter was 7% due to stronger order intake. In the fourth quarter, the Swedish operation was awarded several important contracts improving the order backlog and leading to a much stronger position going into 2022. EBITA* for the quarter was NOK -21 million, at same level as in the same period of 2020. The profitability is still impacted by low revenue in addition to cost provisions related to old projects won before 2020.

Revenue in Norway was NOK 508 million compared to NOK 442 million in the fourth quarter of 2020. The organic growth was 15% in the quarter mainly driven by the Environment and Civil divisions. EBITA* was NOK 21 million compared to NOK -43 million in the same period of 2020, which leads to an EBITA* margin of 4.2% this quarter, up from -9.7% for the same period last year. The increased profitability is mainly explained by improved results in the Environment division where implemented measures during the year have yielded results. The profitability in the fourth quarter last year was affected by significant write-downs in this division.

Group operating profit (EBIT) for the quarter was NOK 10 million, an increase from NOK -16 million last year. The EBIT in the quarter was affected by one-off M&A cost provisions of -22 million related to previous years’ acquisitions. Approximately NOK 10 million is related to a loss in a court case against the previous owners of Signal och Banbyggarna i Dalarna AB (company acquired in 2017) in Stockholm’s District Court. NRC Group was judged to pay the defendants litigation costs. NRC Group has appealed. In December 2021, NRC Group received a claim of approximately NOK 12 million related to an insurance case in Finland from 2016.

Net financial items amounted to NOK -16 million for the quarter, compared to NOK -20 million for the same period last year.

Fourth quarter order intake was NOK 1,872 million, split on announced contracts of NOK 935 million and unannounced order intake of NOK 937 million. The order backlog amounted to NOK 7,801 million at the end of December, an increase of NOK 154 million from last quarter.

In Norway, new orders included an appointed contract by Oslo Municipality of NOK 95 million for ground, foundation and construction work in connection with the establishment of a water reservoir at Holmenkollen. The work commenced in January 2022 and is scheduled for completion in October 2023. NRC Group Sweden was appointed to a contract of track renewal on the railway connections between Älvsbyn-Piteå, Bastuträsk-Skellefteå and Västeraspby-Långsele by the Swedish Transport Administration. The contract is valued at approximately SEK 199 million. The work commenced in November 2021 and is scheduled for completion in November 2022. New orders in Sweden also included a contract for track related work in Örebro municipality, appointed by the Swedish Transport Administration. The contract is valued at SEK 43 million and commenced in November 2021. The work is scheduled for completion in November 2022. In Finland, new orders included a contract for track construction, electro and groundwork at Haapajärvi and Oulainen raw wood terminals in Northern Finland. The contract is valued at approximately EUR 19.8 million. The work commenced in January 2022 and is scheduled for completion in November 2023.

The Group has identified an addressable tender pipeline of approximately NOK 19 billion for the next nine months. This compares to a NOK 20 billion tender pipeline three months ago and NOK 21 billion at the same time in 2020.

The tender pipeline in Finland is approximately NOK 1.6 billion, a decrease of approximately NOK 2.4 billion compared to the tender pipeline three months ago mainly due to postponed tenders. The tender pipeline is approximately NOK 3.6 billion lower than the same period last year, mainly related to maintenance tenders which have been awarded during 2021.

The tender pipeline in Norway is approximately NOK 8.9 billion, an increase of NOK 1.4 billion compared to the tender pipeline three months ago. The increase is mainly in Rail Construction. The tender pipeline has increased approximately by NOK 2.7 billion compared to the same period last year.

In Sweden, the tender pipeline is approximately NOK 8.6 billion, at same level as three months ago. The tender pipeline is NOK 1.4 billion lower than the same period last year, which is mainly related to reduced level of tenders in maintenance as there have been several contracts awarded in 2021.

Update on Covid-19

NRC Group continues a sharp focus on adopting guidelines and policies to prevent and handle Covid-19 outbreaks. The Group monitors the development of the pandemic and its potential impact on the industry and on business continuity. The main risks are related to potential operational impact with new outbreaks and variants, and if restrictions reoccur.

The infection rate for Covid-19 is expected to remain high for a period. This will impact the sickness absence rate in the Group.

NRC Group’s main priority is to keep employees safe while maintaining operations. The Group communicates regularly and transparently to equip teams for virtual working and safe project execution. The Group complies with restrictions and guidelines from relevant authorities and follows up with immediate actions when relevant and needed.

The Covid-19 pandemic has had limited financial impact for NRC Group to date. Still the long-term impact for the societies and people is characterised by uncertainty.

Dividend

NRC Group expects to create value for its shareholders by combining increased share value in a long-term perspective and distribution of dividends. The Board of Directors at NRC Group has introduced a dividend policy whereby, subject to a satisfactory underlying financial performance, it is NRC Group’s ambition over time to distribute a dividend minimum of 30% of the profit for the year. Based on the 2021 results, the Board of Directors will not propose a dividend for 2021.

Outlook

NRC Group is strongly positioned in a growing market with a substantial tender pipeline. Proposed national budgets and updated proposals of the National Transportation Plans with substantial long-term investments, confirm a positive market outlook.

NRC Group continues its focus on measures to improve profitability. For 2022 we expect a continued positive operational and financial development with moderate to strong revenue growth and moderate increase in EBITA* margin compared to 2021.

The fourth quarter 2021 result report and result presentation can be found attached and will be available on the company’s homepage: www.nrcgroup.com.

This information is considered to be inside information pursuant to the EU Market Abuse Regulation, and is subject to the disclosure requirements pursuant to Section 5-12 of the Norwegian Securities Trading Act.

This stock exchange announcement was published by Cecilie Blaauw Cock, Marketing & Communication at NRC Group ASA, on 16 February 2022.