Aker Solutions Q1 2026 Earnings Call | EPS Beats At NOK 1.31 As Order Backlog Hits Record NOK 80B

Good morning and welcome to Aker Solutions presentation of our first quarter results. My name is Prebrørbek, the head of investor relations. With me today is our CEO Ketel Digre and our CFO Idar Eikrem. They will take you through the main developments of the quarter. Following the presentation, we will open for questions. Those of you who are following the webcast can submit your questions via the online platform. I give the floor to Ketel.

Thank you PR and welcome to everyone tuning in. As usual, let me start the presentation with the main messages for today. Firstly, we continue to deliver solid financial results as our revenues normalized from peak levels in 2025. A key priority in 2026 is to secure new orders. And I'm happy to report that Aker Solutions was awarded several important long-term frame agreements in the first quarter and our financial position remains highly robust.

Mid April, the annual general meeting approved the payment of 8.6 kroner per share of ordinary and extraordinary dividends which was distributed to shareholders earlier this week. Our mantra in Aker Solutions is always home safely. But sadly during Easter we lost a colleague in a fatal accident at our decommissioning site at Sord. This loss is a stark reminder of why our focus on safety is so important every day in every task. To fully understand what happened and to prevent it from happening again, Aker Solutions has established our own internal investigation and we are collaborating with the police and authorities in their investigations.

Moving on to our project portfolio, we are making good progress with several milestones met on the Aker BP projects. This includes stacking complete for Hugen A and Valhall TWP as well as the sailaway of both the Fenris topside and Hugen B jacket in early April. The geopolitical situation in the Middle East is monitored closely. Shortly after the outbreak of the war, we decided to evacuate non-critical personnel from Dubai. At the same time our ongoing projects executed with our partner in Dubai are continuing as planned. Lastly, based on our secured backlog and the high tendering activity, we are upping our guidance for the full year, expecting revenues to be around 50 billion with stable underlying margins. I'm also encouraged to see the steps we are taking to position our company in emerging markets such as data centers and small modular reactors. I'll talk more about this later, but first I will take you through some of the operational highlights of the quarter.

As mentioned, the Aker BP portfolio is progressing according to schedule with several milestones met in the first months of 2026. In February, our yard at Stord celebrated the completion of the so-called stacking program on Hugen. This means that all the key modules and preassembled units have been lifted into place on the platform. On Valhall PWP, a similar milestone was achieved in the beginning of April with a successful lift of the 1081 ton Meg module from our subcontractor NBO. Also in April, both the Fenris topside and the Hugen B jacket sailed away from our Verdal yard and were successfully installed offshore. So what does it take to deliver such projects? The photo you see on the upper right corner is from a town hall held at Stord earlier this year and to me it gives a good picture of the current activity level at the yard. As we speak, we have more than 10,000 hires in on rotation at the yard in addition to our own employees. This also highlights our flexible model using hires and contractors during peak activity periods. All in all, I'm very proud that the alliance continues to deliver on its promise to radically change how to deliver capital projects. In short, we are building faster and we are building better.

Moving over to our life cycle segments. In the first quarter, we were awarded new long-term frame agreements for maintenance and modification services for both Equinor and Aker BP Norway. In both these contracts, Aker Solutions' scope increased, taking responsibility for several new assets, both offshore and onshore. One example is Aker BP's new YBA development which will set a new benchmark for remote operations and the use of new technology to enhance efficiency. The frame agreements are also important to position us for future modification projects. Equinor has announced targets for bringing more than 75 subsea projects on stream over the next decade which will require topside modifications.

Increased subsea tieback activity will also open opportunities for fabrication of subsea equipment from our Egersund yard to clients such as SLB One Subsea. We are also actively engaging with clients to position for future opportunities across a range of markets. Within oil and gas, we are in the pre-FEED phase for several FPSO projects that we expect will move into the next phases of development over the next 12 months. This includes both greenfield developments and lifetime extensions of existing assets. With offshore wind, we are working directly with transmission system operators and equipment partners to design the next generation of offshore converter platforms. A key focus is to optimize the design to reduce weight and standardize equipment to reduce cost. On CCS, we were recently awarded the FEED study for the Klaipeda CO2 storage terminal in Lithuania, a project co-funded by the European Union. The planned facility will have storage capacity of about 2.8 million tons of CO2 which will be captured from industrial sources across the Baltic region. The FEED study began in the first quarter with a team of more than 100 experienced engineers from our hubs in Oslo and India.

And we are also taking important steps into adjacent markets such as data centers. According to McKinsey, more than 7 trillion dollars will be invested in data centers by 2030 to meet the growing demand. We are still in an early phase but already we are seeing that our capabilities for advisory services, electrical system design, and project management services are in demand by developers. And speaking of important steps, small modular reactors or SMRs for short are moving from concept to reality. Yesterday we announced the signing of an MOU with Rolls-Royce SMR, a leading player in this market. Through this partnership, Aker Solutions will apply our expertise in design, project management, and modular construction for the development of non-nuclear parts of these power plants. The partnership will initially focus on ongoing developments in the United Kingdom and the Czech Republic where Rolls-Royce have been selected as the main contractor and technology provider for upcoming SMR projects. As part of the MOU, Aker Solutions will work closely with Rolls-Royce SMR to mature the module scope with the aim of finalizing the first binding contracts. I believe this MOU represents a great opportunity for our company in a potential significant market. As Europe accelerates its energy transition, SMRs are emerging as a key technology to meet growing energy demands while reducing carbon emissions. I also think the fact that Rolls-Royce SMR selected Aker Solutions for this partnership is a good example of how we are drawing on decades of oil and gas experience to unlock new opportunities and reinforcing our role in the broader energy transition.

As mentioned, a key priority in 2026 is to secure new orders. Tendering activity is high and our bid pipeline grew about 10% in the quarter to almost 90 billion. Growth has mainly come from Asia Pacific and Australia. Here we are tendering for several FPSO opportunities and we are also in the process of renegotiating frame agreements for maintenance and modification services in the region. And just as a reminder, the tender figures do not include SLB One Subsea where we sold the 20% ownership. Tendering activity in SLB One Subsea is also high. Supported by a strong underlying market, SLB One Subsea targets cumulative bookings exceeding 9 billion dollars over the next 2 years. And so far in 2026, SLB One Subsea has announced several new orders in different geographical regions. Within subsea production systems or SPS, SLB One Subsea was awarded both a 20-well key project in China and the deepwater K project in Malaysia in the quarter. And in April, SLB One Subsea together with its partner Subsea 7 signed a strategic collaboration agreement with Petronas for future SPS and SURF deliveries to Suriname. Within subsea processing, SLB One Subsea has a dominant market position leveraging decades of technical innovation in both Aker Solutions and in SLB. And so far this year, the company has been awarded both the upgrade of the Gullfaks compression system in Norway and the delivery of high pressure, high temperature, multiface boosting for Beacon Offshore Energy in the Gulf. All in all, we are pleased to see that SLB One Subsea is on track to deliver on its ambitious order targets which will lead to growth from 2027 and onwards. The valuations of subsea technology companies show that the strong and sustained momentum across the subsea market is increasingly being recognized by investors. As a committed co-owner of SLB One Subsea, we believe the company is well positioned to capture this momentum and support value creation over time. And in our view, this ownership represents an important underlying value that is not fully reflected in Aker Solutions' current valuation. And with that, I leave the word to Idar who will take you through the financials of the quarter.

Thank you. So to summarize, I am pleased to see that we continue to deliver solid financial performance as our revenues normalized from peak levels in 2025 and we are not resting. During the quarter, our backlog increased to 83.2 billion and pipeline grew to 90 billion. Also encouraged by the steps we are taking to position our company in emerging markets such as data centers and small modular reactors. Next, over to our guiding for 2026. Based on secured backlog and market activity, we expect revenues to be around 50 billion. EBIT margins excluding net income from SLB One Subsea are expected to be in the range of 7% to 7.5% for the full year, in line with previous guidance. CapEx is expected to be around 1% of revenue in 2026 and onwards. And despite the developments in this quarter, we continue to expect working capital to normalize over time to a level of between 4 and 6 billion. Finally, we have a robust financial position and this enables us to both develop the company for the future and to serve our shareholders. Thank you for listening. That was the end of our presentation and in a few minutes we will open for questions.

So we will start with a few questions from Sondre Medu in Nordea. On life cycle, margins in life cycle – is anything specific affecting this quarter? And does this reflect the overall margin? And then the second question on life cycle: we have had a solid order intake and expanding backlog, how should we think about the run rate for the margin for the volumes going forward?

Just start by just super happy with having key clients that are renewing. Excellent horizon to work with. Activity level in all those contracts, we know the installations as well. And in addition to that, the non-scope, we know that there will be a lot of modification work for these clients based on the need for energy security triggering lifetime extension projects and also the huge subsea tieback scope which also triggers top modification. So in that time frame, there is obviously an excellent opportunity to work on both improvements and have ambitions for growth.

Thank you. We will move over to a question on the legacy projects. When are they expected to be completed and what was the impact of the quarter?

Yes. On completion, you know this project has been constructed, completed, installed offshore, and we are now together with our clients testing the functionality and going to complete them during the second half of this year.

Moving over to a question about working capital. Do you have any view on where we land at year end?

Move over to a question on the capex guidance and the...

I think you think that there is a clear signal that capital discipline is very strong in the company. We don't invest more than what we need, and we need to have good business cases in order to go over and above our guidance. And where we are now, we capitalize on the investments that we have done. And in the quarter, it's only 0.4% of the revenues. Our guidance is still maintained at 1% of revenue, and you should view that as a guidance over time, not necessarily for 2026 only.

Moving over to a question from Victoria Mlock in RBC. Can you remind us of the milestones for the Aker BP projects?

Yes, just remind us what that is all about for us. You know, we are doing a lot of work obviously, but we have four platforms to be completed with jackets, two big ones and two smaller ones. One of the small ones, Flis, is already installed offshore and we are starting the offshore completion of that. One more is coming from our Verdal yard later this summer. And then the two big ones coming from Stord. This is planned to be installed during the second half of this year.

Moving then over to a question on the tender pipeline. If you can give some color on the around 40 billion of projects in Europe and also in Asia Pacific which grew in the tender pipeline this quarter.

Yes. In Europe, we have a very clear position within oil and gas, over dimension lifecycle, and there is a lot of work that has to be done within the operational part for these projects. So there is modification work in that pipeline. And then we're also looking at greenfield developments. One very well-known one where we are involved is the Wisting project, potentially being installed in the Barents Sea in some years. And then we are involved in many parts of offshore wind, in components like foundations and also marine services, but particularly on the substation, multiple HVDC opportunities. And then we are, as announced, broadening our role in carbon capture and storage, and our target is also, as we have announced, the SMR business and also data centers are opportunities that we are moving into. And in Asia Pacific, you know, if you look at who we are in AP, we can start with our India office in Mumbai, we are around 1000 engineers there. We do use them to support the global operations, but they also are engaging in local regional tasks, both onshore and offshore. And then we have our MMO business giving us presence in Far East Asia, where we are looking at renewing contracts, potentially growing into new areas there. And then from both our office and at large, you know, we are also looking at FPSO opportunities. And FPSO opportunities in Asia for us will be to use our project management skills and competence and also the whole sort of engineering muscle, I would say.

Thank you. Moving on to a question about One Subsea. Do we have any expectation on dividend levels for the rest of the year?

Moving to a question from Russell in Upstream. Can you give a bit of detail on the Dubai projects and if there are any expected disruptions?

Yes, we have had quite a lot of projects with our partner in Dubai. Just to mention them, you know, we had substantial modules coming from Dubai into the Aker BP projects. They have been transported to Norway and are now part of the bigger topsides at Stord. We also have the Rosebank project for Altera and Equinor, now Adura, that actually left Dubai just a few days before the war was initiated. Now we have two HVDC projects, the Norfolk Vanguard East and West, which is running according to plan, and we have had to sort of create some alternative supply chain routes. That is one of the fastest consequences, but all in all, these projects are on schedule and currently we don't have any new projects that will be triggered in the near future, but we are working on opportunities.

Question from Martin Husby Karlsen in DNB. If you can shed some light on the SMR agreement. Your partner Rolls-Royce said that the first SMR unit in the UK could generate power around 2035. How should we think about timing of Aker Solutions' activity?

Yes, first of all, we are in the phase now where we, under the MOU, are working on maturing both the design and the role setup, execution models, etc. That is going on now, and that is quite a substantial organization at Aker Solutions that are working on that now from both London and Oslo and Stord. If we then sign a contract and enter into the next phase, these are undertakings and projects that require a lot of people in the engineering organization and planning and procurement, and that will then build up towards a construction start. To be able to deliver in 2035, we need to start around 2029-2030, how the estimate. And one other comment is obviously that this is not just one SMR project. With our partner Rolls-Royce, the idea is to actually execute a sequence of projects that are coming in a natural order. So in the period that I just described, we will probably initiate more than one SMR. So again, a huge undertaking that we are really looking forward to being part of.

Thank you, Ketel and Idar. That concludes our Q&A session for today. From all of us here, I would like to thank you for listening in. Goodbye.