Vow ASA (“Vow” or the “company”) has reassessed cost and margin in its portfolio of projects. Inflation and higher costs in the supply chain for some projects in the Maritime Solutions segment has accumulated to NOK 35 million which will be charged to the company’s accounts in the third quarter 2023. Including these one-off effects, the EBITDA result in the quarter was negative NOK 15.5 million. Revenues were NOK 254.6 million, up from NOK 194 million in the third quarter 2022, an increase of 31 percent.
Vow continues to steadily grow its business. Revenues in the first nine months this year was NOK 703.5 million, up 18.5 percent from NOK 593.6 million in the same period last year. The growth is a result of increased demand for the company’s technology from customers across a wide range of industries.
The relevance and attractiveness of its solutions is clearly visible in the company’s order backlog, which was NOK 1.1 billion at the end of September 2023 and all of Vow’s main markets remain strong. In addition to the firm backlog, shipowners have placed options on the newbuild series being equipped with Scanship systems amounting to NOK 932 million in likely future revenues related to the Maritime Solutions segment.
“We have for a long time been very busy delivering large projects, and we are of course proud that we have been able to deliver to our customers on time. But we are also deeply regretful for having to inform about such significant one-time effects on our margins,” said Henrik Badin, CEO of Vow ASA.
“In the same period, we have strengthened the capacity and quality of the organisation. We have finalised the implementation of a new ERP system which is giving us better visibility and control. I am particularly grateful for having Tina Tønnessen onboard as new Chief Financial Officer since May this year. Together with her team, she has been instrumental in this work,” Henrik Badin added.
Positive outlook
The review of the project portfolio confirmed that all projects are progressing well. Some contracts with subcontractors have already been renegotiated to better terms, and that the quality of the company’s order backlog is good. Other margin improvement initiatives have also been identified, and are currently in the process of being implemented.
Revenues for the full year 2023 is forecasted to exceed NOK 900 million, and the EBITDA margin for the full year is estimated at 2-4 percent, including the negative effect in the third quarter.
Vow’s current backlog holds potential for significant cash flow going forward owing to the strong demand from customers in multiple industries, and the company is currently actively bidding and positioning for major contracts in cruise, and circular solutions for end-of-life tires, sewage sludge, metallurgy, and renewable energy. Securing new orders while at the same time maintaining healthy margins will be imperative going forward.
The company’s financial position remains strong, with available liquidity for the group amounting to NOK 72 million at the end of September 2023.
| Vow Group (Amounts in NOK million) | Q3 23 | Q3 22 | YTD 23 | YTD 22 | 2022 |
| Revenues | 254.6 | 193.7 | 703.5 | 593.6 | 782.8 |
| EBITDA before non-recurring items | -15.5 | 25.1 | 14.1 | 78.4 | 92.2 |
| EBITDA before non-recurring items margin | -6.1% | 12.9% | 2.0% | 13.2% | 11.8% |
| Order backlog | 1 095 | 1 326 | 1 095 | 1 326 | 1 190 |
Business segment information
| Industrial Solutions (Amounts in NOK million) | Q3 23 | Q3 22 | YTD 23 | YTD 22 | 2022 |
| Revenues | 110.7 | 78.9 | 258.4 | 262.4 | 304.3 |
| EBITDA before non-recurring items | 2.7 | 11.9 | 2.2 | 36.7 | 37.7 |
| EBITDA before non-recurring items margin | 2.4% | 15.1% | 0.9% | 14.0% | 12.4% |
| Order backlog | 535 | 488 | 535 | 488 | 441 |
As expected, Industrial Solutions secured several key contracts and work orders in the third quarter. The Rhode Island project is well underway and delivered positive gross margins in the third quarter. Further, an expansion of the Follum project was awarded by Vow Green Metals. As a result, revenue has increased in the quarter. The margin has started to improve compared to the previous quarter, which was impacted by capacity costs, and is forecast to continue to improve.
Demand for Vow circular and low carbon technologies and solutions is strong, as evidenced for instance by the front-end-engineering design (FEED) agreement for a major international pyrolysis project announced in September. Vow has also seen strong interest and several contracts awarded by heat intensive industry for CHE technology for electrification, heat exchange and heat recovery solutions.
| Maritime Solutions (Amounts in NOK million) | Q3 23 | Q3 22 | YTD 23 | YTD 22 | 2022 |
| Revenues | 94.3 | 82.4 | 308.0 | 249.6 | 358.6 |
| EBITDA | -15.1 | 18.1 | 28.5 | 58.4 | 76.9 |
| EBITDA margin | -16.0% | 22.0% | 9.2% | 23.4% | 21.4% |
| Order backlog | 560 | 839 | 560 | 839 | 749 |
Maritime Solutions continued to deliver a strong topline, driven by high activity and completion of projects. The EBITDA result was heavily impacted by the one-time effect mentioned above. For full-year 2023, the EBITDA margin is expected to be slightly above the margin year-to-date.
Reports and remarks by the large cruise operators indicate that this industry has recovered fully from the 2020-21 shutdown, and that the operators are contemplating investments in fleet renewals and expansion to meet expected increase in number of passengers. Vow’s current backlog in this segment includes confirmed contracts to 2029, and tendering activity is high.
| Aftersales (Amounts in NOK million) | Q3 23 | Q3 22 | YTD 23 | YTD 22 | 2022 |
| Revenues | 49.6 | 32.4 | 136.6 | 81.6 | 119.9 |
| EBITDA | 5.7 | 3.6 | 18.7 | 8.0 | 14.0 |
| EBITDA margin | 11.4% | 11.2% | 13.7% | 9.9% | 11.7% |
Activity in the Aftersales business is closely correlated with the number of cruise ships in operation. Revenues and EBITDA are expected to remain steady through the remainder of the year.
Note: More information about status, markets and outlook will be presented when Vow welcomes analysts and investors to a Capital Market Update in November. Details about time and venue will be shared shortly. The session will also be streamed and available online.
For more information, please contact:
Henrik Badin, CEO, Vow ASA
Tel: +47 90 78 98 25
Email: henrik.badin@vowasa.com
Tina Tønnessen, CFO, Vow ASA
Tel: +47 406 39 556
Email: tina.tonnessen@vowasa.com
About Vow
Vow and its subsidiaries Scanship, C.H. Evensen and Etia are passionate about preventing pollution. The company’s world leading solutions convert biomass and waste into valuable resources and generate clean energy for a wide range of industries.
Advanced technologies and solutions from Vow enable industry decarbonisation and material recycling. Biomass, sewage sludge, plastic waste and end-of-life tyres can be converted into clean energy, low carbon fuels and renewable carbon that replace natural gas, petroleum products and fossil carbon. The solutions are scalable, standardised, patented, and thoroughly documented, and the company’s capability to deliver is well proven.
The company is a cruise market leader in wastewater purification and valorisation of waste. It also has strong niche positions in food safety and robotics, and in heat-intensive industries with a strong decarbonising agenda.
Located in Oslo, the parent company Vow ASA is listed on the Oslo Stock Exchange (ticker VOW).
The information is such that Vow ASA is required to disclose in accordance with the EU Market Abuse Regulation. This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
