Vow ASA - Q3 trading update: inflation and increased cost in supply chain result in loss in the quarter

29 Oct 2023 22:49 CET

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
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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%
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Order backlog 1 095 1 326 1 095 1 326 1 190
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Business segment information

Industrial Solutions (Amounts in NOK million) Q3 23 Q3 22 YTD 23 YTD 22 2022
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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%
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Order backlog 535 488 535 488 441
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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
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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%
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Order backlog 560 839 560 839 749
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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
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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%
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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.

More information:
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