Aker Solutions ASA

OSE:AKSO

Earnings Call Transcript 2018-Q2

[Tove Røskaft, Head of Umbilicals]

Good morning, ladies and gentlemen, and welcome to Aker Solutions presentation of second quarter results for 2018. My name is Tove Røskaft, and I am heading up Communications and Investor Relations at Aker Solutions.With me here today, I have our Chief Executive Officer, Luis Araujo; and our Chief Financial Officer, Svein Stoknes. They will go through the main developments in the quarter. We will also have time for some questions and one-on-one with the press after their presentations. Please note that we have no fire drills scheduled today. So in case of an alarm, I would like to point you to your nearest emergency exits, which is behind you and to the left, through the glass door. Luis, I will now hand the stage over to you.

[Luis Antonio Gomes Araujo, Chief Executive Officer]

Thank you, Tove. Good morning, and thank you for joining us here today. I'm pleased to be here today with Svein to go through our results for the second quarter, which was another period of strong execution and solid order intake.As usual, we will start with the main developments in the quarter. While the market remains very competitive, activity is picking up. More projects are being sanctioned amid lower breakeven costs, and we won NOK 5.7 billion in new orders in the quarter. That's almost double the same quarter last year. We delivered yet another period of strong execution, making good progress in key projects globally.To give you a flavor, in Norway, Equinor's Johan Castberg, Troll and Askeladd projects are moving forward. And we have started refabrication of the templates, and we have mobilized teams in Brazil, U.K., Malaysia and Norway.At Johan Sverdrup, the drilling platform, the riser platform and the connecting bridge have been installed offshore. And work has started ahead of schedule on the hookup of the riser platform. At Aker BP, Valhall Flank West, the engineering for the platform is on track. This work is being carried out under our wellhead platform alliance with Aker BP, Kvaerner and ABB.Also in Norway, we delivered the first 2 subsidiaries for Kameleon and Skogul. We did this ahead of schedule, thanks to a strong collaboration with our alliance partners, Aker BP and Subsea 7. At DEA's Dvalin gas project, we have installed the subsea templates and delivered the wellhead systems.Well, outside of Norway, we also made good progress. In Brazil, we installed the third deepwater manifold for Petrobras at pre-salt fields in the Santos Basin. We also delivered the manifold number 4 out of 8 this fourth quarter -- this fourth manifold, actually, will be installed later this month. We delivered 3 more subsidiaries to Petrobras, and this brings the total trees delivered to 37 out of 60 plant subsidiaries for the pre-salt. In Angola, our offshore commissioning is on track in the Kaombo north. The manifolds and trees are installed and about to be commissioned ahead of the first oil this year, which are major milestone for this large project.In the quarter, we continued to make good progress improving operations and reducing costs throughout the company. These include deploying several digital initiatives to boost efficiency as we continue to improve how we work. This effort helps support margins compared with the year earlier. And finally, and actually more importantly, we strengthened both our top and bottom lines in the period.So now for the main numbers. Our second quarter financial figures were revenue of NOK 6.3 billion, EBITDA of NOK 439 million and EBITDA margin of 7%. Excluding special items, the margin was 7.1%, and EPS was NOK 0.48. We had another good period of order intake that accounted for NOK 5.7 billion, bringing the backlog to a healthy NOK 37 billion.I'm pleased to say that our order intake in the last quarter almost doubled compared to the period last year. And the new orders included a contract for Equinor Phase 2 of Johan Sverdrup. The quoted for modification of the riser platform and field center is worth NOK 3.4 billion, and it will be split with Kvaerner, our partner in this project.Equinor also orders an EPCI contract for the Mongstad terminal. And we secured -- also secured for Equinor to deliver a module for the Troll A platform to help increase output at the field. This NOK 1 billion contract is our latest award at the Phase 3 of Troll. This comes in addition to work to provide the subsea provision systems and services for the same field. We are delighted to extend our work at Troll, a field that helps Norway remain a major gas exporter for decades to come. Outside Norway, 2 key customers returned to us for more work. In Angola, Total awarded a contract to deliver 5 subsidiaries for Phase 3 of the Dalia project. We have already delivered subsea systems and equipment for previous phases of Dalia, and we are pleased to continue our work at this field.In the U.K., we secured a 3-year contract extension from Perenco for operations and maintenance services at its Southern North Sea assets. We have supported Perenco at this asset since 2003, and we are very pleased they select us again.And last month, the government approved funding for the engineering and design of a carbon capture plant at Norcem cement factory in Brevik. This is great news, and we have already started the FEED for this important project. Norcem and other carbon capture plants will be crucial to achieve the Paris climate goals.In the front-end, demand is continuing to grow for our early-phase work. Last year, we held many small FEEDs for tie-ins in the Norwegian shelf. And this year, we have seen that the studies in FEEDs are for larger and more complex projects, including some outside Norway. In the quarter, we won 35 front-end orders, and this give us a total of 73 for the first half of the year, slightly ahead of last year. Almost 1/3 of these orders in the first half are for projects outside Norway. I have said it before, but it's worth repeating, early involvement put us in a strong position to secure more work. In the first half of the year, 6 of our project concept studies led to FEEDs, and 8 of the FEEDs led to full projects. This work -- this includes work at Troll Phase 3 in one of our new orders for this quarter.In the quarter, we continue to deploy digital tools and initiatives to make our process, our systems and our business more efficient. This helps drive value for our customers and for our company. For example, last month, we began to move our SAP applications to the cloud-based platform. This move will save about 20% on software costs for -- software license costs for our company. In another example, we are using robotic automation to increase efficiency internally in areas such as HR, finance and supply chain. And we are using a software robot named Jenkins to build and test our software for our electrical module factories. Last quarter, I talked about what we are doing to digitalize projects and project execution. That included examples like software app engineers -- engineering assistant. This is a digital tool that provides easy access to data and documentation for projects we have already delivered. And it makes easier for our engineers to find and reuse good solutions.Now I would like to give you a quick overview of how we are digitalizing our subsea products. We are equipping the subsea products with software and connectivity to make them more intelligent. This creates a system with real-time insight into the performance and condition of subsea equipment. Enhanced sensors on equipment and increased connectivity enable vectors to proactively monitor subsea infrastructure. As well as remotely configuring subsea equipment, vectors can also provide diagnostics. That insight enables our customers to make the best decisions in terms of concepts, investment, safety, performance and predictive maintenance. Factories will be -- it will be a strong delivery at many projects, including the Dvalin, Wintershall's Nova and Equinor's Johan Castberg. Making existing products and equipments smaller and lighter is one way we have already reduced cost in the equipment that we provide. Our standardized vertical subsidiary for the North Sea -- for Norwegian shelf is a good example of that. Actually, these trees are being used in several current projects, as I mentioned previously.But of course, we haven't stopped there as we need new technology to move our industry forward. We just signed a joint industry project, a JIP, with Total, Equinor, Lundin and Aker BP to develop our next-generation, all-electric subsea system. We have combined our advances in standardizing equipment with sensor technology and data capture into an all-electric subsea production system. This marks a step change in the capabilities of our subsea system and equipment that will help drive reliability in our industry.An all-electric subsea system has many benefits. One, removing hydraulics can reduce topside, umbilical and subsea infrastructure, helping to lower costs. Tiebacks can be longer, so fields further out can be developed. It can also cost -- cut costs of ultra-deepwater developments. Actually, this could be the technology leap we need to reduce the -- to compensate for cost inflation that could come as market recovers. It enables a real-time insight on engine assets, and applying the analysis to this insight can reduce inspection and facilitate predictive maintenance.Our subsea gas compression system for Equinor Åsgard field is a good example of an all-electric system that can increase reliability for our customers. This complex subsea system has been in operation for over 2 years, and Equinor says it learns like a Swiss watch. I guess with 2 Swiss partners, ABB and MAN on this project, this joke never gets old.And now let's look ahead. While the outlook for oil services remains competitive, there are increasing signs of a recovery. Improvement measures across the industry are lowering breakeven costs, oil prices are higher and we are seeing more projects being sanctioned. Going forward, we expect increased activity. Tendering activity is high in our main markets, and we are currently bidding for contracts totaling about NOK 50 billion. About 2/3 of this is in the subsea area, and we expect some key projects to be awarded over the next 6 months -- 6 to 12 months. We are well-placed to take advantage of an upturn in the markets. Long term, we're optimistic demand for energy in any form will increase globally, and this is where we'll push for sustainable solutions that will truly pay -- start paying off.So as I round off my part of the presentation today, let me quickly recap the main points. We closed the first half of the year with a strong order intake, high tender activity and continued solid execution of our Projects and Services. This is supporting margins amid increasing signs of a market recovery. We are well-positioned in major markets globally, and we are actually pursuing new opportunities as we build our capabilities in delivering sustainable energy solutions.Thank you for listening, and Svein will go through this in more details. Svein?

[Svein Oskar Stoknes, Chief Financial Officer]

Thank you, Luis, and good morning. So as usual, I will now take you through the key financial highlights of the second quarter, our divisional performance and then run through our financial guidance before we then move on to the usual Q&A. And as always, all numbers mentioned are in Norwegian krone. So as usual, let's start with the income statement.So overall operating revenue for the second quarter was NOK 6.3 billion, up 15% year-on-year, supported by continued good progress on a number of key projects. In our Projects reporting segment, both field design and subsea increased revenue from same period last year. Overall, Projects was also up 15% year-on-year.Our Services segment was up 16% year-on-year, reflecting our strategy to grow our world-class Services business. This was primarily driven by the past subsegment or production asset services.Our reported second quarter EBITDA was NOK 439 million. This included net NOK 2 million of special items. For your reference, we have, as usual, set out a table in the appendix that further specifies these special items. Excluding special items, EBITDA was NOK 441 million, an increase of 10% year-on-year from NOK 400 million a year earlier. This was equal to an underlying margin of 7.1% compared to 7.4% in the same period last year.We continue to deliver stable underlying margins, a solid achievement as newly awarded work is in early phases of execution. This is a clear evidence of our continued strong execution and good momentum on our continuous efficiency improvement program.We saw the same development for the first half of 2018. Volumes were up year-on-year by 11% to NOK 11.7 billion. And we delivered an underlying EBITDA of NOK 825 million with a margin of 7.1% versus 7.2% in the same period last year.Second quarter depreciation was slightly down year-on-year at NOK 185 million. This is in line with our guidance, and we continue to expect underlying depreciation to be around NOK 750 million to NOK 800 million per year. Our reported second quarter EBIT or operating profit increased year-on-year to NOK 254 million from NOK 99 million. Excluding special items, EBIT was NOK 256 million and the margin was 4.1%, up from 3.7% last year.Excluding an unrealized hedging loss of NOK 18 million, net financial items were minus NOK 63 million in the quarter, including a minor net negative impact from currency effects and other financial items. We continue to see net financial items on an annual basis in the range of NOK 60 million to NOK 70 million per quarter. This excludes the effect of currency and non-qualifying hedges.Our tax charge was equivalent to a rate of 33% in the quarter. Going forward, we continue to expect average P&L tax rates to be in that low to mid-30% range.We ended the quarter with unadjusted net income of NOK 117 million or earnings per share of NOK 0.42. Excluding special items, the earnings per share were NOK 0.48.Now moving to our balance sheet and cash flow performance. Our net current operating assets or working capital remained stable and under the second quarter very strong at minus NOK 1.4 billion. This came as a result of continued solid project execution, ongoing initiatives to optimize cash flows and timing of some milestone payments.Working capital is likely to fluctuate around large project work, and we still expect the level to gradually trend toward 2% to 4% of group revenue over the next 9 to 12 months, again, as a result of the strong momentum on the initiatives to minimize our working capital needs.We had net interest-bearing items or net debt of NOK 247 million at the end of the quarter, down from NOK 475 million at Q1, reflecting good capital discipline and strong cash collection.Our net debt-to-EBITDA ended the quarter at a very solid 0.2x. As previously communicated, we still expect to be closer to our targeted level of net debt-to-EBITDA of about 1x towards the end of 2018.Our financial position remained strong at the end of the quarter, with a total liquidity buffer at a healthy NOK 7.4 billion. This includes our revolving credit facility with leverage covenant at 3.5x net debt-to-EBITDA. Our solid financial position continues to give us flexibility and good financial headroom going forward.Our cash flow from operations in the second quarter was NOK 318 million, reflecting good progress on our backlog and strong cash collection. Our investing cash flows total a negative NOK 102 million in the quarter, and we continue to see overall CapEx and R&D at roughly 2% of revenue going forward with flexibility. Cash flow from financing was negative NOK 387 million in the quarter due to repayment of debt in Brazil, with maturities in 2018.Now onto Projects, where second quarter revenue was up 15% year-on-year, with growth in both field design and in subsea. This resulted in an underlying Projects EBITDA margin of 6.7% in the quarter versus 7% last year. The EBIT margin, excluding special items, was 4.2%, an increase from 3.8% a year earlier.While newly awarded work is in an early phase of execution, we continue to realize significant benefits from improvement programs in our Projects portfolio, coupled with solid operational performance during the quarter. First half Projects revenue increased 10% to NOK 9.1 billion, and we achieved an underlying EBITDA of NOK 650 million. This was equivalent to a margin of 7.1% versus 6.8% in the first half of 2017, again, thanks to our continuous improvement efforts, cost reductions and strong execution. Order intake in Projects was solid in the second quarter, and book-to-bill ended at 1x versus 0.6x a year earlier. The book-to-bill for the first half of the year was at 1.3x. The backlog in Projects ended the quarter at a healthy NOK 27.3 billion. This is equal to about 18 months of Projects revenue.Now let's take a look at the key figures for subsea and field design within this reporting segment. So revenue from subsea projects increased 11% from the same period last year on the back of our recent strong order intake.Revenue from field design projects was up 19% year-on-year, mainly driven by several ongoing North Sea modification and hookup jobs. Solid order intake in projects was mainly driven by field design with a book-to-bill of 1.4x, both for the quarter and for the first half.The subsea order intake is impacted by the timing of major awards, but ended the first half at a solid 1x book-to-bill. Despite the challenging market, tendering activity is still healthy, and we are currently tendering for around NOK 40 billion of work overall in Projects, with the majority in subsea.Our Services revenue increased 16% year-on-year. This was driven by international growth in our production asset services subsegment. As of the second quarter, production asset services accounted for about 50% of Services revenues, up from 40% in the same period last year. Underlying EBITDA was NOK 173 million with a margin of 13%, an increase from 12.7% in the same quarter last year. EBIT was NOK 132 million with a margin of 9.9%, up from 8.8% a year ago. The higher margins were due to increased activity levels versus last year and good momentum on our continuous improvement program.For the first half of 2018, Services revenue increased 12% from last year to NOK 2.5 billion. We achieved an underlying EBITDA of NOK 309 million, equivalent to a margin of 12.4% versus 13.4% in 2017, mainly related to changed activity mix and an unusually high installation and commissioning activity in the first half of last year.Second quarter order intake in Services increased to NOK 0.7 billion from NOK 0.4 billion a year earlier, resulting in a second quarter book-to-bill of 0.5x. The book-to-bill for the first half of the year was 1.2x. I would like to remind you that a part of Services order intake is short cycled or book and turn in nature. Despite the tough market, tendering activity is good, and we are currently tendering for around NOK 10 billion of work -- in Services work globally.Now over to the order intake and backlog performance for the group as a whole. Overall second quarter order intake was solid at NOK 5.7 billion, with a good combination of greenfield, brownfield, services and growth on existing contracts and frame agreements. This is equivalent to book-to-bill of 0.9x. And year-to-date, we have a strong book-to-bill of 1.2x.Our backlog totaled NOK 37 billion at the end of the second quarter, which is equivalent to around 1.6x our 2017 revenue and is up from NOK 31 billion a year ago.With the recent strong order intake, this ability has significantly improved. Order intake continue to be somewhat uneven, caused by large contracts. As mentioned earlier, tendering activity is still good, with several key projects likely to be sanctioned over the next 6 to 12 months. We are currently engaged in tenders with an estimated sales value of around NOK 50 billion.As a reminder, our backlog does not include a good part of our Services business or potential growth or options on existing contracts.And finally, over to our guidance. As Luis mentioned, we see an uptick in activity levels. On the back of a strong order intake in the first half of the year and continued high tendering activity, we continue to see our overall top line up close to 10% in 2018 versus a year earlier. We see revenue growth in both Projects and Services and across subsegments. While some of our regions would benefit from improved order intake, we also see signs of an uptick in activity levels in these regions. And we will continue to leverage the differentiating front-end capabilities to capture opportunities and engage with our customers at an early stage. At this point, we still expect our underlying EBITDA margin for the group overall to remain around current levels, even as newly priced orders enter our backlog and as new awards are in early phases of execution.This achievement is supported by continued solid execution and our relentless focus on continuous improvements. As activity levels are picking up, it will be important to harvest scale effects from our very fit and streamlined organization and asset base.We have a healthy backlog, improved visibility and a solid financial position. This continues to give us increased flexibility and financial headroom to position Aker Solutions to fully take advantage of the recovery.So to sum up, again, we ended the quarter continuing to deliver strong project execution with good underlying financial performance. And by securing a solid order intake, that further improves our visibility moving forward.Thank you for listening. That was the end of our presentation here today, and we will now move on to Q&A.

[Tove Røskaft, Head of Umbilicals]

As Svein said, we now have time for questions. We have webcast audience with us today, but we will start with question with the audience in this room. So for the sake of good order and for the sake of the people on the webcast, can you please introduce yourself with your name and where you work, and I think we have time for a question and a follow-up question from each.

[Luis Antonio Gomes Araujo, Chief Executive Officer]

Before I go into that, I'd make -- I'd like to make it clear that as a Brazilian, absolutely clear, there's no question about World Cup. No one is against. It's off the agenda until 2022.

[Tove Røskaft, Head of Umbilicals]

Yes, gentleman?

[Haakon Amundsen, Lead Analyst]

Haakon from ABG. Just a question on the cost pressures you're seeing, given that you're running at around 7% margin when you are recognizing, I guess, cautiously on the newly started projects. As these projects proceed and you execute well, do you expect these cost pressures to then absorb that improving margin on those projects? Is that what you're seeing? Or do you think that's manageable?

[Luis Antonio Gomes Araujo, Chief Executive Officer]

I can start. We are watching, of course, supply chain very closely. I think some of the changes we made or some of the efforts we put to the cycle by standardizing components, as I think I mentioned, we are using the same tree right now in the Norwegian shelf for 3 different clients and 5 projects. So that same tree that help us to also organize our supply chain in a way that they have some visibility, right, we don't change all the time and also an improved economies of scale. But of course, we have pushed -- we all have pushed the supply chain quite hard and that pull the clients to us down the chain, and there's a limit to what we can do. So we can see that there are -- there might be some headwinds. But we have not seen that yet. We see, of course, headwinds on salary demands as we get busier. Of course, we have held the salaries down for quite some time. So -- but it's been quite good discussion with the unions, for example, in Norway and other places, and we don't see huge pressures. And we are actually hoping that we're going to continue driving those solutions to the shops and making sure that we take more ways to compensate for those pressures. But there's also risk, and the industry has inflation, so -- but we have not seen -- still quite a lot of capacity available. That's my point.

[Svein Oskar Stoknes, Chief Financial Officer]

I should probably add that we have a very strong track record now over the last 4 years during the downturn to improve on our as-sold margin levels. And we concluded the first phase of #thejourney at the end of 2017. We launched on the next phase of #thejourney, the next 20% we're pursuing and, of course, that is a key element for us to drive our as-sold margins to the level they need to be at in order to sustain margins at today's level in the short term. Then, of course, as I said, scale effect is going to be a key element of margin expansion for us as activity levels is picking up further.

[Luis Antonio Gomes Araujo, Chief Executive Officer]

I guess, like everybody else, we appreciate better prices. But in Norway, we're counting on that, especially as we want to make more and more projects viable, like we've been doing low in the beginning cost. So we don't want to break the chain now.

[Tove Røskaft, Head of Umbilicals]

The gentleman in the back?

[Tommy Johannessen]

Tommy Johannessen from SpareBank 1 Markets. On the contract opportunities pipeline, you have now removed Norway from the short-term contract list as many of the contracts has been awarded. Do you see more competition going forward on contract awards, given that you now are mentioning more international opportunities?

[Luis Antonio Gomes Araujo, Chief Executive Officer]

I think competition is everywhere. As I mentioned, the industry still has quite a lot of capacity in global terms, plants, less on people, maybe now, we protect our force. But as the industry, in general, I think quite a lot of people have asset. We need to start bringing this -- some of those young guys back in. But yes, I think they are also in competition. And I think in terms of Norway, yes, we don't see a lot of new greenfield projects, with a few exceptions, I think Aker being one of them. But it's quite a lot of brownfield work, a lot of tiebacks. And actually, it's evolved now. We see some, as I mentioned in the presentation, we see some more large projects coming on now, which is good, but they are not the same scale and size as we saw in 2014. I think the companies are still being very cautious about sanctioning large projects, especially the ones taking a long time to produce. So we see a mix between tiebacks, so that's going to be -- a lot of the new fields are going to be tiebacks, like we saw Dalia now with 5 trees. There is next phase of Kaombo, for example, in Angola. There are some Nigerian projects. A lot of tiebacks coming in, so we see a combination of both. So we see -- but I'll also be competitive, there's no question about that.

[Tommy Johannessen]

And you also mentioned Africa specifically and now, which you didn't mention in Q1. Is that mainly down in Nigeria?

[Luis Antonio Gomes Araujo, Chief Executive Officer]

Well, I think we saw some countries moving. And especially when it talks about gas and so on, you see LNG and some projects moving, Senegal, new areas, and Senegal, Mozambique start to move. But also, the more established, I would say, Ghana, for example, there's activity there now. But we also see activity in Angola finally moving forward. So those countries were shocked with the oil price, and they are left with very expensive fields to develop in terms of taxes. And they have put in place new structures, it takes time, have to go through government approvals. So we see that they have eased out in some of those terms. And then, of course, production is declining because one thing that you assure that the decline in [ cove ] never sleeps, right? This is how it goes down. So we need -- they start to need to replace in all this production, so we see more movement in these places. So it's actually encouraging to see that in deepwater, things have started to move again.

[Magnus Olsvik, Equity Research Analyst]

Magnus Olsvik, Kepler Cheuvreux. Just given that you have now more than 70% of your backlog in Norway, do you have the capacity to execute that backlog? Or would you need to add capacity over the coming years? And if so, do you see that capacity available? Or are there pressure on that capacity?

[Luis Antonio Gomes Araujo, Chief Executive Officer]

Okay, you're talking about specifically Norway?

[Magnus Olsvik, Equity Research Analyst]

Yes.

[Luis Antonio Gomes Araujo, Chief Executive Officer]

Okay. Yes, no, we did. As we said during the course of the downturn that we are protecting capacity. We could have been far more brutal, of course, taking workforce out, but we know how much we invest in these people. So we see that we're preoccupied in the West Coast right now. That's true. There's still capacity in Oslo. Some of the large green fields, they start to -- will start to demand probably in the next 12 months. So we have capacity. We are hiring new people. We're actually focused in some specific capabilities. We need to bring more people in. And also, we want to bring some of the more youngsters back to the industry. We worked very hard to our clients to make sure that people understand this has a long -- this seems as a long time span. So -- and there's a lot of new stuff to work on. I just showed today these electrical systems. It's exciting new technology we developed, so it's a lot of good work for the young guys out there that are looking for -- starting their working life. So yes, we are hiring people. Back to capacity, interestingly, we've got some contractors, got quite a lot of contractors back for the last 12 months. And most of these people have worked for us before, so -- which is quite good for the continuity of the systems. I think we have done some survey, about 90% of the contractors we got in West Coast have worked for us before. So there is people out there.

[Svein Oskar Stoknes, Chief Financial Officer]

Add to that, that one of the key things we have done during this downturn is to develop our global execution model. So despite a lot of activity, North Sea was -- we're able to execute on that work by leveraging the workforce and the sites we have globally. So on the Johan Castberg project, for example, you have Norway involved, you have U.K. involved, you have Brazil involved, you have Malaysia involved. And on the engineering side, we have 500 people, 600 people strong workforce in Mumbai and India. We had the key element of our work share globally. So we have built that flexibility into our system and are able to cope with that pressure in a completely different way than we were 4 years ago.

[Luis Antonio Gomes Araujo, Chief Executive Officer]

And that's a very important point, actually, because the work -- the work scope will vary in regions. And that's somebody -- just now, they still need work. We need work in KL, for example, we need work in London. We are demanding people in U.K. as we speak in London, so we have done this restructuring there. But we keep the core business, the core group competence so we can add contractors and also start to leverage this workforce across the globe. It's a very good point.

[Tove Røskaft, Head of Umbilicals]

Okay. If there's no more questions from the audience in this room, I think we have one question from the webcast audience. It's from Lars Maalen-Johansen in Global Assets. The EBITDA margin is lower in Q2 than in Q1. How do you see the margin development going forward?

[Svein Oskar Stoknes, Chief Financial Officer]

Yes. I think we made it clear in our presentation that we expect our EBITDA margin to remain around current levels. So we leave it at that.

[Luis Antonio Gomes Araujo, Chief Executive Officer]

That's what they are.

[Tove Røskaft, Head of Umbilicals]

Then we are ready to wrap up. Luis, any last words?

[Luis Antonio Gomes Araujo, Chief Executive Officer]

No, thank you for being here. I'd like to -- very pleased to see so many of you here, and it's a beautiful day in Norway, so I wish you a good summer. Of course, if you are in the Northern Hemisphere, if you are in Brazil and in Australia, a good winter. Thank you.

[Svein Oskar Stoknes, Chief Financial Officer]

Okay, thank you.

[Tove Røskaft, Head of Umbilicals]

Thank you.