Strong revenue growth and good operating cash flow in Q2


Interim report january-June 2023

• Total operating revenue amounted to NOK 799.4 million (608.5), an increase of 31.4%. Currency adjusted organic growth was 4.0%.
• Revenue from customer contracts amounted to NOK 792.3 million (603.9) an increase of 31.2%.
• EBIT amounted to NOK 67.8 million (63.6).
• The period was charged with non-recurring items amounting to NOK 4.4 million (5.6).
• Adjusted EBITA amounted to NOK 82.7 million (77.6) up 6.7%.
• Profit for the period was NOK 56.7 million (58.2) down 2.5%
• Cash flow from operating activities totaled NOK 132.5 million (32.2).
• Basic/Diluted earnings per share amounted to NOK 0.31 (0.32).

January-June 2023
• Total operating revenue amounted to NOK 1,504.0 million (1,134.9), an increase of 32.5%. Currency adjusted organic growth was 6.1%.
• Revenue from customer contracts amounted to NOK 1,492.4 million (1,122.1) an increase of 33.0%.
• EBIT amounted to NOK 113.8 million (99.9).
• The period was charged with non-recurring items amounting to NOK 6.7 million (5.6).
• Adjusted EBITA amounted to NOK 142.1 million (120.9) up 17.6%.
• Profit for the period was NOK 89.3 million (76.3) up 17.0%
• Cash flow from operating activities totaled NOK 177.6 million (66.6).
• Basic/Diluted earnings per share amounted to NOK 0.49 (0.42).

Significant events during the January-June 2023 period
• Norva24 acquired NRC Gravco in Oslo adding NOK 90 million in revenues and further consolidating Norva24’s position in Oslo and the surrounding area.
• Mikael Smedborn assumed his position as new CEO of Sweden.
• Henrik Norrbom was appointed new Group CEO. Henrik will assume his position as from September 18, 2023.

Significant events after the reporting period
• Stein Yndestad assumed the position as acting Group CEO as from August 1, 2023, until September 18.

Strong revenue growth and cash flow
– softer margins

In Q2 2023, Norva24 achieved a strong total revenue growth of 31%, supported by currency adjusted organic growth of 4%. This level of organic growth is below what we see as a normal rate of growth in our industry but needs to be viewed in retrospect of the strong growth experienced in the first half of 2022, particularly in Norway with 20% organic growth due to the backlog after Covid-19.

Overall, we still see good market development, but during the quarter utilization has been particularly uneven across branches with very high utilization in some branches and modest or weak utilization in other branches. We do not see this as a permanent or long-term shift and therefore not shifted resources between branches to mitigate, but to a larger extent used subcontractors in the markets with high demand. This has contributed to the margin reduction for the quarter. Q2 last year was, as communicated earlier, impacted by catch up activities after Covid-19 affecting organic growth and margins particularly in Norway. Adjusted EBITA in Q2 2023 was up 7% to NOK 83 million, and adjusted EBITA-margin was 10% during the quarter. We remain confident that Norva24’s business model is resilient in this weaker economic environment as well as inflation resistant, with a lag as adjustements take place in arrears.

Cash flow from operating activities was strong at NOK 133 million with a healthy cash conversion of 85% of our adjusted EBITDA. We are comfortable with our financial position, excellent cash flow and a leverage of 2.3x LTM adjusted EBITDA at the end of Q2. During the last 12 months we reported cash flow from operating activities amounting to more than NOK 450 million. This is providing us with significant headroom in relation to our financial covenants in the financing facility. We currently have NOK 520 million available in the credit facility to enable continued strong M&A pace going forward.
The M&A activity in 2023 started off strongly as Norva24 in January 2023 completed the acquisition of Gravco in Norway, which strengthens Norva24 in the greater Oslo area and surroundings. Gravco had revenues of NOK 90 million in 2022 and high margins. In addition a smaller acquisition, Toms Kloakservice, was completed in Denmark in August 2023. We have a solid pipeline and remain confident that 2023 will be a strong acquisition year despite slightly slower M&A pace during the last few months. The five acquisitions we have closed during the last 12 months add annual revenue of NOK 380 million and provided an acquired growth of 19% in Q2 2023. Norva24 is well on track to achieve the financial target of NOK 4.5 billion in revenue by 2025. On the target on adjusted EBITA margin of 14-15% in the medium term we are however trending slightly behind, but measures have been initiated to mitigated this trend.

In Q2 Germany showed the strongest total growth at 72% driven by organic growth of 29% and acquisition growth of 43%. Currency adjusted organic growth was 11% and adjusted EBITA margin decreased 3 p.p. to 13% due to utilization in the German market, and one underperforming unit.

Norway showed slower organic growth mainly due to strong development in 2022 as the backlog of work after Covid-19 was done. Adjusted EBITA margin for Norway at 15% was still strongest in the group.
The improvements and positive momentum in the Danish operations seen in previous quarters continued in Q2. Adjusted

EBITA margin improved by 3 p.p. for Q2 compared with last year and 4 p.p. year to date confirming that Denmark is on the right track even if margin is still below the group average.
Sweden posted a softer Q2 with adjusted EBITA margin of 10% mainly due to utilization across different branches and somewhat slower activity level mainly in the capital area. In Norway, Germany and Sweden we have seen high demand in some branches, leading to additional overtime and higher use of subcontractors. At the same time, we have seen lower demand in other branches, resulting in lower utilization of personnel and equipment. Combined, this have impacted margins negatively.

Our vision remains clear and achievable: We want to be the market leader in underground infrastructure maintenance in Europe. We will continue to strengthen our position through both acquisitions and organic growth to fully live up to our promise to our customers: “We always help!”
We have a clear, proven, and consistent acquisition strategy, with 43 acquisitions completed since 2015. We operate in the European UIM market, with a total addressable market of more than NOK 140 billion and have a clear number one position in Northern Europe, a market worth NOK 36 billion.
I assumed the position as acting Group CEO as from August 1. I have been working closely with the board and the previous CEO on the strategy and developing Norva24 for the last 6 years. We will continue to follow the same path so it’s very much business as usual.

As we communicated before the summer, Henrik Norrbom will assume the position as Group CEO from September 18. We are very happy to have Henrik onboard the Norva24 team. Henrik has valuable experience and expertise in managing geographically dispersed and decentralized organizations, managing operations in the Nordics and mainland Europe, carrying out integrations through mergers and acquisitions, as well as building strong international and customer-focused cultures. He has a proven track record from several executive management positions in different industries.
We once again welcome Henrik to the team.
I also want to take the opportunity to thank Henrik Damgaard for his time in Norva24 and wish him the best in his new position.

Stein Yndestad
Acting Group CEO

“We look back at a quarter with strong revenue growth of 31% and a strong cash flow from operations. Organic growth slowed slightly in the quarter on the back of Covid-19 catch up last year.”

Investors, analysts and journalists are welcome to attend the company’s webcast with teleconference at 09.30 (CEST).

Stein Yndestad, acting Group CEO, Dean Zuzic Group CFO,  and Sture Stölen, Head of IR, will present the report. The presentation will be held in English.
Date: 22 August 2023

Webcast with teleconference at 09.30 (CEST)

To participiate in the conference and see the phone numbers, please go to link below
Webcast/Teleconference :

For further information:
Stein Yndestad, Acting Group CEO
Tel: +47 916 86 696

Dean Zuzic, Group CFO
Tel: +47 414 33 560

Sture Stölen, Head of IR
Tel: +46 723 68 65 07