Cadeler A/S Q3 FY2025 Earnings Call

Good morning, and welcome to Cadeler's Third Quarter 2025 Earnings Presentation. Presenting today are Mikkel Gleerup, Chief Executive Officer; and Peter Brogaard, Chief Financial Officer. Please be reminded that the presenters' remarks today will include forward-looking statements. Actual results may differ materially from those contemplated. The risks and uncertainties that could cause Cadeler's results to differ materially from today's forward-looking statements include those detailed in Cadeler's annual report on Form 20-F on file with the United States Securities and Exchange Commission. Any forward-looking statements made this morning are based on assumptions as of today, and Cadeler undertakes no obligation to update these statements as a result of new information or future events. This morning's presentation includes both IFRS and certain non-IFRS financial measures. A reconciliation of non-IFRS financial measures to the nearest IFRS equivalent is provided in Cadeler's annual report. The annual report and today's earnings presentation are available on Cadeler's website at cadeler.com/investor. We ask that you please hold all questions until the completion of the formal remarks. At which time, you will be given instructions for the question and answer session. As a reminder, this call is being recorded today. If you have any objections, please disconnect at this time. Mikkel Gleerup, you may begin.

Thank you very much, and welcome to this Q3 presentation from Cadeler. Thanks to everybody who's dialing in for listening to us today. With me today, I have Peter as normal, and Peter will take you through the financial section of the presentation. So just the standard disclaimer. And we can say that this quarter, the highlights of the third quarter of 2025, we can say that it has been financial performance in line with our expectations. We have, in this quarter, also signed the third full scope foundation T&I contract and also 2 turbine installation T&I contracts. We have delivered 3 of our 4 newbuilds scheduled for delivery in 2025 already. And we have the remaining newbuild, the Wind Mover on track for delivery, and she is delivering according to current expectations within the next couple of weeks. We have had very strong utilization in the third quarter. We have had 92% utilization. And we believe that, as we have always said, that is a strong measure of our business, and we are working across the globe in both U.S., in Europe and in Asia. And we are continuing with very strong execution. We have the Wind Ally currently mobilizing for the Hornsea 3 foundation T&I project, and we have the Wind Keeper now here in Denmark at Fayard and also upgrading before she embarks on her long-term contract with Vestas. In terms of commercial highlights of the third quarter 2025, the vessels have been working out there, and we are starting with the Wind Orca that has been performing work on the He Dreiht project for Vestas. The Wind Osprey has done an O&M campaign for Vestas and is now installing a wind turbine installation project on Baltic Power in Poland. Scylla has continued to work on Revolution Wind in the U.S. for Ørsted, and Wind Zaratan completed an O&M campaign in Asia and is now getting ready for her next assignments in the next year. The Wind Peak is also continuing to install on the Sofia wind farm owned by RWE, where we are working for Siemens Gamesa. Wind Maker is working on Greater Changhua in Asia for Ørsted. And Wind Pace has been executing an O&M campaign basically since she was delivered from the yard, and she's working for GE Vernova. The Wind Keeper, as I said, has arrived in Denmark on schedule and is currently undertaking a complex upgrade scope. We do believe that we will see her on a project in the first quarter next year. Wind Ally delivered 7 weeks ahead of schedule from the yard and sailed directly to the next mobilization port, where she's mobilizing all her foundation mission equipment, getting her ready for the Hornsea 3 foundation installation project. Cadeler sits on a significant backlog across key markets, both in U.S. and Asia, but certainly also in Europe. And we have recently disclosed a very large foundation project with an undisclosed client for execution in 2029, which is something that we are very, very pleased with. I think it's a verification of the concept we are running on the foundation side where the biggest clients in our industry are coming to us for full T&I on foundation installation, both near term, midterm and also in the longer term. We will continue to work very, very diligently for more foundation work, but also for more WTG work. And as we do that, we will also continue to build Nexra, our O&M vehicle. And we expect that the backlog will continue to be strong across the years that we are sailing through now. The backlog has basically grown since we listed the business, and we are now standing today at a backlog of almost EUR 2.9 billion, where 78% of that has reached FID. We believe that is a quality sign that so much of our backlog has reached FID and also that we are continuing to grow the backlog. We have discussed before that we see 2027 and 2028 as years with slightly more competition for the projects and also an expected lower utilization degree on the fleet. But we are, of course, still working very, very hard to get the best projects in these years so we can continue the journey with our fleet, with our company and our people. In terms of the newbuilds out there, we have the Wind Mover that is delivering in Q4 this year. This is the last delivery this year. And when this is delivered, we will have totally taken delivery of 5 vessels this year, including the Wind Keeper, which was an additional delivery this year that was unexpected at the beginning of the year. And it's very, very close to completion, has already completed the sea trials, and we are expecting, as I said before, to deliver the vessel in the next couple of weeks. The Wind Pace is on track. And we expect that she will be floated out of the dry dock here in December 2025 and delivery is still planned for the third quarter 2026, but there are opportunities for us to potentially advance that should the market need that in 2026. On Wind Apex, we still look to the delivery in Q2 2027, and we are following the plan there exactly as on the other vessels. The Wind Keeper, as I said, has arrived at Fayard in Denmark, and we are on schedule. It is a big upgrade scope we are doing on the vessel, but we need to make sure that these vessels operate to catalyst standards from the beginning. We are working with one of our esteemed clients with Vestas, and we want to make sure that Vestas receives a real Cadeler experience on the Wind Keeper from the beginning. The primary scope of the Wind Keeper will be O&M services, but with the crane she has, the leg length she has, and the carrying capacity she has, she can also embark on installation scopes. For us, it's important that we drive a lot of value out of this investment, and we believe that with what we have seen so far, that is very much a strong opportunity for us and for our client in collaboration. At this point, I will hand over to Peter for the financial highlights in this quarter.

Thank you very much, Mikkel. Yes, financial highlights for Q3. It was a very, very strong quarter that reflects high utilization and cost under control. In comparison to last year, of course, we have 3 more vessels in operations, the 2 B Class vessels Wind Peak and Pace and Wind Maker. Revenue was EUR 154.3 million. The equity ratio is still with the more leveraged balance sheet with deliveries and drawdown on our facilities still very solid at 47.3%. Utilization was very high at 92.2%, which is very, very good for the quarter. Market cap is EUR 1.4 billion, approximately 3x the guided EBITDA for the year. EBITDA for the quarter was EUR 109.1 million. Cash flow from operation activities was EUR 214 million. And as Mikkel explained, a backlog record high at EUR 2.9 billion, with a 3-month daily average turnover of EUR 5.4 million. If we look at the P&L for Q3, yes, again, it really reflects that there are more vessels in operations, Wind Peak, Wind Pace, Wind Maker. And it is a picture that we have seen quarter-by-quarter with very strong results once a vessel goes into operations. Revenue of EUR 154.2 million is primarily due to high utilization, but also the additional vessels. Cost of sales are under control, around EUR 38,000 approximately for the quarter, a little bit up as compared to last year, but also 2 vessels in operations in the U.S. with a slightly higher operational expenditure per day, but still below the EUR 14,000 mark per day. SG&A is also up due to what we have communicated for some time now that we are building the organization exactly to what we see now. We have more vessels in operation and also the upcoming foundation projects. EBITDA, as said, is EUR 109 million, which is more than double what we had last year. The P&L for the 9 months from the 1st of January to the 13th of September reflects the same story. Additionally, you can see that the operational expenditure for the year is EUR 34,000 per day, which also reflects that operations are under control. As communicated around the first half report, we also have received termination fees for the termination of a long-term agreement on a postponed project, Hornsea 4. The balance sheet reflects the deliveries we have taken this year, with 3 new builds and the Wind Keeper. But as stated, the equity ratio is still at a very comfortable level. This is a slide we have shown a couple of times. It shows that we have sufficient funding to go through the remaining CapEx program we have with the Mover, with 2 A Class vessels coming in, in Mover in Q4 '25 and Ace in '26 and Apex in '27. So we have quite a strong balance sheet and cash and liquidity available. Another story here is that we still see a lot of support from the banks. I think it's unchanged strong support we have seen throughout the last couple of years. Apex is not committed financing yet because it's delivered in '27. So we will start financing that one in '26 and have that in place approximately 1 year before delivery in order to not incur too much commitment fees on that one, but we see exactly the same strong support and interest from the banks also for the Apex. This is the financing overview. What is new here is that we had a Wind Keeper bridge facility that we took when we signed the agreement on the acquisition of Wind Keeper, and we now have a Wind Keeper syndicated facility in place to replace that. That was not done by end of Q3, but that is something that has happened subsequently. Full year outlook for '25. We maintain the outlook that we issued around the first half year report after the termination of the long-term agreement. Of course, we are far along into the year, and there's not a lot of uncertainties and judgments left. However, what can fluctuate here is how much of the T&I scope on T3 falls into '25, '26, '27; that is something that can move a little bit, but we maintain the guidance from the half year before. Over to you, Mikkel.

Thank you, Peter. In terms of the commercial outlook for the business, I think what we can say in terms of our view on the market, we get a lot of questions on this, and rightfully so. We do see a recalibration. We still see strong momentum, especially in the inner years and in the outer years with a period in between where the momentum is weaker. What do I mean by that? Let me first talk about the inner years. I think it's fair to say that at the moment, there are several projects out there that don't have an installation solution or an O&M solution at the moment, and they are still looking in the market. In '26 and also in '27, it is becoming increasingly difficult to get a solution, especially if that solution involves the same vessel that does everything. Of course, if you're willing to piece-meal it together, then you can find a solution still. But this will be the next step. I think '26 is close to impossible at the moment. In '27, it is becoming increasingly more something that you have to put together to deliver a full solution to clients. So we are seeing that in the middle year, so the second half of '27 and also in '28, that some of the projects there have been shifting to the right. And that means that there is lower-than-expected utilization in this period. But we are still seeing significant outbuild in '29 and forward. As we have shown the market as well, we have signed a big contract for '29, and we see actually that some developers would like to secure their capacity for this period, the '29, 2030, 2031 period sooner rather than later to not miss out on the capacity in those years. A lot is still pending on the forthcoming auctions like auction round 7 and auction round 8. But we do see that there is also support from governments. In Denmark, for example, there have been support on 2 of the offshore projects to make them increasingly attractive to the market. Hence, we also believe that there will be successful bidding in Denmark around the auction. We believe that it's fundamentally important to also say that even with the adjusted targets, we are still seeing a large outbuild of offshore wind in this decade. From next decade, we expect that the curve will increase in its steepness, and more will be outbuilt as we come into that area. We do expect a vessel undersupply towards the end of the decade and the beginning of the next decade. In terms of capacity and what we see in the market and what others are observing in the market, we have seen a different reality from whoever you ask. We have tried to show here what the various consultants and analysts that are looking at the market say about the worldwide market excluding China, particularly what will be installed before 2031. Regardless of what line you're taking here, there is a significant increase from where we are today and to where we will be as we move into the next decade. Cadeler's focus is to grasp the right projects, the best projects and ensure that we are running on as high a utilization profile on our vessels as possible. With the plan that we have laid out for the middle years, the '27, '28 years, we are on a mission now to close these years as quickly as possible with the best projects feasible. It is a fact that there is more competition in '28 than we expected due to missed auction rounds and projects being shifted to the right, but that doesn't mean that there are no opportunities. The important message from us is that there are opportunities, and we are fighting for those opportunities, and we will continue to do so. Europe will continue to be the leader in the outbuild, but we also see APAC continuing outbuild, especially Korea coming into that market, in addition to what we have observed in Taiwan and Japan. Recently, there has also been a European developer signing a development agreement in another Asian country, but we don't believe that will have an impact in this decade. We still possess the largest fleet in the industry, and we believe that this fleet, along with the flexibility, predictability, and affordability it offers our clients, is something they prefer. We are still active in a wide range of tenders across all years in the future, and we are striving to deliver the best value and projects to our investors. This is what drives us to work hard every day. The offering we can provide to our clients holds value and is expected to drive value for us and our investors. We've demonstrated here that the supply has decreased since we last addressed the investors in a group setting. The Maersk Offshore Wind vessel, the contract between Maersk and Seatrium was terminated. Thus, we don't consider that vessel to be a part of the supply currently in the market, leading to the overall supply having gone down. In terms of key investment highlights, as mentioned earlier, we have the largest and most versatile and flexible fleet, enabling various opportunities for our clients, including cost utilization, efficiency, and project derisking. All these factors are subjects of ongoing discussions with clients for current, near-term, mid-term, and long-term projects. We have a highly experienced team, and we have grown conservatively, which is why we are confident we have the right-sized team for the current situation. We have strong relationships with clients and contacts in the industry, positioning us well in terms of negotiating projects. We have a resilient global platform, which allows us to spread risk across more units, maintaining a strong position both operationally and in the market risk context. We see the O&M market taking an increased share of the fleet concerning either campaigns on turbines or ad hoc service work required for main component replacements on already installed products in the market. We observe an undersupply of capable vessels, particularly for foundations in 2029 and WTG vessels from 2030 onwards. We are already witnessing early indications of this as we are actively bidding on some of these projects. Additionally, we see a marked growth in the demand for O&M services. Overall, the reality for the middle years, particularly the second half of '27 and '28, indicates we are entering a market that will be busy, where every single vessel day will be captured. This will give way to a more balanced work environment and utilization before we observe a market pick-up again in '29 with the projects we currently see on the horizon. Our strong track record in the capital markets is further validated by a record-high order backlog of EUR 2.9 billion, which provides significant earnings visibility. As referenced in some reports this morning, over EUR 700 million of the backlog is scheduled for the coming 12 months. Therefore, regarding coverage for the upcoming year, we are in a very advantageous position. To summarize, we see a robust near term, a slightly weaker middle term, and then a resurgence in the longer term. That concludes our presentation today, and we are happy to take questions.

Our first question is from Martin Huseby Karlsen from DNB.

I think you did a pretty good job talking about 2028 being a transition year, but I'm curious to hear a little bit on your confidence level for '29 and '30 seeing higher volumes. Is that related specifically to some events out there? Or is it in general contingent upon more government and political support for offshore wind in Europe?

Thank you, Martin. That's a good question. Our confidence is mainly based on the number of projects we're currently bidding on and our clients' willingness to commit to these bids if they can secure capacity. Regarding the U.K. round 7 auction, while I know the budget was set lower than expected, I still believe that a significant number of projects can be approved within that budget. It's important for us to be involved in the right projects, and we have a general belief in the projects that are currently available for bidding in those years. This gives us an overall perspective that suggests that in 2029, there will be an environment where not all clients can be served in that year.

Good. And then as a follow-up, in terms of positioning Cadeler for the next, call it, next couple of years in terms of backlog, '28 looks maybe to be a little bit challenging. But when you get into '29 and '30 and there is quite a lot of uncertainty in the industry as a whole, could you talk a little bit to how you perceive or get comments from clients with respect to your positioning, having a large fleet of vessels and also being able to do both foundations and turbines as opposed to some of the single or two-vessel companies out there?

Yes. I think that is something that is certainly valued highly by the clients — predictability and safety in the supply side. I think that, even in a year like '28, where some developers have only one project to execute, it is very important that project goes to plan. We see that – and we also feel it very much through our discussions with clients that it revolves primarily around our ability to deliver, our ability to guarantee vessel and potentially backup vessels if something should go wrong, which matters more than anything else. We often get asked how much we discuss price with our clients, and I would argue that price is not the primary focus in our discussions. It is true that there is more pressure in '28 because we are competing for fewer projects. Hence, that's a natural correlation. However, it is essential to recognize that realities exist on both sides of that equation. Firstly, it largely depends on the developer we are dealing with. Secondly, it also depends on what type of project they intend to execute. Particularly for foundation work, confidence in delivery is critical. On the WTG side, it involves ensuring backup around the turbine OEMs should they experience issues. So those are the things we discuss.

And you touched a little bit on it, my next question in your answer already. But in terms of pricing, there has been at least from the outside, pretty solid pricing for '26, '27 execution. Then you announced recently work for '29 and '30, which also seem to be at good pricing. Can you help us understand that in the context of '28 demand looking a little bit softer?

I think, again, it depends a lot on where you're looking. If you're looking in Asia, we are still seeing a tighter supply and demand balance even in '28 compared to the rest of the world. In contrast, in Europe, the prices for '28 are slightly more pressured, and you need to be sharper to secure projects there. In '28, I would argue that price is indeed a focal issue because, obviously, if you have a project in 2028, you know that there are more companies capable of doing it than there are currently projects available, thus creating pressure if not downward pressure on prices, then at least a stabilization of prices. It's more of an overall evaluation criterion. It is – as I've said previously, evaluating on a daily rate basis is difficult, and I cannot give you a precise figure of change. However, it's more about the overall view of the project, but it doesn't imply that it isn't still an attractive endeavor for us.

Our next question is from Jamie Franklin from Jefferies.

So firstly, just focusing on Q4. You mentioned obviously that Hornsea 3 is probably the biggest variable in terms of where you end up within your full-year guidance range. Could you give us a bit more color on the scope currently being worked on Hornsea 3? And as you move into 2026, what’s your current expectation in terms of timing for first monopile installation, please? And then the second question is just for Peter. In terms of cash flow for Q4, can you give us any indication of what to expect in terms of working capital, a pretty decent inflow in Q3? Should we expect that again in Q4? And similarly, on CapEx, what are the main components to expect in Q4? Is it just a final installment of Wind Mover? Or will there also be some Wind Keeper upgrade CapEx as well?

Yes. If we take the last question first. Thank you, Jamie. CapEx for Q4 will primarily involve costs for the Mover and the mission equipment on Wind Ally. There will also be the usual capitalized borrowing costs incurred each quarter. Overall, it will amount to around EUR 320 million primarily driven by changes in working capital. Q3 is somewhat of a unique quarter for working capital as it sees a significant decrease due to receiving the termination fees on the long-term agreement cancellation, which was recorded as an asset at half-year, that cash was received in Q3. Isolating that event, we're expecting a similar trend in Q4 as we experienced in Q3, with modest growth or stable working capital levels. On the transport and installation scope for Hornsea 3 in 2026, we are currently engaged in planning and engineering work, as well as getting started on transportation scope this Q4.

Yes. I can address that, but we cannot disclose specifics because it is Ørsted that governs those announcements. However, I can affirm that we are absolutely on plan for Hornsea 3, and we are tracking all our planned deliveries effectively, on target and on budget at this stage, which is very gratifying. Currently, we have successfully delivered many of the engineering scopes we’ve been working on for years. This includes the transportation frames for the secondary steel, transportation frames for the piles, mission equipment for the vessel, and the vessel is mobilizing at present. Concurrently, we are preparing two ports—Port of Tyne for secondary steel where the Wind Orca will operate, and Tees work where the Wind Ally will be loading out piles. So a lot is currently happening, and we view ourselves as being in full execution mode for Hornsea 3. However, the specific schedules and targets are not something we can discuss publicly.

Our next question is from Daniel Haugland from ABG Sundal Collier.

Good to see you and congrats on a good report. So I have a couple of questions. The first one is on the contract, the EUR 500 million contract you announced recently. Are you able to provide any indication of a rough kind of percentage split of how much is related to the T&I services and how much for the installation?

Unfortunately, we cannot divide it further than we have right now as it forms part of an auction for the client. We will disclose more details after we pass certain milestones, but at this point, it’s not something we can do.

Okay. That's fine. And then my second question is, given that you're ramping up revenues from foundations into 2026, will you start segment reporting, splitting out the two different segments at some point? Or will you continue with reporting as you have been?

We have no plans to show segment reporting on that.

Okay. And then on the commercial outlook, I see that you're still expecting vessel undersupply towards the end of the decade. I was wondering if you could elaborate a bit more on that, Mikkel, because as you've mentioned, demand appears to be shifting to the right. Are you expecting anything to happen on the supply as well? Or are you merely asserting that demand will still grow sufficiently in, say, 2029 and '30 to generate an undersupply?

As I mentioned to Martin, when he asked the same question, our confidence stems from the projects we are currently bidding on, alongside the willingness of clients to invest in these projects. This presents us with good opportunities, and in terms of undersupply, we believe that many analysts have been miscalculating the supply side, both concerning WTG and foundation installations with erroneous assumptions about supply. The future will clarify this; however, we believe that the best assets in the industry will inevitably drive a significant level of efficiency on projects, making it optimal to select the best assets. So regarding fall height, we are confident with our assets' positioning, suitable for standard utility-scale offshore wind projects. Our belief that demand and supply dynamics will evolve favorably towards a tight supply scenario for certain project scopes by the end of the decade continues to support our strategic plan.

Our next question is from Andreas from SB1 Market. We are unable to hear you right now. Apologies for the technical difficulties. That is our final question for today. We would like to hand back to Mikkel Gleerup for any closing remarks.

Yes. Thank you. Just wanted to say thanks for listening to this quarterly presentation. We are looking forward to coming back with the fourth quarter and the year presentation also with more details on Hornsea 3 because at that point in time, we will have a lot of exciting stuff to show you. So please stay tuned for that. It will be interesting. There are a lot of exciting things ongoing at the moment, and we're looking forward to announcing the delivery of the Wind Mover in the not-so-distant future. Thank you very much for listening, and feel free to reach out to us if there's any follow-up questions that are better handled on a one-to-one basis. Thank you.