Earnings Call Transcript - CDLR Q4 2025

Operator, Operator

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 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 to 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.

Mikkel Gleerup, CEO

Thank you very much, and thank you to everyone dialing in to listen to our presentation this morning/afternoon. Yes, I will ask everybody to read through the disclaimer in the presentation. So annual report 2025 and first, taking you through the highlights of 2025. Financial performance in Cadeler in 2025 was above our expectations. We ended at the top end of the range that we guided last year, ending the year with a robust contract backlog of EUR 2.8 billion, which really gives us that earnings visibility into the future that we have been discussing with our investors over the course of the last couple of years. We had 4 new builds scheduled for delivery in 2025, and they were all delivered on time and on budget. We added Wind Keeper to the fleet to support Nexra and our partners and really this new O&M service platform. We continued exceptional execution with significant progress made towards delivering on the Hornsea 3 project. Wind Keeper upgrade successfully completed and multiple campaigns supported with vessel swaps. We have had strong utilization with vessels operating across the world in markets such as Europe, U.S. and in APAC. Commercial highlights for the financial year '25. Scylla continued to work in the U.S. on Revolution Wind for Ørsted and have since shifted over to Sunrise Wind. The Wind Orca has been mobilizing for the Hornsea 3 project for Ørsted, where she will be executing the secondary steel scope. On Wind Osprey, we have been mobilizing for the EA3 turbine installation, which is a project we do for ScottishPower Renewables. On Wind Mover, we will shortly be commencing the turbine installation on the Baltic Power project, where she is taking over from another vessel that we previously had working on that project. The Wind Maker stays in Asia. And as we have announced over the course of the last couple of weeks, we'll be executing O&M campaigns for clients in Taiwan this year. Wind Pace came back from the U.S. after having supported the Vineyard Wind project and is now mobilizing for the EA3 turbine installation project for ScottishPower Renewables. Wind Peak will continue to install turbines on the Sofia project for Siemens Gamesa. The Wind Keeper has been delivered to the client on an up to 5.5-year contract and is currently installing on the He Dreiht project for Vestas. Wind Ally is completing the last phase of the mobilization in Europe in Rotterdam and is preparing to go to the U.K. to start putting in monopiles for Ørsted on the Hornsea 3 project. And the Wind Zaratan project, for her 2026 is a transition year. We have decided to do some upgrades to Wind Zaratan, do some O&M work in Asia and then take the vessel back to Europe to start working both on O&M, but also on support jobs for foundation projects. At a glance, we now stand at 362 office-based employees, more than 800 seafarers. We have now installed more than 1,700 wind turbines, more than 900 foundations, a number that will go up significantly during this year due to the Hornsea 3 project and also have been working on more than 275 locations for operations and maintenance. So all in all, very busy and continuing to grow the business in the industry that is also growing with us. We have been discussing a lot with our investors and other stakeholders in the company about the transition to full scope T&I campaigns for the foundation work. And we have prepared a few slides to go through where we are now on the Hornsea 3 project and where we are as a company on the transition to taking on these full scope T&I campaigns. The company came from a charter-based day rate model where we could add services as requested by the client to now having a more integrated project delivery and construction platform. As we say, it's a solution-based offering to the clients. We used to have a very compact organization and moderate complexity in the organization, but also in the offerings we were providing to the clients. And now we are going into a much more complex environment and really also where the organization has to deliver many different scopes from transport on heavy lift vessels to handling equipment in port, offloading, unloading very large pieces of equipment, storing them safely, ensuring quality on these products while we have them in our custody for the clients. We came from a utilization-driven model with a higher relative percentage margin to an execution-driven model with a higher absolute return and upside model on the T&I scopes. The vessels in the previous model were the primary revenue stream where we today see vessels as strategic enablers to capture more scope as we take on these bigger projects for our clients. On Hornsea 3, trying to give you an overview of the timeline for the first full T&I scope that we have embarked on. The project was signed in early '23, a very busy year for us signing both that project, but also working on the merger with Eneti, preparing for taking delivery of the vessel, a lot of supplier scopes starting to transport monopiles and secondary steel, starting to install monopiles and secondary steel and then also embarking on installing 50% of the turbines on the project and then commissioning and closing the project somewhere in '27. It is a very complicated project and something that we go into with a great deal of humility. But I think that I'm pleased to say that we are exactly where we want to be. The Wind Ally delivered early; we were able to mobilize her in China directly from the newbuild yard and have taken her successfully back to Europe, finalizing mobilization now in Rotterdam before, as I said, starting to put in monopiles in April this year. Hornsea 3 really requires a lot of coordination. And we are also now experiencing being in the middle of the project the complexity of the project and also the benefit of having built up the team and having worked closely with our clients in terms of what was required to execute this because a project like this never goes to plan, I think it's fair to say. And we have also been met with requirements from our clients to change different things as we have worked since '23 and until today. But I'm pleased to say that we have taken on these challenges with our can-do attitude in the company, and we are exactly where we want to be in terms of being ready to install the project from April of this year. A total capacity of 2.8 gigawatts when it's installed, 197 monopiles, 60 office-based staff working on it, 120 port and construction staff working out there for us in somewhere where there's a yellow dot on this map. We have 10 vessels in total, 3 from Cadeler working on the project. We are transporting more than 400,000 tonnes of material on the project. We have 10 ports involved and 12-plus partners involved in this. So in all fairness, a very complicated project, but also one where we are learning a lot. We've taken some pictures from the project to also demonstrate the scale of this project because I think it's hard to understand the size of these monopiles. All of them are the same size as the Los Angeles class submarine, and we are installing 197 of those in the U.K. from April this year until 2027. We have also been working with our client to do a mockup trial of the secondary steel. These foundations are TPless, meaning that they don't have a transition piece on top. And that means that all the secondary steel is being installed by a tool that is being carried on board the Wind Orca that carries storage towers for secondary steel and then she's lifting the secondary steel on board the foundation in one lift with this tool. Together with our client, we built a mockup for this, a full-scale mockup in the port where we were able to test this tool and the functionality of this tool before going offshore. It has been a pleasure to work with our client on these mockups and really refining the whole rehearsal of concept before we go into the actual execution offshore. As we have been discussing, the changes in the project timeline have led to increased, but delayed revenue for the foundation T&I. So Cadeler will earn more money on the Hornsea 3 project compared to what was originally envisaged when we signed the project. Not due to things that have happened on the Cadeler side, but because our clients have had to change what they originally anticipated in terms of, for example, monopile delivery, whereas the monopiles are coming from. Originally, we expected two fabrication yards; today we are working with four fabrication yards. That all means that we are receiving the monopiles at a different pace, but it also means that the project is stretching over a longer time and that we will be involved with some of the suppliers we have on the project for a longer time. So this means that there's increased revenue and increased margin to Cadeler, but the project will stretch over a longer period of time. In terms of our commercial pipeline across the globe, I have to say that we are still continuing to grow, and we are still involved in a lot of projects and a lot of bidding on projects globally. Obviously, the European market is really the front runner in terms of new projects that we are working on. And as you can see from this slide, we are working on more than 50-plus open commercial opportunities in the market, and we are discussing projects with our clients, both for '27, '28, '29, 2030, but also well into the next decade, which gives us a great deal of confidence in the market as such, but also a positive outlook for where we are going as an industry. Asia continues to perform as well. We see new markets opening in Asia as we progress the ongoing market, which is Taiwan, Korea, and Japan. We also see development now in the Philippines, but also development in Australia. All in all, we are active where our clients want us to be, and we are continuing to bid for projects in a region that is developing as expected. The U.S. market, it is what it is, and we have discussed it many times before. We don't see any short-term opportunities in the U.S. market, but we are still executing in the U.S. market. We sent the Wind Pace back to Europe from completion on Vineyard Wind, and we are now installing with the Scylla on the Sunrise Wind project. All in all, we expect to be busy in the U.S. for the years to come. And also, we are happy to engage with our clients for new projects in the U.S. region when that time is coming. We still sit on a significant backlog. Our backlog year-on-year has grown. We are standing at EUR 2.8 billion in backlog, which, as I said, really provides the earnings visibility that we would expect and also what we have communicated to our clients. We have things also that we are working on here that we have discussed in the market where we are the preferred supplier on a foundation project that is not counted in our backlog, and it's also not sitting in our vessel reservation agreements because it has not reached that stage yet. But we still have work that will hit the backlog, and we are sure that in the coming quarters we will have positive announcements around backlog development. As I said, the backlog stands at EUR 2.8 billion at the moment and 80% of the total backlog has reached FID. We have discussed that before. And I think that that's truly a sign of the quality of the backlog where we know that 80% has already been approved for the final investment decision on the client side, meaning that, that project has also reached a contractual milestone that is important for us. As I said, we do have a preferred supplier agreement, a sizable preferred supplier agreement. One of the things that we discussed around our Q3 announcement was that we had some projects on site that we would like to secure. And one of them is what we now have a preferred supplier agreement on. It's for a significant foundation project in Europe and one of the projects that was important for us for our 2028 campaign. I am pleased to say that we are moving ahead as we expected on that one with our client and that we are also now in negotiation with the client to make this preferred supply agreement into a real contract. On '27, '28 that we discussed at length in the Q3 presentation, I'm happy to say that in '27, we consider ourselves fully booked now. We are currently working with the yard to potentially deliver the Wind Apex slightly earlier because we have a client that is ready to take the vessel straight from the yard and into a project, meaning that with a few white spaces we have left in '27, we do consider that time that we want to keep available for clients should they run into some sort of supply chain issue and have built a solid '27 for ourselves. In '28, we are also much more positive now than we were in Q3 due to the fact that we have secured the preferred supplier agreement on this large-scale foundation project and overall are seeing positive momentum for the '28 campaign overall. In terms of the progress on the new builds, Wind Ace, we are at 94% completion. The naming ceremony for the Wind Ace, the official naming ceremony will be on the 15th of April, and we are looking to deliver the vessel on time. On the Wind Apex, as I said, we are 34% completion, and we are currently discussing with the yard for potentially 1 month early delivery due to the fact that we have a client who would like to take that vessel straight from the yard and into a project for a sizable project on turbine installation. In terms of the progress from the yard, a few pictures as we always have. I think that I can say that on the Cosco shipyard side, things are progressing as planned. Not many surprises there and really pleasing to see that the collaboration we have with Cosco Shipyard continues to develop, and we are very, very pleased to work with Cosco Shipyard, the quality partner for us and for the development of the company. The fully delivered Cadeler fleet as it stands today has an average fleet age of 5 years, which I believe is a very good number to have, and really also shows that we have been building a young fleet that is ready to take on the positive developments of the future. Now, I will hand over to Peter for the financial highlights of 2025.

Peter Brogaard, CFO

Thank you very much. The financial highlights for 2025 indicate it was a strong year from both a financial and operational perspective. We ended with revenue of EUR 620 million, up from EUR 249 million. Our equity ratio is currently at 44%, which is a decrease from last year, but we believe this is where it will reach its lowest point before starting to increase again. Our adjusted utilization rate was very high at 88.9%, compared to 75% last year, with the adjustment reflecting the exclusion of planned dry docking and transportation from the yard, which we consider a significant metric as new vessels are delivered. Our market cap stands at EUR 1.8 billion, EBITDA is EUR 425 million, up from EUR 126 million last year, and net profit, which is vital for our shareholders, was EUR 280 million compared to EUR 65 million the previous year. As previously mentioned, our backlog is EUR 2.8 billion, with a three-month daily average turnover of EUR 7.1 million on the stock exchanges. Looking specifically at Q4 2025, it was a very strong quarter with EUR 167 million in revenue, an increase of EUR 82 million compared to Q4 2024, and an adjusted utilization of 87%. Cost of sales has naturally increased due to the new vessels delivered, and SG&A has also risen as we've ramped up our organization to manage more complex foundation projects. Finance net for Q4 was EUR 20 million, reflecting a capitalization of borrowing costs as we had more vessels under construction. As these vessels have been delivered, a larger portion of finance interest will be reflected in the P&L, which will be apparent in 2026 as well. Overall, EBITDA was very strong at EUR 104 million in a quarter where Ally and Mover were primarily in transport to the first project. For the full year, our results aligned with expectations, with revenue at the higher end of guidance, costs of sales in line, and SG&A as expected. We are very pleased with our financial results for 2025 and the operational control we maintained. Our total EBITDA was EUR 425 million, with vessel operational costs averaging EUR 36.3 million per day, which is a slight increase but manageable. Our average onshore headcount was 307, and our consolidated balance sheet reflects equity of EUR 1.5 billion, an increase of nearly EUR 300 million compared to last year, with the equity ratio remaining at 44%. This is consistent with our previous outlook of reaching a bottoming out point as we take delivery of vessels, which naturally raises both our assets and liabilities. We continue to have a CapEx program for the Wind Ace and Wind Apex with ongoing commitments, along with an RCF facility of EUR 148 million, leading to total financing of EUR 637 million, with advanced discussions ongoing for the Wind Apex financing expected to be finalized in 2026. Our cash balance is EUR 152 million, indicating a significant cash surplus despite pending A Class payments. The financing overview shows that while we've not fully drawn on our RCF A and B facilities, we recently signed a second unsecured Holdco financing of EUR 60 million with terms similar to our original Holdco. The outlook for 2026 forecasts revenue between EUR 854 million and EUR 944 million, with EBITDA expected between EUR 420 million and EUR 510 million. It's important to note that 2025's results include revenue originally allocated for 2028, which was postponed, and we received termination fees for that. Therefore, we have a strong outlook for 2026, which will be somewhat of a transition year for Wind Zaratan. Wind Ally and Wind Ace are set for delivery in Q3 2026 but will not contribute to contractual revenue that year, as we plan to sell directly to early projects. Previous experience indicates that some wind turbine installation vessels might do preliminary work before the first project, but this is not the case for foundation projects, indicating a desire from our customers for us to be present as early as possible. Regarding Hornsea 3, revenue recognition will span multiple years, with earnings fluctuating due to developer-design changes impacting project timelines. As such, while reviewing 2026, it's essential to take the broader context into account. Back to you, Mikkel.

Mikkel Gleerup, CEO

Thank you, Peter. As this is something that still remains very important between '24 and '25. We have been working on biofuel blending in our fuels, and that has been successfully introduced across the fleet in 2025, together with our clients and our sustainability team. We have developed a new circularity strategy. We have more than 30% women in leadership, and that was achieved in 2025. We have set a new target of 40% women in leadership by 2030, and also on governance, the CSR leadership group established to execute key ESG priorities. In terms of our path to zero, we have set a target of a net zero target in 2035 and a 2030 target of 50% intensity reduction. Obviously, we are going up in intensity in the beginning, and that's largely due to the fact that we are delivering lots of vessels that are still burning fuel. But we have a path towards achieving our targets here, and we have maintained our targets. It is described on this slide, it's adoption of green fuels, it's enabling electrification, optimizing energy consumption, which we believe is one of the big things because really education and training of teams on board and clients is one of the real big savers here. That is how we will achieve the first part of this journey. The second part of the journey is continuing to enable electrification and again, optimizing the energy consumption. Also as we start to see it, getting the green fuels onboard, will form a larger part in the second part of this journey. At the moment, the reality is that the green fuels are not available to us. Although we have a portion of our fleet on the new builds that can burn these green fuel types, we are not able to buy them at the quantity that we need them, and it would be more of an R&D project at the moment. We believe that the second part of the journey will have a greater availability of this fuel type, and that is something we will support with the demand for these green fuel types when available. In terms of commercial outlook, which, of course, is important because I think in all honesty, we are coming from a 2025 where we were facing a very negative narrative in general in the industry due to several factors. We are seeing milder winds blowing over the offshore wind space and also continued growth of the industry and the deployment of offshore wind globally. After '28, '29, we expect very strong growth towards the end of the decade. Europe has been raising the bar, as declared by the North Sea Summit, the 9 member states of the North Sea Summit have declared a target of 15 gigawatts per year outbuild between 2030 and 2040, and we are very, very pleased with a target like that because that is, in our opinion, how you build a supply chain — you actually set a target that the supply chain needs to be able to push out per year in this region. This is not the entire European target. This is for the member states of the North Sea Summit. So in all, Europe will be a higher number than this. Besides the annual outbuild target, there's also a financial plan to how to achieve this. That has been lacking in the more arbitrary targets that were previously set for 2040, 2050. We are pleased to see these targets, and we believe that it provides a strong data point for the future and also for the demand situation going forward. Another very real data point is the U.K. auction round 7, where the U.K. government awarded record volumes — 70% above what was expected — and the budget went up to 200% of what was the original budget. So that’s also a very strong data point. But a strong point is that the U.K. auction round 8 has already been shifted forward, and we can expect that already to happen in July 2026. These are projects happening toward the end of this decade and the beginning of the next. We are already in dialogue with clients for work occurring in '29, 2030, 2031, 2032, 2033, and so on. This is a very positive data point for us. We also do see a lot of private capital coming back into offshore wind, Apollo committing USD 6.5 billion to acquire 50% of Hornsea 3 and KKR forming a joint venture with RWE for offshore wind projects, with many other examples of this. Altogether strong growth in the space and the industry. We have said a much better feeling about the '28 situation for Cadeler, although we still recognize that for the industry, '28 for some can be a difficult year, but we have a much better feeling about 2028. We still believe that there will be an undersupply of capable vessels in the market, which will start in '29, 2030. We believe, in particular, on the foundation side to begin with, of course, because they go in first, followed by the VTG side. It happens for several different reasons — efficiency, larger turbines, complicated projects, raw efficiencies in how many turbines and foundations these vessels can transit with, and a fact that there are many vessels reaching the end of their useful life in the early part of the next decade. So vessels that are counted today because they can theoretically install a turbine will not be counted after the beginning of 2030 because they will be falling out due to coming to the end of their useful life. As the fleet stands today, Cadeler still holds the largest fleet in the world, and we believe we have the most versatile fleet of truly Tier 1 assets that can support our clients with the targets they have for the continued outbuilding of offshore wind. We have also decided to distribute this slightly differently, first looking at which vessels we believe are able to efficiently install 15-megawatt turbines, and the picture looks somewhat different. With the targets being set in the North Sea Summit by European and Asian governments at the moment, we believe there is still a significant undersupply as we come into the next decade of the capable vessels that will always be chosen first by the clients. If we look on the foundation side, the picture is even more problematic if we want to deliver the targets that are currently being set and backed up by auctions in many different countries worldwide. A few words on Nexra, our business platform for the aftermarket services in offshore wind. We believe that the O&M market will continue to demand growth. We believe that the market is shifting towards long-term agreements. We have seen that with our agreement on Wind Keeper with Vestas; other examples in the market as well. We believe the whole O&M story and strategy for Cadeler is significant because it will create a longer and more transparent revenue stream on part of the fleet, and also it will be able to generate utilization on the installation fleet if there are small gaps between installation projects. This is important because we have always talked about the importance of keeping high utilization. Hence, we believe this is a strong advocate for the development of the Nexra business platform. We believe Nexra will grow as a business and at some point in time, potentially even become a bigger business than the installation business, but that is in the years out in the future. Every time we install a turbine, the whole ecosystem for turbines installed grows, meaning that there is more work for the Nexra platform to service our clients. As it stands today, we mainly conduct main component exchanges that we do from a jack-up. In terms of the development of Nexra and an update on that, I think we have always seen it as a strong market, a market that can stand on its own, is profitable and a diversification of income streams for Cadeler. We signed the first contract for an O&M campaign in Taiwan, showing that when a vessel is in a region that is complicated to transit back to Europe from, we can do these O&M campaigns in the spot market and still maintain a very healthy financial year for the asset. That is important because after this, we have also announced another project yesterday morning in the same region for the same vessel. There's a dedicated team for Nexra today, and we are continuing to build the team. I think it’s also fair to say that we receive positive feedback from clients regarding having a dedicated team to discuss aftermarket services with them as they have dedicated teams to handle that part of the value chain for them. We believe that as we grow, we will also better understand the needs and execution requirements. We have a very strong mandate from all over this company here, from top to bottom, to grow Nexra into the strength vehicle we believe it can be. We executed a strategic fleet expansion in Nexra last year with the acquisition of Wind Keeper. We believe we did a very strong deal and executed very quickly on this, but also were able to pin a contract — a commercial contract to that vessel very soon after the acquisition of the asset. We took the vessel back to Europe and performed the modifications we deemed necessary; we are now working with the client on a project with the vessel, which we are very pleased to see. O&M services in 2025 form around 1/5 of our total revenues, indicating the significance of what we already are doing in O&M. Continuing the growth journey, as we have said, we are in an industry that is growing, and as we are saying to you today, we are more positive and have a very positive and optimistic view about the years to come. That’s also why we are looking to continue the story of Cadeler. We evaluate opportunities to expand into attractive and synergetic segments, like, for example, the strategic O&M offering. We are open to both organic and non-organic growth. We believe that scaling the organization and having a bigger, more versatile and more flexible offering for our clients is something the client is willing to pay a premium for and something that will ensure that Cadeler will always take more than our proportional share of projects in the industry, simply due to derisking our clients' projects that we can provide. In terms of regional expansion, we are where our clients want us to be, and we are working with the projects we believe in that will go from development to FID to final execution. That is how we look at it. That's how we have always looked at it, and that’s how we’ll continue to look at it. We are monitoring and applying new technologies, and we believe that efficiency will drive a lot of the value in the industry and a lot of the sustainability in the industry. We are very open to discussing efficiency gains with our clients. We are also willing to do our part in what was the North Sea Summit, which aimed to create a more competitive offshore wind industry by being more efficient. That is definitely something we can pursue if we work together throughout the value chain. Strategic partnerships have been one of the foundations and pillars that Cadeler stands on, ensuring that we develop strategies to strengthen our key partnerships with our clients, including the long-term agreements that we believe are out there and also completing the scopes with the clients that they are asking for. We are trying to understand, be proactive with our clients, understand what they require from us, and deliver that quality-wise and safety-wise when needed. That is very important. Regarding key investment highlights, we have the largest and most capable and versatile fleet. We believe that means redundancy for our clients. I've already said, clients are willing to pay a premium for this, which will secure a more than proportional share of the market for Cadeler. We believe strong relationships and partnerships and our industry-leading position will support the growth of the company. We have global reach and experience; we have worked in all key markets and are happy to continue in all key markets if our clients desire. We believe there's a structural undersupply and increasing market demand, and we are already starting to see signs of very strong demand as we move into the next decade. We have a strong track record and backlog, and we are very much looking forward to continuing to work with our clients in the future. With that said, I think we are moving into Q&A.

Operator, Operator

Our first question comes from Martin Karlsen from DNB Carnegie.

Martin Karlsen, Analyst

I understand that — can you hear me okay? Sorry, there was some...

Mikkel Gleerup, CEO

We can hear you, yes.

Martin Karlsen, Analyst

I think I heard during the prepared remarks that you said the Wind Apex would be delivered early and do turbine work. Could you talk a little bit about the background for using the vessels for turbines and not foundations and the decision process behind that?

Mikkel Gleerup, CEO

Yes, that is a good question. We are discussing it directly; we are looking at delivering the Wind Apex early because we have been asked whether we were looking at potentially delivering her late. Just to clarify that that is not a thought at all; it’s the opposite. We have evaluated opportunities in the industry, and the best opportunity we believe for Apex right after the yard is to embark on a turbine installation project. The reason for that is that working with the client on a turbine installation project potentially opens up opportunity for other things. We have decided that the best use of the capacity we do have available, as you also heard in my presentation, is that we consider ourselves fully booked in '27 now. So basically, what we have available for clients now is becoming limited. This is the opportunity we have for the client, and hence, we have decided to go with the client, as we believe it is the best overall decision for Cadeler to start with a turbine installation project. It doesn't mean that Apex will stay on turbine installation projects, but the first project will be a turbine installation project. What it means is that she will generate revenue earlier compared to if we did a foundation project. With the long duration of the contract we're looking into, that will continue into 2028 and will also offer potential for something on the back end with the same client.

Martin Karlsen, Analyst

Could you remind us about how much time and cost there would be to get it back to foundation mode?

Mikkel Gleerup, CEO

So there is a mission spread, but that is typically part of the project. When you sell a foundation project, the client contributes to the mission spread there. It would typically take somewhere around 2 to 4 months to put her into foundation mode with mobilizing all the equipment on the vessel.

Martin Karlsen, Analyst

And for 2028, you definitely came across as more optimistic, but it seems to be more Cadeler specific than for the industry as a whole. Can you talk a little bit about why Cadeler has been more successful than the industry for '28 and what has changed since last quarter?

Mikkel Gleerup, CEO

Yes. I think that what we do say, when we talked about '28 after the Q3 announcement, we also said that it looked like a year that could be challenging for the industry. That’s still the case; we believe there are still some companies that will have challenges in 2028, but we today feel much better about '28 than we did around the Q3. There were still some things we believed in at that point in time, but that had to happen. Now we are seeing that, that is happening. Hence, we are much more confident on 2028. One of them is, of course, the preferred supplier agreement on a large-scale foundation project. That is important for '28, but that’s not the only thing. It is also how other things we are working on have progressed. So all in all, we are much more positive about '28. That does not mean that everybody else will have the same feeling, but for Cadeler, that is the case. There is a progression from the Q3 call to now where we are saying today that 2027, we can say we're fully booked now.

Martin Karlsen, Analyst

Last question, you're about to get into a real cash-generating mode with all the newbuilds delivered. Could you talk to how you look to allocate capital ahead between shareholder returns, delevering, and you also spent some time in the presentation today talking about growth opportunities?

Mikkel Gleerup, CEO

Yes. As we have said before, capital allocation ultimately is a Board decision. It’s realistic to believe that we will be spending our capital in 3 buckets. One is to delever the company. One is to continue to maintain the position we have in the industry. The last bucket is, of course, returning capital to shareholders in some shape or form. It’s realistic to believe that all 3 buckets are possible at the same time. So that’s where I will land it at this point in time.

Operator, Operator

Our next question is from Jamie Franklin from Jefferies.

Jamie Franklin, Analyst

So firstly, I just wanted to clarify on Hornsea 3, and I appreciate the useful slides in the presentation. If I look at Slide 12 specifically, as you understand it correctly, essentially, we're now going to have a much more progressive ramp-up in revenue through the year from that project. So it's going to be very back half weighted. The expectation is the first turbine installed around Q3. If I assume that the margin and EBITDA contribution should start to kick in from the second half, is that a fair assumption?

Mikkel Gleerup, CEO

Yes. I think overall, what you're saying is a fair assumption. That said, it's complicated to explain when you have projects and calendar years because overall, Hornsea 3 is a more value-creating project today than it was when we signed it. But the way the revenues and profits are stretched over time is different. That is what we are trying to explain today. It’s due to decisions made by others than Cadeler, and although it’s in our interest, we are contractually obligated to deliver on this new method. One key thing on the project is the flow of the foundations when they come into the project is slower. We are not building up the buffer we had in the beginning. The monopile delivery is over a longer period out of Cadeler's control and is due to things related to the fabrication yards on the monopile foundations.

Jamie Franklin, Analyst

Okay, got it. And then secondly, just on operations and maintenance. Obviously, you've announced a few shorter-duration awards to the Nexra platform recently. As you mentioned, there's been this 10-year O&M contract announced by one of your peers. Could you give us a sense of how you expect to balance the longer-term agreements with the shorter-term contracts? Is the plan to keep Zaratan and Scylla available for more spot O&M, while Wind Keeper kind of takes the longer-term contracts? Or could we see you enter into a longer-term contract with a specific one client on those assets?

Mikkel Gleerup, CEO

Yes, that could be expected but it all depends on project economics. There are limits where we believe it’s better to stay in the spot market than to sign up for long terms. That is an internal evaluation that happens between us and the team dealing with the clients on these long-term opportunities. There are benefits to a long-term contract, but the benefit can be outweighed by what you're sacrificing in terms of annual revenues. It’s a balance. If we believe we can generate more by having the vessel in the spot market and being available to our clients when they need us, then that's the decision we will go for. We've discussed before how working in the O&M market is about building social capital with clients. When they have issues, if you can help them and fix them, that is something appreciated. You are able to foster stronger relationships and partnerships with them. Long-term agreements aren't everything we aim for, but we are open to discussing them if they meet our criteria.

Jamie Franklin, Analyst

Okay, very clear. And finally, there was a wind turbine installation vessel order announced by shipyard Hanwha Ocean for about $530 million last month, a very high price tag, obviously, relative to what you paid for your new builds. Is there anything you can say in terms of what is driving those higher vessel prices? Is it simply a function of shipyard capacity or material inflation? Any thoughts there would be helpful.

Mikkel Gleerup, CEO

The reality we are looking at today is that the shipyards are incredibly busy. Even if you wanted to deliver a vessel in the short term, you wouldn’t be able to. I know that this vessel looks on paper like a short timeline, but that is mainly because they have been working on it a long time before they announced it. It’s a vessel targeting the domestic Korean market with many Korean companies working together on that vessel. It's a repeat M-Class vessel more or less that they paid $530 million for. The underlying reason for the price is a tightness in the yards, and generally, what it costs to build a jack-up today is increasing.

Operator, Operator

Our next question comes from Anders Rosenlund from SEB.

Anders Rosenlund, Analyst

Could you break down the order backlog indicatively on '26, '27, '28, and '29 and beyond?

Mikkel Gleerup, CEO

Unfortunately, we don't do that, Anders. We only give guidance 1 year ahead. So we don't provide guidance year-by-year on the backlog.

Anders Rosenlund, Analyst

Also, do you expect to see more of your competitors place new building orders for '29 and 2030 or beyond delivery given the outlook comments you're making today?

Mikkel Gleerup, CEO

Given the supply-demand balance we see at the beginning of the next decade and the tightness in the yards, I would be surprised if there were not several companies already looking in the yards.

Operator, Operator

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

Unknown Analyst, Analyst

This is a representative from China Securities. Thank you for taking my questions. I have two questions. The first question is about the foundation installation business. I noticed that the foundation business includes significant preparation work and has larger amounts. Could you please share what your target for the foundation business is in the future? Will the volume or amount be higher than next year? You mentioned that future revenue could surpass installation revenue. Could you provide insights into the future of the foundation business? What’s your target or strategy? This is my first question.

Mikkel Gleerup, CEO

Can we take these one by one? Thank you. I think to answer your question, we have had a humble approach to the full scope foundation construction and installation projects. In 2026, we will be executing the Hornsea 3 project. In 2027, we will be embarking on the EA2 project with ScottishPower Renewables. We are on a journey here where we are building up together with our clients, two of the biggest developers in offshore wind worldwide. Together with them, we are building up these capabilities to ensure that we execute this safely and with the quality that both we and they expect. Our long-term target is, of course, to execute several foundation projects in parallel in a year. That's how we have built the fleet, and we are building the team and the protocols around this. We have three A Class vessels targeting the foundation market, and we would certainly expect these three vessels to be doing foundation work in parallel at some point in the future. When I mentioned that the O&M market could be as big as the installation market, it’s due to the outbuild targets we’re seeing in the industry that will necessitate a lot of O&M requirements. However, we cannot say when this will happen or whether it will reflect. But we believe that the O&M market will be a very value-creating sector in which to participate, potentially even bigger than the installation market.

Unknown Analyst, Analyst

Okay, great. And the second question is about the financial expenses. I noticed that in 2025, the financial expenses are a little bit higher. Could you give us some color about the financial expenses in the near term or in the 1 to 3 years? Because once your 2 vessels are delivered in 2026 and 2027, these expenses will not go into the — they cannot be capitalized, and this should go to the P&L. Could you give us some color on that?

Peter Brogaard, CFO

That is absolutely correct, and also what I mentioned in Q4, where you saw net or — finance net was around EUR 20 million. That is what you should expect to see going forward; less and less goes to CapEx once we deliver a vessel here in '26, then it will be less '27 once we get the last one delivered. It will go to current plans with nothing that we can capitalize. Q4 is more representative for '26 than the full year.

Unknown Analyst, Analyst

Okay, great. Thank you so much. That's very helpful. Thank you.

Mikkel Gleerup, CEO

Thank you. I don't know whether we missed Daniel from ABG.

Operator, Operator

Yes, we have a question from Daniel.

Daniel Vårdal Haugland, Analyst

I was a little bit back in line there. So I have a couple of questions on 2027 that you could perhaps enlighten me on. You now say that 2027 is getting fully booked from your perspective. What type of utilization level are you kind of targeting or at least some kind of range for fully booked, since there seems to be a lot of white space based on announcements?

Mikkel Gleerup, CEO

That is a fair question. We have guided from the beginning of the journey between 75% to 90%, and that is also the target in 2027. That is adjusted utilization because, obviously, to assume that a vessel is busy when it's transiting from Asia back to Europe is not possible, even though we would love to install turbines all the way. That’s how we look at it. As Peter also said, when he went through his numbers, we exclude planned dry docking and things of that nature. The adjusted number we are expecting between 75% to 90%. For '27, yes, it is correct that we are considering ourselves to be at the moment fully booked.

Daniel Vårdal Haugland, Analyst

Just to clarify, then you include this potential contract that you talked about for the Apex.

Mikkel Gleerup, CEO

Yes, that’s how we have to do it. This contract is being negotiated, but of course, nothing is firmed before it is signed, and there's ink on paper. When we are in the process, we believe this is something that will materialize, we think we are in a situation where we don’t have much other stuff to sell.

Daniel Vårdal Haugland, Analyst

One question on the Orca. It seems that she will be working alongside the Ally on Hornsea 3 on secondary steel. It seems from the slide that you kind of indicate that going through Q1, maybe into Q2. Is that correctly assumed?

Mikkel Gleerup, CEO

Yes, it's correct that Orca is starting almost side by side with the Ally being mobilized now for the campaign to go to — on to Hornsea 3. It was a valuation we did when we secured the project because it was our option to either go with an offshore construction vessel or one of our jack-ups. There were benefits in the jack-up in terms of weather downtime during the winter and hence, the progression on the project. That’s why we decided on the O Class vessel as the best option for the task.

Operator, Operator

Thank you. That's all we have time for today, and thank you for your participation. I will now hand the floor back to Mikkel Gleerup for any closing remarks.

Mikkel Gleerup, CEO

Thank you, everybody. If we did not have time to take your questions, then you all know where to reach Peter and myself or Alexander. We are, of course, happy to take offline discussions with all of you. But thanks a lot for taking the time to listen to us today. We're looking forward to catching up with you as we move ahead. Thank you.