Earnings call transcript: Soiltech posts record Q2 2026 as growth outlook brightens

Soiltech reported record Q2 revenue of NOK 132 million (+17% YoY) and adjusted EBITDA of NOK 36 million (margin +27% vs 24% a year earlier), alongside profit before tax of NOK 18 million (13% margin). Management flagged Q3 revenue expected to be somewhat lower than Q2 but still well above Q1, with strong visibility into 2027 as contract portfolio grows to ~30 ongoing contracts across Norway, the U.K. and the Middle East. The company also plans ~NOK 200 million equipment spending and added an extra NOK 150 million term-loan facility post-quarter, while near-term stock reaction was muted (down ~0.23% to $88.6), suggesting investors weigh execution timing and Middle East uncertainty against the margin/visibility upgrade.

Analysis

This is less a one-quarter earnings story than a capacity-acceleration story. The real signal is that management is pre-committing capital ahead of demand, which usually happens when utilization is tight enough that service pricing and contract renewal terms can stay firm; that is constructive for the next 6-18 months, not just the next print. The second-order winner is the offshore ecosystem around Norway: more rig activity and longer program duration should lift service intensity for customers like OMVKY, RIG, and SHLLF, while smaller competitors without financing flexibility will struggle to match response times or be forced into dilutive capex.

Near term, the risk is cash conversion, not earnings quality. Front-loaded equipment spend plus project start-up working capital can keep operating cash flow below EBITDA for another 1-2 quarters, so a strong-looking P&L may not translate into immediate rerating unless the market sees utilization staying high into Q4. The key falsifier is any slippage in rig start dates or a pause in North Sea activity; that would push the equipment payback farther out and expose how much of the 2027 visibility is still conditional.

Contrarian take: consensus may be overweighting the Middle East optionality and underweighting execution risk at home. Until Saudi/UAE volumes normalize, that region is more of a long-dated call option than a valuation driver, while the cleaner earnings lever remains Norwegian drilling density and contract extensions. The tax case is a headline overhang, but the likely cash impact looks too small to matter unless the dispute broadens; the bigger issue is whether the market will pay up for backlog before it sees sustained free cash flow conversion.

Key Decisions for Investors

• Stay flat / do not chase Soiltech-linked exposure into strength for the next 4-6 weeks; wait for either a 5-10% pullback or evidence that Q3 cash conversion improves as start-up invoicing clears.
• Buy RIG and SHLLF on a 1-3 month horizon only on pullbacks of 5-8%; thesis is that higher North Sea utilization and contract extensions support offshore service intensity. Risk/reward is roughly 1:2 if drilling activity data keeps improving, but cut if rig-delivery timing slips.
• Use OMVKY as a modest relative winner on Norwegian activity, but size it smaller than the drillers; upside comes from stable service demand, while downside is limited unless Brent and regional capex both roll over. Falsify on weaker Norway rig-count data or a broad E&P capex reset.
• No options trade is warranted here; the cleaner expression is a tactical long basket in the drillers/service chain rather than a volatility bet on the company itself.