Cadeler A/S (CDLR) Q2 2025 Earnings Report, Transcript and Summary

Good morning, and welcome to Cadeler's H1 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. [Operator Instructions] 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 good morning and good afternoon and good evening to the people that have dialed into this presentation. Happy to present our half year results together with Peter. And what we can say around the first half year result in 2025, our financial performance is above our expectations with the full year guidance increased in July 2025. We maintain that guidance in this half year report. Wind Keeper delivered a long-term contract with Vestas was secured, I think a process that we entered into earlier during the year, where this opportunity became possible for us and where we also had a discussion with our client to come to the point where we are now. Upgrades are waiting for Keeper before we will put her into commercial operation in Q1 2026. Seven vessels are on hire around the world, including 2 in Taiwan and 2 in North America. Strong and increasing demand for O&M services, especially for the larger turbines is reinforcing our decision to establish Nexra, our service concept, where we also have seen now the first real evidence of that coming to the market with the Wind Keeper. Our backlog continued to strengthen even with the removal of the Hornsea 4 after delay from Orsted on that project, and we currently stand at EUR 2.5 billion. Commercial highlights in the first half of '25. The Wind Keeper is certainly a commercial highlight. It's a vessel that we negotiated, acquired and took delivery of all ahead of schedule. It's the newest addition, and we have secured a long-term contract with Vestas, a 3-year period with additional 2.5 years of options with the same client. The contract, as I said, commences in the early part of 2026. And we believe that the Wind Keeper will be a very versatile service vessel where the client can mainly do operations and maintenance for the vessel, but also have an ability to support transport and installation for certain projects. And before -- as I said, before we put her on work for Vestas in Q1 '26, the Wind Keeper will undergo tailored upgrades really to fit the Cadeler operating model, but also what we would like to deliver to our clients in terms of vessel and also what the vessel can do in European waters on projects there. Overall, on the fleet, we can say that the Wind Orca is continuing the installation on He Dreiht. She had an O&M campaign earlier during the year, but is now installing on He Dreiht. Wind Osprey is also -- had also an O&M campaign and is installing on Baltic Power now in Poland. Scylla, probably a question that I will receive in the questions- and-answer section around the Revolution Wind, but we are working on Revolution Wind for Orsted and the vessel is still here in the U.S. On Zaratan, she's working in Taiwan on O&M. The Peak continued to install on Sofia. The Wind Maker is installing on Greater Changhua for Orsted and Wind Pace is also here in the U.S. working for GE [ Vernova. ] And the Wind keeeper is in transit on the way back in or close to South Africa at the moment, expecting to arrive in Northern Europe in October this year. In terms of our backlog standing at EUR 2.5 billion. I think that what we wanted to highlight on this slide here is really because there's not a great change. We have had another project coming in, in Taiwan with the Formosa 4 coming in. We announced that last week, it was part of a reservation agreement, and we signed that contract last week. And I think that it was a healthy contract economics we saw on that project and a project that will be installed in 2028, which fits really the strategy for what we are doing at the moment and 2028 is certainly a focus here, but more to follow on that. In terms of U.S., we are busy on 3 projects. In the U.S., Revolution Sunrise and an O&M job here. But the U.S. in total constitutes less than 10% of our total backlog and Revolution itself is the smallest part of that U.S. backlog in itself because we are almost done on that project. Next slide, please. In terms of the backlog, I think having increased the backlog, although slightly from the Q1 presentation, I think it is an achievement, especially with a large chunk coming out from the Hornsea 4 and we still stand at a very, very high level of final investment decisions in our backlog. So 97% of the projects in our backlog has final investment decision. And we are focusing on maintaining a solid overview of the projects that we are adding to the backlog, but also ensuring that the quality of projects we are letting into the backlog is something that we do on the same basis as we have always done. But pleased that we have been able to maintain the backlog at its current level after the delay of Hornsea 4. In terms of the new builds, I'm pleased to say also that we are on Wind Ally almost complete. We are on sea trials and jacking trials as we speak, and we are ahead of schedule. Originally, we expected to deliver the Wind Ally in November this year but according to the current plan, we are looking to take delivery at the end of September, which is a very, very strong performance, both by site team, but also by the yard and everybody who've supported that. The Ally then has a sequence of jobs to do in terms of mobilizing her for her first project, which will be the Hornsea 3. But it's very good for us that we are delivering as we are because it also means that we are coming on the project as we expect and everything there looks to go according to plan as we see it at the moment. Also on Wind Mover, we are also looking to deliver the Wind Mover in the fourth quarter of this year. And at the moment, it also looks like we are slightly ahead of schedule on Wind Mover, which is also positive. The Wind Mover has a contract also where she will depart the yard and immediately go on that contract. So for us, it, of course, has been important to make sure that the yard and us have an agreement on when the vessel is delivering and as early as possible for us was important. The Wind Ace is also in production in COSCO in Qidong and the Wind Apex is currently at block stage. So I would say that on newbuilds, the fourth remaining newbuilds is on or ahead of schedule and also on budget, which is pleasing. And on the financial results, I will hand over to Peter, so he can walk you through the financial results.

Yes. Thank you very much, Mikkel. For Q2 the 3 months ending, we had a revenue of EUR 233.1 million. That is, of course, impacted by the termination fees from the postponement of the Hornsea 4. However, if you adjust for that, then it's still a substantial growth as compared to last year. Equity ratio is still at around 50%, i.e., a very solid balance sheet going forward. Utilization -- adjusted utilization for the 3 months in Q2 was 94.1%, which is very, very solid as well, and we are pleased to see that we are above 90% for the quarter. Market cap, EUR 1.7 billion, EBITDA also substantially up against last year, again, of course, impacted by the termination fees on Q4. We adjusted our outlook for '25 early July. So we took the range up with EUR 103 million indicative of this termination fee. But adjusting for that, it is still a substantial growth that we are showing. Cash flow from operating activities also up EUR 50 million in the quarter. Backlog stands, as Mikkel said, at EUR 2.5 billion and 3 months daily average turnover on the stock exchange is EUR 4.9 million. If we look at the P&L for Q2 '25 -- and still bearing in mind, of course, this termination fee, which inflated the numbers. We see very, very solid growth in Q2. Of course, now we have 8 vessels on water as compared to 4 last year when people coming in very late in the quarter and not operational yet. However, we see that our operational model is functioning very well. Cost of sales is following the increase of vessels. OpEx also even a little bit lower than compared to last year and SG&A, which is a number that we have talked a little bit about in the past where we have increased that number in the past to be able to operate a bigger fleet and the foundation vessels now also showing that with the base that we have, we can operate a bigger fleet and also foundation vessels and more projects. As said, utilization was 76% and adjusted utilization 94%. And cost of sales is, of course, increasing with the delivered vessels, which is then -- will peak, delivered in August last year, so not in the comparable numbers Wind Maker and with Pace. And EBITDA also a very solid growth from EUR 32 million to EUR 189 million. The P&L for the first half is of course, impacted by -- again, by the termination fees that we have received on Q4. Adjusted utilization for 6 months is 89%, also a very, very good number. Revenue increases with the termination fees, of course, but also with more projects and more vessels and projects we also see at a higher rate than historically. So again, it shows the operational business model is working as planned. If we look at the quarter and the first half year, it is as we have expected and planned, I think on all lines. So I think development under very good control, costs under very good control, revenue as expected or above. So it is a really, really strong quarter, no doubt about it. The balance sheet is, of course, increasing with the delivery of vessels. Also CapEx for the quarter was as expected. You can find more flavor on it in the notes to the first half accounts. But it is growing with the Wind Maker installments on Ally. It is on the M- Class vessels of which one was delivered. And it's on the Wind Keeper that came in late June with a significant amount, but again, as planned. Other current assets is increasing, and that is, of course, again, the termination fees, they are sitting in the balance as contract assets -- we issued the invoices early July. We got the termination very late in June. Hence, it's sitting as a contract asset, but it's not a reflection of it's less certain. It is only a reflection of that we received the termination the 30th of June, and then invoiced in early July. Termination fees are due here in Q3. So we expect to have a cash inflow from our other current assets in Q3. Still a solid balance sheet equity ratio of 50% as compared to 64%. Of course, it goes down as the balance sheet is a little bit more leverage, but you will not see -- we will not expect the rate to go below 45% around that [indiscernible]. CapEx program is expected to be fully funded. What is outstanding now is only the third A class vessel, the Apex coming in, in '27. It's a bit early for us to start that. We have started, you could say, the bend and stretch on starting up a facility discussion on that one, but it's not being delivered until '27. So it's too early to start paying commitment fees, but there is a strong interest from banks to also support the funding of that vessel. We have a cash of EUR 51 million, but of course, we are not taking in the termination fees here. So all in all, the conclusion on this slide is that we have a very, very solid financial situation with cash and available cash -- substantially available cash also after payment of the CapEx program. As we have elaborated on in the past, our hedging policy is that we hedge 50% of the U.S. dollar exposure on the installments to the yards. And we hedge 50% of the interest exposure. And that is a strict policy that we stick to and I think has served us very well in the past. Financing overview. We have a EUR 2.1 billion of committed facilities. And then the Wind Apex is uncommitted as of now, but we are in dialogue with the banks to also get that financing committed, and we expect to close it approximately a year before delivery. We had the Wind Keeper Bridge Facility in Q2, which formed a part of a very attractive business case where we were able to buy the Wind Keeper at an attractive price, and get an attractive contract on it and fully finance it. We are -- we have signed the takeout facility of EUR125 million. The remaining part of purchase price and CapEx we can finance from the operational cash flow and the already available cash we have in place. Full year outlook, as said, it was increased early July on the back of the termination of Hornsea 4 project. Now it is an outlook of revenue between EUR 588 million to EUR 628 million and an EBITDA of EUR 381 million to EUR 421 million. It's, of course, the full year is impacted by termination fees and timely vessel deliveries and execution on projects. Wind Maker and Wind Pace, which was delivered in Q1 '25 and it's already employed in APAC and U.S. And then there is 2 additional vessels deliveries coming in Q3, Q4 with Ally and with Mover A.nd as Mikkel said, it is on time and budget. And then we also start to see the revenue and cost from foundation project starts to be recognized. So it's the 2 foundation projects that we have, Hornsea 3 and [ EA 2. ] I would like to also elaborate a little bit on how we show revenue in our numbers. There's 2 lines a line from time charter revenue and foundation work and installation work. That is what is coming from our vessels and the contracts on the vessels. Then we have another line, which is our other revenue for this first half, it's EUR 120 million. That is where the termination fees sits, but the EUR 120 million is not equal to the termination fees as there's also other services and other revenue in there. It's what you would call sundry income. So it's income from accommodation and catering on the vessels, and there can also be other smaller revenue streams. And you can see in the comparable numbers, there's also EUR 13 million for first 6 months in '24. So it's not a correct conclusion then to say that the termination fees from Hornsea 4 was EUR 120 million. Then I will give the word to Mikkel on sustainability.

Yes. Just a slide on sustainability update as well. We believe that, that is important to update you guys as well on what is being done. I think we can say that the team has been expanded both in terms of competencies, but also raw muscle to develop what we need to develop. We have had several investors over the years asking us to be vetted and certified under different schemes, and that is something that our sustainability team is also working on to make sure that we are where we need to be in terms of that. But also in terms of really [ raw ] decarbonization on what we do. We have our own targets, and we are trying to be ambitious. And the road map has been defined also with the larger fleet that is coming in. And the gaps that are needed to be bridged, so to speak, they are being modeled and what to do for -- to reach our targets. We also have ongoing shore power upgrades for the O-class vessels with Wind Osprey being finalized in Q1. In terms of equipment efficiency upgrades, we're also looking at that on the O-class vessels after the energy order we did there, and we are execution, we are planning the execution for the end of Q3. In terms of biofuel, this is also a strategy we're looking at. The legacy vessels will not be able to sail on the new fuel types and the biofuel can play a role. And we are -- we have been testing with blending biofuels into the fuel mix to also have that as an asset on the sustainability radar for us and something that we can work with our clients to procure and to deliver on projects as well. And then last but certainly not least, we are also developing a road map for implementation of a human rights strategy, and that is something we have based on the old one and to be presented to the Board for final approval and then roll out across the company as well. In terms of commercial outlook, I think that our view of the market is that there is a calibration in the market, but there is also a continued momentum. We recognize that there are things that are happening in the market that is outside anyone's control at the moment but we think that there is a period of recalibration. There has also been targets in every market basically that were not achievable with the supply chain we have. So things are being recalibrated. There are also companies that are recalibrating their road maps due to local auctions and auctions that didn't go as they planned. Denmark is an example, Germany is an example. The U.K. had an example of that in the round 5, but also due to company-specific events that means that companies have to recalibrate what they can do and when they can do it. So I think that what we can say is that we are, I think the market caution is exercised and is prudent. And -- but I think also that we think that conditions and policy improvements are expected, and we have seen some of that in the markets that are -- that have redone their tenders and have gotten them right. And I think we have seen improved conditions both in Denmark, but also in the U.K. And as many others, we expect that the U.K. round 7 will be a solid round. We saw also the British government coming back with the approval of even projects without permits allowed to be participating in the round. And I think that that's certainly a new thing for that round for those auctions. So we are seeing that the governments are also trying to play a role in achieving as much as possible by 2030. So some projects are facing delays and time lines are shifting on some projects closer to 2030. Where on the other hand, we see a pretty significant pickup again in projects. As I said already, there are important auctions ahead. The AR7 is probably the most significant one. But also, we see several new early-stage markets beginning to emerge. And just this morning, there were news about offshore wind in Vietnam again, where one of the larger developers are taking now a share in one of those projects. And we see more of that. We see also test projects in Brazil starting to emerge and have been in contact as well with partners in these markets, although this is also again for the longer term and probably more into the next decade. We still have a positive outlook on the long term in the market, but -- and we believe that offshore wind will play a crucial role in the future energy mix for many different reasons but also that we are seeing that probably '27 and '28 are more challenging now than they were a year ago because when one of these bigger projects goes out of the market, then it's for sure that, that is playing a role. But what our strategy has always been to work on projects that are our primary projects, but also always to have backup. And we believe that with the strength of the fleet and the strength of the assets that we will be able to also play a strong role for our clients in the market even in those years as well. And as we see it currently, we have been developing this slide here from last time as well. We see that there is still an undersupply of vessels expected coming towards the end of the decade. And it starts first on the foundation vessels where we see an undersupply in '29 based on the projects that needs to go into the water. We also see that clients are engaging early with these projects with us and with others to ensure the right capacity for installation. But also for O&M and one of the reasons that we announced Nexra in our last call with you guys is, of course, because we have seen that the O&M market is something where we see the clients really asking for support and supply of capacity. And that is across regions where some regions have more access to O&M supply where other regions find it very difficult due to complex sites, deepwater, complex soil conditions and the biggest turbines out there. And we do believe that Nexra and our fleet strength can play a strong role in both these spaces. And if we are to look at what is really an efficient vessel. We have talked a lot about this supply, and we have shown you how we believe that the supply situation looks in the market, but more on an overall what is in there in total. But I think that here, we are trying to say how we look at the situation in terms of efficiency. And efficiency in offshore wind is really days, how many days do you take to install a project. And here, we have just said a theoretical project that we have evaluated and tried to program, how long time would it take for 2 different vessels to install this project. We have said it's 100 turbines of 15-megawatt class. It's 140 nautical miles from the site that we're installing and it's in the North Sea. If we look at the P-class vessel that can transit with 6 [ VTGs ] per round trip, then we need 17 round trips and 2.14 days per turbine. If we compare that to another standard vessel in the industry, the Gusto engine, 9,000, then they can transit with 2 turbines. They need 50 round trips and they need 2.69 days per turbine installed. So if you look at the raw numbers, the raw program, then we would need 214 days to install such a project, and they would need 269 days. But on top of that, comes project-related delays. And the longer you take to install, no matter where you start and where you end, you will have longer time and, let's say, a less favorable season. So waiting on weather, waiting on pilot, waiting on tide and stuff like that, that is something that is increasing on the less capable vessel. And we do believe that, that is converted into money in the value calculation at the clients as well. And hence, we believe that the stronger assets will be the first ones to be taken in the market because they simply drive a better value proposition to the clients. So trying to take that into the next slide, where we show you the slide we have shown you before, what is the total supply in the market? What is the total supply of newbuild vessels since 2020 and what is the total supply of legacy vessels. This is a slide that you all should be familiar with because we have shown it before. Cadeler is on the left side here with 12 vessels and currently the market leader in terms of number of vessels. If we then try to say, okay, what is the efficient vessels that are out there. And then we are looking at -- if we look at what vessels can install wind turbines, then we believe the number looks quite different. If we say what vessels can efficiently install the 15-megawatt class of turbines, then the numbers look very, very different. And at Cadeler, we are discounting a number of vessels here in terms of efficient installation, but we believe that we have 9 DEME with 2, [ Vanord ] with 1, Seaway 7 with 1, Yandenul with 1, Penta Ocean with 1, Maersk with 1, Shimitsu with 1 and Dominion with 1. But it's a significant reduction from the overall numbers. If we then look at the foundation installation, then it's an even more dramatic number we are looking into because in terms of efficient installation, then we're looking at 7 at [ Padler ], we're looking at 4 at DEME, 2 of those are only for foundations. We're looking at 2 at [ Vanord ], one of those only for foundations, and I would say, primarily foundations in the Baltic Sea due to limited weather capability, 3 at Herma, 1 at Seaway 7, 2 at Yandenul, 2 at [ Bosalis, ] 1 at Penta Ocean and 1 at Saipem. So I think that, that is our view on what is efficient vessels, and it changes the supply equation slightly and hence, also why we do believe that, especially in '29, we see an undersupply of vessels that can do efficient foundation installation compared to the number of projects that will be installed. So we have been asked for it many times, what is our view on efficient installation across the 2 components, turbines and foundations, and this is our view. I know that if you compound the numbers, we have more than the total number of vessels, and that's because some of our vessels can be converted to both -- to either foundations or turbines. And hence, they are counted in both spaces. But obviously, they can only work in one space. So if one is counting them for installing foundations, then one has to discount them from the turbine installation and hence, make that space slightly tighter. If we look at the demand for O&M, the reason we entered into that market is pretty simple. We see a steady growth in the O&M market due to a larger installed fleet. And we also see that our clients are asking us for more services in this space and the support on the bigger assets that can handle more complex sites because this is really where the bigger turbines are installed. And we have seen situations where clients have only had 1 or 2 vessels to select from to do particular service for their turbines. We are here to try to help our clients and provide them with what they need to do the work, and that's why Nexra is believed to have a pretty strong demand outlook across the years ahead of us. And as we said, the vessels on our side where we believe that there will be in the beginning, at least, an O&M future. We are looking at Wind Zaratan and Wind Scylla and Wind Keeper. Scylla and Keeper will also have some installation scope to do, Scylla in the U.S., Keeper probably primarily in Europe and then on to a future of O&M. And then the installation vessels will have patches of O&M in between installation work. We believe that the market opportunity, as I said already, is growing and it's growing significantly. We are working to strengthen the Nexra team, and I think with the Vestas contract that we now have, not only is that a proof of concept, but also it is really also now the point in time where we can start to build the Nexra team and make sure that we are able to deliver what our O&M clients they are requesting. We have gotten the question from a lot, why Nexra and why not just under the Cadeler umbrella? It is still under the Cadeler umbrella, but the reason that it's Nexra is really because we want someone -- we want a team that can speak the same language as the O&M clients on the other side. And that is something where I think that the first 3 months of Nexra has shown that, that is something that is appreciated by the clients as well and also good conversations have come from that. We believe that we are deepening the client engagement, not only across the O&M, but also into the installation space by having more touch points with our clients. And then, of course, the strategic fleet expansion with Wind Keeper, I think we already knew that there was a future for that asset with investors. And hence, we believe that both the price we could acquire, but also what we could agree with our client was both attractive enough to make this decision and hence, we did it, and we believe that, that will add value to the overall case for our investors. In terms of what the future is for Cadeler and what we are focusing on at the moment, we are really focusing on building a resilient business with a clear and consistent focus on our core competencies, also so we can handle when things don't go to plan. And I think that we are talking about the expansion. We have talked about that for a long time. And I think that the Nexra expansion was an expansion that really not only is it something that is asked for by our clients, but it's also something that stabilizes the whole Cadeler fleet due to an expected utilization stream from Nexra into the installation fleet as well. And I think as I already talked about, the latest acquisition of Keeper is one where we had the opportunity to look at an attractive price for an asset and an attractive client with a client -- sorry, an attractive contract with a client, we know. And those things together, we discussed with our Board and both we and the management team and the Board agreed that, that was attractive enough to go ahead with it. But we are, of course, also looking at what is good growth and what is not good growth. And I would say that at the moment, we are very, very happy with where we are on fleet size and what we can both across O&M, turbine installation and foundation installation. We are working in all the major regions, and we are also being asked to be a partner in the emerging markets, which is positive. That has been a strategy for us to be having early looks, so we know what is coming, not in the near or midterm, but really in the long term, but that is a positive sign that we can see that these markets that we expected to come online, they are also coming online as expected. And focusing on strategic partnerships has always been a focus for Cadeler. And I think that the latest addition of the long-term contract with Vestas is a further substantiation of that and also enabled us to maintain our backlog despite the fact that the Hornsea 4 was delayed and hence taken out of the backlog. And then really also monitor and apply new technologies. Here, we are mentioning the developing and testing of biofuel and having a strategy for that to really drive down our carbon footprint, but it also is something that will be very relevant for the whole Nexra entity in terms of having, let's say, more strategy on tooling and tools used for O&M to really make the O&M journey as efficient as possible for us and our clients. And we already are in discussions with large clients in the industry to co-develop certain tools and assets for that, that could -- and when I say assets, I mean the things that we need on the jack-ups to efficiently do the maintenance, which can, for example, be a flexible sea fastening that can range across different turbine types, for example, so we can service different components as fast as possible and as efficient as possible. So in terms of investment highlights, still sitting on the largest and most capable and versatile fleet in the industry, and we believe that the complementarity on the fleet really enables the cross utilization efficiency and project derisking across the 3 different legs that Cadeler stands on today, very experienced team. And as Peter said, we are now where we would like to be in terms of being able to execute across different things. And I think also the team has shown its flexibility and its versatility by also enabling the onboarding of Keeper at record pace and still also having it manned at record pace and getting it back to Europe, strong technical plan for the upgrades and getting it to work in the early part of next year. A resilient global platform that can handle these shifts in the market that we see. Some of them are really unfortunate, and we are finding the best possible way to support our clients with stabilizing as much as we can, and that is what the Cadeler fleet can do, but also what our team can do. We can think out of the box when things go not to plan, and we are looking forward to continue to support our clients when things don't go to plan. As I said, an undersupply of especially foundation vessels from '29 and onwards. And we see an increasing market demand, especially to the beginning of -- end of this decade and beginning of next decade. So still I believe in the long-term story for O&M -- sorry, for offshore wind and for O&M, in general also in the market with a larger need for electricity in the market, that is something that we still stand firm on. We have a strong track record in the capital markets and a record high backlog, and we believe that, that creates earnings visibility for our investors, and we continue to focus on being a good custodian of capital. So with those words, thank you for listening in, and now we open up for the Q&A.

[Operator Instructions] We will take our first question from James Franklin with Jefferies.

So firstly, I've got to ask on Revolution Wind. So I know, obviously, it's only a very small part of your backlog now, but just wanted to get a bit of color on what the potential impact could be to Cadeler if this project remains halted, for example, if it stays halted for a month or what would ultimately happen if the contract is canceled. So do you have any contractual protection in place, firstly, on Revolution Wind? And then secondly, on Sunrise Wind, please?

Yes. I think what we can say is that contractually, we are as well protected as you can be. And that has been discussed before because the fact that the market here is difficult at the moment is not a surprise, I guess, for anybody. So the contract we have on both Sunrise and Revolution are contracts where I would say there's a lot of protection in them. At the moment, what we can say about Revolution Wind is that we are in dialogue with our clients. The only reference point we have is Empire that was halted for around about a month or so, and then it was restarted again. The question is, will the same happen here? Nobody knows at the moment. So I think that we are here and we have said to our client that we are looking to support them to the degree we can with the installation of the project. That's the only logical outcome of this. This is that Revolution is completed and providing clean energy to the citizens of the U.S. And -- but I think that nobody really knows today what is happening. So we have been told that we should stop working on Revolution Wind and comply with the stop order and that we will hear more. That is what we know today.

Okay. Got it. That's helpful. And then secondly, I just wanted to talk about Wind Keeper. So you gave a bit of commentary on your CapEx in the first half of the year, which included various construction payments for the newbuilds. But talking about 2Q specifically, is it fair to assume that the majority of that CapEx related to Wind Keeper and there's no sort of other major construction payments? And then second part on Wind Keeper is if you can just give us a bit of color on the upgrades that you're expecting to make on the vessels, so not just in terms of the value, but if you can give us a sort of picture of what the physical upgrades are likely to be?

Let me -- thank you, Jamie. Let me answer the first part of the question and then Mikkel can answer the second part of the question. Yes, it's fair to assume that Q2 CapEx is [ Wind Keeper ], there's no unplanned CapEx in Q2 or first half. It is really the installments that is in the contracts with the yards. And then Wind Keeper, of course, came in with a big number in Q2. So your assumption is correct.

And in terms of the upgrades, the upgrades we are doing on Keeper is upgrades that will enable the Wind Keeper to work in European waters like what we see on other vessels. So the Wind Keeper has been built by a company in China that had an ambition of working in Chinese water and also in international waters. But there are things that they have done in the design that we would have done differently if we had started the design, so to speak. And we are trying to rectify some of those. I cannot give you all the details, but some of the things that we are doing is that we are, for example, putting a new auxiliary crane on the vessel because the current auxiliary crane is in the way of the way we do a deck layout for efficient O&M, but also for potentially installation work. We're also adding a new bow cluster to improve the [ DP ] for North Sea operation, and we are also working on the leg guides to get more capacity out of the very nicely long legs that this vessel has that enables her to work on very, very deep water depth and very complicated soil conditions. We're also recertifying the main crane under an international classification society, which means that we can do a better lifting curve with the crane and then a general accommodation upgrade that will make her similar to our other vessel standards and also to what our clients can fairly expect from a Cadeler vessel. So in highlight, those are the upgrades we are looking at.

That's great. And then final question then with regards to Wind Keeper, were you actually sort of actively looking for an O&M vessel? Or was this basically just an opportunity that came up at a good price and you went for it? And have you seen sort of other similar vessels in the market in Asia?

Last question first. We don't see similar vessels. And I think the Wind Keeper is pretty unique in terms of how it's been built. It's been built with a lot of international components. So there's a lot of, let's say, read across to other spare parts in the Cadeler fleet, for example, on the [ Husbank ] crane and so on and so forth. So we have looked at other Chinese assets, but mainly due to the fact that we got the questions from investors a lot, what if these Chinese vessels are coming to Europe suddenly starting to compete. That actually made us look into all these vessels, what is out there? How can it be done? How would it look if they came and what would need to happen to them if they had to be upgraded? And the conclusion was clear it's very, very hard to upgrade the vessels that have been built, particularly for the domestic market in China because they have been built for a different installation methodology that almost would make it easier just to build a new vessel rather than to try to retrofit to Europe with one of these assets. The exception was Keeper, but it has been offered to us for a long while, more than 2 years, but the price started in a different area. I think that our interest in Keeper started really when we were contacted by the lenders of the vessel. And we could see that we could acquire the vessel at a price point where we believe that we could also build an O&M business case on the vessel. And at the same time, we had a dialogue with a couple of clients that were in need of that O&M supply already starting next year. And hence, since there's very, very limited availability this year and next year in the market, we had a dialogue with some of these clients and said this could be an option. Is that something you would go for? And if you wanted to go for it, how would you do it? And that is what led to the decision. So that is very transparently sharing how the decision was made. Can we stop the presentation so we can see the speaker, please?

Our next question will come from Roald Hartvigsen with Clarkson.

Congratulations on another strong quarter. So first, just to follow a bit up on the first question that came in on Revolution and Scylla. And I know it's still early, so probably no firm plans yet, as you alluded to, but do you see the potential for alternative work scopes for the vessel amid the stop order? And I guess, more specifically, Sunrise Wind is in the same area still progressing. Do you think there is a scenario where Scylla moves over to help out with work there while awaiting clarity on the stop order? Or are there roadblocks making that prohibitively challenging?

I think, first and foremost, our clients don't wish that. So the vessel is mobilized for the installation of Revolution and Sunrise. And hence, if we work on something else, we have to demobilize from these projects because we are working with a Jones Act compliant [ box ] that is landing the equipment on the jack-up and then we install from the jack-up. So it is not so easy to just go and work somewhere else. So I think it's fair to say that our clients don't wish us to go and work somewhere else now. But that is certainly something we would have considered if it was possible also to minimize the impact for our client. I can say that after this news came out on Friday, we have been caught up by some clients that is interested to hear whether that vessel then becomes available because there is, at the moment today, a shortage in the market on capacity in projects also in Europe that is already in installation. And hence, I believe that if the vessel comes free, which I don't believe or hope today, I would like to make that clear, then I think that it could be repurposed to another project.

Furthermore, we have, over the last year or so seen a number of contract terminations for turbine installation vessels where the turbine installation vessel operator have benefited significantly from large termination fees. And I guess many would also place you in that category. My question is, in that context, do you see more pushback from developers to sort of lower termination fees on the contracts being signed and negotiated now and in the time ahead? Or are you still of the impression that the levels for termination fees in the contracts remain fairly stable from the contracts that were signed 1, 2, 3 years ago? And yes.

I don't see that at the moment, but I would also say that the backdrop is very short still. So if it's coming, it's probably we have not seen it yet. But I don't -- I think that the flip side to that coin is also that for us as a vessel provider to lock in the vessel and not being able to do anything else with the vessel, it comes with a cost. It's an option and an option has a price [ right ]. So it's something that you can calculate the value of an option. And I think that, that is how we are looking at it as well because we can also say to our clients that projects have been delayed and hence, we need to protect ourselves if that happens. We cannot just sit with nothing if it happens because then we've become the losers in the grand of play, so to speak. So I think that we are -- we still have very fruitful dialogues on this, but -- and it's a 2-sided sword almost you can say, because one thing is, of course, to have the protection and the termination fee. The other side to that is also to try to really bet on the projects you believe on as well. And so there is work on our side to be rightly placed for the right projects. And then, of course, also to not always look for the last dollar, but also look for the right conditions and the contracts, I would say. And I think that, that's something that is still working fairly well for all parties in the industry. And I would like to say that termination fees as a contractor, you are happy they are there, but you really don't want to have them. You would like to do the project instead. The same goes for Hornsea 4. We would have loved to do Hornsea 4. We will still love to do Hornsea 4 when it comes back.

Yes, makes sense.

We have no further questions at this time. Thank you for your participation. I will now hand the floor back to Mikkel Gleerup for any closing remarks.

Just thank you for everybody listening in. Good to speak to you again and reach out to us separately, Alexander, Peter and myself, if there's any additional questions. I'm sorry, we cannot give more detail on Revolution, but I think everybody can understand that it's very new for everyone and that we are working with our clients as much as we can in this sad situation that our client is currently in. So we will update you as soon as we know something that we can share. But thanks for listening in now, and have a good day ahead.