Hexagon Composites (HEX) Q3 2024 earnings summary

Executive summary

• Achieved record-high Q3 2024 EBITDA of NOK 184 million, up from NOK 120 million, with revenues of NOK 1,250 million, driven by strong Mobile Pipeline, heavy-duty fuel systems sales, and operational efficiencies.

• Major orders secured, including $18 million from a U.S. refuse collector and USD 18.7 million for RNG fuel systems, with significant new RNG fleet adoption.

• Hexagon Purus completed a NOK 1 billion capital raise, ensuring funding well beyond cash flow break-even, with Hexagon Composites participating with NOK 383 million.

• Sale of Hexagon Ragasco completed in June 2024, resulting in a net gain of NOK 677 million; historical figures restated for comparability.

• Solutions enabled avoidance of 1 million metric tons of CO2 equivalents in 2024.

Financial highlights

• Q3 2024 revenue reached NOK 1,250 million, up 9% year-over-year; EBITDA increased to NOK 184 million, with a 15% margin, and leverage reduced to 1.1x post-capital raise.

• Agility segment delivered NOK 1,220 million in revenue, up 10% year-over-year, and NOK 203 million in EBITDA, with a 17% margin.

• Net interest-bearing debt reduced to NOK 573 million; liquidity reserve at NOK 1,617 million at quarter-end.

• Equity ratio stable at 56% after NOK 300 million capital raise.

• Free cash flow supported by profitability and equity raise.

Outlook and guidance

• 2024 revenue guidance maintained at NOK 4.8 billion, with EBITDA guidance raised to over NOK 560 million due to margin improvements.

• Management expects to maintain or improve current margin levels into next year, targeting a 15% annual baseline.

• Truck sales and volumes expected to increase significantly in H2 2024, supported by UPS order and X15N engine demand.

• Mobile Pipeline production ramp-up completed in September, ready for larger orders and strong finish to 2024.

• Digital Wave expects high activity in MAE services and a recovery in UE machine volumes in Q4.