Hexagon Composites (HEX) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues from continuing operations were NOK 1.15 billion, with EBITDA rising to NOK 137 million and a 12% margin, up from 9% year-over-year, driven by Hexagon Agility's strong performance.

• Sale of Hexagon Ragasco to Worthington Enterprises for NOK 1,050 million generated a net gain of NOK 677 million, strengthening the balance sheet and sharpening focus on core fuel systems and Mobile Pipeline businesses.

• Secured major orders, including a $60 million UPS order, a $13 million Mobile Pipeline order, and a record $12.8 million industrial gas order, supporting growth in RNG and heavy-duty truck segments.

• Launched the Hexagon Purus Tern battery electric truck in the U.S., with first deliveries expected in Q3 2024, and Hexagon Purus reported 60% revenue growth and EBITDA positivity in Hydrogen Mobility & Infrastructure.

• Approved near-term and net zero greenhouse gas emission reduction targets by the Science Based Targets initiative, with solutions enabling avoidance of 537,790 metric tons of CO2e in H1 2024.

Financial highlights

• Q2 2024 revenue: NOK 1.15 billion; EBITDA: NOK 137 million, up NOK 27 million year-over-year; EBITDA margin: 12% (Q2 2023: 9%).

• Net debt reduced to NOK 753 million; leverage ratio down to 1.6x after Ragasco sale; liquidity reserves at quarter-end: NOK 1.4 billion.

• Digital Wave revenues up 13% to NOK 45 million, with stable profit.

• Profit before taxes from continuing operations: NOK -85 million, mainly due to NOK -101 million share of losses from associates.

• Total profit before taxes for the Group: NOK 600 million, including discontinued operations.

Outlook and guidance

• 2024 revenue guidance: NOK 4.8 billion, up from NOK 4.5 billion in 2023, with EBITDA expected to exceed NOK 500 million, a 37% increase over 2023.

• Long-term EBITDA margin target remains at 15%, with expectations to achieve this by 2026.

• Second-half 2024 expected to see higher truck sales, margin appreciation, and strong performance from Mobile Pipeline.

• Mobile Pipeline business nearly fully booked for 2024, with additional capacity coming online in September.

• Digital Wave anticipates high activity in MAE services and growth in UE volumes, with regulatory requirements supporting long-term demand.