Hexagon Composites (HEX) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue reached NOK 5,186m, up 21%; EBITDA was NOK 480m, or NOK 507m excluding strategic and restructuring costs.

• Record Mobile Pipeline sales and 54% Digital Wave revenue growth supported performance; Mobile Pipeline was the key profit driver.

• Reported FY net profit was NOK 1,136m, largely reflecting a NOK 2,351m deconsolidation gain, partly offset by a NOK 702m impairment.

• Sustainable solutions were estimated to avoid 1.5m metric tons of CO2-equivalent emissions in 2023.

Financial highlights

• Q4 revenue was NOK 1,437m, up 13% YoY; EBITDA was NOK 126m versus NOK 105m, with a 9% margin versus 8%.

• Q4 EBITDA excluding NOK 11m of strategic and restructuring costs was NOK 137m, a 10% margin.

• FY revenue was NOK 5,186m versus NOK 4,303m; excluding ~NOK 390m of positive FX effects, underlying growth was 11%. FY EBITDA included NOK 27m of non-recurring costs.

• Q4 continuing-operations profit after tax was NOK -783m, including a non-cash NOK 702m impairment; FY total profit after tax was NOK 1,136m.

• FY free cash flow was NOK 465m; Q4 free cash flow was NOK 124m, supported by Agility and a favorable working-capital release.

Outlook and guidance

• 2024 revenue and profitability are expected to be back-end loaded, with Agility margin improvement from H2 as truck volumes increase.

• Cummins 15-liter natural-gas engine deliveries are expected from Q3/H2 2024; truck demand is expected to ramp significantly in 2025.

• 2025 targets remain revenue above NOK 6bn and an EBITDA margin of ~15%.

• Mobile Pipeline production capacity for 2024 is almost fully booked; additional capacity is scheduled during the year, with strong RNG demand supporting growth.

• Digital Wave expects further growth in MAE services and UE equipment; Ragasco expects Linktra and Gasco to support growth, with its strategic review due by end-Q2 2024.