Hexagon Purus Asa

Hi and welcome to Hexagon Purus Q3 2026 presentation. My name is Mathias Meidell and I will be moderating from the studio in Oslo. As usual, I'm also joined by Group CEO Morten Holum and Group CFO Salman Alam. The agenda for today includes the highlights from the quarter, company update, the financials, and the outlook. We will end the presentation with a Q&A session, so please feel free to enter your question via the function on your screen. And with that, I'll pass right over to you, Morten, who will take us through the highlights of the quarter.

Thank you, Mathias, and good morning, everyone. Thanks for tuning in to our webcast this morning. Key developments in the second quarter. Number one, revenue remained broadly stable compared to last quarter. Number two, cost base has been substantially reduced. The annualized cost base in Q3 is around 50% lower than in 2024, which shows that the targeted cost cuts have been delivered. And finally, number three, the order book visibility for 2027 has improved and is now more or less in line with where we were at this point last year. So let's look at it in a bit more detail. Starting with revenue on the left, revenue in the third quarter was 150 million NOC. We had a positive working capital true-up of 7 million NOC related to the US divestment. So excluding that, underlying revenue in Q3 was 143 million NOC, which is down 20% year-over-year on a comparable basis. We had expected higher revenue in Q3, but had some deliveries pushed into Q4, partly related to customer scheduling and partly related to supply chain. EBITDA on the right was minus 83 million NOC in Q3 compared to minus 116 million NOC in Q3 last year. So this is somewhat better than last year, despite 20% lower revenue, which is mainly driven by the substantial reduction in fixed costs. Looking at revenue composition, the revenue mix shifted a bit in the third quarter. Largest revenue share in Q3 was hydrogen infrastructure with almost 30% of the total. This is still our largest product area, but we had significantly higher share of revenue coming from battery mobility in Q3 this year, 24% of total revenue up from 7% in Q3 last year. The year-over-year revenue bridge is putting things on a like-for-like basis by excluding the effects of the divested US business. And with that exclusion, revenue in Q3 was 20% lower than last year. Hydrogen infrastructure, down 45%, which is a pure volume effect. And hydrogen mobility was also down by 44%, where lower volume in transit bus was only partly offset by higher volume in rail applications. We delivered the storage systems to Stadler's hydrogen train in California, now in Q3. On the positive side, we had strong revenue growth in battery mobility following deliveries of eight vehicles to Hino in Q3. And we expect activity to remain high also in Q4. We have truck deliveries to Hino and deliveries of hydrogen storage systems and battery systems to Toyota North America. In other applications, there were limited changes. A bit lower activity from industrial gas and a bit higher revenue from maritime. The order book remains broadly stable from last quarter, but the visibility for 2027 has improved. Hydrogen infrastructure accounts for the largest share of the order book, 55%, while hydrogen mobility accounts for 17%. We have good visibility for battery mobility for the remainder of 2026, but limited visibility going into 2027. But with an increased number of trucks now in customer demo programs and good feedback from customers, we're working on converting that interest into firm orders. As of Q3 26, around 58% of the order book is for execution this year, which means we're going to have a busy quarter now in Q4. And we're also encouraged by the strong order intake for hydrogen distribution in the quarter. As you can see on the right hand side, 40% of the order book is for delivery in 27 compared to 15% in Q2. So the order book for next year increased by almost 3x in the quarter. The current order book will be executed on a lower cost base than the comparable quarters in 2025. So the levels we're at now is not too far away from supporting positive EBITDA operations. And with good execution, the anticipated revenue in Q4 provides an opportunity to approach underlying EBITDA breakeven at group level for the first time. We have made substantial changes to the size and the cost of our operation since the beginning of 2025. Most of the intended structural measures are now complete. The annualized cost base in Q3 has been cut by approximately 50% compared to 2024. This has been done partly by reducing the group's workforce by around 50%, partly by cutting other OPEC spend, and partly by undertaking structural measures, such as the U.S. business divestment and reducing our exposure to the China JV. These initiatives will enable us to reach EBITDA and cash break even at significantly lower revenue. We have recalibrated the company operations to match the current market conditions. Earlier this month, we launched HiCarrier, our next generation distribution system for multimodal hydrogen transportation. High Carrier builds on a strong legacy of more than 650 hydrogen distribution modules already in the field and several decades of experience with safe and secure transportation of compressed gases. The High Carrier marks an important step in future-proofing Hexagon Purus's hydrogen distribution offering. and we look forward to start delivering this new module to our customers. And the first units are planned to be shipped in April next year. HiCarrier features a modular setup with optimized cylinder dimensions and system design that allows for higher payload with approximately 40% less cylinders on board compared to the existing distribution system. It's a higher payload system with capacity up to 1.3 tons of hydrogen at 380 bar working pressure. And that reduces the total cost of ownership for our customers. Compared to the existing system, the high carrier allows for lower material input without compromising on system capabilities and safety level. The new cylinder design also increases the periodic inspection interval from 5 to 10 years, which reduces operational downtime and inspection costs over the system lifetime. The next-gen module also features a modular design with standardized components to simplify repairs and spare parts supply. And finally, it's of course designed with integrated safety features, building on our in-field experience from more than 650 units that we have manufactured and put into the field. So this confirms our leadership position in this space and further strengthens our competitiveness. So those were the main points for Q3 overall. I think we had expected a higher revenue quarter, but with some deliveries pushed beyond the quarter end, we expect to make that up now in Q4, which will be a very busy quarter. With that, I'll hand it over to our CFO to go through the financials. Salman.

Thank you. Thank you, Morten, and good morning, everyone. Taking a step back, the third quarter was broadly stable in terms of activity compared with the second quarter and somewhat below what we had planned for, for the reasons Morten just described. Revenue amounted to 150 million, with somewhat of a different mix than in recent quarters. There was a lower activity in hydrogen infrastructure and transit bus, but that was to some extent offset by higher activity in battery mobility. We ended the quarter with 220 million in cash and an order backlog of 508 million. As Morten touched on as well, the total backlog is broadly unchanged from the second quarter, but its composition has shifted. So the portion of delivery in 2027 increased significantly during the quarter. So from a financial perspective, the main feature of the quarter is the lower cost base, which is now more clearly visible in the P&L, which we'll look at in a moment. Moving on to the P&L, revenue was down 40% compared to the same quarter last year, but that comparison quarter still includes the divested US business and the China joint venture, which was deconsolidated in the first quarter of this year. Together, they contributed 74 million of revenue in the third quarter last year. Therefore, excluding that effect and the 7 million working capital true-up from the U.S. sale recognized this quarter, the like-for-like decline was 20%. The underlying picture is somewhat different than in recent quarters. Hydrogen infrastructure and transit bus were lower, while battery mobility and rail applications were higher as we made customer deliveries in the quarter. Year-to-date reported revenue is NOK 701 million, up 4%, and that figure includes about 141 million of extraordinary gain from the two transactions that we announced in the first quarter. On a like-for-like basis, excluding those gains and divested revenue, year-to-date revenue is 506 million versus 515 million last year. So broadly stable revenue development year-to-date, but delivered on a considerably smaller structural footprint. On costs, cost of materials was 84 million or 56% of revenue, which is unchanged from the second quarter of this year and up from 47% last year. The cost of materials ratio this quarter was impacted by high materials cost on the Hino truck deliveries in the BVI segment, which was mainly built from higher cost legacy inventory and by a 5 million inventory write-down that we did in the HMI segment. Payroll was 90 million against 187 million last year and 109 million underlying in the second quarter. This is the first quarter that mostly reflects the payroll effect of the headcount reductions that we've implemented to date. Other operating expenses were 59 million against 62 million last year and includes approximately 6 million in strategic and consultancy costs related to the ongoing restructuring. Total operating expenses therefore ended at 233 million against 368 million last year, which is a reduction of just over a third. EBITDA was minus 83 million against minus 116 million last year, which is an improvement of 33 million despite around 100 million of less revenue and an improvement from the minus 102 million in the second quarter. The improvement in the third quarter itself was held back by some volumes that slipped into the fourth quarter, the mixed effects that I just described and also restructuring related costs. Year to date, EBITDA improved from minus 519 million last year to minus 184 million this year. And when we strip out the extraordinary gain, the underlying improvement is roughly 200 million or close to 40%. That's mainly the cost program then flowing through the numbers. Moving below EBITDA, depreciation was 40 million in the quarter, down from 68 million, reflecting the lower asset base following the divestments that we completed earlier this year. The share of loss from associates was 6 million, which represents our minority interest in the China JV. Finance income was 32 million, of which around 30 million is currency effects and 2 million is interest on deposits. Finance costs were 144 million, where the large majority is non-cash. About 74 million is payment in kind interest on the two convertible bonds and around 8 million is interest on lease liabilities and other debt. The remaining 62 million is currency effects. Tax was immaterial as the group is not in a taxable position and net loss for the quarter was 242 million against 365 million in the same period last year. Moving on to the segments. As a reminder, HMI is our European hydrogen cylinder and systems business produced out of Kossel and Wetz in Germany, together with our industrial gas activity. With the reductions implemented in Kossel and Wetz earlier in the year, now mostly reflected in the numbers, The segments cost base is more aligned with the demand picture we're currently seeing, and we saw periods of profitable operation at the Kassel facility during the quarter. HMI revenue was 104 million in the quarter, down 55% as reported. Adjusting for a divested US business which contributed 65 million in the comparison quarter, revenue declined 38% year-over-year. Hydrogen infrastructure delivered 41 million of revenue against 75 million last year on lower hydrogen distribution volumes this quarter. A substantial volume of distribution modules is now scheduled for delivery in the latter part of the fourth quarter, especially in November and December. Hydrogen Mobility was 32 million against 94 million last year with the prior year figure including the US business. Transit Bus accounted for 19 million against 92 million last year, where 57 million when excluding the divested business. This is consistent with the muted expectations for BUS that we've communicated throughout the year, and it's broadly in line with expectations. Rail applications contributed 11 million, and industrial gas came in at 27 million, which is down 19% year over year. EBITDA was minus 34 million against minus 47 million last year. Year to date, the underlying improvement in EBITDA is cost-driven. The run rate effect of the workforce reductions in Kassel and Vets is now largely in the numbers, and the lower cost base and improved productivity supported periods of profitable operation at the Kassel facility during the quarter. Year-to-date, the underlying improvement in EBITDA is cost-driven, and the run rate effect of the workforce reductions in Kastler Vets is now largely in the numbers. Moving on to the next page on BVI, This is then our battery systems business in Kelowna and the US in Dallas. The main customer here for this segment is Hino. and in the quarter we mainly saw delivery of battery electric trucks to Hino. The operational focus for this segment remains the same as last quarter, executing on the truck program and the hydrogen and battery systems deliveries to Toyota within the smaller organization established through the restructuring earlier this year. Looking at the financials, BVI revenue was 35 million, which is up significantly compared to last year. The quarter comprised delivery of eight battery electric trucks to Hino, compared with one truck in the same quarter last year, together with sublease income from the Dallas facility. Some hydrogen and battery system deliveries to Toyota and truck deliveries to Hino shifted from the third to the fourth quarter, which weighed on revenue in the quarter and adds to the volume scheduled for delivery towards year end. EBITDA was minus 28 million against minus 30 million last year and minus 75 million year to date against minus 115 million last year. The higher revenue did not translate into improved profitability in the quarter as the trucks delivered carried high materials costs from legacy inventory. We needed additional temporary labor to support truck builds in the quarter. Executing the substantial fourth quarter delivery schedule while controlling production costs and cash requirements is the most important operational item for the BVI segment in the remainder of the year. Moving on to the balance sheet, total assets ended the quarter at 2.6 billion, down from 2.8 billion at the end of the second quarter, which primarily reflects the net loss for the period and a working capital release. Property, plant and equipment was 589 million, broadly stable or normal depreciation and minimal additions. Inventory was 360 million, which is down 22 million as we continue to convert inventory into deliveries. Trade receivables were 198 million, up 18 million, mainly reflecting the higher revenue in BVI in the quarter, and cash ended at 220 million. On the other side of the balance sheet, non-current interest-bearing debts stood at 2 billion, primarily the debt component of the two convertible bonds, which continues to grow mechanically with the payment in kind interest accrual. Current liabilities increased to 409 million from 383 million, driven by higher trade payables and by contract liabilities, which is mainly customer prepayments. Total equity was minus 224 million at quarter end against 41 million at the end of the second quarter and 1.1 billion a year ago. The development reflects the loss for the period, including the accrued interest on the convertible bonds, and the group now is in a negative consolidated equity position. We are in discussions with the company's stakeholders on a financial restructuring, including measures relating to the two outstanding convertible bonds with the objective of reducing the debt burden and restoring positive equity. On liquidity, the measures taken over the past two years have substantially reduced our funding requirements. And on current forecasts, the group has sufficient liquidity to meet its obligations for at least the next 12 months. Those forecasts are obviously sensitive to volume, delivery timing, margins, customer payments and order intake. But that's the current assessment. Net cash flow was minus 88 million in the quarter, taking cash to 220 million. Operating cash flow was 67 million and consists of the operating loss in the quarter, partly offset by a 64 million working capital release. Cash flow from investing was positive 9 million, where capex and capitalized development together was around 4 million, which continues to be deliberately restrained. and we received 10 million from escrow release and working capital true-up related to the US divestiture from earlier this year. Financing and effects absorb 30 million, which is lease payments of 18 million together with a negative currency effect on cash of 11 million. With that, I'll hand the board back to Morten for the outlook. Thank you, Salman.