Hexagon Composites Ord

Good morning and welcome to Hexagon Composites Q2 2024 financial presentations, financial results. My name is Karen Romer. I'm the SVP communications for Hexagon Composites. And joining me here in the auditorium in Oslo is Knut Flack, our chair of the board, and David Bendelli, our CFO, who will be covering this morning the Q2 highlights and market outlook. Financial, and then Outlook, again, with Knut at the end. For those of you that are our online audience, there is a question field in your screen. So during the presentation, feel free to input your questions. And in the room here at the end of the presentation, we will have a Q&A. And I'll ask you to wait for the mic to be delivered to you before asking your questions so that we can include our webcast audience in hearing that. So without further ado, I'd like to invite Knut Flack to the stage.

Thank you, Karen. and good morning everyone. Welcome to our presentation. I'm very happy that you are here and also for the online audience, a heartfelt welcome. As you all know, or most of you know at least, we are in the business of driving the energy transformation. We have a mission that we should create clean air everywhere. That goes for both local pollution and it goes for CO2 reductions. And in the first half of 2024, our solutions have enabled the reduction of CO2 in the range of 540,000 tons, which would equal to about 120,000 petrol cars removed from the road for one year. In the quarter, we've also been approved by design-based targets. They have approved our near-term and net-zero greenhouse gas emission reduction targets. And we're quite proud of that because it's a limited number of companies worldwide that has so far been approved. So Q1 was a solid quarter with significant margin growth. And we are definitely on track for our 2024 targets. That's with the adjustment of Hexagon Logosco, which was sold during the quarter. We came in at 1.15 billion Norwegian kroner in sales and had an EBITDA margin of 137 million, which turns into a margin of 12%, which is quite an improvement compared to the previous quarters. We had several highlights during the quarter. The commercial activity was very high, and we have noted substantial orders both for our fuel systems and for our mobile pipeline business. We saw the launch of the Hexagon Purus truck in the US, and we had the successful sale of Hexagon Rogosco in the quarter. So let's take a quick look at each of them. On the commercial side, the most notable one was the order from UPS of close to 60 million US dollars. This is the front runner on the X-15 natural gas engine. So it includes quite a number of the natural gas engines for the large X-15 engines. And it is in a fairly soft U.S. freight market. So to see UPS place an order of that magnitude at this point in time is quite encouraging. And it shows that they put a lot of focus on renewable natural gas and have a clear aim to turn their fleet into more green or greener solutions. In addition to the specific order, we also extended the framework agreement with UPS. So that's now extended for three years, well into 2027. On the mobile pipeline side, we received an order of close to 13 million US dollars from a global gas company. And this is not for natural gas, renewable natural gas. It's a different gas. And it shows that there is a need for mobile pipeline solutions also in other segments, not just in the natural gas, renewable natural gas segment, which I will revert to later on. And they have continued their strong growth with the first half of the year being well above the first half of 2023. The other major event during the quarter was in Hexagon Puris, which we are owner of, or 38.5, sorry, 38.4% owner of. So it means a lot to us as well. They launched the turn truck in the US and it created quite a lot of attention from the audience during the ACT Expo. This is a truck that is targeting regional and city use, because that's where battery electric solutions have a clear advantage. If you talk long haul trucking, if you talk very heavy loads, it's probably different solutions that will take the main part of the market. It's a groundbreaking, heavy-duty battery electric truck. and it will be quite exciting to see how that rolls out. They had had a very good response on the truck, and I think they also have received their first order, and they are starting now to deliver in Q3 2024. What's also important here is the cooperation with the Haino trucks, because these trucks will be sold exclusively through the Haino truck network. Haino is a Toyota group company, as you might know. And to have this distribution arm and this after sales and service arm is quite important for us to be successful in this new segment. Then last but not least, we sold Hexagon Rogosco in the quarter. We sold it to Worthington Industries and we think that will be a good new owner for Rogosco who can take the company further because of their strong position in the LPG market. So that was important to us, but even more important was the fact that we received a price that we were satisfied with, and also that we can now focus even more on the fuel systems for buses and trucks and for mobile pipeline solutions. Because there is a lot of growth potential in those areas, and we want to ensure that we can really take the lion's share of the market going forward. We're also proud that we have been able to develop Ragasco from being a fairly small company when we acquired it back in 2001 to become the globally leading composite LPG cylinder manufacturer, with more than 22 million cylinders sold worldwide to over 100 countries. So it's been a journey and it wasn't an easy heart that I decided or we decided to sell because I've been following the company for 24 years almost. But it was the right thing to do. And I certainly believe that Worthington will be a good owner for the company. And I also believe that this will be good for Hexagon with a strengthened balance sheet and with a more focused approach going forward. So with that, I'll leave it to David to talk about the financials.

Thank you very much, Clint. Yes, indeed. That was a successful quarter and also evidenced in the financials. So we had a higher heavy-duty truck volume, something we've been waiting for. They came a little bit even further than our expectations in the quarter. That led to accelerated margin increase and, as Knut mentioned, a significantly strengthened balance sheet then as we exited Q2. But first, it's important to see how these transactions affect the financial statements from Q2 onwards. And first of all, the sale of Regasco to Worthington, as Knut mentioned, resulted in an enterprise value of significantly $1,050 million. It also included an earn-out component with a sliding scale from minus 50 to plus 100. And to put a data point in there, it's based on EBITDA. So if Regasco do the EBITDA performance they do in 2023, that would result in a plus 50 million result. No surprise that there was a gain on the transaction. We recorded that that's $677 million, and that is net of transactions costs. But perhaps the most important thing going forward is that Regasco has been reclassified and presented as discontinued operations under IFRS. So that means that everything from revenue down to profit after tax has been stripped out of the continuing operations and presented below profit after tax in discontinued operations in one line. So that means that what's left is completely free of Regasco numbers in the P&L from revenue down to profit after tax. And that is both for 2023 represented and 2024 and going forward. So that's very important. For the acquisition of 49% of Worthington Enterprise's Sustainable Energy Solutions business, SES, that we did for 114 million NOC. It's a 49% and non-controlling interest. So it's presented as investment and associates and will be accounted for using the equity method. So going forward, we will take our share, 49%, of the either profit or loss in that investment going forward. Okay, so for the group, we did 1.15 billion in revenues, but more importantly, off that revenue base, we generated 137 million in EBITDA, up 27 million from last year. And that 12% EBITDA margin then represents three percentage points increase year over year. So substantial. And really, this kind of accelerated margin recovery already in Q2 does set up a stronger second half of the year. We closed Q2 with net debt at 753 million and leverage reduced to 1.6 then primarily as a result of the sale of Rogasco. So where is this margin appreciation coming from? So first of all, we've had a very strong base of mobile pipeline volumes, particularly in the first half of this year and profit performance. So that's the base. What has been low and has been recovering for some time now our truck volumes. And in the quarter, we were able or Hexagon Agility were able to deliver 140 million EBITDA of their 1.1 billion of revenue for EBITDA margin of 13%. And that is the highest margin since Q3 2021. So truly all the issues that followed the pandemic, the war in Ukraine, The cost inflation, the disruptions that all impacted our margins and the subsequent price revisions, all that is now firmly under control and we look forward to hitting our longer term EBITDA margins. So quarter over quarter, you see the real difference. There were six percentage points of EBITDA margin improvement, and that's really from a 2.6x pickup in heavy-duty truck sales versus the low Q1. When we look at the shares on the left, although we see 28% in Q2-23, five percentage points of that was medium-duty, where we have much lower content. So you can see there was even a year-over-year increase in heavy-duty truck sales for that period. So recovering truck volumes drive further EBITDA margins. And what continues to drive Hexagon Agility going forward? Remember, we do transit buses, we do refuse trucks. We just got an order for almost $90 million published. But we also do trucks. And in the trucking business, we have nine-liter engines. We have predominantly 12-liter engines doing a lot of business there. And what's new is this game changing 15 liter engine. And what that does, and Knut will follow that up, but it does triple our market and it opens the market up basically for high power, high torque operations, and particularly high payload, long range. So that's the difference. UPS, as you heard, is a big customer, $58 million order from them that combines both the 12 liter and the 15 liter engine. So that is actually the largest commercial order for 15 liter to date. And of course, we've had some further orders as well. So Kenworth and Peterbilt, they're the forerunners who have adopted the 15-liter engine. And we have serial production in Q3. And that's where the first orders are being generated through. And in time then, in 2025, sometime from the mid-2025 onwards, then Daimler or DTNA will also have homologated or approved the 15-liter engine for use in their trucks. Altogether, that would be two thirds of the North American OEM market and a very good future base then for future sales going forward. At the moment, we see a lot of quoting activity being market leader. We're heavily involved in that and we will see that quoting activity then turn to orders and sales in due course. So that was Agility. Let's turn our attention to Digital Wave. That's our cylinder inspection and testing arm. This is an arm that is fully complementary to both Hexagon Agility and Hexagon Puris businesses. Digital Wave increased their revenues 13% to $45 million in the quarter, with a modest profit of about $1 million. Knock each period stable. There was a pickup in the UE machine volumes from a low Q1, but that stable profit is really more due to continued growth OPEX year over year for digital wave. So where are we on the guidance? We reconfirm our guidance, really no changes. We just adjust for the sale of Hexagon Regasco. So 100% of the results of Regasco are out. And that leaves us with a 2024 expectation of around about $4.8 billion in top line. That would be against the comparative $4.5 billion for 2023. And EBITDA of greater than 500 million. And that's at least then a 37% increase from the comparative 2023, which is 366 million. So impressive EBITDA expansion already in 2024. And we expect that to continue in 2025. So on track for our targets. So as we close Q2, we see the uptick in truck volumes. We see the accelerated margin and margins coming back in. And of course, with the UPS order and the order for the refuse trucks for 19 million, that really sets us up for a stronger second half of the year. And of course, all this within a much strengthened balance sheet going forward. On that note, I'll ask Knut to come back for the outlook.

Thank you, David. So what's really been at the core of Hexagon's success? We've had, since we founded the company back in 2000, we've had an annual cumulative annual growth rate of 18%. The majority of it being organic growth. Some acquisitions, but there has also been some divestments. When I founded the company in 2000, the idea was to make composites more competitive, cost competitive. Because everyone talked about the product advantages, you know, the lightweight, the high strength, the corrosion resistance and so forth. They were preoccupied with that. very few people talked about the cost of it. And in most cases the cost was substantial more than the existing alternatives like steel and aluminum and so forth. So to us it was a question about focusing on cost competitiveness and make these products able to take market share from the established solutions. The same thing goes for it today. And this is what's going to drive the growth going forward in a market that is demanding our products. We have to stay cost competitive. We have to ensure that the product is able to compete with the existing solutions as well as with our competitors. So it's for two reasons. One is to enable the green shift to actually happen. The world needs to go that way, but then they also need cost-competitive solutions, competing with the established solutions. And we do it because we want to stay ahead of the competition. So this is what Hexagon looks like today, after the sale of Rogosco. Obviously, Hexagon Agility is the largest part of it, 100% owned. Digital Wave is a smaller company, but important in terms of quality and ensuring that our products deliver and that they stay safe. Then we have the substantial ownership in Hexagon Purus of 38%. And we also have two other units, CryoShelter, which is a development company at the moment, developing LNG solutions for the trucking business. And we also, after the sale of Rogosco, we have received a 49% ownership, as David mentioned, in SES. And we see very interesting opportunities in SES, but those will be explored as we go forward over the coming quarters. So we will then decide what to do, and we'll discuss it with Worthington, and I think we can find very exciting solutions in that business, because there is a lot of overlap with the business that we have in Hexagon Agility, and also in Hexagon Pures. This has been mentioned already, so I'm not going to spend a lot of time on it, but it's quite important to understand that the market is opening up completely. In the past, it was only a third of the market that was addressable to us. Now it's the entire market. And we see a lot of activity in this heavy-duty end of the market. We see a number of fleets now testing the new engine. We see Walmart, we see smaller fleet owners. So there is a lot of variety. It's not just one or two companies, not just UPS, for instance, which has already ordered the engine. We will see a lot of quoting activity. We will see a lot of orders coming on as we move forward. And the reason for this is that the large fleet owners and the medium and the smaller ones, they have ambitions to go green. So waste management, for instance, they already have 11,300 alternative fuel trucks in their fleet. Amazon has got 4,400 natural gas trucks at this point in time. And UPS, even more, 6,500. And they have clear targets to go net zero in the long term, and that's going to have to be a gradual journey. You can't do it overnight. You have to do it gradually. And we're quite happy about that because we wouldn't be able to supply if they all demanded solutions right away. This one is also important. It's to understand that renewable natural gas is a carbon negative solution in most cases. And especially when you go for agriculture as source, manure and other residuals from agriculture, that's actually contributing by reducing emissions, not just going zero emission, but reducing them. And last year, 79% of the fuel used in these trucks were renewable natural gas. And what about the availability of renewable natural gas? At this point in time, about 5% only of the possible supply is being utilized. So there is a lot of growth potential in renewable natural gas going forward. Yeah, I mentioned this. But what's also important to notice is that most farms are located in rural areas. They are off-grid, if you want. There is no pipeline next to the farm. So that creates a market for our mobile pipeline solutions. And this will be one of the main segments for mobile pipeline going forward because of the increased use of renewable natural gas, taking it from the farm and bringing it to the pipeline or to the end user directly. There are other segments, of course, as well. We have the transportation of the gas from the pipeline to stranded users. It can be industrial companies. It can be oil and gas exploration and so forth. And then you have the bottlenecks in the pipeline network. Because in the peak summer months and the peak winter months, you have higher need for natural gas. And then the pipeline network doesn't have the same capacity, or sufficient capacity, I should say, in all parts of the country. So you get arbitrage possibilities to bring natural gas from one point to another one, beyond that bottleneck in the system. And then we see an increasing activity in mobile refueling. Again, tied into our heavy duty trucking and so forth, because there is an increasing need for refueling around the country and in rural areas. So when we introduced the mobile pipeline solution back in 2012, it was really a game changer. And why? Well, because compared to the existing solutions at the time, which was steel tube trailers, You increased the capacity more than two and a half times. And we provided a solution which is 75% lower weight compared to steel tube trailers. So we've taken a lot of market share from that, and we've also created a product that can expand the market in its own right. And this has been the journey over the last few years. 2020, we had 296 million in sales. Last year, 1.3 billion. And as you saw from the previous slides, we're also continuing to grow into 2024, and we expect that to go on as well in 2025 and onwards. So to date, we have delivered more than 2,000 mobile pipeline modules, and we have a market share of roughly 60% in North America. But it's not just about North America. There is a market potential outside also. And you have seen orders coming in from South America. You have seen from the Middle East. We're seeing it in Europe. But there is clearly a lot more potential in other regions of the world. You have Asia. You have increased penetration in Latin America and so forth. And it's for different reasons. They have, you know, the regulatory net, the regulatory... Regulations in Europe, for instance, are different from the US and so forth. So there will be different drivers of this in different parts of the world. But there is for sure potential in penetrating those markets in addition to the strong foothold that we have in North America. And to meet this, we have increased our capacity. It's coming on stream as we speak. We have upgraded the facility in Lincoln, Nebraska, and we've also established more assembly capacity in Kassel in Germany. So altogether, we're talking roughly about 40% increase in our capacity for mobile pipeline units. So the key takeaways. We have established a market leader which is serving large and demanding blue chip customers globally. We are in, I'd say, pole position to take advantage of the expected growth in these markets. And we're on track on our targets. And then adjusted for the sale of Rogozco, as we mentioned earlier. So with that, I think I'll move on to Q&A. Thank you.

Thank you, Knut and David. I'll remind the viewers on the webcast, you can submit your questions via the question field in the screen that you have, and also if there's any questions here in the audience, please raise your hand, and Emily will bring you a microphone. We have a question in the back, Emily, if you could...

Thank you. Fabian Jørgensen from Carnegie. You talk about high tender activity on the HTV side and for the 15-liter. With the short lead times you have, could we expect to see orders in the second half of the year, and could those be executed also in the second half of this year?

Yes and yes.

Very good. And we've seen the volumes effect having a great effect on margins. Do you see the scope for reaching 15% EBITDA margins for agility in the second half of this year?

I think if you look at history, agility has had quarters with 19% EBITDA margin. So it all depends on volumes and how they're spread. We tend to look at it in years, obviously, because it is a pattern there. But to answer your question, yes, technically, that can happen. I think what we've tried to look at is a second half of the year will be a higher margin than first half of the year clearly. And as the trend continues, the growth continues and 2526 will see even higher margins.

Thank you. And finally, I have a strong cash balance now. Can you talk about the alternatives for the use of those proceeds?

We are quite happy that we have a strong balance sheet now because we see a lot of opportunities going forward. So we are prepared and we want to be in a position where we can take advantage of those opportunities, both in terms of increasing our capacity when it's needed, because right now we have already invested a lot and have sufficient capacity for the short, medium term. But we want to be able to also expand further and follow the market as it grows. And there are interesting opportunities for acquisitions as well. So we see every reason to... I think we can employ the money in a good way going forward.

Would that be complementary technologies when you talk about the acquisitions here, or is it more competition-based?

I'm sorry, I didn't hear the question.

When we speak about the potential acquisitions, is that complementary technologies or is it more competing companies with similar production?

I think we will stay pretty focused going forward. But as you have seen, we've also, for instance, invested in CryoShelter, which is a different technology compared to the high-pressure systems. It's a liquefied natural gas in that case. So, yes, we will be focused, but we will also look at widening our portfolio so we can cover all parts of the market.

Thank you.

Yes, we have a question here in the front.

I'm sorry.

Hi, Thomas. I'll just follow up on what Fabian asked about the 15-meter orders. You said yes, yes, David. Have you included many of those in your guidance number, or would those be added on top?

I'd say, you know, we have expected that we've talked about second half of the year, we expect uplift, both in the 12 litre and the 15 litre. And I think the UPS order kind of shows what's happening in the market. So both will grow.

And can you say a bit more around the integration of Worthington SES? How's that going? And I also think you mentioned something about competition regulations here in Europe because you were taking such a large part of the bus market. Am I wrong now?

First of all, it's a non-controlling interest, so there's no... Okay, but... Just to be clear on that, but maybe you want to talk about the opportunities?

Yeah, SES is a mix of different products and solutions at this point in time. They have a valve business. They have a T4 business, which is pretty much along the same type of product that Puris is working with. They have also a CNG business with T3 systems. So we will evaluate these different product lines going forward and see what would be a good fit into Hexagon, both composites and perhaps also purers. But we see interesting opportunities there, but need a bit more time before we can present the final solution.

Thank you.

Hans-Erik Jacobsen, Nordea. Metas are obviously going very well in North America. And you mentioned Europe as one of the places where you probably see businesses going to pick up. But it's been rather slow compared to what we had expected a couple of years back. Can you explain a little bit why it is so slow and when do you expect business to pick up in this important geographic area?

The European market is quite different from the North American at this point in time. And one of the challenges in Europe has been that the authorities or the EU has been focusing on tailpipe emission and not looking at from well to wheel. And in that case, battery electric solutions, for instance, they are zero emission, but in reality they're not zero emission if you take into account the way the electricity is produced. For renewable natural gas, it would be a great benefit if we can get the regulators to actually talk about, well, to wheel. And we're spending a lot of time on that in Brussels and elsewhere to make them understand that renewable natural gas is actually a better solution than, for instance, a battery electric solution, simply because it doesn't emit energy. it emits much less CO2 or even negative CO2 footprint compared to, for instance, battery electric, which, looking at the entire energy chain, is certainly having a carbon footprint. So I hope and I think we will be able to get some traction there moving forward, but of course it depends on that work.

Yeah, we're working with a lot of groups to try and get that message across. It started with the 35 BCM RNG production, the 10X improvement in supply in Europe. But we understand there are some delays in terms of getting coordination across all the European states. But yeah, it's still very much on our agenda.

Thanks.

I have a couple of questions from the webcast audience. We'll take those while we think in the room here. David, perhaps you could confirm, could you please confirm how much CapEx you have left on the CapEx program?

So we talked about nine in the automotive and $3 million in mobile pipeline. So mobile pipeline is more or less all spent, and I'll say we're halfway there on the $9 million.

Excellent. Okay. Another question from the webcast audience. David, there did not seem to be a specific 2025 financial target in this presentation. Are these reiterated adjusting for Regasco?

Yeah, we focused on 2024. Regasco is a segment that's been reported individually. So I think all the analysts have adjusted Regasco out of their numbers, 24, 25. And we agree with the expectations going into 2025.

Okay, continuing then with the... Oh, no, we have a question here in the audience.

Anders, can you be a bit more clear on that? Because previously you said you have an ambition of 6 billion in revenues in 2025 with a 15% EBITDA margin. What does that translate to now?

If you look historically, Regasco has had anything between 1% and 1.5% EBITDA margin accretion for the group. So obviously you take out Regasco, it's a higher margin business, there will be naturally lower margins. But certainly we can see we're overperforming on the continuing businesses of agility. So again, as we see consensus, we feel that's the right position and we are on track.

But my question is really, what is that 15% target that you've talked about in the past? Is that 15% or is it 14%?

The target will remain at 15%, and we will achieve that with the scale, volume, and agility in due course, absolutely.

In 2025, that's the target?

In 2025, I think it will be difficult, just mathematically, but of course not unachievable. But certainly by 26, it should be very achievable.

Okay, so we should disregard the 15% target for 2025.

No, it remains a long-term financial target. So we won't stop until we're at 15% EBITDA margin, and that will come through with agility volumes.

I don't think you should stop there.

Well, we'll ensure our product is less pricey and more competitive versus diesel going forward after 15%.

Okay. I have another question as well, if I may. I think there was a comment behind me here that you were extremely cash rich after the sale, but you've used that cash to pay down debt, haven't you? Correct. So you have flexibility on your balance sheet, but you've actually paid down debt in order to avoid sitting on a lot of cash on the balance sheet.

Correct, and revolving facilities, yeah.

And that revolving facility, will that change in size given the lower operation or the smaller operation?

We will have a look at all the opportunities and just keep the flexibility for now. But now you have 1.4 billion in available capacity.

Okay, so does that mean there's no change to the size of the revolving credit facility after the sale?

Correct, as we stand. Thank you.

Great. We have another question in the audience.

Just on that note, what do you see as a kind of sensible capital structure for Hexagon moving forward, seeing you're maybe a bit more, or depending on the structural growth, of course, for the CNG, RNG adoption rate, I mean, you're a bit more cyclical now than you were with Vargasco, kind of delivering quite

Yeah, I mean, historically we've been acquisitive. So take agility. So obviously when we bought agility, we had to lever up to around about 4x or so. So that will be normal in a growing company, a growing company like ours. But we've always had steady state. We do intend to try and keep to IFRS reported 3x leverage, steady state. Is 3x kind of a roof or is it a target? It's a target. It's good to keep under that leverage. But it can go up and down depending on the situations.

So we also have another question from the web audience. Knut, you mentioned the importance of cost competitiveness. Can you shed some light on what you're doing to achieve this?

Yeah, I can do without revealing all of our strategy. But to achieve competitiveness, I think, first of all, it's very important that you set ambitious targets. And then if you look at our history, if you look at Rogosco, for instance, the reason why that company became very successful and why it increased in value was because we focused on automation. We built a state-of-the-art facility. We increased capacity. It's fully automated. And that gave us a competitive edge versus other players in the same industry. And we will do the same on the high pressure side. And in fact, we couldn't have sold Rogosco, in my opinion, if you go a few years back, because at that point in time, we hadn't transferred the, say, Rogosco technology over to our high pressure area. So... Now that we have done that, when we have built facilities in Germany, in the U.S., and in China, using that kind of technology, then it was possible to actually exit the Roscoe business. So automation and efficient manufacturing is definitely important in order to achieve cost competitiveness. And then I'll also say, you know, on the innovation side, I'm working with... product, well, value engineering, you call it, that you actually look at, does this product feature actually create the value that is exceeding the cost of it? Looking at the actual need of the customer, because you have to provide a product that is really adding value at the lowest possible cost. So value engineering, I think, is quite important. And then you also have to understand that you are, in most cases, only one part of the value chain. So you have to work closely with the other people in the value chain, your suppliers, your distributors, everyone, to create an efficient chain all the way through. So I think those four are quite important. And then, of course, there are many, many other elements. So we'll continue to have a strong focus on that going forward.

Excellent. I have another. I'll take one more from the webcast, then we'll go back to regarding the order win in mobile pipeline in industrial gas. How is the competitive landscape compared to R&G? So industrial gas versus RNG.

Could you repeat the question?

Regarding the order win in mobile pipeline that we recently announced in industrial gas, how is the competitive landscape compared to RNG?

I think the competitive landscape is pretty much the same because it's not a different solution product-wise that's being applied on the industrial gas. It's very similar to the one that transports RNG or natural gas. So I think from that point of view, it's the same competitive landscape. But it shows that there are other segments in the market than just natural gas. Excellent. Yes, I'm sorry, we have a question.

It's Anders again. On Hexagon Purus, it's given their comments in Q2 about probably needing more capital. Hexagon Composite's view on this is that to continue to be a supportive majority share owner, or not majority, but largest share owner, or how do you think about that? Is increasing your stake likely, or will you, because at least you've said by several occasions that you find it extremely attractive valuation-wise, so will you consider increasing your stake to above 50% again, or how should we think about that?

I think it's very encouraging to see Hexagon Purus developing the way it is. They delivered a very strong second quarter and they were for the first time EBITDA positive in the mobile pipeline segment. So I'm very encouraged about that. Then they also reiterate that they will be reaching the EBITDA positive numbers in 2025. So the situation is quite different from what it was back in 2021 that we divested. Yeah, end of 20. Okay. because at that point in time it was a long journey before they expected to be EBITDA positive. So they're getting closer, and we don't have a specific answer to your question, because we will do whatever we think is to the best interest of the shareholders of Hexagon Composites when it comes to the ownership stake.

I have two more questions from the webcast audience. Perhaps David, can you give us more detail on the quoting activity you're experiencing for the X-15 with your fuel systems?

Yeah, it's obviously confidential processes, but we obviously see them. There's a There's at least 40 names I recognize and a lot of them are new to us as well. So that augurs well because again, these are long haul operations and the market is opening up with the 15 liter. It's extremely hot, which is good, and it means that we need to gear up our capacity.

And they're not just new to us as potential customers, but in many cases they're actually new to natural gas. They've only had diesel trucks in the fleet in the past. So, for instance, if you take, because Walmart is out there with their news that they are testing the engine, they've never had natural gas engines in the past, and they've only relied on 15-liter diesel trucks or diesel engines. Now they're moving into the natural gas industry. market as well. So it's encouraging to see. And as I said, it's not just the big guys, it's also the medium and the smaller guys. And to have that with 40 plus companies at this point in time, it's quite interesting.

Excellent. I have one more question from the webcast, and then maybe we'll wrap it up from there. Is there any updates on the search for a new CEO, Knut?

Yes, it's well underway, and I'm happy to see that we have some very interesting candidates in the pipeline. It's not determined yet who it will be, and of course we will announce that as soon as it's clear. But we are certainly looking for someone who can take the company from where it is today, with five, six billion in sales, to triple, quadruple that going forward. I expect the new CEO to do what his predecessors have done, to take the company from being this size to this size to this size. You and Eric has taken the company from one billion to five, six billion today. And so he's five, six times the size when he started. And I expect the new CEO to be of a caliber that can actually do the same kind of thing going forward. Because the market opportunity is there and the organization is there. It's a strong organization and we just need to find the right person to lead the team. But the process is well underway, so.

Excellent. All right. Well, that concludes the questions I have from the webcast and I think from the room. So thank you very much. Thank you both for the presentation and thank you all for joining us this morning.

Thank you.