Hexagon Composites Ord

Good morning, everyone, and welcome to Hexagon Composites Q2 presentation. My name is Berit-Katrin Høivik, and I'll be moderating today's session. Joining me in the studio today is our CEO, Philip Schramm, and CFO, David Vandella. They will take you through a company update, financials, and outlook before we wrap it up with a Q&A session. And with that, I'll hand the word over to Philip.

Thank you so much. Good morning everyone and thank you for joining us for our Q2 results. The first half of this year has been a mix of progress and challenges. The continued macroeconomic headwinds led to low volumes in Q2. But we have taken action, including cost-saving measures, right-sizing of the organization and strategic progress. we are seeing encouraging and strong signals in our core markets, especially in heavy-duty trucking in North America. Major orders are now coming through and more and more fleets are showing interest as they are seeing the benefit of the new game-changing X15N engine with our fuel systems on. So let's turn to the quarter. Group revenues were 674 million NOC with an EBITDA of 12 million NOC. These results reflect the continued uncertainty in several of our major markets and general delays in investment decisions by our customers. Our fuel system segment continues to outperform the trucking market, especially in the refuse sector. In mobile pipeline, we see continued delays in spending and investment decisions. Macroeconomic uncertainties and low oil prices are driving many operators to focus on asset utilization. For our aftermarket segment, revenues increased in our vehicle service business, offset by the cyclical and anticipated lower activity in cylinder requalification services. While navigating these macroeconomic headwinds, we are continuing to position ourselves for sustainable growth. Our main focus areas are in expanding and growing in existing and new markets, broadening our portfolio and exploring new opportunities to build a more diversified, more resilient and more globally integrated company. And I will come back to this in the outlook section. With that, I will hand over to David, who will walk you through the financials. David, please.

Thank you, Philip. Good morning, everyone. Our results this quarter reflect both the solid performance delivered by fuel systems, but also market uncertainty in mobile pipeline. We are confident that we can navigate this challenging environment. On a group level, Q2 revenues were $674 million with an EBITDA of $12 million. The quarter was impacted by continued macroeconomic uncertainty, particularly mobile pipeline, as anticipated. Positively, we generated solid revenues in fuel systems despite a depressed freight market and led by the strength in the refuse sector. We have continued to proactively take action to mitigate the macro environment with cost saving measures that won't prevent our ability to scale up when the market rebounds. Also, We have updated our reporting segments this quarter to align to our new internal structure. Hexagon Group will be reported as three distinct segments. Fuel systems, our commercial vehicle segment, mobile pipeline, our gas distribution segment, and our aftermarket segment, which includes results from Hexagon Agility's fleet care, the vehicle, parts, service, and install activities, previously reported within fuel systems, and combined with Hexagon Digital's cylinder re-qualification and testing technologies. More details can be found on our website. So let's see how the segment results stack up for Q2, starting with fuel systems. Fuel systems delivered solid results despite the current market uncertainty, outperforming the overall trucking market and generated $463 million in revenue for the quarter. The refuse sector has been incredibly strong in the first half of 2025, offsetting a weaker truck sector. Transit has been relatively steady, and we are pleased to have received a record order for buses in Dallas with Gillick. With considerable piloting activity in X15N trucks following Freightliner, the largest US truck OEM beginning production, we see momentum building and orders starting to come through in larger volumes. For the segment, EBITDA margin was lower at 7% due to change in product mix and lower overall volumes. Now over to mobile pipeline. Mobile pipeline remained under pressure and continued to be impacted by broader market uncertainty, resulting in customers halting their capex spending this quarter. Larger players and historically our strongest customers are favoring module utilization over fleet expansion because of this uncertainty. There's also a delay in investment spending impacting capital goods across many industries, including within the compressed natural gas and renewable natural gas markets, as well as in oil and gas applications. This has resulted in the decline in volumes impacting revenue and our group margins. Revenues were 132 million in the quarter with negative margins of 25%. Moving to our aftermarket segment. Aftermarket delivered revenues of 109 million on par with Q2 2024. The expected reduction in cylinder requalifications towards mobile pipeline trailers had a negative impact on EBITDA resulting in 4 million with a 3% EBITDA margin. Otherwise, the vehicle parts, services and install activities remained robust. As communicated in Q1, we've paused formal guidance for 2025, given the market uncertainty. But within this environment, we've continued to proactively take actions and protect EBITDA and liquidity. So far, our responsible cost initiatives include an 8% reduction in headcount, as well as significant decreases in other spend categories. We've successfully reduced annual capex to 130 million. We have also revised purchasing contracts for our key raw material in Q2. Now, the positive liquidity effects of this will show in the second half of 2025 by reversing the large negative working capital effects from the first half of the year. So with these initiatives, together with 0.8 billion in liquidity and flexible arrangements with our long term banking partners, we are actively navigating these headwinds and will continue to act responsibly and prioritize value creation. And with that, I'll hand it back to Philip to share more on our outlook. Philip.