Hexagon Composites Ord

Good morning everyone and welcome to Hexagon Composites second quarter presentation for 2026. My name is Berit-Cathrin Hoyvik and I'll be moderating today's presentation. Joining me in the studio today is our CEO Philip Schramm and CFO Eirik Lohre. They will take you through a company update, financials and outlook before we wrap up with the Q&A session. With a reminder that you may submit questions on your screen at any point during the presentation. And with that, I'll hand over to Philip.

Thank you. Good morning everyone and thank you for joining us today for our Q2 2026 earnings call. Let me start with the headlines. I can proudly describe this quarter as a turning point for Hexagon Composites. Over the last year, we've been focused on improving our resilience, strengthening our balance sheet, lowering our break-even point, and positioning the company for the next phase of growth. This quarter, we saw the results of some of these actions materializing, building on the improvements we have delivered in Q1. We are now fundamentally Moving from a defense position into an offense position. The progress we delivered is visible across four important developments. First, we have successfully completed the cost reduction program that we launched during 2025. When we initiated this program, we committed to reducing costs while retaining the capacity required to scale up as markets rebound. We have delivered on those commitments. Second, we have strengthened our balance sheet through a 650 million Norwegian kroner equity raise and significantly improved our financial flexibility. Third, our mobile pipeline business signed the largest order in its history in July. We secured an order of 100 million US dollars equivalent to 1 billion Norwegian kroner. That opens up a new application for our technology in supporting data center power generation. And finally, we secured an important long-term agreement with Iveco Bus, who has selected Hexagon Agility as the exclusive fuel system and cylinder supplier across its entire global CNG bus platform. And this for the next three years. As I mentioned in previous quarters, our goal was never just to navigate a market downturn. Our goal was to emerge from it as a stronger, more resilient and more profitable company. That disciplined execution is highlighted in these developments and testifies in our results this quarter. Hexagon Composites delivered revenues of 627 million NOC. Adjusting for currency effects, revenues were steady compared to last quarter. What is most significant about these results is the increase in profitability. We delivered EBITDA of 69 million NOC. For the quarter, a significant improvement of 57 million from the low point of the market downturn a year ago. This profitability step up corresponds to an EBITDA margin of 11%, a vast improvement of 9 percentage points from last year. Let me explain some of these actions we have taken to deliver this improved profitability. We have now successfully completed the cost reduction program that began in 2025. This program was ambitious and it required difficult decision, but it has fundamentally improved the economics of our business. We reduced our headcount by approximately 25%. With that, we reduced personal expenses and SG&A costs by around 260 million NOC. Adjusting for currency effects and extraordinary items, the underlying structural saving is 120 million. We reduced layers within our organization. With that, we improved the efficiency and the agility of our organization. We reduced capex spend and released around 60 million in co-working capital in spite of strategic inventory build-out. With those actions, we improved our liquidity. We consolidated our European manufacturing footprint. With that, we streamlined productivity. And in doing so, we have structurally lowered the cost base of our group. Today we are operating from a much stronger foundation and we will retain the capability, the expertise and the manufacturing capacity needed to capture future growth. Alongside our own operational improvements, the equity raise of 650 million NOK has enabled us to strengthen our balance sheet and amend our lending facilities with extended maturities and flexibility. The proceeds were used primarily to reduce debt, with net interest-bearing debt now reduced from just under 1.3 billion to 576 million NOK. Our available liquidity has also improved from $528 million to $796 million, all after the repair offering. This combined strategy has enabled us to deliver on one clear purpose to give Hexagon the financial flexibility required to execute through the recovery cycle and the growth ahead. We now have that flexibility and we intend to use it with the same discipline that has characterized our actions throughout the last year. Now let's move on to one of the most exciting developments for our mobile pipeline business. In July, we secured the largest mobile pipeline order in Hexagon's history. Valued at 100 million US dollars equivalent to 1 billion NOC. This latest order from Soteris also includes an additional option valued at around 25 million dollars through to entire 2028. Beyond the size of the order, it represents our first confirmed entrance into data center power generation. Alongside this exciting new application in data center power generation, we have also taken important steps recently in Europe. Last week, we secured a strategically important agreement with Iveco Bus. Iveco is the market leader in European ZNG transit. After two decades of collaboration and delivering more than 10,000 CNG buses together, IVECO selected Hexagon Agility as its exclusive fuel system and cylinder supplier across its entire CNG bus portfolio. Transit remains one of the more resilient parts of our core business, and natural gas and biomethane continue to deliver both economic and environmental benefits to municipalities and bus fleets. This new agreement strengthens our market leadership in Europe while unlocking a piece of future growth in emerging geographies. With that, I will hand over to Eirik who will walk you through the financials in more detail. Eirik.

Thank you, Philip, and good morning, everyone. Starting with the group financials, we delivered revenue of 627 million NOK in the quarter, broadly in line with the first quarter when adjusting for FX effects. Revenue for the first half of 2026 amounted to approximately 1.3 billion NOK, reflecting what is typically a seasonally softer first half of the year for Hexagon. The quarter was characterized by low activity level in mobile pipeline, Partly offset by solid performance in fuel systems, which delivered another relatively strong quarter. EBTA came in at 69 million NOC, corresponding to a margin of 11%, and the improvements in profitability reflects both the favorable segment mix and the structural cost measures implemented throughout 2025. For the first half of the year, EBTA amounted to 126 million, or a 10% margin. Overall, we are quite pleased with the profitability development so far in 2026, particularly given that these volumes remain below what we consider normalized levels. Segment-wise, I'll turn first to fuel systems, which, as mentioned, delivered a relatively good quarter, with revenues of NOK 450 million and EBITDA of NOK 78 million. This represents a margin of 17%. The truck market remained relatively quiet in the first half for us, but we continued to see solid activity from selected customers. During the quarter, we delivered meaningful volumes of sleeper cab systems into Mexico, which is becoming an important growth market for Hexagon. Transit bus activity was strong across multiple regions in the quarter, not least in Europe, where we have consolidated production in Kassel from the month of June, as also Philip touched on earlier in the presentation. And together with aerospace deliveries and other specialized deliveries, this contributed positively to both revenue quality and margins in the quarter. And all this, together with operational cost improvements, a good mix contributed to very healthy profitability and, in fact, our best quarter in fuel systems, EBTA-wise, since our record quarter Q4 2024. Moving to Mobile Pipeline, which continues to be lumpy and delivered revenue of 101 million NOK during the quarter, which is significantly down versus Q1. This development was driven partly by timing effects, but also lingering caution among customers regarding capital investments in the North American market, a trend that we expect to see reverse. And looking ahead, we do expect a significant step up in activity during the second half of the year and also into 2027, driven, of course, by the record Sataris contract we announced in July. And in preparations for this, we deliberately built inventory during the second quarter. And we do expect a significant portion of that inventory to convert into shipments during Q3 and Q4. Turning to Europe, which delivered a strong performance this quarter, good activity levels in the UK and Ireland, where we did supply modules to several RNG, renewable natural gas projects, in addition to deliveries into continental Europe, but also into Middle East. And despite the overall activity level remaining pretty low for Mobile Pipeline in the second quarter, the segment delivered break-even EBTA, which also reflects improved cost performance and the actions taken over the last year to reduce the structural break-even level of the business. Additionally, I do want to note that the discipline continues to guide our market expansion strategy. In Q2, we had multiple opportunities to pursue additional opportunities in South America in particular, but chose not to participate where pricing didn't support our return requirements. So we do want to protect our margins also when approaching new markets and emerging markets. Aftermarket, we delivered revenue of 98 million NOK and EBTA of 11 million NOK for the quarter. The overall parts and service market remains relatively soft as we continue to see fleet operators extending service intervals and also utilizing existing spare parts inventories. That said, the mix is gradually improving. We saw increasing activity in mobile pipeline trailer requalifications during the quarter, and while this is still a relatively small part of the business, requalification activities entering a more favorable cycle that follows mobile pipeline sales volumes in the years following 2020. Moreover, we're seeing our certified pre-owned and refurbishment offerings continue to gain traction as our first-generation systems and trailers reach end-of-life. These activities typically carry attractive economics and represent a growing share of our external service revenues, but also contribute positively to revenue and margins in Q2. Turning to cash flow, cash flow from operations was 128 million NOK for the quarter, which was helped by release of working capital and other accruals. And I do want to point out that this is despite the fact that we have built significant inventory of finished goods, as mentioned, to prepare for the extra and increased activity in the second half of the year, in particular within the mobile pipeline segment. So we could expect that particular effect to be reversed in the coming quarters. We continue with low capex spend, only prioritizing critical capital projects. So far this year, we have spent around 20 million NOC, 12 million NOC this quarter, against our full year guidance of 70 to 80 million NOC. Net interest payments of 39 million included an annual interest payment related to the PURES TRS, which was terminated in April. So expect this to drop significantly in the coming quarters, also because we have obviously reduced our overall debt level. All in all, net cash flow for the quarter was 115 million NOK, which includes around 30 million net proceeds from the equity raise and repayment of debt, but also 30 million from our discontinued operations in Poland, which involved sale of inventory, but also a collection of receivables as we emptied the factory in Poland. On top of our cash flow improvements, I wanted to touch briefly on our balance sheet. Our leverage has significantly reduced following the recent equity raise and refinancing. And at the end of the second quarter, we had gross debt of 972 million, cash on hand of 294 million and net interest bearing debt of 678 million NOC. And including the proceeds from repair offering completed in July, as Philip mentioned earlier, Eirik Lohre, Gunnar Engkrog, Philipp Schramm Eirik Lohre, Gunnar Engkrog, Philipp Schramm So all in all, we believe the refinancing and the strengthened balance sheet provide us with the financial flexibility needed to support growth and also execute on our commercial opportunities for the second half of the year and not least beyond that. So with that, I'll hand it back to Philip to walk you through what we see ahead.