Hexagon AB (publ)

Good day and thank you for standing by. Welcome to the Hexagon Q3 Report 2026 webcast and conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Anders Svensson, President and CEO of Hexagon. Please go ahead.

Thank you operator and good morning everyone on the line and also thank you for joining us for this Hexagon third quarter 2026 results. My name is Anders Svensson. I'm the President and CEO of Hexagon. And I'm pleased to have with me here in the room, Enrique Patriksson, our CFO. And with that, we turn into the cautionary statements. And then after this, we go into the agenda for today. So I will begin with the Hexagon's performance in the third quarter. Enrique will then present the business review and financials in more details. And I will then conclude the presentation, and we will open for question and answers. So next slide. So let me begin with an overview of our performance in the third quarter, and we can now turn into the highlight slide. We delivered another excellent quarter. Organic growth accelerated to 13%, and this is our highest level in the last five years. And we achieved that against a tougher comparable, while also generating even stronger order intake and adding to our order book in the quarter. Gross margin held stable at around 62% and our EBIT AC margin excluding robotics rose to 25.3%. And that is up 450 basis points on a like to like and quarter on quarter that's up 100 basis points. Cash conversion was 82% in the quarter and that's reflecting the normal seasonality that we have in the second quarter. in the third quarter versus the second quarter. Operationally, we continued building our business for long-term profitable growth. The acquisition of Waygate Technologies is expected to complete during this quarter, the fourth quarter. And we also announced the bolt-on acquisitions of Guidance Marine, ZG Technologies, and Rock Science during the quarter. And we continue to embed the Hexagon Way And that was also done during the our leadership forum where we collected 200 leaders across the group where we improved alignment accountability and collaboration We also launched a new company wide values, which are trust curiosity encourage Aeon our humanoid continues to make great progress. We gained two new customers during the quarter and and two of our existing customers have now started training Aeon independently for different use cases. It is an industry first and possible thanks to our simulations and world models. And this is a great step forward to full production deployment at our customers. So as the Hexagon Way takes hold of across our business, we are well positioned to capture the significant opportunities for profitable growth lying ahead of us. So let me now take you through the quarter in more details and I will start with the organic growth slide, the next slide. So organic growth accelerated to 13% during the quarter and every one of our business areas grew. Autonomous solution was again leading the way with 23% growth. Manufacturing intelligence delivered a strong 16% growth and infrastructure and geospatial grew 4% in quite tough environments. All categories grew, but sensor sales led the way with 20% growth. But strong hardware sales today is enabling future sales of software and service solutions, which are normally at the higher margin. Adoption of our newer products continue to progress very well and represents an increasing part of sales for us. It is an important support for growth of both the top line and gross margin development going forward. On the next slide, I will now show how the organic growth was spread across our regions and industries. So looking at the regional industry picture, growth was the strongest in EMEA with 17% growth Followed by China at 15% and the rest of Asia at 14%. The Americas grew 6% with tough comparables. Construction, which is our largest industry at 27% of sales remain mixed. Growth was strong in China, but however from a low base as you are aware. And helped by large monitoring projects and monitoring projects of infrastructure of course. Western Europe returned to growth on machine control and reality capture. In North America, construction services and software were strong, but machine control was weaker, and South America declined for us. In general manufacturing, we were strong basically across the board, with the Americas particularly strong due to reshoring trends. Aerospace and defense continue to see strong demand across both manufacturing intelligence and autonomous solutions. Mining also grew well in the Americas, including a record quarter in LATAM and returned to growth in EMEA and the rest of Asia. And that was driven also by mining radar. Sentiment remains cautious, given the high fuel cost within mining and also the Iron ore inventories and iron ore growth rate that we see. Automotive was a more mixed picture. The America is improving in both shipments and in orders while EMEA was flat and China was clearly weak. A trend that we have seen now for some time and also see with all our competitors. Electronics was a bright spot in Asia. with strong orders and shipments of bridge machines and also vision systems, both within China and within Southeast Asia. Finally, agriculture, which has only represented 2% of sales, remains weak, with farm income continuing to be under hard pressure, both from, again, fuel costs, diesel, but also from fertilizer costs due to the Middle East conflict. I'll now turn into the next slide, which is the gross margin. And we kept the gross margin around 62%, so that's the same as last year. And this is despite the growth of census sales of 20%, like I mentioned previously, which is a reminder of the strong gross margin profile across our portfolio, from census to software and services. But also that we managed to keep pricing in a good way year on year. And we should remember that increasing the installed base with a large sense of sales is enabling future high margin recurring and solution sales. Then we move into the next slide. So we generated 265 million euro of EBIT AC excluding robotics. And that's giving us an increase in our margins to 25.3% in the quarter. And that's up from 23.1. in the previous year. And last year's margin here was flattered by 230 basis points from a large, very profitable one-off order within Autonomous Solutions for Defense Application. And this is an order that we spoke about one year ago as well. And we also have some smaller one-offs included in that flattered margin increase. So if we remove those one-offs, the margin improved by 450 basis points year on year. And if we break this down, roughly 130 basis points was from favorable FX or currency. And 170 basis points came from the full contribution of the cost saving program that now reached the 18.5 million in the third quarter. And then the rest, the 150 basis points where the drop through from our organic growth. We benefited in the quarter from some tariff refunds, but these were more than offset by the increase in cost related to the Iran war and cost from semiconductor shortages and memory costs. We aim to mitigate this impact also going forward, of course, but some of these effects will wait until the Q1 2027 to get full effect. Sequentially, the margin increased 100 basis points compared to the second quarter, even though that the third quarter is seasonally weaker than the second quarter, so this was another proof of a strong third quarter. Including robotics, EBIT AC margin was 24% compared to 22.5% a year ago. And the difference reflects then the investment of 13 million during the quarter versus the 6 million in 2025. I then move into the next slide.

And now we turn to robotics.