Hexagon Ab Class B · OMXSTO:HEXA_B
Hexagon Ab Class B — Q2 2024 Earnings Presentation
39 slides from Hexagon Ab Class B's earnings presentation, Jul 26, 2024
Slide 1: Q2 2024 report
iby HEXAGON Q2 2024 report 26 July 2024
Slide 2: Paolo Guglielmini, President and CEO
Paolo Guglielmini President and Chief Executive Officer
Slide 3: Strong margins, recurring revenues and cash conversion
Strong margins, recurring revenues and cash conversion • Challenging demand environment in the construction and Total revenue automotive sectors impacting the organic growth profile 1,353.4 MEUR (1,366.0) • Continued positive momentum in recurring revenues, up 8% y/y to 0% organic growth 560 MEUR, d
Slide 4: Key geographic trends
Key geographic trends Mixed demand environment across geographies Americas EMEA APAC 38% of revenues 35% of revenues 26% of revenues -1% Organic growth 4% Organic growth -3% Organic growth North America Western Europe China • Continued investments in manufacturing • Slow manufacturing activity, part
Slide 5: Divisional performance
Divisional performance Mixed markets, tough comparatives, strong margins Manufacturing Asset Lifecycle Autonomous Safety, Infrastructure Intelligence Intelligence Geosystems Solutions & Geospatial Hexagon Q2 2024, MEUR Revenue 483.8 203.1 405.5 141.2 119.8 1,353.4* Organic Growth 0% (11%) 9% (11%) -
Slide 6: Divisional performance
Divisional performance Division Category (MEUR) Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 Revenue 1,366.0 1,352.1 1,435.3 5,440.0 1,299.9 1,353.4 Organic growth in revenue 8% 8% 5% 7% 3% 0% Hexagon* EBIT1 394.1 393.0 438.4 1,596.7 376.5 399.5 EBIT1 margin % 28.9% 29.1% 30.5% 29.4% 29.0% 29.5%
Slide 7: Manufacturing Intelligence
Manufacturing Intelligence Revenue by industry (FY 2023) General manufacturing 3% 13% Automotive 4% 32% Aerospace & Q2 2024, MEUR (Q2 2023) Business update Defence 10% Electronics Continued investments in commercial aerospace 14% Energy & Power capacity driving demand for our precision 24% Revenue 4
Slide 8: Asset Lifecycle Intelligence
Asset Lifecycle Intelligence Revenue by industry (FY 2023) Oil & Gas Chemicals 24% 27% Heavy construction - Q2 2024, MEUR (Q2 2023) Business update industrial facilities 5% Energy & Power Strong sales in SaaS and perpetual software 9% 18% Mining Revenue 203.1 (186.2) Double digit growth in EMEA and
Slide 9: Geosystems
Geosystems Revenue by industry (FY 2023) Heavy construction - infrastructure 8% 6% Buildings 29% 11% Surveying Q2 2024, MEUR (Q2 2023) Business update Mining Construction markets remain challenged 19% 27% Mapping Revenue 405.5 (424.8) Growth in EMEA focused on the Middle East, China very weak, conti
Slide 10: Autonomous Solutions (AS)
Autonomous Solutions (AS) Revenue by industry (FY 2023) 5% 9% Mining Agriculture Q2 2024, MEUR (Q2 2023) Business update 17% 52% Aerospace & Defense Good growth in the mining sector for monitoring and safety solutions, to be supported by more innovation Marine 17% Revenue 141.2 (139.3) and upcoming
Slide 11: Safety, Infrastructure & Geospatial
Safety, Infrastructure & Geospatial Revenue by industry (FY 2023) 5% Public safety 7% Aerospace & 10% Defense Q2 2024, MEUR (Q2 2023) Business update 44% Utilities 12% Transportation Good growth in public safety and security solutions Revenue 119.8 (115.3) OnCall Computer Aided Dispatch (CAD) soluti
Slide 12: David Mills, Chief Financial Officer
David Mills Chief Financial Officer
Slide 13: Income statement
Income statement Strong margins despite challenging markets Adjusted income statement MEUR Q2 2024 Q2 2023 % Change Sales bridge 2023, MEUR 1,366.0 Net Sales 1,353.4 1,366.0 0* COGS -442.4 -469.9 -6 Structure, %* 0% Gross earnings 911.0 896.1 2 Currency, % 0% Gross margin 67.3% 65.6% 1.7 Organic gro
Slide 14: Gross margin
Gross margin All time high gross margin Rolling 12-months gross margin Gross margin by quarter 70% 67.3% 66.6% 65% 66.5% • Richer software mix in 66.5% 66.2% 65.6% portfolio through innovation 65.3% and M&A 65.5% 60% 65.2% • Innovation drives higher GM% for next generation 55% devices 50% • Exit of
Slide 15: Record gross margin driving EBIT1 margins
Record gross margin driving EBIT1 margins Profitability drivers Gross margin/adjusted cost base Gross profit +1.7% • Divisional and product mix • Continued pricing discipline • Divestment of low-margin activities 65.6% 67.3% GM • Rationalisation programme benefits S&M & G&A – 0 % • Sales investments
Slide 16: Revenue & profitability bridge
Revenue & profitability bridge Good margin improvement contribution from structure and organic MEUR Q2 2023 Currency Structure Organic Q2 2024 Operating Net Sales 1,366.0 -5 -6 -2 1,353.4 Growth 0% 0% 0% -1% Adjusted Operating Earnings (EBIT1) 394.1 4 1 0 399.5 Adjusted Operating Margin 28.9% -90% -
Slide 17: Seasonality
Seasonality Seasonal pattern: Q2 & Q4 tend to be the strongest quarters MEUR 32% 1,400 30% 28% Adjusted EBIT1 Margin % 1,200 26% 24% 22% 1,000 20% 18% 800 16% Net Sales 14% 600 12% 10% 400 8% 6% 200 4% 2% EBIT1 0 0%
Slide 18: Cash flow
Cash flow Strong cash conversion Cash Flow Statement Q2 24 Q2 23 Change % MEUR • Improved operational cash Adjusted operating earnings (EBIT1) 399.5 394.1 1 generation D&A (Excluding adjustments) 108.4 95.2 14 • Marginal increase in investment Adjusted EBITDA 507.9 489.3 4 levels Non-cash items -10.
Slide 19: Working capital to sales
Working capital to sales Returning to trend WC/Sales, % 25% WC Bridge Q2 2024 Receivables & 20% -14.0 Prepaid expenses Q2 2024 Inventories 13.1 7.3% 15% Liabilities 3.8 10% Deferred revenue 26.5 Accrued expenses -26.3 5% Change in WC 3.1 0% Working capital to net sales (on a rolling basis) 19 | hexa
Slide 20: Ben Maslen, Chief Strategy Officer
Ben Maslen Chief Strategy Officer
Slide 21: Rationalisation programme update
Rationalisation programme update Synergies Performance Footprint Automation • Simplification of the • Strategic divestments made in MI • 24 facilities closed in Q2 • Investment in automation for organisational structure and and SIG reflected in improved assembly and calibration to related savings tr
Slide 22: Product suite in action
Product suite in action Safety Manufacturing Asset Lifecycle Infrastructure Autonomous Intelligence Intelligence Geosystems & Geospatial Solutions Core market/ Discrete Buildings & Networks & Public Autonomy & Process industries Positioning Relevant TAM manufacturing Infrastructure Safety Reality Ca
Slide 23: AC Energy Solution Co Ltd, Thailand
Manufacturing Intelligence Metrology hardware & software AC Energy Solution Co Ltd, Thailand Customer background Customer challenge AC Energy are establishing The primary challenge is ensuring high Thailand’s first electric vehicle (EV) accuracy in geometrical analysis and battery factory, using Cel
Slide 24: Ecopetrol
Asset Lifecycle Intelligence Operations & Maintenance Ecopetrol Customer background Customer challenge Ecopetrol, a Colombian oil and gas Ecopetrol relied on a multitude of disparate company, manages a hydrocarbon digital platforms with various data sources, value chain with more than 18,000 hinderi
Slide 25: A global data centre hyperscaler
Asset Lifecycle Intelligence Enterprise Asset Management A global data centre hyperscaler Customer background Customer challenge This global data centre hyperscaler They lacked insight into asset conditions needed to improve infrastructure (e.g. cooling, water) and operating uptime and reliability t
Slide 26: Bluesky International
Geosystems Survey hardware & software Bluesky International Customer background Customer challenge Bluesky International is an aerial Bluesky's customer, Nottingham City Council, mapping company and the agreed sought to create a detailed digital twin of the geospatial data provider to public city to
Slide 27: BMW
Safety, Infrastructure & Geospatial Computer Aided Dispatch BMW Customer background Customer challenge Global carmaker BMW operates BMW’s former security system needed security centres at its major more scalability and interoperability as it did manufacturing plants not meet today’s security and IT
Slide 28: Asset Lifecycle Intelligence: SDx2
Asset Lifecycle Intelligence Operations & Maintenance A cloud-native, Software-as-a-Service (SaaS) solution for engineering, operations and maintenance SDx2 contextualises, visualises and enhances work processes across the asset lifecycle, increasing intelligence and automation across portfolios Ear
Slide 29: Itus Digital
Asset Lifecycle Intelligence Asset Performance Management Itus Digital Acquired 4th April 2024 • Provider of asset performance management (APM) software • SaaS based, innovative solutions to optimise the performance of industrial assets • Manages the entire asset strategy and digital twin lifecycle
Slide 30: Xwatch
Geosystems Machine Control Xwatch Acquired 23rd April 2024 • Provider of OEM agnostic machine control and software technologies for enhancing safety on construction sites • Includes height control, slew control and rated capacity indication for heavy machinery • Previously partnered to deliver the 3
Slide 31: Voyansi
Geosystems BIM Voyansi Acquired 18th June 2024 • AECO focused provider of BIM solutions, services and software development • Offer services and solutions to digitise large assets, including data centres and industrial facilities • Adds advanced 3D modelling and data integration capabilities to build
Slide 32: Paolo Guglielmini, President and CEO
Paolo Guglielmini President and Chief Executive Officer
Slide 33: Conclusions
Conclusions Market Recurring Strong Cash Future demand revenues execution generation ready Muted growth due to Strong adoption for SW Gross and operating Conversion within Despite short term uncertainty in our core platforms and margin progression guidance, operating growth, confident in our end-mar
Slide 34: Cautionary statement
Cautionary statement This communication may contain forward-looking statements. When used in this communication, words such as "anticipate", "believe", "estimate", "expect", "intend", "plan" and "project" are intended to identify forward- looking statements. They may involve risks and uncertainties,
Slide 35: For the calendar
for the calendar 24-26 Sept Minexpo 24-26 Sept Intergeo
Slide 36: Appendix
Appendix
Slide 37: Our key targets
Our key targets Organic growth Average annual growth of 5-7% Conviction in our existing Growth via M&A Average annual growth of 3-5% 2022-2026 targets Operating margin More than 30% by the end of 2026 (EBIT1 incl. PPA) Cash conversion Annual target range of 80-90% Additional targets 95% reduction of
Slide 38: R&D breakdown
R&D breakdown Research & Development Q2 2024 MEUR Gross R&D cost 215 Capitalised R&D 121 Amortisation of previously capitalized R&D 58 Adjusted net R&D cost (impact on EBIT1) 152 38 | hexagon.com
Slide 39: Income statement YTD
Income statement YTD Six months to 30 June 2024 Adjusted income statement MEUR YTD 2024 YTD 2023 % Change Sales bridge 2023, MEUR 2,652.6 Net Sales 2,653.3 2,652.6 1* COGS -877.8 -900.4 -3 Structure, %* 0% Gross earnings 1,775.5 1,752.2 1 Currency, % -1% Gross margin 66.9% 66.1% 0.8 Organic growth,