Hexagon Ab Class B · OMXSTO:HEXA_B
Hexagon Ab Class B — Q3 2023 Earnings Presentation
32 slides from Hexagon Ab Class B's earnings presentation, Oct 27, 2023
Slide 1: Q3 Interim Report 2023
Q3 Interim Report 2023 27 October 2023 1
Slide 2: Agenda
Q3 Financial Highlights review Awards & Closing remarks customer stories & QA 2 | hexagon.com
Slide 3: I. Q3 highlights
I. Q3 highlights t HEXAGON
Slide 4: Highlights Q3 2023
Highlights Q3 2023 • Good organic growth in most • regions and verticals. Innovation in automation, reality 65% 64% Cash capture and cloud support Adj. gross positive momentum. margin conversion • Solid GM% and strong FX adjusted incremental margin. • Good cash from operations diluted by temporary t
Slide 5: Strong organic growth in IES, standout performance in A&P
Strong organic growth in IES, standout performance in A&P 41% 10% 9% 8% 7% 6% IES Manufacturing Asset Lifecycle GES Geosystems SIG A&P Intelligence Intelligence -5% IES: Industrial Enterprise Solutions GES: Geospatial Enterprise Solutions SIG: Safety, Infrastructure & Government A&P: Autonomy & Posi
Slide 6: Rationalisation programme update
Rationalisation programme update Targeting annualised savings of 160-170 MEUR fully realised from 2025 Progress at Q3 2023 Priorities P&L Investment Synergies Footprint Full 198.6 MEUR charge • Optimise G&A spend across teams • Reduce offices and facilities by ~25% taken and divisions. • Adapt to hy
Slide 7: Analysis of organic growth per geographic region and by industry
Analysis of organic growth per geographic region and by industry Share of W EU EEMEA2) NA SA CN ASIA3) sales1) 26% (25) 7% (7) 36% (36) 5% (4) 14% (15) 12% (13) Surveying & Reality Capture 17% Power, Energy & Mining4) 22% Electronics & Manufacturing 18% Infrastructure & Construction 12% Automotive 8
Slide 8: Geospatial Enterprise Solutions – Q3 2023 overview
Geospatial Enterprise Solutions – Q3 2023 overview Sales and EBIT1 Sales of 666.1 MEUR EBIT1 of 203.2 MEUR (197.0) (641.9) – organic growth and operating margin of 30.6 of 7 per cent per cent (30.7) Negatively impacted by FX Geosystems SIG A&P +6% organic growth -5% organic growth +41% organic growt
Slide 9: Industrial Enterprise Solutions – Q3 2023 overview
Industrial Enterprise Solutions – Q3 2023 overview Sales and EBIT1 Sales of 686.0 MEUR EBIT1 of 196.8 MEUR (198.1) (678.3) – organic growth and operating margin of 28.7 of 9 per cent per cent (29.2) Negatively impacted by FX Manufacturing Intelligence Asset Lifecycle Intelligence +8% organic growth
Slide 10: II. Q3 Financial review
Il. Q3 Financial review 4“ HEXAGON
Slide 11: Income Statement – Q3 2023
Income Statement – Q3 2023 MEUR Q3 2023 Q3 2022 Change % Sales bridge Operating net sales 1,352.1 1,320.2 81) 2022, MEUR 1,320.2 Revenue adjustments -2.3 -3.6 n.a. Net sales 1,349.8 1,316.6 81) Structure, %* 2% Adjusted gross earnings 885.6 860.7 3 Currency, % -7% Adjusted gross margin, % 65.5 65.2
Slide 12: Gross margin – R12M
Gross margin – R12M % R12M 66% (65) 70% Historic R12M GM% expansion: 65% • Richer software mix in portfolio through innovation 60% and M&A • Innovation drives higher GM% 55% for next generation devices • Q3 adjusted gross margin of 50% 65.5% (65.2) 45% 40% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q
Slide 13: Profitability bridge
Profitability bridge Growth -7% 2% 8% 2% MEUR Q3 2022 Currency Structure Organic Q3 2023 Operating Net Sales 1,320.2 -87 20 99 1,352.1 Adjusted Operating Earnings (EBIT1) 386.2 -41 6 42 393.0 Adjusted Operating Margin 29.3% 47% 30% 42% 29.1% Accretion / (Dilution) -1.1% 0.0% 0.9% 13 | hexagon.com
Slide 14: Q3 Cash Flow analysis
Q3 Cash Flow analysis Cash Flow Statement Reported Reported Change % MEUR Q3 2023 Q3 2022 Adjusted operating earnings (EBIT1) 393.0 386.2 2% • Investments consistent with the prior year Cash flow from operations before change in working 489.6 463.1 6% capital excluding taxes and interest • Working c
Slide 15: Working capital to sales
Working capital to sales WC/Sales, % 25% WC Bridge Q3 2023 20% Receivables & 35.1 Prepaid expenses 15% Inventories -5.0 Liabilities 56.9 10% Deferred revenue 34.1 5% Accrued expenses -23.1 Change in WC 98.0 0% -5% -10% 15 | hexagon.com Working capital to net sales (on a rolling basis)
Slide 16: III. Awards & customer stories
III. Awards & customer stories 16
Slide 17: Hexagon receives Wichmann Innovations Award for software and hardware
Hexagon receives Wichmann Innovations Award for software and hardware At this year’s INTERGEO in Berlin, Germany, Hexagon’s Reality Cloud Studio powered by HxDR and the new handheld reality capture scanner, the Leica BLK2GO PULSE, won the prestigious Wichmann Innovations Awards. 17 | hexagon.com
Slide 18: Glencore: 10+ years of partnership
Glencore Customer background Customer challenge One of the world’s largest globally diversified natural Seeking to improve safety in resource companies, headquartered in Switzerland and their mining operations. Global operating in 35+ countries. Glencore has more than 60 strategic partnership across
Slide 19: Maquinarias THM
Maquinarias THM Customer background Customer challenge A Chile based machine contractor for Keeping operators out of danger while mining, focused on quality of service in improving productivity in dam handling mining operations. operations. How Hexagon is helping Hexagon’s newly acquired Hard-Line T
Slide 20: CORio
CORio Customer background Customer challenge Rio de Janeiro is the second Consolidating many different departments largest city in Brazil with over 9 to more effectively control the city’s million people. daily operations. How Hexagon is helping Hexagon’s incident and operational management software
Slide 21: Global Energy Company
Global Energy Company Customer background Customer challenge A Canadian midstream oil and gas Needed a reliable solution to supply critical company focused on energy infrastructure plant and asset information in real-time, on solutions across the value chain. demand and with minimal effort. How Hexa
Slide 22: Mueller
Mueller Customer background Customer challenge A leading manufacturer in the transmission, Implement new technology to distribution and measurement of water in improve operational efficiency. North America. How Hexagon is helping Our Nexus Connected Worker software helps Mueller manage production, m
Slide 23: HAUK
HAUK Customer background Customer challenge This automotive parts supplier in Needed to improve and modernise their the Czech Republic has been a inspection processes for their largest Hexagon customer for 25 years. customer, SKODA. How Hexagon is helping HAUK has moved from using our traditional ma
Slide 24: Continued growth, resilient margins, rationalisation, cash conversion, governance
Continued growth Resilient margins Rationalisation Cash conversion Governance As innovation offsets Good FX adjusted Kicked-off and on track Impacted by growth Focus on transparency slowing end markets incremental margin against targets driven working capital and BoD composition 24 | hexagon.com
Slide 25: 7th December 2023, London
7th December 2023 12:00 – 5:00 PM GMT London Webcast will be made available 25 | hexagon.com
Slide 26: IV. Closing remarks & QA
IV. Closing remarks & QA 26 | HEXAGON INTERIM REPORT 1 JANUARY – 30 JUNE 2023
Slide 27: Appendix
Appendix 27 | HEXAGON INTERIM REPORT 1 JANUARY – 30 JUNE 2023
Slide 28: Cash flow statement
Cash flow statement MEUR Q3 2023 Q3 2022 Cash flow from operations before changes in working capital excl. taxes and interest 489.6 463.1 Taxes paid -61.5 -47.3 Interest received and paid, net -42.4 -8.6 Cash flow from operations before changes in working capital 385.7 407.2 Change in working capita
Slide 29: Seasonality in profit
Seasonality in profit Seasonal pattern: Q2 & Q4 tend to be the strongest quarters MEUR 35.0% 1,400 Adjusted EBIT Margin % 30.0% 1,200 25.0% 1,000 20.0% 800 Net Sales 15.0% 600 EBIT1 10.0% 400 200 5.0% 0 0.0% 29 | hexagon.com
Slide 30: Adjusted operating margin – R12M
Adjusted operating margin – R12M % 35 Target 2026: >30% 30 R12M adjusted 29.1% (29.5) 25 20 15 10 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 The 2026 target of reaching an adjusted operating margin of >30% is based on an older definition of EBIT1 where amortisation of surplus values
Slide 31: 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 32: Global leader in digital reality solutions
Global leader in digital reality solutions that are empowering an autonomous, sustainable future by putting data to work