Hexagon Ab Class B · OMXSTO:HEXA_B
Hexagon Ab Class B — Q3 2024 Earnings Presentation
41 slides from Hexagon Ab Class B's earnings presentation, Oct 25, 2024
Slide 1: Q3 2024 report
Q3 2024 report 25 October 2024
Slide 2: Paolo Guglielmini, President and CEO
Paolo Guglielmini President and Chief Executive Officer
Slide 3: Potential separation of NewCo
Potential separation of NewCo
Slide 4: Hexagon evaluating potential separation of NewCo
Hexagon evaluating potential separation of NewCo • The Board of Directors has authorised management to evaluate a potential separation of its Asset Lifecycle Intelligence (ALI) division (NewCo). • NewCo will also include businesses with strong customer, technology and operational synergies with ALI:
Slide 5: Hexagon AB
Hexagon AB Accelerated focus on capturing and integrating reality data through automation Company profile Estimated key metrics* • Market leading portfolio of industrial and geospatial solutions Revenue: 4,408 MEUR • Strong innovation capabilities tailored to serve large global customer base Gross m
Slide 6: NewCo
NewCo Diversified solution provider for assets and industrial facilities Company profile Estimated key metrics* • Leading software provider to Fortune 500 companies Revenue: 980 MEUR • World class portfolio of solutions to manage digital projects and assets Gross margin: ~80% • Leverages digital twi
Slide 7: Potential transaction details
Potential transaction details Lex Asea distribution • The separation of NewCo would be by way of a Lex Asea distribution (or “spin-off”) to shareholders • Shareholders would receive shares of Newco in proportion to their existing holding in Hexagon • Hexagon is evaluating listing options for NewCo i
Slide 8: Potential timeline
Potential timeline Expected to take 12-18 months Proposal Updates Process Decision & list • 25 October 2024 • Throughout • 12 – 18 months • In 12-18 months (today) • Updates to be provided at • New legal entity creation • Decision (by shareholders) • Proposal announced to quarterly results, AGM and
Slide 9: Q3 2024 Performance Update
Q3 2024 Va Performance Update “ 5 HEXAGON
Slide 10: Strong growth in recurring revenues and solid margins
Strong growth in recurring revenues and solid margins • Market conditions in several geographies and verticals remained Total revenue challenging 1,299.8 MEUR (1,352.1) • Continued positive momentum in recurring revenues, up 7% y/y to -2% organic growth 565 MEUR, driven by subscription and SaaS grow
Slide 11: Key geographic trends
Key geographic trends Mixed demand environment across geographies Americas EMEA APAC 41% of revenues 33% of revenues 26% of revenues -3% Organic growth 0% Organic growth -5% Organic growth North America Western Europe China • Continued growth in manufacturing, • Slower manufacturing activity outside
Slide 12: 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 463.8 207.6 373.0 134.8 119.6 1,299.8* Organic Growth -2% (8%) 6% (10%) -
Slide 13: Divisional performance
Divisional performance Division Category (MEUR) Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 Q3 2024 Revenue 1,352.1 1,435.3 5,440.0 1,299.9 1,353.4 1,299.8 Organic growth in revenue 8% 5% 7% 3% 0% -2% Hexagon* EBIT1 393.0 438.4 1,596.7 376.5 399.5 376.6 EBIT1 margin % 29.1% 30.5% 29.4% 29.0% 29.5% 29.0%
Slide 14: Manufacturing Intelligence
Revenue by industry (FY 2023) Manufacturing Intelligence General manufacturing 3% 13% Automotive 4% 32% Aerospace & Q3 2024, MEUR (Q3 2023) Business update Defence 10% Electronics Continued growth in aerospace, general 14% Energy & Power manufacturing broadly stable, automotive 24% Revenue 463.8 (48
Slide 15: Asset Lifecycle Intelligence
Revenue by industry (FY 2023) Asset Lifecycle Intelligence Oil & Gas Chemicals 24% 27% Heavy construction - Q3 2024, MEUR (Q3 2023) Business update industrial facilities 5% Energy & Power Strong sales in SaaS and perpetual software, offset 9% 18% by weaker services Mining Revenue 207.6 (197.6) 17% D
Slide 16: Geosystems
Revenue by industry (FY 2023) Geosystems Heavy construction - infrastructure 8% 6% Buildings 29% 11% Surveying Q3 2024, MEUR (Q3 2023) Business update Mining Construction markets remain challenged and 19% 27% difficult comparatives in reality capture Mapping Revenue 373.0 (389.0) US markets more unc
Slide 17: Autonomous Solutions (AS)
Revenue by industry (FY 2023) Autonomous Solutions (AS) 5% 9% Mining Agriculture Q3 2024, MEUR (Q3 2023) Business update 17% 52% Aerospace & Defense Mining environment more uncertain, performance also impacted by delays in order conversion Marine 17% Revenue 134.8 (157.1) Other Agriculture remains w
Slide 18: Safety, Infrastructure & Geospatial
Revenue by industry (FY 2023) Safety, Infrastructure & Geospatial 5% Public safety 7% Aerospace & 10% Defense Q3 2024, MEUR (Q3 2023) Business update 44% Utilities 12% Transportation Strong growth in public safety and network & utilities Revenue 22% Consumer goods 119.6 (120.0) Significant OnCall di
Slide 19: Innovation delivery
Innovation delivery Strong track record of delivering organic growth & incremental margins GEO: RCS HxDR Transform MI: ATS800 GEO: TRK100 MI: Presto System GEO: RCS HxDR GEO: iCS20/50 AS: OEM7 for AG Grow AS: Blast movement Intelligence ALI: EAM on HxGN Cloud Strengthen SIG: OnCall 2023 2024 19 | he
Slide 20: David Mills, Chief Financial Officer
David Mills Chief Financial Officer
Slide 21: Income statement
Income statement Strong margins despite challenging markets Adjusted income statement MEUR Q3 2024 Q3 2023 % Change Sales bridge 2023, MEUR 1,352.1 Net Sales 1,299.8 1,352.1 -2* COGS -427.7 -466.5 -8 Structure, %* 0% Gross earnings 872.1 885.6 -2 Currency, % -1% Gross margin 67.1% 65.5% 1.6 Organic
Slide 22: Gross margin
Gross margin Continued strong gross margin progression Rolling 12-months gross margin Gross margin by quarter Resilient GM% development: 70% 67,3% 67,1% 65% 66,5% 66,5% • Richer software mix in 66,5% 66,2% 65,6% portfolio through innovation 65,5% and M&A 60% 65,2% • Innovation drives higher GM% for
Slide 23: Revenue & profitability bridge
Revenue & profitability bridge Good margin improvement contribution from structure and organic MEUR Q3 2023 Currency Structure Organic Q3 2024 Operating Net Sales 1,352.1 -14 -6 -33 1,299.8 Growth 0% -1% -2% -4% Adjusted Operating Earnings (EBIT1) 393.0 -16 0 0 376.6 Adjusted Operating Margin 29.1%
Slide 24: Cash flow
Cash flow Seasonal cash conversion Cash Flow Statement Q3 24 Q3 23 Change % MEUR • Improved operational cash Adjusted operating earnings (EBIT1) 376.6 393.0 -4 generation D&A (Excluding adjustments) 112.9 98.5 15 • Capital expenditures down Adjusted EBITDA 489.5 491.5 0 sequentially Non-cash items -
Slide 25: Working capital to sales
Working capital to sales Returning to trend WC/Sales, % 25% WC Bridge Q3 2024 Receivables & 20% 8.6 Prepaid expenses Q3 2024 8.3% Inventories 12.8 15% Liabilities 14.1 10% Deferred revenue 35.3 Accrued expenses -14.6 5% Change in WC 56.2 0% Working capital to net sales (on a rolling basis) 25 | hexa
Slide 26: Ben Maslen, Chief Strategy Officer
Ben Maslen Chief Strategy Officer
Slide 27: Hexagon's net-zero target validated by SBTi
Hexagon’s net-zero target have been validated by SBTi* Targets grounded in climate science 2027 Source 100% of renewable electricity Procure renewable electricity and increase investments in onsite renewables 2028 50% of procurement spend with suppliers using science-based reduction targets Supplier
Slide 28: Customer win: Malaysia NG999 Project
Customer win Malaysia Next Generation 999 (NG999) Project Customer background Customer challenge NG999 is a new platform for Malaysian The agencies sought to modernise Emergency Response Services, Malaysia’s 999 emergency services integrating five emergency agencies operational communications with n
Slide 29: Customer win: Leading European EPC
Customer win Leading European EPC Customer background Customer challenge A global leader in large-scale Needed a single, streamlined solution to manage infrastructure across nearly 50 the lifecycle of engineering deliverables with countries. customisable workflows and automated reporting. How Hexago
Slide 30: Customer story: BYD
Customer story BYD (Build Your Dreams) Customer background Customer challenge A global leader in electric vehicles Increasing pressure to reduce costs, creating the and renewable energy solutions, challenge to balance quality and efficiency while known for pioneering battery meeting procurement dema
Slide 31: Customer story: Paris Olympics / Swiss Timing
Customer story Paris Olympics / Swiss Timing Customer background Customer challenge Swiss Timing provides timing, scoring, Measuring the difference between and result services for various sports athletes at an elite sport level events worldwide. This August, they requires extreme precision and suppo
Slide 32: Absolute Tracker ATS800
Absolute Tracker ATS800 The leading edge, at a distance Hexagon revealed the Leica Absolute Tracker ATS800 at IMTS, a high-end direct scanning laser tracker opening a wide range of applications in aerospace, automotive, and large-scale industrial manufacturing where crucial tolerances are needed at
Slide 33: Digital twins industry report
Hexagon Industry Report Digital twins Industry report Published 22nd October 2024 Key headlines 8 out of 10 organisations say their digital twin is helping reduce their carbon emissions The average revenue growth associated with a digital twin is 19% 87% of digital twin users are seeing a ROI of bet
Slide 34: Paolo Guglielmini, President and CEO
Paolo Guglielmini President and Chief Executive Officer
Slide 35: Conclusions
Conclusions Innovation Recurring Strong Cash Potential revenues execution generation separation Strong pipeline of Strong adoption for SW Stable operating margins Confident in 80% to Evaluation in progress product development platforms and across the divisions 90% for full year coming through applic
Slide 36: 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 37: Appendix
Appendix
Slide 38: 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 39: R&D breakdown
R&D breakdown Research & Development Q3 2024 MEUR Gross R&D cost 213 Capitalised R&D 120 Amortisation of previously capitalized R&D 60 Adjusted net R&D cost (impact on EBIT1) 154 39 | hexagon.com
Slide 40: Income statement YTD
Income statement YTD Nine months to 30 September 2024 Adjusted income statement MEUR YTD 2024 YTD 2023 % Change Sales bridge 2023, MEUR 4,004.7 Net Sales 3,953.1 4,004.7 0* COGS -1,305.5 -1,366.9 -4 Structure, %* 0% Gross earnings 2,647.6 2,637.8 0 Currency, % -1% Gross margin 67.0% 65.9% 1.1 Organi
Slide 41: 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%