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Hexagon Composites Investor Presentation 2014

May 9, 2014

3619_rns_2014-05-09_b5e8e017-463d-4ab0-b0be-eec5f6d75003.pdf

Investor Presentation

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QUARTER 2014

Oslo, 9th May 2014

st

Jon Erik Engeset, Group President & CEO David Bandele, CFO

DISCLAIMER AND IMPORTANT NOTICE

This company presentation (the "Presentation") has been prepared by Hexagon Composites ASA ("Hexagon" or the "Company"). The Presentation has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market place. The Company makes no representation or warranty (whether express or implied) as to the correctness or completeness of the information contained herein, and neither the Company nor any of its subsidiaries, directors, employees or advisors assume any liability connected to the Presentation and/or the statements set out herein. This presentation is not and does not purport to be complete in any way. The information included in this Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or its advisors or any of their parent or subsidiary undertakings or any such person's affiliates, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company and its advisors assume no obligation to update any forward-looking statements or to conform these forward-looking statements to the Company's actual results. Investors are advised, however, to inform themselves about any further public disclosures made by the Company, such as filings made with the Oslo Stock Exchange or press releases. This Presentation has been prepared for information purposes only. This Presentation does not constitute any solicitation for any offer to purchase or subscribe any securities and is not an offer or invitation to sell or issue securities for sale in any jurisdiction, including the United States. Distribution of the Presentation in or into any jurisdiction where such distribution may be unlawful, is prohibited. This Presentation speaks as of 9th May 2014, and there may have been changes in matters which affect the Company subsequent to the date of this Presentation. Neither the issue nor delivery of this Presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of the Company have not since changed, and the Company does not intend, and does not assume any obligation, to update or correct any information included in this Presentation. This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo City Court as exclusive venue. By receiving this Presentation, you accept to be bound by the terms above.

AGENDA

  • •Group Highlights
  • •Group Financials & Segment overview
  • •Summary and Outlook
  • •Q & A

STRONG REVENUE GROWTH

OPERATING REVENUES

NOK Million

* All numbers excluding Devold AMT and Rugasco

HIGHLIGHTS Q1 AND APRIL 2014

  • •Best quarter in Company history (EBITDA)
  • • High overall capacity utilization and production efficiency ̵Still capacity constrained
  • •Increased margins
  • •Growth in the Heavy Duty truck market continues
  • • Gas Distribution Products (TITAN™ and SMARTSTORE™) sustained at robust level
  • •Passenger car business breaking even in the quarter
  • •Phase 1 capacity increase commissioned
  • • Major LPG tank contracts to Qatar and Iraq secured for Q3 and Q4 deliveries
  • ̵High capacity utilization throughout the year
  • • Strategic Joint Venture entered into with our largest customer, Agility Fuel Systems
  • ̵Drives Heavy Duty segment growth short and long term
  • ̵Enables innovation and economies of scale

st

QUARTER 2014 GROUP FINANCIALS

Q1 2014 GROUP INCOME STATEMENT

O
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Q1 '14* V '13* INCOME STATEMENT HIGHLIGHTS

  • • High-pressure drives NOK 57 million growth
  • • Low-pressure drives 48 million growth
  • High-pressure at 20.2% margin
  • Low-pressure at 28.4% margin
  • NOK 4 million depreciation growth mainly due to volume based methods (Low-pressure 3, Highpressure 1)
  • • Tax growth of -NOK 8 million
  • • Finance and other contributions growth of - NOK 10 million
  • • Income from divested business of +NOK 4

Significant margin improvement from supply-chain efficiencies

•

•

GROUP EBITDA Q1 '14* V Q1'13*

Good contributions from both core business segments

www.hexagon.no

*Figures have been restated according to the Equity accounting method for Joint Ventures as of 1st January 2014 9

FINANCIAL POSITION V PREVIOUS QUARTER

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  • • NOK 115 million receivedfor sale of Composites Reinforcements business
  • • Cash reserves used to pay down NOK 150 million in debt
  • • Additional Liquidity reserves are NOK 420 million
  • • Net Interest-bearing debt reduces by NOK 91 million (Q4 2013: 198* v Q1 2014: 107)

CAPITAL STRUCTURE

•Net Interest Bearing Debt of NOK 107 million at Q1 2014

SEGMENT SHARES Q1 2014

BEFORE INTERCOMPANY ELIMINATIONS AND GROUP CHARGES*

Q1: HIGH-PRESSURE CYLINDERS

  • • Strong heavy duty demand in North America and global bus market
  • • Global market for TITAN™ and SMARTSTORE™ transportation and storage systems on target
  • • Our position in multiple markets allows us to take advantage of growth in the varying markets
O
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Q1: LOW-PRESSURE LPG CONTAINERS

  • • Strong global sales; majority of growth outside Europe
  • •Commercial production in Russia
  • •High manufacturing utilisation and productivity
N
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st

QUARTER 2014 SUMMARY & OUTLOOK

EXPANSION PROGRAM

  • •Phase 1 commissioned in March
  • • Some start-up issues and technological challenges remain to overcome to reach name plate capacity
  • high degree of comfort regarding choice of technologies and line layout
  • • Gradually improving supply / demand balance, but still longer than normal delivery times
  • Expect sufficient capacity from Q3
  • • Maintain plan to commission Phase 2 from Q2 2015
  • ̵ Problems faced and solved in Phase 1 will greatly benefit Phase 2
  • • Preparing a Phase 3 expansion jointly with Agility mid 2016
  • •"Just in Time"

AGILITY HEXAGON JOINT VENTURE

  • •Alliance with largest customer
  • • Opportunity for joint R&D and systems optimization
  • • Feasibility study to consider new integrated site

Agility Fuel Systems

Company Overview May 06, 2014

Agility Offers a Full Product Line and has over 25,000 Units in Operation

History of innovation and market leadership

Merger of FAB and EnviroMECH created the dominant player in heavy-duty natural gas fuel systems

Next-generation side-mount System

Most Innovative Natural Gas System in the Market!

  • Neck and strap-mount options available
  • Developed through two years of capturing VOC, field data, and refining the design
  • Integrated Fuel Management Module
  • "Drop & Go" brackets for ease of installation
  • Protective side impact structure built into covers
  • 30 to 63 Diesel Gallon Equivalent (DGE) per tank

The evolution of our side-mount system over the past three years has led us to this mature design intended to serve the market moving forward

Back-of-cab mounted system 155 DGE

  • •Enables a range of up to 600-miles
  • •Industry's best DGE per inch of frame rail
  • •Only 35-inches of frame rail space required
  • • Wedge profile allows system to fit behind fairing and maintain vehicle aerodynamics
  • •4 Type 4 cylinders; measuring 26" x 80" each
  • •Weighs 2,550 lbs. empty
  • •Integrated Fuel Management Module
  • • System includes patent pending ignition disconnect fuel caps
  • •Best placement with entire system above frame rail
  • • Can be packaged with side mount systems for a total of 275 DGE
  • • Can be combined with rail mounted systems to maximize fuel on board
  • • Integrated lights, grab handles, accommodations for trailer connections

System can be packaged with side mount systems for a maximum of 275 DGE, which is the most of any system in the market!

SUCCESFUL GEOGRAPHICAL EXPANSION OFLPG CYLINDER BUSINESS

2013

HEX SHARE TRANSACTIONS

www.hexagon.no

OUTLOOK REMAINS VERY ENCOURAGING

THANK YOU

Jon Erik Engeset, CEO

David Bandele, CFO

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