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Hexagon Composites Investor Presentation 2013

Feb 13, 2014

3619_rns_2014-02-13_887e9641-9f03-4379-98d9-730ce64112e3.pdf

Investor Presentation

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QUARTER 2013 th

Oslo, 13 February 2014

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

AGENDA

  • •Highlights
  • •Group financials
  • •Segment review
  • •Summary and outlook
  • •Q & A

SOLID EXPERIENCE IN A GROWING INDUSTRY

OPERATING REVENUESNOK Million112176290 300 318 425561 599 787868 846992 1033 1280183*2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 BUILDING VOLUME AND ACQUSITIONS FOCUSING ON SPECIALISATION AND CORE BUSINESS BUILDING NO. 1 GLOBAL POSITION RAGASCORAUFOSSFUEL SYSTEMSLINCOLNCOMPOSITESCOMRODPOWER AND LERCCOMRODCOMPOSITESCANDINAVIAHEXAGON DEVOLD

Acquisitions Divestments

* Marked area in 2013 represents revenue in Composite Reinforcements, which was divested in January 2014

www.hexagon.no

HIGHLIGHTS Q4 2013

  • •Sale of Hexagon Devold to Saertex GmbH & Co. KG
  • • Strong growth in demand for Heavy-Duty Vehicle fuel tanks
  • • Substantial sales of TITAN™ modules in North and South America
  • • Introduction of the Euro 6 standard with effect from 1 January 2014, which makes natural gas-powered buses more competitive in comparison with diesel buses
  • •Several orders for LPG cylinders from outside Europe
  • •Formal Russian approval of Rugasco's LPG cylinder

KEY FIGURES*:

GROUP FINANCIALS – CONTINUING OPERATIONS

CONTINUING OPERATIONS*STRONG MARGIN IMPROVEMENT

MARGIN DEVELOPMENT

www.hexagon.no 5 *Figures for 2013 only have been restated to exclude Composite Reinforcements, which was divested in January 2014 and is accounted for as profit/(loss) from companies held for sale

www.hexagon.no 6

Q4 2013

  • • Turnover NOK 306 million (211)
  • Hexagon Devold excluded
  • •EBITDA NOK 31,3 million (7,4)
  • •EBITDA NOK 31,3 million (7,4)
  • •EBIT NOK 12,8 million (-7,5)
  • •Net Profit NOK 7,1 (-6,3)
  • •Non recurring costs of NOK 21 million
  • • Goodwill write down Hexagon Raufoss NOK 3,9 million
  • • EBIT charged with NOK -1,9 million from Rugasco JV (RU)

FULL YEAR 2013

  • • Turnover NOK 1,28 billion (0,857) +49% Hexagon Devold excluded
  • • EBITDA NOK 202 million (87) + 132%
  • •EBIT NOK 139 million (32)
  • •Net Profit NOK 89,8 (5,4)

TWO WARRANTY ISSUES

  • • Hexagon Ragasco (LPG)
  • ̵ Permeation higher than standard prescribes
    • •No hazardous risk
  • • Hexagon Lincoln
  • Recall of limited number of cylinders due to performance deviations
  • • Warranty provisions increased by NOK 10 million

STRONG UNDERLYING PERFORMANCE IN HIGH PRESSURE SEGMENT

  • • Very strong quarter for Heavy-Duty Vehicles driven by launch of Cummins Westport ISX 11,9 ltrs
  • •Continued strong growth for bus and refuse truck applications
  • •Another weak quarter for Light-Duty Vehicles segment
  • • Strong demand for Gas Distribution Products (GDP)
  • TITAN™ and SMARTSTORE ™
  • Mainly North and South America

  • ̵First deliveries to Russia

  • • Hexagon Lincoln capacity fully utilized in Q4

  • Short term delays and extended delivery times
  • Expansion Program Phase 1 on revised schedule for completion within Q1 2014
  • Expansion Program Phase 2 on schedule for completion within Q1 2015

TITAN™ AND TUFFSHELL™

Q4 IS THE LOW SEASON FOR LPG

  • • Underlying operating income growth of 17% in Q4 2013 versus Q4 2012
  • ̵ After adjusting for one-offs of NOK 28,3 million in 2012
  • • Several introductory orders taken in new markets outside Europe
  • South East Asia, Caribbean, Middle East, Africa

th

QUARTER 2013 GROUP FINANCIALS

PROFIT AND LOSS ACCOUNT*

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Q4 2013 V 2012 PROFIT & LOSS HIGHLIGHTS*

Satisfactory underlying performance, impacted negatively by one-offs

negative impact of one-offs (-15 vs -13)

www.hexagon.no 15 *Figures have been restated to exclude Composite Reinforcements, which was divested in January 2014 and is accounted for as profit/(loss) from companies held for sale

million of the growth

IMPACT OF ONE-OFFS ON EBITDA Q4 2013*

Normalised Q4 EBITDA of NOK 47 million

GROUP EBITDA Q4 2013* VS Q4 2012*

High pressure drives growth in Q4 versus prior year

2013 V 2012 PROFIT & LOSS HIGHLIGHTS*

  • in both segments NOK 6 million negative impact of one-offs (-28 vs -22)
  • pressure segment accounts for + NOK 8 million of growth
  • contributions of +NOK 14 million

Exceptional growth and margin improvement but also growth challenges

GROUP EBITDA 2013* VS 2012*

Good growth in both core business segments

FINANCIAL POSITION*

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  • • Material improvement in Cash and Cash equivalents
  • Additional Liquidity reserves are NOK 270 million

•

  • • Net Interest-bearing debt reduces by NOK 73 million (2013: 204 v 2012: 277)
  • • Reduction in NIBD of a further NOK 115 million in January 2014, being receipts of sale of Composites Reinforcements business

www.hexagon.no 20 *Assets and Liabilities for Composite Reinforcements which was divested in January 2014 have been shown in separate lines in 2013 only as it is accounted for as companies held for sale

CAPITAL STRUCTURE

LIABILITIES AND EQUITY

QUARTER 2013 SEGMENT RESULTS

SEGMENT SHARES

AFTER INTERCOMPANY ELIMINATIONS AND GROUP CHARGES*

Q4: HIGH-PRESSURE CYLINDERS

  • •Continued strong market demand in North America
  • • Continued high global activity for TITAN™ and SMARTSTORE™ transportation and storage systems
  • • Continued strong bus market with the start of T4 deliveries to Turkey
  • •The European passenger car market remains weak
  • • Current capacity expansion in Lincoln is making headway, with completion still expected by the end of Q1 2014

HIGH-PRESSURE CYLINDERS2013 KEY FIGURES

HIGH-PRESSURE CYLINDERS2013: STRONG MARGIN DEVELOPMENT

EBIT MARGIN DEVELOPMENT

  • • Strong sales and profit North America
  • • Fully utilised production capacity in Lincoln
  • • Strong growth in European bus systems sales

Q4: LOW-PRESSURE LPG CONTAINERS

  • • Continued strong sales, especially to France, and growing order book outside Europe
  • • Formal Russian product approval received for LPG cylinders
  • • Added 5th shift to meet expected demand in H1 2014

IMPACT OF RESTATEMENT

N
O
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T
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A
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Q
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*Composite Reinforcements (Hexagon Devold) was divested in January 2014 and is accounted for as profit/(loss) from companies held for sale www.hexagon.no 28

th

QUARTER 2013 SUMMARY & OUTLOOK

STATE OF THE UNION

2011 2012 2013 Total Station CountCNG StationsLNG Stations

THE FUTURE LOOKS BRIGHT

  • • We expect continued strong growth in High Pressure area.
  • Especially in US Heavy-Duty segment
  • European passenger car segment expected to gradually improve
  • Global market opportunity for Gas Distribution Products (GDP)
  • EURO 6 makes CNG buses more competitive than diesel buses in Europe.
  • • LPG capacity expected fully utilized in Q1 and Q2 2014,
  • improved utilization in Q3 and Q4 compared with previous years
  • •Gross margins expected to be sustained through 2014
  • • The growth will not be linear
  • Variations between quarters should be assumed
  • • Significant investment in organizational development in 2014
  • Increased manning and management ̵
  • Information systems
  • Expansion project

THANK YOU

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