Hexagon Composites — Investor Presentation 2015

May 7, 2015

1ST QUARTER 2015

Oslo, 7th May 2015

Jon Erik Engeset, 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 forwardlooking 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 forwardlooking 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 7th May 2015, 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
• Outlook
• Q & A

SOME MARKET CHALLENGES IN THE QUARTER

OPERATING REVENUES

www.hexagon.no

HIGHLIGHTS Q1 2015

• Record delivery volumes for the Heavy-Duty market segments
• Soft Mobile Pipeline™ quarter largely due to order postponements
• Reasonable LPG capacity utilization, but lower than Q1 2014
• Positive impacts of USD

1ST QUARTER 2015 FINANCIALS 1ST QUARTER 2015 FINANCIALS

SUMMARY FINANCIAL HIGHLIGHTS Q1 2015

• Strong underlying growth in CNG business North America v Q4 2014
• Lower volumes impacting overall profitability in Mobile Pipeline™ and LPG businesses
• Losses in Light-Duty Vehicles business unit
• Generally higher cost base as we invest in personnel and activities for the future – NOK 18 million real growth v Q1 2014
• Group operating income NOK 401.6 million
• EBITDA NOK 52.9 million
• Earnings per share NOK 0.28

Q1 2015 GROUP INCOME STATEMENT

NOK THOUSAND	THREE MONTHS ENDING	TWELVE MONTHS ENDING
	31.03.15	31.03.14	Variance	31.12.14
Operating Income	401 636	410 529	(8 893)	1 650 829
Operating expenses	(348 782)	(325 416)	(23 356)	(1 321 678)
EBITDA	52 854	85 113	(32 259)	329 151
Depreciation and impairment	(13 328)	(17 993)	4 665	(72 363)
EBIT	39 526	67 120	(27 593)	256 788
Share of profit/(loss) from associates	(112)	(755)	643	(9 554)
Other financial items (net)	13 837	(8 892)	22 728	(9 815)
Profit before tax from cont. operations	53 251	57 473	(4 222)	237 419
Tax expense	(15 643)	(18 951)	3 308	(77 072)
Profit after tax from cont. operations	37 608	38 522	(914)	160 347
Profit/(loss) from companies held for sale	0	4 855	(4 855)	4 325
Profit/(loss) for the quarter/year	37 608	43 377	(5 769)	164 672
EBITDA %	13.2%	20.7%		19.9%

Q1 '15 V '14 INCOME STATEMENT HIGHLIGHTS

• impacts of c. NOK 66 million
• Low-Pressure decline NOK 42 million (-29%)

• margin

• Financial items effect of NOK + 23 million (FX +23; Interest 0)

• Effect from Rugasco JV NOK +1 million
• Tax effect of +NOK 3 million
• Hexagon Devold divestment effect NOK -5 million

Reasonable revenue and profit generation despite negative impacts of volume mix and higher cost base

GROUP EBITDA Q1 '15 V Q1 '14

Low-Pressure profitability impacted primarily by lower volumes;

High-Pressure profitability impacted by higher innovation and development driven cost base and portfolio mix

SEGMENT SHARES Q1 2015

BEFORE INTERCOMPANY ELIMINATIONS AND GROUP CHARGES*

SHARE OF OPERATING INCOME

• High-Pressure: CNG Automotive (Global)
• High-Pressure: Mobile Pipeline™

• Low-Pressure: LPG (Propane)

• High-Pressure: CNG Automotive (Global)

• High-Pressure: Mobile Pipeline™
• Low-Pressure: LPG (Propane)

SEGMENT SHARES Q1 2015

BEFORE INTERCOMPANY ELIMINATIONS AND GROUP CHARGES*

• High-Pressure: CNG Automotive and Mobile Pipeline™

• Low-Pressure: LPG (Propane)

• High-Pressure: CNG Automotive and Mobile Pipeline™

• Low-Pressure: LPG (Propane)

Q1: HIGH-PRESSURE CYLINDERS

• Strong heavy-duty demand in North America and global bus transit market
• Relatively weak sales of Mobile Pipeline™ solutions
• Weak demand in Light-Duty Vehicles; loss making
• Higher cost base than Q1 2014 reflecting investment in resourcing-up this business area

NOK THOUSAND	SUMMARY FINANCIALS
	Q1 2015	Q1 2014	Variance
Operating Income	299 394	266 709	32 685
Operating expenses	(265 189)	(212 746)	(52 443)
EBITDA	34 205	53 963	(19 758)
Depreciation and impairment	(10 300)	(6 958)	(3 342)
EBIT	23 905	47 005	(23 100)

www.hexagon.no

Q1: LOW-PRESSURE CYLINDERS

• Reasonable level of recurring sales, mainly in Europe
• Good production capacity utilization though lower than Q1 2014

NOK THOUSAND	SUMMARY FINANCIALS
	Q1 2015	Q1 2014	Variance
Operating Income	104 044	146 535	(42 491)
Operating expenses	(83 694)	(104 946)	21 252
EBITDA	20 350	41 589	(21 239)
Depreciation and impairment	(2 828)	(10 441)	7 613
EBIT	17 522	31 148	(13 626)

CAPITAL STRUCTURE

0 200 400 600 800 1 000 1 200 1 400 31.12.2014 31.03.2015 EQUITY SHARE: 44.4% Current liabilities Long term liabilities Equity LIABILITIES AND EQUITY NOK Million

Continued Strong Cash and Equity position; Low leverage

FINANCIAL POSITION V PREVIOUS QUARTER

NOK THOUSAND	31.3.2015	31.12.2014	Change
Intangible assets	104 864	107 085	( 2 221)
Tangible fixed assets	325 644	294 462	31 182
Other non-current assets	9 372	4 852	4 520
Total Non-current Assets	439 880	406 399	33 481
Inventories	384 598	320 468	64 130
Receivables	285 985	250 570	35 415
Bank deposits, cash and similar	122 896	202 179	(79 283)
Total Current Assets	793 477	773 216	20 262
Total Assets	1 233 357	1 179 615	53 743
Total Equity	547 611	487 109	60 502
Provisions	36 984	36 571	413
Long-term interest-bearing debt	297 428	297 243	185
Total Non-current Liabilities	334 412	333 815	598
Short-term interest-bearing debt	-	-	-
Other current liabilities	351 334	358 691	(7 357)
Total Current Liabilities	351 334	358 691	(7 357)
Total Liabilities	685 746	692 506	(6 760)
Total Equity and Liabilities	1 233 357	1 179 615	53 743

• Additional Liquidity reserves are NOK 385 million
• Net Interest-bearing debt increased by NOK 80 million (Q4 2014: 95 v Q1 2015: 175)
• ̵ Working capital build in US operations

CASH FLOW Q1 2015

Working capital expansion primarily in US operations

1ST QUARTER 2015 OUTLOOK 1ST QUARTER 2015 OUTLOOK

HEAVY-DUTY TRUCKS

• Very positive market development in light of the low diesel prices
• Hexagon increasing market share
• Orders of around USD 8 million related to the 27 inch cylinder
• ‒ increased storage volume and reduced weight

CONTINUED STRONG BUS MARKETS

• Driven by environmental concerns around the world
• The trend away from diesel gaining new momentum

TITAN™ ON THE MOVE

• The prospect list is growing strongly
• The market is new and many prospective end users are unfamiliar with the economics of natural gas
• ‒ Low diesel prices entail uncertainty while value proposition remains very solid
• Shale oil & gas customers cutting back on CAPEX, but cost saving investments likely to be prioritized medium term NG Advantage using TITAN™

supplying Ticonderoga International Paper plant in upstate New York

"the highest volume use of trucked CNG to-date in the U.S." NG Advantage

PUSH TO FULLY UTILIZE CAPACITY AT HEXAGON RAGASCO

• Several design innovations under way
• Approaching new customers with partnership models to overcome the initial adoption barriers
• Aiming at reducing dependence on "one off" orders to a minimum

OUTLOOK

• Heavy Duty looks solid
• Mobile Pipeline™ soft next quarter or two, but very strong drivers expected to release demand when end customers have been able to process relevant facts
• Healthy growth in most LPG markets, but lack of large one-off orders leaves a portion of 2015 production capacity unutilized
• The Light-Duty Vehicle segment remains challenging ‒ Structural measures will be considered
• Innovation and growth initiatives will be continued and strengthened regardless of the short term uncertainty in some segments

QUESTIONS PLEASE

Jon Erik Engeset, CEO David Bandele, CFO