Hexagon Composites — Investor Presentation 2021

Nov 4, 2021

Q3 2021

Jon Erik Engeset, CEO David Bandele, CFO

4 November 2021

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 forwardlooking 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 4 November 2021, 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

• CEO update
• Financials
• Outlook
• Q & A
• Appendix: Segment financials & other material

Q3 business highlights

Hexagon Agility

Strong RNG fuel systems order intake: NOK ~1bn of orders received from one single logistics customer so far in 2021

4

Hexagon Agility

Mobile Pipeline experiencing a strong rebound driven by diversified customer mix

Hexagon Purus

Robust organic growth +96% versus Q3 2020

Hexagon Purus

Transformative acquisition of Wystrach, integrating vertically and doubling headcount and revenues

Hexagon's low emission mobility solutions had a positive CO2 impact in the first three quarters of 2021

Petroleum cars off the road

Metric tons of GHG avoided

971,000 Acres of forest

Source: Calculated based on the Alternative Fuel Life-Cycle Environmental and Economic Transportation (AFLEET) tool from the Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET®) model has been 5 used for estimating emission reductions, Greenhouse Gas Equivalencies Calculator | US EPA

Solid financial performance in Q3 2021 despite industry-wide shortage of key components

Revenues excl. Purus NOK 848 million (NOK 769 million Q3'20)

EBITDA excl. Purus NOK 110 million (NOK 85 million Q3'20)

Hexagon Purus Revenues NOK 103 million EBITDA NOK -80 million

Organization focused on mitigating supply chain challenges

Supply chain challenges:

• Long lead times and shortage of critical components
• Chassis, battery cells, semi-conductors
• General raw materials inflation and high freight costs impacting margins

Mitigating actions:

• Inventory build-up
• Price adjustment discussions with customers
• Efficiency improvements World Class Manufacturing processes
• Economies of scale

Significant global and national drivers

Our addressable mobility market is expected to grow by 4x by 2025, driven by transition to a cleaner commercial transportation fleet

USD bn

Major engine producers introduce new, industry-changing natural gas models for heavy duty trucks, positioning for growth in RNG (1/2)

Cummins introduces new 15-liter natural gas engine for heavy-duty trucks

• North America's most popular Heavy-Duty truck engine platform
• Opens up new natural gas market of 250,000 Heavy-Duty Class 8
• Improved engine efficiency will further improve total cost of ownership

"We believe this natural gas option is a game changer as a costcompetitive power option to existing diesel powertrains in heavy-duty trucking, making it a great complement to reduce CO2 emissions." "

- Brett Merritt, Vice-President On-Highway Engine Business, Cummins "

Source: Cummins

Major engine producers introduce new, industry-changing natural gas models for heavy duty trucks, positioning for growth in RNG (2/2)

• Expands engine portfolio to focus on long distance transit routes
• Today most long-distance intercity routes are handled by diesel buses
• Will continue to expand natural gas adoption in EU transit which today is approximately 10% adoption

"Biogas will be one of the key tools for decarbonization of heavy-duty transport – especially for intercity and long-distance operations. Half of Europe's heavy duty gas fleet could be powered by biogas in 2025." "

- Jonas Strömberg, Sustainability Director, Scania Buses & Coaches "

Strengthening our European footprint by replicating success formula from North America

• Opening of new commercial hub in Münich, Germany, November 2021
• Replicating US commercial hub in Salisbury, NC
• Strategically located close to major European OEMs and fleet operators
• Improves customer intimacy, application engineering and aftermarket support
• Hexagon's "one-stop-shop" for clean energy solutions
• Part of our strategic agenda to expand European presence together with ongoing cylinder expansion in Kassel and recent acquisition of Wystrach

Ramping up production capacity to meet increased demand

Hexagon Purus – key highlights from Q3 2021

Strong year-over-year revenue growth

Announced strategically important acquisition of Wystrach

Continued strong commercial momentum

Hydrogen distribution driving majority of Hexagon Purus' revenue growth in Q3'21

Hexagon Purus revenues – Q3'21 vs. Q3'20 NOKm

Hexagon Purus revenues almost doubled YoY:

• Increase in deliveries of hydrogen distribution cylinders and modules to Wystrach, Everfuel and large industrial gas companies
• Solaris, Caetano and New Flyer drive increased activity in transit bus segment
• Lower heavy-duty vehicle revenue than prior year

Acquiring Wystrach to strengthen systems capacity and capability –

- solidifying market leadership and doubling revenues

With the acquisition of Wystrach, Hexagon Purus significantly accelerates its business plan

Hexagon Purus has entered the early Hydrogen market growth phase from leading position

Hexagon Purus' addressable hydrogen cylinder and cylinder systems revenue pool USDbn1

Source: Hexagon Purus, third-party consultant, Hyundai. 1 Assuming all end-users use compressed gas hydrogen cylinders in all mobility segments; 2 Includes mobility applications for marine, rail, drones, aviation, farming equipment, construction and mining equipment and HRS on-site storage.

Key takeaways in the quarter

Underlying growth (adjusted for FX) of 14 % despite severe supply chain challenges

Strong rebound for Hexagon Agility Mobile Pipeline

Very strong growth in Hexagon Purus, soon to be further doubled by closing of the Wystrach acquisition

Driving energy transformation

Q3 2021 Financials Hexagon (excl. Purus)

20

Highlights from Q3 2021

• NOK 742m revenue in Hexagon Agility & CNG LDV

• Strong revenues in Heavy-Duty Truck despite continued delays to chassis supply
• Very strong rebound in Mobile Pipeline

• Seasonally low volumes in Hexagon Ragasco

• Promising introductory orders from leading customers in the Philippines, Greece and Trinidad and Tobago
• New SMART cylinder concept technology progressing

• Hexagon Digital Wave

• Growth driven by both Ultrasonic and Modal acoustic technologies

• Hexagon Purus – publicly listed subsidiary

• 96% revenue growth and strong order backlog
• 75% ownership investment valued at ~ NOK 5bn1
• NOK 0.7 bn of cash reserves

Financial highlights Q3 2021

Hexagon (excl. Purus)

• 14% growth before FX headwinds of NOK -27m
• Mobile Pipeline ~ 4 x growth year-over-year

• Strong backlog for both Automotive and Mobile Pipeline businesses

• Solid margin from higher volumes within Mobile Pipeline

• Some headwinds remain from pandemic related higher input prices, however effects outweighed by higher volume

• 7% operating margin up 3 p/p year-over-year

Hexagon Agility & CNG LDV segment | Q3 2021

Hexagon Agility & CNG LDV*

NOKm

• 23% growth before FX headwinds driven by robust recovery in North American Mobile Pipeline market
• Strong sustainability driven US Truck demand offset by planned lower Transit and Refuse call-offs
• Semi-conductor shortage in Light-Duty somewhat mitigated by high activity towards Hexagon Purus

Revenue Share Q3'21

Before eliminations

• Heavy-Duty/Medium-Duty Truck
• Transit Bus
• Refuse Truck
• Light-Duty Vehicles
• Mobile Pipeline

* CNG LDV was part of Purus segment reporting in 2020 and has been included in Hexagon Agility segment reporting in 2021. 2020: preliminary unaudited pro-forma figures after adjusting for reorganizations of Purus business units; 23

Hexagon Ragasco I Q3 2021

NOKm

• Seasonally softer quarter with delays to Asian customers
• Overall market demand remains strong
• Introductory orders to leading customers in the Philippines, Greece and Trinidad & Tobago
• Lower volume and temporarily higher input costs resulted in reduced margin

Hexagon Digital Wave I Q3 2021

NOKm

• Strong sales in Ultrasonic Examinations (UE) and Modal Acoustic Emission (MAE) technologies
• Continued opex investment to scale up organization and develop digitalization products pipeline

Hexagon proforma leverage | Q3 2021

• As of Q3 2021, Hexagon has a total NIBD of NOK NOK 0.9bn

• Total IBD of NOK 1.1bn and cash NOK 0.26bn
• Unsecured Bond NOK 1.1 bn. Maturing March 2023
• Secured Bank facility of NOK 0.6bn undrawn
• Hexagon Purus currently debt free and holds cash of NOK 0.7bn
• Hexagon Purus is ring-fenced from financial covenants in Hexagon loan agreements

Q3 2021 Financials Hexagon Group

Hexagon Group Balance sheet | Q3 2021 vs Q2 2021

Equity Strong balance sheet

Overall summary | Q3 2021

• Strong Q3 for Hexagon despite headwinds from delays in industry supply chains and currency movements year-over-year

• Demand for Heavy Duty US Truck very high
• Strong recovery in Mobile Pipeline
• Hexagon Ragasco had seasonally low volumes, but annual demand remains solid

Outlook & 2021 Full year guidance

Hexagon Agility Medium & Heavy-Duty Vehicles

Resilient sustainability-driven demand

• Strong Q4 with backlog driven by:
• Strong demand from Heavy- & Medium Duty Truck in North America
• Continued positive development in European Transit Bus
• Growth from North America Transit Bus
• Supply chain disruptions causing some delivery delays into Q1 2022

Hexagon Agility Mobile Pipeline

Strong demand from a diverse customer portfolio

• Strong demand and deliveries expected to continue in North America for RNG, virtual interconnect and mobile refuelling units
• Supply shortage of steel may cause some chassis postponements to Q1 2022

Hexagon CNG-LDV

Reduced volumes caused by supply chain challenges

• Key customer, Volkswagen Group heavily affected by semiconductor shortage
• Improvement expected by second half of 2022
• Production capacity utilized for hydrogen, European RNG/CNG bus customers & Mobile Pipeline business

Hexagon Digital Wave

Increasing market applications for our technologies

• Increased demand for Modal Acoustic Emission (MAE) testing services for industrial gas and CNG modules
• Strong backlog on Ultrasonic Examination (UE) systems
• Organization and product development investments on track to realize future opportunities

Hexagon Ragasco

Positive uptick to end the year

• Solid demand from recurring customers in South Asia and Europe
• New market leading customers in Croatia and the Caribbean
• Smart cylinders pilot program progressing
• Supply chain constraints of key electronic components causing some delays
• Preparing for launch in 2022

Hexagon (excl. Purus) 2021 targets*

Substantial and profitable growth

Hexagon (excl. Purus) 2021 Guidance | as at Q3 2021

Despite supply chain delays Q4 expected to be strong and full year EBITDA guidance is intact driven by strong demand, however risk of further delays remain

		CURRENT STATUS	% OF HEXAGON REVENUES YTD Q3 2021	EXPECTED PERFORMANCE FULL TO YEAR TARGET
	HEXAGON AGILITY	• Continued strong sustainability driven demand in Heavy-duty Truck and Mobile pipeline	71%
HEXAGON	HEXAGON CNG LDV	• Semi-conductor shortage impact continues to Q4 • Partly offset by increased volumes to Hexagon Purus	* 9%
	HEXAGON RAGASCO	• Solid quarter to end year on a positive note	18%
	HEXAGON DIGITAL WAVE	• Investing in devoloping new portfolio to extend existing profitable business	2%
		* of which ~5 p/p of revenues impacted by semiconductor shortage have been switched with sales to Hexagon Purus

What are the 3 big things to look out for?

RNG uptake as fast-track alternative fuel to lower harmful emissions for commercial vehicles

Smart Cylinder digitalization of LPG product offering to accelerate adoption of Type-4 tanks versus steel

Smart systems digitalization and real-time monitoring of all highpressure Type-4 tanks driven by Modal Acoustic Emissions technology

2021 onwards 2022 onwards 2025 onwards

Hexagon proforma financial highlights (1/3)

• Hexagon (excl. Purus) provides clean solutions with strong ESG benefits
• Hexagon Agility & CNG LDV**: (renewable) natural gas clean mobility solutions
• Ragasco: Portable LPG cylinders for household and leisure applications
• Digital Wave: smart technology for monitoring and testing of cylinder systems and creating circular economy by extending life expectancy

• Hexagon Purus provides clean and sustainable fuel solutions for battery electric and hydrogen vehicles

*2020: preliminary unaudited pro-forma figures after adjusting for reorganizations; 2021 segment reported and is after central/corporate and eliminations within the segments ** previously referred to as g-mobility and being rebranded to be consistent with other reported segments and ahead of transferring operational responsibility of CNG LDV business to Hexagon Agility by 1.1.22 42

Segment proforma financial highlights (2/3)

NOKm 625 495 ^{630 670} 527 537 742 Q2'20 Q3'20 44 (8%) 51 (8%) 121 (18%) Q1'20 67 (11%) -7 Q4'20 58 (11%) Q1'21 Q2'21 105 (14%) Q3'21 Revenues EBITDA

• Hexagon Agility & CNG LDV provides (renewable) natural gas clean mobility solutions for Heavy and Medium Duty Vehicles (Agility), Mobile Pipeline (MP) and Light- Duty Vehicles (CNG LDV)
• Global leading provider within markets including Heavy-Duty/ Medium-Duty Trucks, Refuse Truck, Transit Bus, Gas Transportation, Refueling units and Passenger cars

Hexagon Agility & CNG LDV* Hexagon Agility & CNG LDV revenue split (after eliminations)* NOKm

* previously referred to as g-mobility and being rebranded to be consistent with other reported segments and ahead of transferring operational responsibility of CNG LDV business to Hexagon Agility by 1.1.22; 2020: preliminary unaudited pro-forma figures after adjusting for reorganizations; 2021 segment reported 43

Revenues

Segment proforma financial highlights (3/3)

Hexagon Digital Wave

• World leading provider of LPG composite cylinders
• Delivered over 19 million cylinders worldwide

• Strategic agenda include IoT and digitalization providing connectivity and driving value chain transformation

• Proprietary safety technology Modal Acoustic Emission (MAE) technology for testing and certifying cylinders

• Strategic agenda include cylinder digitalization with real-timing monitoring, testing and certification, creating a circular economy through enabling life extension

Group cash Q3 2021

Hexagon cash down NOK 77m to 259m principally due to increase in inventories both due to safety stocking of raw materials and chassis delays increasing finished goods Purus cash down from NOK 0.9bn to 0.7bn due to organization buildup and inventories

Consolidated financial statements | P&L Hexagon Composites ASA

Income Statement (NOK 1 000)	Q3 2021	Q3 2020	31.12.2020	31.12.2019
Revenue from contracts with customers	874 435	769 149	3 070 865	3 404 209
Other operating income	745	390	9 511	11 915
Total revenue	875 180	769 538	3 080 375	3 416 124
Cost of materials	414 984	350 804	1 500 976	1 673 120
Payroll and social security expenses	268 388	218 867	941 425	853 706
Other operating expenses	162 238	134 912	448 348	599 209
Gain / Fair value adjustment earn-out				-69 625
Total operating expenses before depreciation	845 609	704 583	2 890 750	3 056 409
Operating profit before depreciation (EBITDA)	29 571	64 955	189 626	359 715
Depreciation and impairment	64 625	60 765	248 340	239 606
Operating profit (EBIT)	-35 055	4 190	-58 714	120 109
Profit/loss from investments in associates and joint ventures	178	-207	-1 885	-749
Net financial items	-14 660	-10 969	7 757	-8 114
Profit/loss before tax	-49 536	-6 985	-52 841	111 246
Tax	15 424	39 344	99 740	3 755
Profit/loss after tax	-64 960	-46 329	-152 582	107 491

Consolidated financial statements | Balance sheet & cash flow Hexagon Composites ASA

BALANCE SHEET (NOK 1 000)	30.09.2021	31.12.2020
ASSETS
Property, plant and equipment	852 462	747 266
Right-of-use assets	264 691	257 337
Intangible assets	2 045 616	2 105 569
Investment in associates and joint ventures	2 152	2 142
Non-current current assets	2 872	79 848
Total non-current assets	3 167 793	3 192 161
Inventories	1 083 867	740 639
Trade receivables	908 375	624 978
Contract assets (incl. prepayments)	2 258	814
Cash and short-term deposits	976 131	1 649 882
Total current assets continuing operation	2 970 630	3 016 313
Total assets	6 138 423	6 208 474
EQUITY AND LIABILITIES
Paid-in capital	2 181 911	2 165 590
Other equity	908 658	1 014 975
Equity attributable to equity holders of the parent	3 090 570	3 180 565
Non controlling interests	337 748	411 221
Total equity	3 428 318	3 591 786
Interest-bearing long-term liabilities	1 137 577	1 206 127
Lease liabilities	225 448	237 266
Other non-current liabilities	193 401	261 999
Total non-current liabilities	1 556 426	1 705 392

Interest-bearing current liabilities 0 0 Lease liabilities short-term 50 496 25 198 Contract liabilities (incl. prepayments from customers) 172 975 53 371 Other current liabilities 930 208 832 726 Total current liabilities 1 153 679 911 296

Total liabilities 2 710 105 2 616 688 Total equity and liabilities 6 138 423 6 208 474

CONDENSED CASH FLOW (NOK 1 000)	30.09.2021
Profit before tax from continuing operations	-206 059
Depreciation and write-downs	191 155
Change in net working capital and other	-212 128
Net cash flow from operations	-227 033
Net cash flow from investment activities	-218 372
Net cash flow from financing activities	-235 540
Net change in cash and cash equivalents	-680 944
Net currency exchange differences	7 193
Discontinued operations
Cash and cash equivalents at start of period	1 649 882
Cash and cash equivalents at end of period	976 131

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