Hexagon Purus ASA: Results for the fourth quarter 2023
Selected key developments in Q4 2023 and after balance sheet date:
- Revenue of NOK 366 million in the fourth quarter of 2023. Full-year 2023 revenue ended at NOK 1,320 million, up 37% year-over-year;
- EBITDA ended at NOK -129 million in the fourth quarter of 2023. Full-year 2023 EBITDA ended at NOK -445 million, translating to a relative EBITDA margin of -34%, up from -42% for the full-year 2022 and 54% for the full-year 2021;
- Raised approximately NOK 1,000 million in gross proceeds from a convertible bond issue announced in December 2023, supported by Mitsui & Co., Ltd., Hy24 and Hexagon Composites. Added Hy24, the world’s largest clean hydrogen pure-play investor, as a new strategic investor in the Company;
- Extended framework agreement with leading European producer of green hydrogen for delivery of hydrogen distribution modules with minimum value of approx. EUR 17 million;
- Received purchase orders for delivery of hydrogen distribution systems to a leading player within the green hydrogen ecosystem worth approx. EUR 9.6 million;
- Awarded purchase order by Ford Trucks to deliver a complete hydrogen fuel storage system for a prototype heavy-duty fuel cell electric truck;
- Selected by New Flyer for the fourth time as partner for the hydrogen bus market in North America with an estimated contract value of approximately USD 4 million;
- Opened new hydrogen infrastructure and systems manufacturing hub in Weeze, Germany, which significantly increases production capacity for hydrogen infrastructure solutions and;
- Exited the quarter with order backlog consisting of firm purchase orders of approximately NOK 1.3 billion.
“2023 has been an exciting and eventful year for Hexagon Purus, where we achieved significant growth from last year. The lion’s share of the investment program is completed, and we are now moving into the ramp-up and operational execution phase. With positive gross margins on customer deliveries, the EBITDA margin will continue to improve as the utilization of the new capacity increases”, says Morten Holum, CEO of Hexagon Purus. “Over the past few years, we have delivered transformational growth, with revenue the last twelve months now more than seven times higher than in 2020. We have a solid foundation for 2024 and I remain confident that we will continue to deliver on our short- and medium-term targets”, he continues.
In the fourth quarter of 2023, Hexagon Purus (“the Company” or “the Group”) generated NOK 366 million in revenue. About NOK 40 million of revenue was pushed out from the fourth quarter of 2023 to the first quarter of 2024 due to technicalities related to revenue recognition. Hydrogen infrastructure solutions continues to be the main driver of growth, coupled with increasing activity within mobility applications, including heavy-duty vehicles and transit bus as well as aerospace. For the full-year 2023, revenue ended at NOK 1,320 million, up 37% compared to full-year 2022.
Total assets at the end of the fourth quarter of 2023 amounted to NOK 3,773 (2,655) million. The year-over-year increase in total assets is mainly driven by increases to property, plant and equipment and right-of-use assets as a result of the Company’s ongoing capacity expansion program, combined with an increase in working capital to cater for a higher activity level. Trade receivables increased to NOK 275 (229) million in the fourth quarter of 2023 and inventory stood at NOK 482 (332) million. The Company’s working capital position reflects growth throughout 2023, which is expected to continue into 2024.
Net cash flow from operating activities in the fourth quarter of 2023 was NOK -138 (16) million, of which NOK -7 (142) million was due to an increase in net working capital. Net cash flow from investing activities was NOK -111 (-118) million in the fourth quarter of 2023, of which NOK -105 million relates to investments in production equipment and facilities related to the ongoing capacity expansion program. Net cash flow from financing in the fourth quarter of 2023 was NOK -18 (10) million. The majority of the outflow from financing is related to lease payments, which in the fourth quarter of 2023 amounted to NOK -17 (-9) million.
Cash and cash equivalents ended at NOK 307 (382) million.
Outlook
The clean hydrogen industry is facing headwinds in terms of higher construction and operating costs and higher cost of capital on the back of rising interest rates. This has resulted in a higher levelized cost of renewable hydrogen, which has slowed down the development of the global clean hydrogen industry compared to previous expectations. However, 1,400 hydrogen projects have been announced world-wide1, up more than 35% compared to the number of projects announced in May 2023. The majority of these projects have been added in Europe, and USD 570 billion in direct investments has been announced in total through 2030 of which approximately 7% have passed the final investment decision (FID) stage. Of the 1,400 projects, more than 70% are expected to be in full or partial deployment by 2030.
For Hexagon Purus, recent market developments have resulted in a slower market for hydrogen mobility than expected a few years ago. This has been offset by a much stronger market for hydrogen infrastructure solutions.
Hexagon Purus’ order backlog, consisting of firm customer purchase orders, stood at approximately NOK 1.3 billion as of the fourth quarter of 2023, with the vast majority for execution during 2024. The order backlog for execution in 2024 is expected to continue to grow as 2024 progresses, mainly driven by call-offs from already secured long-term agreements with the likes of Air Liquide, Linde, Lhyfe, Nikola, Solaris, Hino and Daimler. For the full-year 2024, Hexagon Purus is expecting revenue growth of at least 50% year-over-year. 2025 is also expected to be a year of significant growth as several long-term agreements are maturing and in tandem with higher utilization of the production footprint. The Company retains its target of NOK 4-5 billion of revenue in 2025. Improving profitability and reaching EBITDA break-even in 2025, combined with prudent and restrictive capital deployment, is of critical importance to the Company. Several internal initiatives are underway to underpin and build momentum towards reaching profitability by 2025, focusing along three axes:
- Maximizing capacity utilization: Ramp-up and high utilization of production capacity footprint and newly installed asset base;
- Operational improvements: Operational excellence with focus on quality, reducing scrap and inventory management;
- Minimizing capital spend: Complete current capacity expansion program, including new Dallas, Texas facility, but limit new investments beyond already committed investments or initiated capacity expansion programs. Focus on optimizing working capital position.
These initiatives, combined with the expected revenue growth and mix for 2024, are expected to be gross margin accretive and further improve the Company’s gross margins in 2024, compared to 2023. Additionally, with the revenue growth expected for 2024 combined with continued cost consciousness throughout the organization, benefits of further operating leverage to the Company’s fixed cost base is also expected in 2024. For instance, the hydrogen infrastructure and mobility business, Hexagon Purus’ largest business unit, is expected to reach EBITDA break-even in 2024 (excluding the Chinese joint venture). Additionally, initial revenue from the Hino and Daimler programs in 2024 for the battery systems and vehicle integration business unit will help absorb parts of its cost base.
Consequently, 2023 was the expected trough from a Group EBITDA perspective, and significant improvements to the Group EBITDA margin are expected in 2024. The Company retains its target of reaching EBITDA break-even in 2025.
Presentation of the results
Hexagon Purus will present the Q4 2023 results at 08:30 CET on Tuesday 13th February and the presentation will be broadcast live via https://hexagonpurus.kg5.no/.
The presentation will be held in English and will be virtual. Recording of the presentation will be made available on www.hexagonpurus.com.
[1] Source: Hydrogen Council, December 2023 (link)
For more information:
Mathias Meidell, IR Director, Hexagon Purus ASA
Telephone: +47 909 82 242 | [email protected]
Salman Alam, CFO, Hexagon Purus ASA
Telephone: +47 476 12 713 | [email protected]
About Hexagon Purus ASA
Hexagon Purus enables zero emission mobility for a cleaner energy future. The company is a world leading provider of hydrogen Type 4 high-pressure cylinders and systems, battery systems and vehicle integration solutions for fuel cell electric and battery electric vehicles. Hexagon Purus' products are used in a variety of applications including light, medium and heavy-duty vehicles, buses, ground storage, distribution, refueling, maritime, rail and aerospace.
Learn more at www.hexagonpurus.com and follow @HexagonPurus on Twitter and LinkedIn.
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
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