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TRANSCRIPT
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Driving Energy Transformation Hexagon Composites ASA
DNB SME SEMINAR OSLO 4th April 2019
David Bandele CFO
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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 20 March 2019, 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.
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DELIVERING
ENERGY SOLUTIONS
Hexagon Composites delivers
safe and innovative solutions for a
cleaner energy future
We are adapting our leading
composite pressure vessel technology
for a wide range of
mobility and storage applications
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HEXAGON COMPOSITES
Safe and innovative
energy storage and
transportation
solutions
for a greener future
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Leading Type 4 pressure cylinder technology The heart of our storage and transport solutions
Delivered 500,000 high-pressure cylinders and
15 million low-pressure cylinders
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Type 4
Low-pressure
cylinder LPG
Type 4
High-pressure cylinder
CNG, biogas & H2
LEAK-FREE
Precision-machined valve interface
ensures leak free operation
LIGHTWEIGHT
Lightweight reduces vehicle
mass and
enhances handling and drivability
NON-CORROSIVE
Polymer liner is corrosion free
GOOD FATIGUE STRENGTH
High-strength carbon fiber and/or
glass fiber construction reduces
impact damage and fatigue
HEXAGON
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Hexagon Composites revenues 2000-2018
5
2000
1 033
2001 2007
846
2003 2002 2005 2004 2006 2008 2009 2010 2011 2012 2013 2014 2015
290
2016 2017 2018E
176 112
767
299 318
2 730
425 561 599
1 455
868 992
2 154
1 444
1 676
2 886
CAGR +20% Hexagon Composites
Agility
NOK million
2016 - 2018: Hexagon and Agility proforma
2019: 100% Acquisition completed
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Agility Fuel Solutions 100% acquisition completed in January 2019
• Agility is #1 supplier of alternative fuel
systems in North America having supplied
over 60,000 vehicles
• Further moves us from pressure vessels to
complete fuel systems supplier
• Doubles the size of our business
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Refuse Trucks Transit Buses
Heavy Duty
Medium & Heavy Duty Trucks,
Bus and Refuse
Medium Duty
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Hexagon Composites Group The global market leader in all its segments
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HEXAGON PURUS
Hydrogen &
CNG Light-Duty Vehicles
• Enabling Hydrogen and Biogas
mobility
• Hydrogen business in build-up
phase for strong longer-term
returns
HEXAGON MOBILE
PIPELINE
Gas Transportation
• Lower CAPEX transportation
alternative to pipeline and LNG
• 40% growth in 2018. List of new
applications and markets
continue to grow
LPG
HEXAGON RAGASCO
• Large market in substituting
steel cylinders
• Stable and profitable cash
generation; leading in quality
and automation
AGILITY FUEL SOLUTIONS
Medium and Heavy-Duty Vehicles
• Offering most alternative fuel
system solutions
• Large cash generator with #1
North American market position
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Hexagon Composites Group The global market leader in all its segments
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HEXAGON PURUS
Hydrogen &
CNG Light-Duty Vehicles
HEXAGON MOBILE
PIPELINE
Gas Transportation LPG
HEXAGON RAGASCO AGILITY FUEL SOLUTIONS
Medium and Heavy-Duty Vehicles
~10% ~20% ~50%
c. share of pro-forma revenue before Group eliminations
~20%
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The global energy transformation A megatrend driving unprecedented growth opportunities for Hexagon
From coal and oil to cleaner burning natural gas, biogas and zero emission hydrogen
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Global shares of primary energy
Natural Gas
and Renewables
continue to increase
their share of the
global energy mix
Hydrogen
will play a key role
as an energy carrier
in the clean energy
system of the future.
Source: BP Energy Outlook, 2019 edition and NG Global
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1970 1990 2000 2030 1980 2010 2020 2040
Coal
Oil
Natural
Gas
Hydro
Renewables
Natural gas to overtake
coal by ~2025
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The challenges
Local air pollution and global warming represent challenges that require solutions…
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Temperature rising to record levels
Local air pollution in major cities (NOX, PM)
Hexagon’s solutions
~100% Particulate Matter
reduction
~ 90% NOX reduction
~ Up to 25% CO2 reduction
Biogas can be carbon negative
~Zero emissions
Natural
Gas
READILY
AVAILABLE
Hydrogen
EARLY GROWTH
PHASE
Source: California Air Resource Board, EIA
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11 Hexagon’s Hydrogen focus
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Hexagon storage and transportation solutions are in demand throughout the hydrogen value chain
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Hexagon Hydrogen Storage systems provider to multiple markets
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Distribution
300 bar gas transport module for Linde (Photo: Linde AG)
Rail
World´s 1st hydrogen-powered regional train
Coradia iLint from Alstom, Germany (Photo: Alstom)
Marine
1st hydrogen vessel in the U.S; 70 ft hybrid
hydrogen fuel cell battery catamaran to be sailing (Photo: Golden Gate Zero Emission Marine)
Ground storage/refueling stations
Hexagon’s 950 bar tanks in use at Western
Canada’s first retail hydrogen refueling station (Photo: HTEC Hydrogen Technology & Energy
Corporation)
Heavy-duty trucks
1st iteration Toyota truck with
Hexagon tanks (Photo: Toyota)
Light-duty vehicles
Hexagon delivers 700 bar tanks to
Mercedes GLC-FCELL (Photo: Daimler AG)
Selected examples
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Hydrogen cylinder market size Substantial market potential across multiple applications
Hexagon has product sales in all segments
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2018 2024 2019 2020 2025 2021 2023 2022 2026 2027 2028
0,1 0,1 0,2 0,6
1,4
2,4
3,8
5,1
6,5
8,1
10,1 Hexagon estimate (Billion USD)
LDV
HRS / ground storage
Distribution
Truck & Bus
Marine & Others
Source: Hexagon analysis
Hexagon’s current FCEV
estimates for hydrogen
fuel storage systems in
2028 is approx.
5,5, billion USD.
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Awarded multi-billion NOK contracts with leading OEMs
Development & serial production contracts
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2.0
Year end 2017 (1) Year end 2018
0.1
+20x
(+NOK 1.9bn)
High-low range of est.
H2 OEM development
and serial production
contracts
OEM #1 Mercedes-Benz GLC F-CELL Contract year 2016
OEM #2 Hexagon FCEV Illustration Contract year 2018
OEM #3 Hexagon FCEV Illustration Contract year 2018
OEM #4 Audi h-tron prototype Contract year 2019
(1) Consists of smaller development projects
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Active hydrogen FCEV (Fuel-cell Electric Vehicle) bus market
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New Flyer Xcelsior® hydrogen
transit buses in production –
equipped with hydrogen tanks
from Hexagon
The world’s first double-decker
hydrogen bus now showcased
at Euro Bus Expo 2018
Solaris Urbino hydrogen bus
with official premiere in 2019 Delivery to start in the spring
of 2019
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Heavy-duty Truck hydrogen FCEV moving fast
For heavy-duty trucks, FCEV has a clear practical and TCO¹ advantage
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Hyundai
• Hyundai to deliver 1,000
hydrogen trucks in
Switzerland to be launched in
2019
Toyota-Kenworth
• Toyota unveils the 2nd
iteration of its hydrogen
class 8 truck
• For operations in the Los
Angeles port and basin in
2020
Nikola
• Nikola pre-orders worth USD 14bn
• 800-truck order from Anheuser-Busch in the U.S.
• Launching Nikola Tre model targeting European
market in 2019
‒ Logged >USD 380m worth of pre-orders
‒ Felleskjøpet has reserved 50 vehicles
(1) Total cost of ownership (“TCO”)
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Will one technology be the clear winner? Riding the e-mobility megatrend
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There will not just be the one and only power-
train technology (…) execs globally believe in a
fairly even split of BEVs (30%), Hybrids (25%),
FCEV (23%) and ICEs (23%) by 2040
KPMG Global Automotive Executive Survey 2019
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~400m* NOK EBITDA
~900* employees
*Aggregated 2018, including Agility Fuel Solutions
~6.0bn Market Cap
HEX:OL
~3bn* NOK revenues
Growing in size
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A strong platform for future growth
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Appendix – handout only
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Hexagon enables a wide range of mobility and storage applications
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MOBILE
PIPELINE
HYDROGEN &
LIGHT-DUTY
VEHICLES
20%
10%
Storage modules operated for
bulk transportation of natural
gas, biomethane, and hydrogen
and industrial gases
Key applications Business description
Type 4 high-pressure CNG, biogas
and hydrogen cylinders and
systems for mobility and storage
applications
48%
MEDIUM &
HEAVY-DUTY
VEHICLES
(Agility)
High-pressure composite fuel
solutions and cylinders for medium
& heavy-duty commercial vehicles
Large–scale distribution of CNG
Supplies gases over long distances
FCEV
Marine
Transit Buses
Refuse Transit busses Long Haul
Trucks
Revenue split
20181
Key driver
Shift to cleaner
fuels and
favorable fuel
price spread
Shift to zero
emissions
Shift to cleaner
fuels and
favorable fuel
price spread
19%
47%
EBITDA split
20181
Negative EBITDA
margin (-19% of
total1)
Long Haul Trucks
LPG 22% LPG composite cylinders for leisure
activities, household use and
industrial applications worldwide
Shift from steel
to composite
Leisure Industrial Household
53%
Ground storage Rail
Hig
h-p
ressu
re
Lo
w-p
ressu
re
(1) Segment revenue and EBITDA split are based on share of Group aggregated revenues and EBITDA before eliminations and adjustments
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Hydrogen
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ENERGY SOURCE
Compressed
hydrogen (CHG)
Leading Position in
Type 4
technology
COMPETITION
- Traditional steel cylinders
- Type 3 and Type 4 cylinders
APPLICATIONS
Light-Duty Vehicles
Transit buses | Heavy-Duty Vehicles
Ground storage | Transport
Marine | Rail
Backup power
CURRENTLY INVESTING IN
ADDITIONAL CAPACITY
VALUE PROPOSITION
- Energy carrier for decarbonized energy
systems
- Fast refuel
- Transportable outside the grid
- Type 4 low fatigue cycling properties
Hydrogen storage and transportation solutions for a
wide range of mobility applications
MAIN
MARKETS
USA
Japan
Scandinavia
Germany
UK & Korea
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CNG Light-Duty Vehicles
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ENERGY SOURCE
Compressed
Natural Gas (CNG)
Biogas (e-gas)
#1 Position in
Type 4
technology
COMPETITION
- Traditional steel cylinders
- Type 3 and Type 4 cylinders
APPLICATIONS
Light-Duty Vehicles
CAN RAMP UP CAPACITY
ACCORDING TO DEMAND
VALUE PROPOSITION
- CNG and biogas efficient solution to the
decarbonization target
- Available and reliable technologies
- Existing refueling infrastructure
- Robustness against corrosion
- Low weight, long range & short refueling
MAIN MARKET
Europe
Lightweight composite high-pressure cylinders
(Type 4) for on-board storage of compressed natural
gas in light-duty vehicles
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Mobile Pipeline
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FUEL TYPE
CNG and biogas #1
Position in
Type 4
technology
COMPETITION
- Traditional steel cylinders
- Type 3 and Type 4 cylinders
APPLICATIONS
Gas capture | gas utilities
Drilling rigs | Oil field transportation
Mobile refueling | Industrial applications
Virtual interconnect | Gas islands
Biogas plants
Rail | Marine
SUFFICIENT EXISTING
CAPACITY
VALUE PROPOSITION
- Fuel price differential and gas price stability - Low weight provides more gas and longer range (OPEX vs CAPEX) - Lifecycle Asset Management Program (LAMP)
Storage and transportation cylinders and modules
for off-pipeline applications
>USD
350m In total sales to
Hexagon since 2010
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LPG
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ENERGY SOURCE
Liquefied
Petroleum Gas (LPG)
(propane and butane )
#1 Position in
Type 4
technology
COMPETITION
- Traditional steel cylinders
- Type 4 cylinders
APPLICATIONS
Leisure activities
Household use
Industrial applications
SITE CAPACITY PROGRAM
THROUGH TO 2020
VALUE PROPOSITION
- Low weight and high corrosion resistance
- Superior user-friendliness and safety features
- Differentiation through branding and design
options
- Reduce your maintenance and logistics costs
Low-pressure composite Liquefied Petroleum Gas
(LPG) cylinders for leisure activities, household use
and industrial applications
15m cylinders sold
globally
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The acquisition in brief
• Hexagon closed the acquisition of the remaining 50% share in Agility
on 4 January 2019
• The transaction valued Agility’s equity at USD 250m (NOK ~2.1bn)
on 100% basis
• Following closing of the transaction Agility will be fully consolidated
into Hexagon’s financials increasing 2018 aggregated revenue and
Adj. EBITDA by ~95% and ~61%, respectively
• Investment was fully financed with a secured facility with DNB Bank,
which will be refinanced with proceeds from the contemplated
unsecured bond issue of NOK 1,100m
(1) See slide 58 for more details
(2) Source: IHS, Markit
(3) Full EBITDA adjustments as presented in Q4 results presentation, including i.a. non-cash stock compensation, severance, transactions costs
Acquisition rationale
Global zero emission transportation mega trend
Secure No.1 position as the integrated clean fuel systems provider
U.S. production of natural gas up 40%(3) the last decade and the
growth will continue
Adoption rate stimulated by availability, economics and environmental
agenda
Accretive investment, allows for full consolidation of financials and
underlying value of Hexagon
Revenue and Adj. EBITDA (Agility)
Acquisition allows for full P&L consolidation
1 487
2 886
1 419
Hexagon Aggregated Agility
-19(1)
+95% 235
398
117
Aggregated Hexagon
13(1)
33(1)
Agility
+61%
2018 EBITDA (NOKm) 2018 Revenue (NOKm)
Elims.
Elims. Elims.
The acquisition of Agility Fuel Solutions Increased presence as a system provider and broadening the earnings base
32 36 38
47 52
0,7
2,5
3,3
6,3
7,9
Q4’17 Q2’18 Q1’18 Q3’18 Q4’18
Revenue Adj. EBITDA(3)
USDm
2%
7% 9%
13%
15%
% EBITDA Margin
Q4 revenue +63% YoY