Good morning, everyone, and welcome to Hexagon Composites' third quarter presentation for 2026. My name is Berit-Cathrin Høyvik, and I will be moderating today's presentation. Joining me in the studio today is our CEO, Philipp Schramm, and CFO, Eirik Løhre. They will take you through a company update, financials, and outlook before we wrap up with a Q&A session, with a reminder that you may submit questions on your screen at any point during the presentation. With that, I will hand over to Philipp.
Good morning, everyone, and thank you for joining us today. I am proud to say that our performance in Q3 provides another and further evidence that the strategic actions we have taken over the past year to strengthen our business are paying off. We are now seeing again those efforts translate into stronger financial performance. This quarter, our team delivered Hexagon's strongest quarter since the record Q4 of 2024, with better top-line activity and more normalized demand across all our key business segments. Group revenues increased by astonishing 73% year-over-year. One of the main drivers of this performance was the record deliveries globally within our bus segment. Demand grew in both North America and Europe, demonstrating the important role natural gas vehicles play in public transportation. Besides that, Mobile Pipeline rebounded strongly, with new demand drivers emerging in gas-to-power applications, including data centers and industrial applications.
Finally, we continue to expand our geographic reach, signing our first major OEM partnership in South America. These developments show our strategy in action, and this quarter represents another meaningful step in the right direction for Hexagon Composites. Turning to the financial highlights. Hexagon delivered revenues close to NOK 1 billion, EBITDA of over NOK 100 million in the Q3, both significant step-ups compared to both the previous quarter and the same period last year. This resulted in an EBITDA margin of 12%, an impressive rebound from one year ago. With strong EBITDA, you can also expect impressive free cash flow developments this quarter. More to come on this from Eirik. We are in a much stronger position today than we were 12 months ago. One of the reasons for that improvement is our Mobile Pipeline business, where the market is rebounding, particularly in North America.
Module availability is tightening in several of our established markets, including oil and gas. The step-up in activity this quarter was supported by the first deliveries under the $100 million order received in July to support data centers and industrial applications. This demand is growing faster than grid and pipeline infrastructure can be built. This is creating a need for practical, scalable power solutions that can be deployed sooner. Mobile Pipeline can help solve this challenge. As we always say: No pipeline, no problem. We have the solution. Our modules transport natural gas to on-site or behind-the-meter power generation systems. These power generation systems can include gas turbines, reciprocating engines, and solid oxide fuel cells. Let me be clear about our role here. We do not expect Mobile Pipeline to become the permanent primary source of fuel or behind-the-meter power generation for data centers.
The opportunity is to bridge these infrastructure gaps. Mobile Pipeline can provide fuel during the period before permanent pipeline or grid capacity becomes available, if available. Depending on the project, that bridge may last from one to more than 10 years. It can also support ongoing demand for backup power generation, fuel redundancy, and peak shaving requirements when the primary power source is constrained or unavailable. Today, operational U.S. data centers have approximately 73 GW of power generation capacity. This capacity is expected to more than double by 2029, with announced projects coming online, and most importantly for us, the share of plant capacity expected to operate behind-the-meter is projected to increase from 2% - 8% as the grid is further constrained. That creates a meaningful addressable application for off-grid gas distribution.
Yes, it is currently still too early to say exactly how large this opportunity will become for Hexagon, but our Mobile Pipeline technology is well-suited to help customers manage that gap. We see gas-to-power operations, including data centers, as a promising new demand driver for Mobile Pipeline, alongside the gradual normalization of these established markets. Let us turn to our other growth market, turning to fuel systems, where natural gas vehicle adoption is progressing across several regions and applications. Transit was the highlight this quarter. We delivered a record volume in transit with strong activity in both of our core markets in North America and Europe. We also made progress this quarter in opening up adjacent markets, signing a long-term agreement with Agrale Argentina to supply fuel systems to their CNG buses.
This is our first major vehicle OEM partnership in South America and an important step in a market with meaningful long-term potential. Municipalities across the globe are continuing to prioritize solutions that are proven, cost-effective, and sustainable. Natural gas and renewable natural gas are one of the best ways to meet those requirements. In heavy-duty truck, fleets continue to report positive operational experience with a new generation of natural gas trucks. We have continued our deliveries to Mexico, where a very successful CNG truck fleet rollout is underway. Outside of Mexico, broader North American heavy-duty trucking or the truck market conditions are improving, and the fuel price spread between natural gas and diesel continues to highlight the economic benefit of making the switch to natural gas.
We saw an uptick in heavy-duty truck volumes this quarter, and we continue to expect the sustainable adoption of natural gas trucks to take time. Nevertheless, our conviction in the long-term role that CNG will play in North American trucking remains unchanged. With that, I will hand over to Eirik to take you through the quarter's financial performance in more detail. Eirik, please.
Thank you, Philipp. Q3 was a strong quarter for Hexagon. We delivered revenue of NOK 929 million, representing an increase of 48% from last quarter and 73% compared with the same quarter last year. For the year- to- date, revenue reached NOK 2.2 billion, and I am pleased to say that the sequential increase was the result of improved performance across all segments. However, the main delta was in our Mobile Pipeline business, which delivered a significant step-up in activity, driven by, among other things, the record Certarus order announced in July. EBITDA for the quarter came in at NOK 108 million, corresponding to a margin of 12%. Year-to-date EBITDA was NOK 234 million at an 11% margin.
What I think is particularly important this quarter is the operating leverage we are seeing, and despite a somewhat less favorable product mix and certain pricing and inventory effects, EBITDA margins improved as higher volumes were absorbed by a relatively stable cost base. Overall, a strong quarter and further evidence that the measures we have taken over the last year, as Philipp said, are translating into improved profitability as volumes grow. Turning to our fuel systems segment, which recorded a healthy increase in volumes this quarter. Revenue was NOK 526 million, building on the growth we have seen through the year. EBITDA was NOK 62 million, corresponding to a margin of 12%. The transit bus market was a key positive driver, with record quarterly volumes globally and continued strong activity in both North America and Europe.
Alongside the strength in the CNG transit market, our truck segment saw an uptick in activity in North America, including Mexico, thanks to improving market fundamentals compared with the first half of the year. Aerospace activity, on the other hand, was low in Q3, which did have an impact on the segment's profitability compared to Q2, given the specialty products within that space. For the quarter, the EBITDA margin of 12% reflected a softer mix, the reversal of certain favorable inventory effects from the previous quarter, as well as some one-off effects. But importantly, the like-for-like materials margin and our cost base remain stable. While the quarterly margin moved with mix and inventory, the underlying operational performance remains solid. Moving to our Mobile Pipeline business, which is our gas distribution module segment.
Driven by an improving order book, we delivered a significant volume growth that we expected and communicated last quarter. Revenue increased to NOK 320 million, making this the strongest quarter since the record fourth quarter of 2024. The increase was primarily driven by North America, where deliveries under the Certarus contract commenced in August, combined with renewed activity from other customers, including customers serving the oil and gas industry. EBITDA increased to NOK 50 million, representing a very healthy margin of 16% for the segment. The margin growth reflects the significant increase in volumes, as well as the operating leverage from a lower fixed cost base compared to last year. This was, however, offset by certain ASP effects, as well as the reversal of some inventory effects seen in the previous quarter. Overall, Q3 provides a good demonstration of the earnings potential in Mobile Pipeline as volumes improve.
At the same time, as we know with this segment, delivery timing and product mix will continue to create some natural variation between quarters, also going forward. Moving on to our aftermarket segment, which is our service, testing, and inspection business. Revenue for the quarter was NOK 111 million and grew from higher installation activity and testing and inspection volumes. Parts and service activity remained stable quarter-over-quarter and remain relatively soft as we continue to see larger fleets extending service intervals. As mentioned in our previous quarter, we are also seeing increasing activity in our newly established certified pre-owned and product refurbishment offering, which is an area we expect to grow in 2027 and beyond. EBITDA for the quarter was NOK 5 million, which corresponds to a margin of 5%, and this is weighed down by some mix effects in addition to an overall lower activity level.
Turning to cash flow, which is a very pleasant chart to present, and I'm happy to say that our cash generation was very strong during the quarter, supported by both our team's improved operating performance and, of course, the significant release of working capital. In particular, inventory contributed NOK 127 million as a large part of the finished goods we strategically built during the first half of the year converted into deliveries during the third quarter, as expected. Prepayments and other working capital items also contributed positively, partly offset by higher accounts receivable following the increased activity level. We continue to maintain disciplined capital spending, and taken together, this quarter represents a significant strengthening of our cash position. Finally, turning to the balance sheet. The combination of strong cash generation and the actions taken earlier in the year have significantly strengthened our financial position.
Net interest-bearing debt was reduced to NOK 275 million at the end of the quarter, down from 678 million in Q2, while available liquidity increased to around NOK 1.3 billion, as the additional leverage-restricted revolving facility from our banks has become available to us. The equity ratio stood at 56% at the end of the quarter. Overall, we believe we currently have a very healthy balance sheet, providing us with significant flexibility and capacity to support profitable growth as opportunities develop. At the same time, we remain focused on maintaining financial discipline also into 2027. With that, I'll hand it back to Philipp to walk you through briefly what we see ahead.
Thank you, Eirik, for these impressive numbers. As mentioned earlier, demand is normalizing in several of our core markets, and thanks to our strong performance this quarter, I'm pleased to confirm that we are well on track to deliver on our full-year targets. Based on our performance to date, the commercial visibility we have for the remainder of the year, we reconfirm our full-year guidance of around NOK 300 million in EBITDA for 2026, with confidence in delivering on the higher side. We have a strong order backlog for the fourth quarter, supported by the commercial traction that our team has developed throughout the entire year. How large the upside potential around the 300 million will be, will depend on product mix, industry supply chains, and the timing of customer deliveries, with the possibility that some of these deliveries could move into 2027.
Beyond 2026, we expect that our key markets continue gradually to improve. To summarize the quarter and the outlook. First, Hexagon is in a very good position. As I said before, we moved from defense into offense. Our core markets are normalizing, and we have improved fundamentals. We have strengthened our financial foundation, lowered our structural cost base, improved our profitability, and have a very strong liquidity position. We are focused on execution and on maintaining the same financial and operational discipline that has gotten us to the point over the past year. Finally, we have clear long-term growth drivers. We will continue expanding the application of our technology across regions and adjacent segments. With that, I will hand it back to Berit-Cathrin , and we will move into Q&A.
Thank you, Philipp. We will start with the first question for you. Let's see. Can you elaborate more on the rather slow transition to CNG heavy-duty trucks in North America?
Okay. Yeah, there is no question that the adoption is taking longer than we all have anticipated. Nevertheless, what we see and what we experience from all the fleets who are trialing our application is extremely positive. Positive on multiple fronts. The new natural gas engine has the power, has the torque to replace diesel for heavy duty, long haul, and high energy intensive mobility application. It's proven its case. It's also proven its case on the side that the higher diesel price and the delta between diesel and natural gas is proving, not just through this peak here, but also over the average over the last 10 years. That makes a lot of fleets think and consider moving to natural gas. That's positive. We see a momentum within fleet adoption.
New fleets are coming in and trialing it out, but also the fleets who have trialed it out have a great experience and are buying new fuel systems from us. So that's very encouraging. We also see that the entire market is not just what we experience, it's also what diesel trucks experience, is still depressed in the U.S. due to higher cost of capital, uncertainty with EPA 2027. But in the discussions that we are having is that the alternative to diesel is considered CNG, and that's very promising and very convincing for our case and what we believe our future will be.
Thank you. Eirik, moving to a question for you. EBITDA for 2026 around NOK 300 million towards the high side. Q4 down from NOK 150 million last year to NOK 66 million+. Why?
Thank you for the question. I think, first and foremost, our Q4 number from last year was somewhat inflated by an accounting gain, which we have talked about. If you see our numbers now, we have restated our Q4 for last year to around NOK 30 million. That is the kind of like-for-like comparison we should use. I think when it comes to Q4 this year, we have, as we said, we have a relatively good visibility. We have a relatively good feeling about how the quarter will develop. Our backlog is relatively solid for the remainder of the year, and Q4 is typically a seasonally stronger quarter for us. There is a reason for why we have phrased the guidance as we have. I think importantly, some volumes that we typically expect in Q4 have now been pulled into Q3.
I would like to make sure that people see Q4 in context of Q3 as well. Then there are some customer mix effects, product mix effects, et cetera. We hope to deliver another good quarter. There is also some supply chain matters that we try to manage closely. We are optimistic about closing out the year in a good way. That is why we also say that we are confident on the high end of our previously communicated guidance.
Thank you. There are actually several questions related to the higher side of the guidance. Continue with you, Eirik.
With regards to your guidance, you mentioned confidence in the higher side. For clarity, does that mean that you have confidence in delivering above the current full year EBITDA guidance of NOK 300 million?
Yeah, it is kind of intentionally a little bit vague, but yes, I think we feel relatively good about achieving and exceeding that number. Again, highlighting that there are some risks, obviously, related to timing, first and foremost. But yeah, we feel, again, relatively confident in our previously communicated target, and I think Q3 is a good testimony of our earnings capacity. But as I said, there have been some volumes that have shifted into Q3 from Q4.
Thank you. Back to you, Philipp, on data centers.
Yes.
It seems like data centers will be the main focus for Mobile Pipeline orders moving forward. What about the oil and gas market, which has traditionally contributed to high revenue when we had these oil and gas prices?
Mm-hmm.
Do you see increased revenue there going forward, or are these customers switched to other solutions?
No, we don't—l et's start with the last part of this question. We don't see that customers have switched. It's always about rig count, primarily in the Permian, of course, which has not significantly changed. There is development, and we see oil and gas as a market for Mobile Pipeline applications. Nevertheless, without increased rig count and more fracking activity in North America primarily, we need to see other demand drivers. This is what we see in data centers and industrial applications. Let's be clear, this is a new emerging market. As I stated before, the market as it's predicted is significantly increasing within a short period of time, from now to 2030, with the predicted additional gigawatt hours needed for all these data centers in use. Now, let's question, are these data centers all come in place?
Okay, that's a question about how big the growth is. I don't want to be unrealistic here. We see growth from these applications, not just in providing natural gas as a primary energy source through our TITAN trucks, which are perfectly suited to deliver that vast amount of energy needed to these sites. What we also see is, as I stated before during my presentation, is really about backup power supply, about peak shaving, about keeping the uptime of these data centers up and running. That's a great application as the grid is not developing as fast as this energy or the energy demand is growing. That's what we also see on the industrial side, where we see also potential for our application. Our solutions are perfectly suited for these new requirements.
Thank you. Continue with the data centers for you, Philipp. How do you expect the U.S. election results to impact the outlook for the U.S. data center market development in near and long term?
Okay. We have spent a lot of time and effort with our organization to analyze this market. Currently, there are around 1,900 data centers in the United States in use. That number was predicted to grow by 2,800 data centers until 2030. Huge. Doubling in the amount of energy needed by 2030. What we see is also with the shift in some of the governments on a state level from a republic government to a more Democratic or independent government, is that a lot of the statements which we heard so far is that they will continue with the already approved data centers. The ones which were already approved will get built. The question is, how many of these 2,800 which are considered to be built are being questioned, or where they will be deployed?
Because there are also still a lot of red states in the United States which are very favorable for data center applications. I think time will tell how this will unfold, but as I said before, the amount of data centers which are considered is significant. It's not about just the primary energy source, it's also about the secondary applications of our TITAN trucks, which could support backup, emergency, peak shaving, power supply, and that's very exciting for us and the application in itself.
Thank you. We have a timely follow-up question for that. When can we see a new large data center contract?
We are currently working on all fronts, and we are working with all our customers, and let's see, but I don't want to promise you too much, but we are working to fill our pipeline, and for 2026 and 2027, as Eirik said, we have a good base load with what we have, and that makes me confident in the gradual growth which we see in Mobile Pipeline.
Thank you. Then continue with you, Philipp, on transit. When it comes to the strong results in transit, do you view this as a one-off, or can you see this upcycle moving into 2027?
I think we were very clear about our segments, and what we see are segments which are more stable, and others provide more growth potential. The stable ones are transit, bus, refuse, and aftermarket. With the consolidation of the European market, which we have accomplished this year, I see that this market should deliver solid growth potential. On the other side, we have really the growth potentials from fuel systems and Mobile Pipeline, which we spoke about before, where there are a lot of opportunities ahead of us.
Thank you. Also another one for you, Philipp, regarding Hexagon Purus. Are you in dialogue with Hexagon Purus on their capital structure review? If Purus needs additional capital, would Hexagon Composites participate?
Okay. As I stated before, we are with all our minority shareholdings in a constant dialogue about their performance. We always question them in regards to what do they bring for you, for our shareholders? Where is the shareholder value for you? That is the same instance also with Hexagon Purus. We are professionally and collaboratively open to discussions. Nevertheless, I was very clear about this. We do not and will not inject any cash into Purus.
Thank you. Back to you, Eirik, on margins. You note several dynamics negatively affecting margins. Could you provide some color as to what the EBITDA margin could have been, stripping out these effects?
Yep. No, I think there will always be variations, right? It does vary quite a lot with mix, and as we have learned to know over the last few years as well, it does vary with volume, so we have pretty high operating leverage in our business. I would say we had 12% for this quarter. It could have been a percentage point or two, maybe higher. But again, I think some of these effects will If it's not these effects, it will be probably some other effects, right? So there will always be some elements impacting our numbers, positively, obviously, but also negatively. But in order of magnitude, one to two percentage points.
Good. Thank you. There's also several questions related to 2027.
Mm.
So for you, Eirik,
Yep.
How should we think about the starting point for revenue and profitability moving into 2027?
We normally don't guide at this time of the year. We will provide further perspectives when we get to our Q4 report in February. Directionally, I think it's fair to say that we expect growth on 2026. We have, as Philipp mentioned, certain resilient segments that we expect will continue to deliver relatively strongly into next year, aftermarket business, but also our transit and refuse business. As you would know, we have a contracted demand also for Mobile Pipeline well into 2027. The extent of upside to that really depends on, I think, the truck market and also further Mobile Pipeline demand, which is potentially a range of outcomes. We recognize that there is a potentially significant range of outcomes there. I think we, generally speaking, we enter 2027 on a much better footing than 2026.
We have a long-term margin target of 15%, and we will strive to reach that. That's what we aspire for and we will target, but we cannot promise anything. We will continue to build on the momentum that we have now and maintain the same cost and cash discipline that have proven to be successful and help us to success in 2026 so far.
Thank you. Let's see. Back to you, Philipp, on X15N.
Yes.
Could you please comment on any X15N-connected delivery in the quarter?
We had deliveries. They were better than before. Nevertheless, as we see, there are a lot of pilot fleets considering it. What we see there as positive, B.C., is that the fleets are doing it very thoroughly. They are running the pilots, they are testing them, then it leads to another order with, yes, you have seen it, no announcement, so they are below 50 trucks or less. They are doing it very thoroughly. They are trialing them out, they are testing the refueling infrastructure behind the fence, they are trialing the routes, they are training their maintenance department how to maintain a CNG truck.
That is very positive because it is a very sustainable approach, and that makes me very confident that there might be more to come when the economics change and when the mood is changing, because the economics for CNG versus diesel is at the moment extremely good. It takes a lot of fleets a little bit more time than we have anticipated, as I said before, to really switch their entire fleet or a majority of their fleet to CNG.
Thank you. One more question for you, Philipp.
Yes.
On discontinued interest in data centers. Hexagon already has a big contract with Certarus. Are you getting inquiries from other customers in this segment about delivering Mobile Pipelines to data centers?
We are in a lot of discussions, but as we would have announced, there is no order in, and it's way too early to say what will materialize and what will not materialize. But there are good discussions about different applications, as we said before, is for fleets who are delivering natural gas, delivering energy, applications who are delivering backup power, solutions for peak shaving. The applications and the discussions which we are having are very wide, and also the amount of trucks is very wide, from ones to more than one. But it's way too early to say how this materializes, which of these data centers could switch to natural gas applications. As I said before, I see this as a good opportunity, but also these industrial applications as well for backup power behind-the-meter, gas-to-power solutions. That's where I see opportunities for our, yeah, TITAN trucks.
Thank you. That concludes our presentation for the day. Thank you for joining.
Thank you very much.