Hi, and welcome to Hexagon Purus Q4 2021 presentation. My name is Mathias Meidell, and I am Director of Investor Relations in Hexagon Purus. I will be moderating from the studio in Oslo. From the studio, I'm joined by Company CEO Morten Holum, and via Teams from his home office, Company CFO Dilip Warrier. The agenda for today includes highlights from the quarter, the financials, and the outlook. We will end the presentation with a Q&A session, so please feel free to enter your questions via the function on your screen, or alternatively, send your questions to ir@hexagonpurus.com. With that, I will pass the word over to you, Morten, who will take us through the highlights of the quarter.
Thank you very much, Mathias, and a good morning to all of you. I'm very pleased to say that we have put another good quarter behind us with high commercial activity level. As you will have seen from our latest announcement, suitably illustrated by the picture of this beautiful Hino truck, this momentum has continued into 2022. Three main messages that cover both the quarter and the full year. First message, we had record revenue in Q4. Revenue was almost 700% higher than the same quarter in 2020, and revenue for the full year was more than 180% higher than the full year 2020. Part of this is due to the acquisition of Wystrach, of course, but we also had significant organic growth, and I'll come back to that shortly.
Second message, we have landed several landmark agreements, including the breakthrough contracts on the battery electric side of the business that we announced over the past few weeks. This leads me into the third message. With the acquisition of Wystrach and the strong collection of contracts that we have secured, we now have a solid order backlog for 2022 with line of sight to our longer term revenue targets. With this, we have significantly de-risked our business plan and our outlook. Let's focus in on revenue. For the quarter, we grew revenue by a factor of eight from NOK 38 million to NOK 259 million, albeit with a weak comparable. Decomposing that figure, the organic revenue growth was close to 300%.
On top of that, we got the contribution from Wystrach business in November and December, so not even a full quarter, amounting to NOK 142 million. I also wanna highlight that Wystrach had a positive EBITDA margin of 12% for that period. The strong quarter results in a meaningful shift upwards in our LTM revenue curve. For the full year, we recorded revenue of NOK 508 million, which is 182% higher than prior year, including Wystrach. Adjusting for the Wystrach numbers, we achieved an organic revenue growth of 110%. Out to the far right, you see the pro forma revenue number for the full year 2021, the way it would have looked if we had acquired Wystrach from January first, and that number is NOK 677 million.
Breaking down the revenue by application, the vast majority of the revenue growth in the quarter was driven by the distribution segment, similar to previous quarters. This is an encouraging development, not just because it gives us good business here and now, but also because it signals that the green transition is well underway. It's happening. The increase in hydrogen use, particularly for industrial applications, drive the need for distribution solutions. Using our distribution modules is the most cost-effective way to transport hydrogen from where it's produced to the point of use. It's not all about distribution, though. We saw growth in other application areas as well. In the grand scheme of things, the main story of the revenue growth for the quarter really is all about distribution. I wanna take a few moments to reiterate the importance of Wystrach to Hexagon Purus.
As I also said last quarter, we believe the combination of Wystrach and Hexagon Purus is transformative for us and for the industry. Wystrach is a great company with strong leadership and best-in-class system capabilities. Combining the leading European hydrogen systems company with the leading hydrogen cylinder company has created the undisputed leader for hydrogen systems in Europe. Looking at it from our perspective, it significantly increases the capacity and scale of our business. It deepens the proximity to both new and existing customers, particularly to the industrial gas companies. It puts us in pole position in the important hydrogen distribution segment, which is the first segment to approach commercial scale. With that, it has already reached the stage where it is generating profits.
One additional benefit of the Wystrach combination is that it broadens our product portfolio, giving us exposure to other highly related growth segments, like mobile refueling. The mobile refueling unit is highly synergistic with our distribution business, in essence, combining a distribution module with a hydrogen filling dispenser. With that, you get a fully functional mobile hydrogen refueling station. That's an important product at this early stage of hydrogen adoption, particularly in the years before a sufficient refueling network is established. This enables then early adoption for fleet customers with back to base operations. We have a couple of recent examples of this. DHL has partnered with Apple to establish a long-haul hydrogen-powered trucking route across the Dutch-Belgium border, hauling Apple products. We also just received an order from Polsat, who will use our distribution units and mobile refuelers to accelerate hydrogen adoption in Poland.
I shared with you previously, both Deutsche Bahn and Bosch are using our hydrogen refueling units in Germany. This is yet another example of a product offering that we have just gotten out of the gates, but that is poised for significant growth in the years ahead. If you take a step back and look at the business we have secured over the past 12 months, it's a strong collection of contracts. We won the supply contract with Nikola, which will be the first company to put a hydrogen truck into serial production already in 2023. We landed an exclusive long-term supply agreement with one of the European transit customers. We wrote a global supply agreement with Air Liquide, one of the largest industrial gas companies in the world, and also made a national exclusivity agreement under that same supply agreement.
We made a long-term agreement with Certarus for the supply of distribution modules in North America. These are important contracts that provide better visibility of the kinds of volumes that we can expect in the next few years, supporting and de-risking our business plan. At the same time, we are continuing our development work on projects that will not be major revenue contributors in the short term, but that have significant revenue potential in the long term. One example is the project we just announced, where we have partnered with BMW, Bosch, and TesTneT. This is a publicly funded project led by BMW to develop the next generation hydrogen storage system for light-duty vehicles. These kind of projects give us unique insights into the technology development and how leading companies like BMW and Bosch are working on engineering the next generation hydrogen mobility solutions.
We're of course, pleased and proud that they have chosen to do this project with us, underscoring our deep expertise in hydrogen storage technology. Over the past weeks, we achieved the breakthrough for our battery systems. Two landmark contracts with a combined estimated value approaching NOK 20 billion. Both agreements, one with Hino Motors and the other with another long-standing truck OEM, are for the serial supply of battery systems to heavy-duty trucks. We're most often referred to as a hydrogen company. That is true. We are indeed a leading supplier of hydrogen mobility systems. We're also on the technological forefront when it comes to battery systems and electric drivetrain integration for heavy-duty trucks.
While this may be less known about us, these two contracts demonstrate our leadership in this area and position us more broadly as a technology company for zero emission mobility solutions, both battery technologies and hydrogen electric technologies. The future of mobility is electric, and it's not an either/or. We believe both technologies have their relative strength and weaknesses, and the best choice will depend on the customer requirements and the duty cycle. Another significance of these agreements is that they put us a bit earlier in play when it comes to larger serial volume. Battery electric technology has come a bit further in its development cycle than fuel cell electric technology, and BEVs will be ready for mass production earlier. The overall momentum for zero emission mobility is super strong.
With the high sustainability efforts of the major truck fleets, demand for product is growing rapidly and is much higher than the vehicle industry is able to deliver. This situation is likely to last for many years. Regulations such as the CARB ruling in California mandates that 9% of all trucks sold in California already in 2024 need to be zero-emission. You won't get there with hydrogen technology alone. The industry is not yet ready for that kind of scale of adoption on hydrogen. With battery technology, you can get there. This is precisely why many OEMs have accelerated their plans for battery electric trucks. Hexagon Purus is a leading provider of electric drivetrain integration.
Let's dive a little bit deeper into the battery legacy and our vehicle integration capabilities in North America. Today, we perform full electric drivetrain integration of heavy duty trucks, starting with an empty chassis with four wheels and a cab on it, and then building the full electric vehicle. We integrate our own technologies, such as the hydrogen storage system or the battery storage system, and then combine that with third-party components such as an electric drive axle. Then we write the vehicle level software to get the truck road ready. This skill set is quite rare and super important, particularly in the early stages of the transition to electro-mobility. I wanna spend some time today to give you a better understanding of our battery capabilities. The first thing to remember is that we're not a startup company.
We are a carve-out from Hexagon Composites and Agility Fuel Solutions. That means that we carry a long and strong legacy, more than two decades worth of integrating alternative fuel systems onto heavy duty trucks. We know how to integrate large, heavy forms of energy storage onto a truck platform, designing it to optimize the weight distribution, to optimize the use of limited frame rail space, and to withstand the extreme duty cycle that these trucks are exposed to. It's that expertise that brought us into the battery and the electric vehicle business in the first place. Back in 2017, as BEVs started to take off in the passenger vehicle space, the topic of battery electric solutions kept coming up in our customer dialogues.
We put a small team of engineers on it and developed a battery pack in record time using all our knowledge of what's important when designing and mounting heavy energy storage modules onto a truck. We got a contract with Daimler, who wanted to build a zero-emission demonstration fleet of battery electric trucks to gain experience with the technology. The innovation fleet consisted of around 30 trucks, some Class 8 Freightliner eCascadias, as is pictured here, for which we delivered the battery packs. There were some Class 6 Freightliner eM2s for which we did the entire electric drivetrain integration. These trucks were given to Daimler's customers in California for testing in a real-life on-the-road situation, and they have now accumulated more than a million miles of on-road duty.
Besides performing really well, these vehicles have given us valuable data and insights to further improve our battery system offering. This has put us in a leading position when it comes to battery system design and performance. Today, we have one of the lightest and most energy-dense battery packs in the commercial vehicle industry, and also one of the better-looking ones in my personal opinion, nicely integrated under the cab, as you can see in this picture. It's modular, space efficient, and lightweight, and protected by strong IP. We are a broad technology company for zero-emission mobility solutions, both hydrogen electric and battery electric. We're best known maybe for our industry-leading hydrogen storage technology, six decades worth of experience with carbon fiber pressure vessels, and our significant practical experience with hydrogen systems technology across a wide range of mobility applications.
We have the leading battery systems technology and vehicle integration capabilities, as I just explained. This puts us in a very good position to capture the opportunities that are driven by the strong momentum for zero emission solutions. It will grow into a very large market. We did a major market study back in 2020, almost two years ago now, and since then, there has been a remarkable shift in the overall momentum for the energy transition and for zero emission mobility. With all that's happened, we decided to refresh the study, looking at things like updated decarbonization targets, technology developments, OEM vehicle roadmaps, et cetera. Not surprisingly, the numbers have grown substantially.
The addressable market for hydrogen storage on board vehicles that we now expect in 2030 is almost three times higher than in the updated study, increasing from about $7 billion in the old study to $20 billion now. This is driven by higher adoption rates for the heavier vehicle classes, buses and trucks, and the higher revenue content per vehicle driven by the larger systems. Even with the increase in adoption rates, they're still quite modest. Single digits for cars and trucks, low double digit for buses. We've also assessed the addressable market for battery systems and electric drivetrain integration services, giving us a total addressable market of $5 billion already in 2025 and $24 billion in 2030.
The markets are expected to continue growing at high rates also beyond 2030. With that update, I will hand the word over to Dilip, who will take us through the financials.
Thank you, Morten. I just learned that my Wi-Fi at home went down, so we're gonna test Verizon's 5G network coverage here in Atlanta. We're really thrilled with how the quarter shaped up. Not only was it record revenue of NOK 130 million during the quarter organically, but Rustrack also contributed a very strong NOK 142 million to the top line. As indicated in one of the prior slides, you know, much of the revenue growth came from distribution applications. What we really saw it across lots of other applications, heavy-duty aerospace, rail, transit bus, and then also the industrial gas business of Rustrack. Q4 EBITDA loss was NOK 54 million.
That was a sequential improvement from Q3 due to higher revenue and also included NOK 17 million of contribution from Rustrack, so about a 12% EBITDA margin over there. On a full year basis, revenue was NOK 508 million with EBITDA losses of NOK 265 million. About in line with our expectations at the beginning of 2021. Next slide. Thank you. Here you see the breakdown of revenue by segment in the current quarter and the full year of 2021. You know, we've talked about distribution, we've talked about transit bus. Both have contributed roughly 60%-70% of revenue now, quite consistently over the course of the year.
The other category, which is kind of a catchall for a lot of other segments, has now become much more significant with the addition of the industrial gas bundle business from Wystrach. Contribution from the heavy-duty business is down in 2021, but project activity remains high. We expect this market will drive more meaningful revenue in the coming years as vehicle platforms move to start up production. On to our balance sheet. We ended the quarter with just over NOK 450 million of cash. Working capital levels have increased substantially from prior year-end, driven by higher activity levels, supply chain delays, as well as the Wystrach acquisition. All else being equal, you know, pre-Wystrach, our Q4 working capital would have just been about flat with Q3.
Next slide. On to cash flow. You know, majority of cash burn then over the year has been to fund ongoing operations of the business. Working capital was about NOK 164 million of that operating cash flow. The investing cash flow includes the NOK 147 million of cash consideration for the Rustrack acquisition. A little technicality, but the financing cash flow reflects the pay down of our intercompany debt to Hexagon Composites following the sale of the discontinued CNG LNG business, which was completed on October first. We are a clean company in that way now and also debt-free from an intercompany perspective. Back to you, Morten.
Okay, thank you very much, Dilip. As I mentioned earlier in the presentation, the momentum towards zero-emission mobility has accelerated substantially during the past two years, demonstrated across a wide range of metrics. The number of companies committing to decarbonization targets, the number of OEMs announcing the phase out of the internal combustion engine, that's gone from one to six . The number of deployed zero-emission trucks, hydrogen production, which has increased significantly. There's been a significant shift in capital flows towards electric vehicle technology. Almost every observable metric that you look at, you can see that things are moving rapidly in a direction that's supportive for the energy transition and for zero-emission mobility. We are ideally placed to benefit from the strong positions that we have built within several sub-segments and application areas.
Some segments are more or less at commercial scale already. The distribution module is a commercial product where we have a clear leadership position. The momentum is already demonstrated in the current year financials. For transit bus, many hydrogen vehicle platforms are already developed, and volumes are now moving from the hundreds to the thousands. There are some segments that will come into serial production within the next two, three years. Battery electric trucks will come early. Many OEMs are preparing for serial production in 2024, like the ones we signed agreements with during the past few weeks. Passenger vehicles are already on the road today, and more will come. Although we expect the majority of the passenger cars to be battery electric, we also believe that a certain sub-segment will be hydrogen electric.
The fuel cell electric trucks will likely be ready for serial production stage near the middle of the decade. Nikola is the first one with planned start of production already in 2023. There are some segments that that are not likely to be ready at large scale until a bit later. We talk about trains, maritime vessels. These are highly attractive applications that will be significant in size when they scale. They're not expected to give any meaningful volume until around 2025 and beyond, aside from development work and demonstration sets. There's a good mix of application areas that are ready today, some that will come soon, and some that are a bit further away. The common denominator is that we have built strong positions and are well-placed to succeed in many of them.
We've won significant business during the past 18 months in competition with others. We have validated our technology and our competitiveness with customers. The regulatory environment has developed even more favorably than we could have hoped. With that, we have gotten the confirmations that we need to take the next step forward, and that is to embark on the industrial scale-up phase. We have ongoing or planned capacity expansion initiatives on three continents. In North America, we are in process of constructing a new automated manufacturing facility in Kelowna, Canada for battery and hydrogen systems. We're also relocating our specialty cylinder manufacturing facility in Maryland to a new and larger site. In Europe, we're planning to build a new state-of-the-art cylinder manufacturing facility in Kassel, Germany, and we will soon start the construction of a new cylinder manufacturing facility in China together with our joint venture partner.
Speaking of China, things are moving ahead. A lot of the planning work is now well behind us. We have assembled a local management team. We have designed the factory and specified all the manufacturing equipment. We are at the end of the site selection study and in process of negotiating an investment agreement with the local authorities. We have initiated dialogues with many potential key customers and are also working on setting up the local supply chain. There's still some ways to go, but I'm hoping that we will be ready to start construction of our first facility there soon. As we already announced when we went public, we intend to move to the main list of the Oslo Stock Exchange.
We had originally planned that to happen in the second half of last year, but we had to postpone it due to the Wystrach acquisition. However, we've now reinitiated the process, and we target to have that completed before the summer. On to the outlook. For 2021, we originally targeted revenue growth of at least 50% year-over-year, which we later revised upwards to 90%. We ended up growing organic revenue by 110% and, counting in Wystrach, achieved a revenue growth of 182%. For this current year, we target revenue of NOK 900 million , representing a growth rate of around 75%. We expect to grow in several segments: distribution, transit, heavy-duty battery systems, and vehicle integration, and we expect to start our light-duty deliveries in the second half of this year.
As we look at our overall contract portfolio and order book, around 80% of the targeted revenue is already covered by the current order book and the backlog. For EBITDA, we expect losses to widen by a factor of 1.5x. This is driven by the continued investments in organization, in product development, and overall capacity expansion. As such, we don't see this as a loss per se, but rather as necessary capital deployment to prepare the company for larger scale. We also expect a somewhat negative impact from the continued supply chain disturbances that we have experienced in 2021, a portion of raw material inflation that we will not be able to compensate in customer pricing. Overall, we're on track to deliver on the revenue target for 2025.
With the commercial success and the major contracts that we have added to our portfolio during the past year, we now have line of sight to the NOK 45 billion revenue target. Looking at the overall contract portfolio, we see that 75%-80% of the 2025 revenue figure is covered by the long-term agreements that we've already announced. Given everything else that we have in the pipeline, we feel comfortable and confident that we will achieve the targeted revenue. Summing it all up, we are in the early stages of a major shift. There is a strong global momentum for zero-emission mobility, and we are ideally placed to benefit from it. We have industry-leading technology, and that leadership has been confirmed and validated with customers through the business that we have won.
We've executed well, delivered on our targets, and that has put us ahead of our original plan. We will now start the execution of the industrial scale-up and prepare the company for much higher volume. We have tailwind in a very supportive commercial environment. We have significantly de-risked our business plan during the past 12 months. We're confident on delivering on the revenue targets for 2022, and meeting our revenue ambitions for 2025. That concludes our presentation for today, and we will now open it up for Q&A.
Thank you, Morten and Dilip. Let's just jump straight into the first question. Is there any chance of raising money through a placement towards existing partners like Toyota, Daimler, or BMW?
I'll take that. You know, if you look at our financials over the last 12 months in 2021, between the operating cash burn, the working capital, CapEx, et cetera, we're at about NOK 450 million in cash at the end of the year, which is exactly where we expect it to be. You know, yes, we are going to need capital to continue this next phase of investment in the business. Morten has talked about the investments in Kassel, in Kelowna, in Westminster, and in China. You know, I think we're assessing all options when it comes to capital.
Thanks, Dilip. I guess, the next one will go to you as well. What was the 2021 full year EBITDA margin for Wystrach?
Yeah. We're not really disclosing that, but just to give you a frame of reference, I think you know historically they were 8%-9% EBITDA margin. Their 2021 was probably about 7%-8% EBITDA margin.
Yep. Thanks. Next question. Who are the key competitors in the BEV battery pack business? What kind of margins being targeted? Will this require capital investments to add capacity?
Yeah. There are several competitors. Maybe the ones we see as the most likely names is companies like Proterra and AKASOL. Yeah, there is competition. The part of the question related to investments, do you wanna take that Dilip?
Margins and investments.
Margins and investments.
Yeah, let me take a stab at that, right? The battery system business is relatively capital light. We are in the middle of constructing a new facility in Kelowna. Between the equipment and the tenant improvements, we're looking at roughly $18 million-$20 million in CapEx. Sorry, $18 million-$20 million U.S. dollars in CapEx over the course of 2022, 2023. That should give us the capacity for roughly at least 1,000 battery packs, which is fairly substantial in terms of revenue contribution. You know, I'd say that it's total CapEx versus annualized revenue over a timeframe is maybe 15% of annualized revenue. Does that help?
Thanks, Dilip. Next question. Congratulations with a fantastic quarter. Could you give us some color on how maximum revenue capacity is in the years towards 2025?
Yeah. I think the way we think about it is that we are moving from a territory of you know revenue capacity around NOK 1 billion and then we need to get up to roughly about NOK 4 billion-NOK 5 billion in 2025. I think with the CapEx plan that we are currently looking at for 2022 and 2023 that's gonna add roughly NOK 3.5 billion I think so to our overall revenue capacity. Then there are some additional I think investments in 2024 that's gonna take it well above the NOK 5 billion that we have targeted.
Thank you, Morten. On a group level, do you have any long-term margin targets?
Yeah. What we have communicated is that our long-term target is double-digit EBITDA margins, and we haven't really been more specific than that.
Thank you. Next question. When should we now expect Hexagon Purus to go EBITDA breakeven?
Yeah. It's a question that we get asked continuously, and the answer is always the same. We expect that when we are approaching the kind of operating leverage that we get around the middle of the decade, we will be EBITDA breakeven.
Thank you, Morten. The next question. Thanks for a good update. Can you please bridge the revenue guidance of NOK 900 million in 2022? The quarterly run rate leaving 2021 was NOK 259 million, and the implied revenue for the average quarter in 2022 is NOK 225 million. Why the decline given the solid market growth?
Yeah, let me take that. There is an implicit seasonality in the business and, you know, it was pedal to the metal, actually in Q4 to hit some customer shipments. You know, we do expect things to sort of normalize a little bit in Q1, and then build up over the course of 2022.
Thanks, Dilip. Next question, then. What will the capital expenditure requirements be towards 2025, and more specifically in 2022?
Yeah. The CapEx programs that we've talked about here on one of these slides, you know, they roughly add up to about NOK 700 million over the next 24 months or so. As Morten said, that should drive annualized revenue capacity in the call it NOK 3.5 billion range or so.
Thanks. Can you give some more color on cost inflation? What do you expect going forward?
You know, inflation has been quite widespread. I don't think there's any particular area that has not seen inflation, including the cost of freight. It really has been just, you know, across the board. I can't think of any one item, you know, that tips the scale one way or the other. We're keeping a close eye. You know, I think there was a question about profitability, et c. You know, one thing to just keep in mind is, it is quite common in the OEM world, where when there is cost inflation, there are mechanisms in place to drive those cost increases through to the customer.
It may not always happen, you know, in real time and immediately as you would always like it to be, but there are mechanisms, and that's very much the case with our business as well.
Thanks, Dilip . Then on to the next question. Can you shed some light on revenue growth potential for Wystrach moving forward as well as margins?
Well, Wystrach has had a pretty good year, particularly the end of the year, where, as Dilip Warrier said, it's really been pedal to the metal. With all the demand that we have seen, you know, relating back to also our covered revenue backlog for 2022, the Wystrach part of the group is, you know, for all practical purposes, almost sold out. It's clear that for us in the years ahead to further expand the business in any meaningful way, we will likely need to add capacity also in that side of the business.
It's a very capital efficient capacity to add, but it's something that we are considering once we get past this year. Thanks, Morten. I guess we've touched upon this in an earlier question, but we could take it again. You do not seem fully financed for 2022 as it stands now. How and when do you expect to address your financing needs? Yeah, I'm pretty sure that you understand that we cannot be specific on that. As Dilip mentioned earlier, it's no secret that we will need additional capital in order to fund all of our growth expansion plans.
We are assessing all of the opportunities that are out there, and we'll of course announce that when it is done.
Thank you, Morten and Dilip. That wraps up the questions we have received from our audience today. On behalf of Hexagon Purus, I would like to thank you for spending time with us this morning, and we look forward to seeing you soon again. Thank you very much from Oslo. Thanks, everybody.