Hexagon AB (HXGBF) Q3 2024 Earnings Call Highlights: Navigating Market Challenges with ...

In This Article:

  • Revenue: EUR 1.3 billion, down 2% organically.

  • Recurring Revenue: EUR 565 million, up 7%.

  • Gross Margin: 67%, up from 65.5% in the prior year.

  • Operating Margin: 29%.

  • Cash Conversion: 70% in Q3, 81% year-to-date.

  • Manufacturing Intelligence Revenue: EUR 464 million with an operating margin of 25.5%.

  • Asset Life Cycle Intelligence Revenue: EUR 208 million, up 6% year-on-year.

  • Geosystems Revenue: EUR 373 million, down 5%.

  • Autonomous Solutions Revenue: EUR 135 million with an operating margin of 34%.

  • Safety & Infrastructure Revenue: EUR 120 million, up 2% year-on-year with an operating margin of 21%.

  • EBIT1 Margin: 29%, with a 10 basis point decline.

  • Net Working Capital: EUR 56 million build, 8.3% of rolling 12-month sales.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Hexagon AB (HXGBF) is evaluating the potential separation of its Asset Life Cycle Intelligence division into a new company, NewCo, which could create additional value for stakeholders.

  • The company reported strong recurring revenue growth of 7% in Q3 2024, reaching EUR 565 million.

  • Hexagon AB (HXGBF) maintained a solid operating margin of 29% despite challenging market conditions.

  • The company achieved a gross margin improvement to 67% from 65.5% in the prior year, driven by innovation and operational improvements.

  • Hexagon AB (HXGBF) is well-positioned for growth into 2025, with strong product launches and a focus on innovation and customer engagement.

Negative Points

  • Hexagon AB (HXGBF) experienced a 2% organic decline in sales in Q3 2024, with total sales of EUR 1.3 billion.

  • The construction market remains weak globally, particularly in Europe and China, impacting demand.

  • The Geosystems division saw a 5% decline in sales, affected by cautious customer investment due to interest rate concerns.

  • The Autonomous Solutions division experienced a sales drop due to exceptional performance in the previous year and delays in the agriculture market.

  • Hexagon AB (HXGBF) faces ongoing challenges in the automotive sector, particularly in Europe, with a noticeable slowdown in activity.

Q & A Highlights

Q: Can you discuss Hexagon's position in the CAD and EAM markets and how it compares to competitors? A: Paolo Guglielmini, President and CEO, stated that Hexagon's NewCo has market-leading solutions, particularly with the SDx platform, which integrates data into a digital backbone. This strategy positions NewCo for significant growth and competitiveness in the market.