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Interim report Q1 2015
6 May 2015
1. NET SALES AND EARNINGS
2. MARKET DEVELOPMENT
3. SEGMENTS
4. M&A, ORDERS AND PRODUCT
RELEASES
5. SUMMARY
2
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Net sales and earnings
Overview Q1 2015
Organic growth of 5 per cent & recorded growth of 19 per cent
•
The growth was primarily driven by IES where both Metrology and
PP&M showed strength
•
All regions showed mid-single digit growth with an acceleration in
Western Europe compared to previous quarter, but a slowdown in
Asia
Improved profitability and cash flow
•
Group gross margin of 60 per cent and EBIT margin of 21 per cent
•
Cost savings programme initiated and running according to time
table
•
Operating cash flow improved by 40 per cent
4
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Seasonality in profit
Seasonal pattern: Q1 weakest, Q3 second weakest, Q2 & Q4 strong
MEUR
800
25%
700
EBIT Margin %
20%
600
500
15%
Net Sales
400
10%
300
200
5%
100
EBIT1
0
5
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
0%
Key figures Q1 2015
MEUR
Q1 2015
Q1 2014
Change %
Net sales
705.1
594.8
51)
Operating earnings (EBITDA)
198.6
160.4
24
28.2
27.0
1.2
149.8
123.4
21
21.2
20.7
0.5
Earnings before taxes, excl. non-recurring items
142.2
115.2
23
Non-recurring items 2)
-36.6
-17.4
n.a.
Earnings before taxes
105.6
97.8
8
84.0
78.1
8
113.8
92.2
23
Earnings per share, EUR
0.23
0.22
5
Earnings per share, excl. non-recurring items
0.31
0.26
19
Operating margin, (EBITDA) %
Operating earnings (EBIT1)
Operating margin, %
Net earnings
Net earnings, excl. non-recurring items
1) Adjusted to fixed exchange rates and a comparable group structure
2) Non-recurring items in Q1 2015 relate to the implementation of a cost savings programme
6
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Cash flow
MEUR
Q1 2015 Q1 2014
Cash flow from operations before changes in working
capital excluding taxes and interest
191.9
160.5
Taxes paid
-28.9
-17.6
-5.2
-6.5
Cash flow from operations before changes in working
capital
157.8
136.4
Change in working capital
-33.0
-35.0
Cash flow from operations
124.8
101.4
Investments tangible assets
-7.9
-14.4
-47.3
-36.8
Operating cash flow
69.6
50.2
Non-recurring cash flow
-4.5
-3.7
Operating cash flow after non-recurring items
65.1
46.2
Interest received and paid, net
Investments intangible assets
•
7
Operating cash flow in Q1 2015 improved by 40 per cent to 65.1 MEUR (46.2)
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Working capital to sales (rolling)
35%
30%
Consolidation
of Intergraph
Full impact from
recurring revenue
25%
20%
15%
10%
5%
0%
8
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Q1
seasonally
weak
Effects and actions related to FX movements
MEUR
Q1 15 as
reported
Impact from FX
movements
Q1 15 adjusted
for FX
Net sales
705.1
66.4
638.7
Operating earnings
(EBIT1)
149.8
14.1
135.7
21.2
0.0
21.2
Operating margin, %
•
Currency movements had a neutral impact on our EBIT1 margin. However, the currency
movements had a negative impact on Geosystems and PP&M, but a positive impact on
other units
•
The cost savings programme announced on March 31 will affect approximately 400
employees and is expected to drive cash cost savings of approximately 35 MEUR per
annum with full effect as of 2016
9
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Market development
Sales mix Hexagon Q1 2015 (Q1 2014)
North America
31%
(27)
China
(excluding Western Europe)
30%
(31)
7%
(9)
South America
4%
(5)
11
EMEA
Western Europe
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
15%
(15)
Asia Pacific
(excluding China)
13%
(13)
Analysis of organic growth1) per geographic region
CONTRIBUTORS TO GROWTH1) (descending order)
Q1 2014 2)
581.8
Western Europe
North America
Asia excl. China, Australia
China
Eastern Europe, Middle East & Africa
South America
Australia
>8%
Russia
0 to 8%
Q1 2015
1) Adjusted to fixed exchange rates and a comparable group structure (organic growth)
2) Numbers pro forma after the divestment of Other Operations
12
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
705.1
Negative
Analysis of organic growth1) per geographic region
Share
of sales
1)
Surveying
23%
Power & Energy
20%
Electronics & Manufacturing
12%
Infrastructure & Construction
11%
Safety & Security
10%
Automotive
10%
Aerospace & Defence
8%
Other
6%
W EU
30%
MEA
7%
NA
31%
SA
4%
CN
15%
ASIA 2)
13%
TOTAL
1) Sales per customer segment as of 31 December 2014 and sales by region as of Q1 2015
>8%
2) Asia, excluding China
0 to 8%
Negative
x
13
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Organic growth1) per geographic region
180
Asia
160
140
Share of sales
Q1 15
Americas
120
Total
100
EMEA
EMEA
37%
80
Asia
29%
60
40
Americas
34%
20
0
Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015
Index Q1 2008 = 100
1) Adjusted to fixed exchange rates and a comparable group structure (organic growth)
14
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
EMEA market trends, Q1
• Western Europe recorded 9 per cent
organic growth; the positives were UK,
Italy and Spain as well as the Nordic
region; France recorded negative growth
rates
• Segments such as surveying, automotive
and power & energy drove the broadbased organic growth in Western Europe
• Middle East, Africa and Eastern Europe all
grew but Russia recorded -55 per cent
organic growth and hampered overall
growth rates
15
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Q1 Share of sales, %
37
Q1 Organic growth, %
6
- Organic growth, GES %
5
- Organic growth, IES %
6
Americas market trends, Q1
• The demand in NAFTA remained strong,
driven by Mexico and USA
• In USA, segments such as automotive,
electronics and surveying were the primary
drivers. Public safety had a negative
impact, but the backlog has improved to
record levels in recent months
• South America recorded growth despite
negative development in Brazil as markets
such as Argentina and Colombia showed
strong growth rates
16
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Q1 Share of sales, %
34
Q1 Organic growth, %
5
- Organic growth, GES %
1
- Organic growth, IES %
9
ASIA market trends, Q1
• 4 per cent organic growth in China as all
businesses slowed down; the IES segment
continued to show solid growth, while GES
declined due to impact from lower activity
in construction
• Markets such as India, Malaysia, Vietnam,
Singapore and New Zealand all grew at
double digit growth rates
• Australia reported a weak quarter due to
the downturn in mining, which also affects
the wider surveying business
17
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Q1 Share of sales, %
29
Q1 Organic growth, %
3
- Organic growth, GES %
-6
- Organic growth, IES %
8
Segments
Geospatial Enterprise Solutions – Q1 15 overview
Organic growth of 2 per cent
• Geosystems – Organic growth of 1 per cent;
surveying saw strength in North America and
Europe, but overall growth hampered by Russia,
China and mining
• SG&I – 0 per cent organic growth; order backlog
has improved in recent months
Surveying
Positioning
Machine Control
Mapping
3D scanning
Public safety
• Positioning – Organic growth of 6 per cent
EBIT1 growth of 19 per cent
• EBIT1 increased by 19 per cent to 66.3 MEUR
(55.5). Margin of 18.7 per cent (18.0)
• Continued transition to a more solution-centric
business model
Sales per segment
Sales per geography
18%
5%
46%
Infrastructure & Construction
EMEA
Americas
Asia
36%
Surveying
7%
12%
11%
20%
45%
Public Safety
Natural Resources
Defence
Transportion & utilities
Software & services
Recurring revenues
%
19
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Direct sales
Emerging markets
Industrial Enterprise Solutions – Q1 15 overview
Organic growth of 8 per cent
• Metrology – 8 per cent organic growth driven by
strong development for the portable sensor
business. Broadened customer base in
electronics
• PP&M – 7 per cent organic growth; broad based
strength (no one-off deals) fuelled by continued
user conversion to 3D-based software
CAD
CAM
Stationary Sensors
Portable Sensors
Asset Management
Services
EBIT1 growth of 24 per cent
• EBIT1 increased by 24 per cent to 89.7 MEUR
(72.1). Margin of 25.6 per cent (26.3)
• The margin was negatively impacted by
business mix and currency
Sales per geography
Sales per segment
25%
Americas
35%
Aerospace
EMEA
33%
Electronics &
of
15%sales
Manufacturing
Asia
Power and Energy
25%
Software & services
Recurring revenues
%
20
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Direct sales
Automotive
53%
30%
37%
Emerging markets
Gross margin
Q1 2015 60% (56)
%
60
Trend %
GM %
55
50
45
21
2009
2010
2011
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
2012
2013
2014
Q1 2015
Operating margin – R12M quarterly data
2016 Target
%
25
R12M 22% (2014: 21%)
EBIT1, %
20
15
10
2008
22
2009
2010
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
2011
2012
2013
2014
2015
M&A, orders and product releases
Hexagon acquires industrial software company Q-DAS
Q-DAS specialises in statistical process control
solutions for industrial manufacturing
• Solutions widely used in sectors where high production
volumes and dimensional quality needs require statistical
analysis (such as automotive, where Q-DAS is the
de-facto standard)
• Strengthens Hexagon’s Metrology Management System
(MMS), designed to provide easy, one-stop access to
measurement data from any source or supplier
• Turnover for 2014: approximately 15 MEUR
24
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
HxIP releases 2014 airborne imagery content
The Hexagon Imagery Programme (HxIP)
streams geospatial content and delivers
professional-grade airborne images captured
with Leica Geosystems airborne sensors
• Provided airborne imagery from the 2014 flying
season for 11 U.S. states and portions of Canada
and Europe
• Content is now available as a Service (CaaS)
through the cloud via multiple content service
providers:
• Esri ArcGIS Marketplace
• Hexagon Geospatial Power Portfolio
• Valtus
25
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Enabling enterprise asset information across Colombia
EPM is the largest multi-utility in Colombia,
providing all services including power, gas, water
and telecom to more than 5.2 million customers
• Hexagon’s solution helps fulfill the need to
continuously update enterprise asset information in
the field to reflect real-world status
• Mobile MapWorks, integrated with G/Technology
and GeoMedia, enables more customers to have
the right utility information at the right time
26
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Hexagon making an impact worldwide in the agroindustry
Brazil: Usina Cerradão & Usina Ipiranga sugarcane mills
• Using hardware and software from Hexagon to automate the
planting process, reduce waste and increase crop yield
India: Water Resources Investigation and Development
• Using Hexagon remote sensing technology to conduct landuse and land-cover analysis to improve the production of
small farms
USA: Quantum Spatial
• Using airborne sensors from Hexagon to supply airborne
imagery to the National Agriculture Imagery Program (NAIP),
which makes digital ortho photography available to the
government and the public
27
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Hexagon technology aids real-time survellience
Italy-based Selex ES built a custom solution using
components of Hexagon Geospatial’s Power
Portfolio to provide real-time surveillance of
sensitive areas of the world
• A motion video exploitation solution, driven by
Hexagon technology, helps facilitate situational
awareness:
• Movements of groups can be easily monitored
• Analysts are able to handle large amounts of multiintelligence data
• Commanders are able to take decisive action based on a
greater understanding of the what’s happening, providing
better civilian protection
28
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Hexagon and Esri collaborate for public safety and security
Hexagon and Esri are collaborating to align
Intergraph’s Computer-Aided Dispatch system,
I/CAD, and Esri’s ArcGIS Platform
• Collaboration to drive improvements for users of
both systems – from productivity and workflow
efficiencies to enabling the most up-to-date
geospatial data possible within their first responder
systems
• Initial steps include launch of Intergraph’s I/Map
Editor™ for ArcGIS® for map production in I/CAD
• Product available in Q2 2015
29
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
NYC Police Department expands relationship with Hexagon
The New York Police Department (NYPD)
awarded Intergraph a five-year contract to
offer 24x7 on-site support of the system to
ensure optimal reliability and service
• Hexagon employees will integrate onsite with
the NYPD team, providing full, end-to-end
system support for the agency
• The New York Police Department (NYPD)
implemented Intergraph’s computer-aided
dispatch system in May 2013
30
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Helping automate emergency services in Para State, Brazil
Bélem do Para, the capital of Para State in
northern Brazil, is the largest urban city in the
region, with a daily population of more than
two million people
• Hexagon technologies are helping to automate
Para’s multi-agency center, enhancing emergency
public service to the capital
• Solutions implemented:
• I/CAD (call takers + dispatchers)
• S/MapPortal (GWMap + Geospatial Portal)
• S/PSIM (camera integration w/EdgeFrontier)
• Automatic Vehicle Location (AVL) integration
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HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Improved fleet operation with Smart Asset Control
Samarco is using Hexagon’s Smart Asset
Control solution to manage its port assets at
Brazil’s Port of Ubu
• Samarco is using Smart Asset Control to manage a
variety of equipment including trucks, wheel
loaders and flatbeds
• Samarco is expected to reduce its contract with a
third-party logistics company by 10 per cent
32
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
General Motors selects Hexagon’s 360º SIMS for Rosario plant
Hexagon’s unique in-line inspection solution 360º
SIMS continue to enjoy market traction
• General Motors has ordered its first 360º SIMS
• 360º SIMS will be used at GM’s Rosario plant in Argentina
• GM will benchmark 360º SIMS using the Rosario plant
33
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
DSME selects Smart 3D for INPEX project
Daewoo Shipbuilding & Marine Engineering (DSME)
of South Korea is widely considered to be one of the
world’s premium shipbuilding and offshore
contractors
• DSME recently awarded a 2bn USD contract to build an
FPSO vessel used on an LNG mega-project offshore
Western Australia
• Purchased Smart 3D to deliver the project – all
engineering data from Smart 3D will be integrated into
SmartPlant Foundation at handover
34
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Absolute Tracker AT960 gaining attention and momentum
Recently launched laser tracker with high-speed dynamics
and six degrees of freedom (6DoF) capabilities well-received
by the market
U.S.-based Electroimpact
• Designs and builds large tooling for aerospace including the
actuators that bring aircraft sections together during assembly
• Using AT960 to measure more with greater speed by reducing the
number of required setups
U.S.-based Triumph
• Supplies tail sections, wings, cabin structures and other
components to large aerospace companies such as Bombardier,
Gulf Stream and Embraer
• Using AT960s on an existing Gulfstream wing assembly project
and a new Embraer tail section build
35
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Hexagon launches next-gen land-based corrections services
Hexagon launched the new GNSS correction
service level TERRASTAR-C, a global GPS and
GLONASS dataset delivered by satellite
• Following the acquisition of Veripos, the land-based
correction service is now number 1 in terms of
position accuracy
• Solution is not reliant on proximity to a local reference
station or terrestrial communications link
36
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
ScanStation P30/P40 and P16 launched
ScanStation P30/P40
• Adds more detail and natural colour perception to 3D
point clouds, enabling users to better understand and
interpret project deliverables
• ScanStation P40 – offers the highest versatility including
long-range capabilities, delivering outstanding range, speed
and data quality
• ScanStation P30 – high-versatility scanner with an optimal
mix of speed, range and accuracy paired with unmatched
robustness
ScanStation P16
• Combines high performance and environmental
robustness
• Price-performance ratio and user friendly interface make
it attractive for all short-range applications up to 40m
37
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Summary
Summary Q1 2015
• 5 per cent organic growth driven by Industrial
Enterprise Solutions
• Improvement in operating margins despite negative
impact from CHF
• Savings programme will more than compensate for
negative CHF impact on our margins
• Strong cash flow underlines potential for M&A
39
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015
Disclaimer
This presentation contains forward-looking statements. These
forward-looking statements reflect the views of Hexagon's
management as of the date of this presentation. The forward
looking statements may involve risks and uncertainties, including
technological advances in the measurement field, product
demand and market acceptance, the effect of economic
conditions, the impact of competitive products and pricing, foreign
currency exchange rates and other risks. Please read our
earnings reports and our most recent annual report for a better
understanding of these risks and uncertainties. All of these
forward-looking statements are based on estimates and
assumptions made by Hexagon's management and are believed
to be reasonable, but are inherently uncertain and difficult to
predict. Actual results or experience could differ materially from
the forward-looking statements. Hexagon disclaims any intention
or obligation to update these forward-looking statements. It should
also be noted that past performance is not a guide to future
performance and that interim results are not necessarily indicative
of the full year results.
THIS COMMUNICATION DOES NOT CONTAIN AN OFFER OF
SECURITIES IN THE UNITED STATES OR ANY OTHER
JURISDICTION; SECURITIES MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES ABSENT REGISTRATION OR
EXEMPTION FROM REGISTRATION, AND ANY PUBLIC
OFFERING OF SECURITIES TO BE MADE IN THE UNITED
STATES OR ANY OTHER JURISDICTION WILL BE MADE BY
MEANS OF FORMALLY DRAWN UP AND APPROVED
PROSPECTUS.
40
HEXAGON INTERM REPORT 1 JANUARY – 31 MARCH 2015