Q2 2024 Hexatronic Group AB Earnings Call Transcript
Key Points
- Hexatronic Group AB (HTROF) reported a sequential net sales growth of 14% in Q2, driven by a modest recovery in Fiber Solutions and continued growth in Harsh Environment and Data Center segments.
- The company achieved a strong cash flow from operating activities amounting to SEK221 million, corresponding to a cash conversion of 115%.
- Harsh Environment and Data Center segments showed significant growth, with Harsh Environment growing 95% and Data Center growing 31% compared to Q2 last year.
- Hexatronic Group AB (HTROF) maintained a strong financial position with a leverage ratio of 1.9 at the end of June.
- The company signed a new contract with NOVOS FiBER in the US, expected to generate approximately SEK400 million in revenue over three years.
- Hexatronic Group AB (HTROF) experienced a negative growth of revenue of 10% and a negative organic growth of 18% compared to Q2 last year.
- The EBITDA margin decreased to 11% in Q2 from 17.9% in Q2 last year, despite an improvement from 9.4% in Q1.
- The Fiber Solutions segment faced a decline of 23% in Q2, primarily due to higher financing costs, inflation, and price pressure.
- The company reported a higher tax rate above 30% of pretax profit in Q1 and Q2, attributed to non-deductible interest expenses.
- Hexatronic Group AB (HTROF) expects continued price pressure in the Fiber Solutions and duct business in the US throughout the year.
Thank you, and welcome to this Q2 presentation. You will be listening to Pernilla Linden, our CFO, and Martin Aberg, our Deputy CEO and myself. So if we start to look at the agenda, we will go through Hexatronic at the glance, some Q2 highlights, the financial overview and business overview and then in the end, the summary and market outlook, and we'll finish up with the Q&A session.
First, Hexatronic at a glance, so we operate in a Fiber optic infrastructure market and it's an expanding market. And the some of the main drivers are it's a low number still of homes connected via fiber, and that's in most markets around the world, we also see the 5G deployments that they drive the need for building out fiber optic networks. So 5G is totally dependent on fiber.
And we also see increasinFiberg use of data intensive technology that creates a growing need for fiber connectivity companies and especially data centers. And we also see a shift from copper-based solutions to fiber in harsh environment applications such as oil
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