Earnings call transcript: Hexagon Composites’ Q3 2025 struggles with downturn

Hexagon Composites reported its financial results for the third quarter of 2025, revealing a challenging landscape marked by macroeconomic uncertainties and market downturns. The company, a leader in natural gas fuel systems, announced a significant reduction in headcount and a focus on cost-saving measures to navigate the turbulent environment.

Key Takeaways

• Hexagon Composites reported Q3 group revenues of NOK 538 million.
• The company raised NOK 590 million in equity to bolster its financial position.
• A strategic partnership with Cummins and Clean Energy was formed to enhance product offerings.
• The company is implementing a group-wide cost savings program targeting NOK 190 million in personnel cost reductions by the end of Q3 2025.
• Hexagon anticipates a weak start to 2026 but remains optimistic about long-term growth.

Company Performance

Hexagon Composites experienced a challenging third quarter, with group revenues reaching NOK 538 million. The company faced a negative EBITDA of NOK 54 million, highlighting the impact of a cyclical downturn in the truck and mobile pipeline markets. Despite these challenges, Hexagon remains a market leader in natural gas fuel systems and holds a 50% market share in mobile pipelines.

Financial Highlights

• Group Revenues: NOK 538 million
• EBITDA: Negative NOK 54 million
• Equity Raised: NOK 590 million

• Segment Revenues:

- Fuel System: NOK 372 million

- Mobile Pipeline: NOK 93 million

- Aftermarket: NOK 97 million

Outlook & Guidance

Hexagon Composites expects Q4 performance to improve over Q3, although the company anticipates a weak start to 2026. The long-term growth ambition remains intact, with targets set for 8-10% CNG adoption in Class 8 trucks. The company is also limiting its 2026 capital expenditures to a maximum of NOK 80 million to maintain financial discipline.

Executive Commentary

CEO Philip Schramm emphasized the company’s resilience amid market challenges, stating, "It remains a question of when, not if, this market cycle rebounds." He further noted the company’s commitment to cost reduction and cash discipline: "We are doing our utmost to weather the storm and remain focused on driving further cost reduction and cash discipline." Schramm also highlighted the role of natural gas as a cost-effective decarbonization solution for long-haul trucking.

Risks and Challenges

• Macroeconomic Uncertainty: The company faces unprecedented macroeconomic challenges that could impact future performance.
• Market Downturn: A cyclical downturn in the truck and mobile pipeline markets presents ongoing challenges.
• Freight Decline: A four-year decline in freight demand adds to industry pressures.
• Class 8 Truck Market: Reduced forecasts for the Class 8 truck market could affect revenue growth.
• Inventory Optimization: Identifying NOK 150-200 million in inventory optimization potential is crucial for financial stability.

Q&A

During the earnings call, analysts focused on Hexagon’s cost-cutting rationale and strategies for reducing working capital. The company addressed challenges in the Mobile Pipeline market and provided insights into the SES Composites acquisition, underscoring its strategic importance in strengthening Hexagon’s position in the transit bus segment.

Full transcript - Hexagon Composites ASA (HEX) Q3 2025:

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Good morning, everyone, and welcome to Hexagon Composites Q3 presentation. My name is Berit-Cathrin Høyvik, and I’ll be moderating today’s presentation. Joining me in the studio today is our CEO, Philip Schramm, and CFO, David Bandele. Today we’ll take you through a company update, financials, and outlook before we wrap up with the Q&A session. With that, I’ll hand the word over to Philip.

Philip Schramm, CEO, Hexagon Composites: Thank you. Good morning, everyone, and thank you for joining us for our Q3 presentation. Let’s start with a high-level summary of the third quarter this year. The macroeconomic uncertainty continues to negatively weigh on our business, and our core markets are in a cyclical downturn in combination with an unprecedented macro environment. This has significantly affected our volumes and our profitability this quarter, and our Q3 results are weak, with group revenues, which came in with NOK 538 million and led to an EBITDA of negative NOK 54 million. August contributed to the majority of our Q3 EBITDA loss. With our banking partners, we decided to initiate an equity raise to improve our balance sheet, and we have raised NOK 590 million. In September, we launched a group-wide cost savings program targeted at reducing our cost base, improving our EBITDA break-even point, and securing our liquidity.

I will come back to the results and details of this program in more detail shortly. In addition, we remained focused on executing the strategic steps that will drive the adoption of natural gas in North America and in Europe. Let’s take a closer look at how we are managing the current environment. First, let me give you some context to our current market exposure. On the one hand, our transit, refuse, and aftermarket segments represent sectors that operate largely independently of the macroeconomic environment and typically have an uptick in tough times. This is exactly what we are currently experiencing with our refuse business. These segments provide our business with resilient cash flows. At the same time, truck and mobile pipeline are cyclical by nature, with higher sensitivity towards the macroeconomic environment. These are also the two segments which represent Hexagon’s largest growth opportunities.

For a deeper look into how these two cyclical growth markets are developing, I will explain some of the factors that are impacting truck and mobile pipeline in North America. These two segments are currently operating in an unprecedented environment affected by a unique combination of external factors. Constantly changing trade and tariff policies have created a wait-and-see environment. In our discussions with customers, as one example, the announcement and then the quick postponement of tariffs on trucks in September further delayed both spendings and projects. Shifting emissions regulations have had a similar effect. The current U.S. administration has created uncertainty on whether the existing emissions regulations will hold or if other regulations will replace them. This too has caused fleets to sit on the fence. I do want to be clear, though, that from a regulatory perspective, the removal of the zero-emission mandate has supported. CNG as the.

Alternative fuel solution to replace the base fuel diesel. The high cost of capital and lower shale activity due to low oil and gas prices are impacting the demand for mobile pipeline. Currently, gas transportation companies have a strong focus on asset utilization in these high capital-intensive markets. For trucks, the freight decline has spanned now four years. Industry forecasts for the Class 8 truck market in 2026 have dropped dramatically over the last few months. Fleets are more reluctant in this environment to adopt new technologies and to incur higher upfront CapEx costs, despite the positive total cost of ownership that CNG now delivers to heavy-duty fleets, thanks to the new game-changing 15-liter engine. If these projections become reality, then we are preparing to navigate this environment. We cannot control the timing of recovery. However, actions that we are now taking will mean that we will be.

In a more profitable position in the future. What does this exactly mean? As a company, we are laser-focused on reducing our cost base through this down cycle. In connection with the equity raise in September, we launched a group-wide cost and cash savings program. It follows cost-saving measures that were already implemented earlier this year. In total, by the end of Q3 2025, we have reduced personnel costs by approximately NOK 190 million compared to 2024 on an annualized basis. Approximately NOK 70 million of this reflects structural annualized run-rate improvements by the end of Q3. As part of the ongoing program, we are delivering on additional measures and expect to see further effects in the coming quarters. We also see similar positive effects from other operating expenses beyond personnel cost. Our investments are well below 2024 level and will remain that way.

In 2026, we will limit CapEx to a maximum of NOK 80 million for our core businesses. In addition, we have identified significant optimization potential within our inventories. A strategic focus on utilizing our existing assets and raw materials will contribute to a further NOK 150-200 million reduction in the first half of 2026. Improved payment terms will help us as well. As we have communicated in previous quarters, we remain focused on the core business and will have strict investment discipline. We will continue to review how our current assets can create the best value for you, our shareholders. Despite the current environment, this unprecedented market will rebound. We remain focused on driving the adoption of natural gas vehicles, especially in heavy-duty trucking. While the pace of adoption has been slower than expected, we are proactively doing our part to drive the adoption.

In September, we formed a strategic partnership with Cummins and Clean Energy to launch Pioneer, an independent leasing company that is dedicated to mobility applications with alternative fuels. In addition, we launched our own demo truck program in October, enabling fleets across the United States and Canada to test how natural gas-powered heavy-duty trucks work in their specific and individual environment. For fleets to experience the potential of these trucks in their specific environment is reducing the barrier, and it is essential to accelerate adoption. We are already seeing huge interest and confirmation from fleets that they are seeing savings, lower emissions, and the diesel-like performance, which can now go hand in hand without any compromise. In October, we also closed the full acquisition of SES Composites and will now focus on leveraging synergies and consolidating the European market.

With a cylinder site in Poland and a valve manufacturing business in Germany, this acquisition further strengthens our position in the European transit bus segment. With that, I will hand over to David, who will walk you through the financials.

Thank you, Philip. Good morning, everyone. On a group level, Q3 revenues were NOK 538 million, with an EBITDA of negative NOK 54 million. That is after booking severance costs of NOK 9 million. The quarter was heavily impacted by the prolonged market uncertainty in North America. Volumes were lower across all segments, and especially in mobile pipeline. As Philip has confirmed, to mitigate the effects of these weaker volumes, we initiated a new cost savings program in Q3. We are laser-focused on our main priority, which is supporting liquidity through this down cycle. In September, we proactively strengthened our balance sheet by NOK 590 million and negotiated an updated bank agreement. We are already seeing the effects of positive working capital releases, and these efforts will continue to become more visible over the next two quarters. Headcount reductions totaled approximately 20% as at the end of this quarter compared to 2024 levels.

In light of the market conditions this year, this cost savings program is delivering results with more to come. Now let’s look at these results and their drivers in more detail, segment by segment. In Q3, our fuel system segment generated NOK 372 million in revenues, weaker than the third quarter of 2024, which was bolstered by deliveries to the large UPS order received in the back end of 2024. The refuse sector has been incredibly strong in 2025, with continued year-over-year growth in Q3, albeit at slightly lower volumes than last quarter’s record performance. Transit delivered steady volumes with deliveries to multiple municipalities, including the large previously announced order to Dallas, Texas. As expected, the refuse and transit sectors continue to deliver a stable baseload of demand, even amid the current market uncertainty.

For the segment as a whole, the EBITDA margin in Q3 came in at negative 4%. Due to low truck volumes impacted by additional tariffs and further market uncertainties. Now over to mobile pipeline, which remained under pressure with continued impact from broader market uncertainty in the quarter. Lower shale gas activity and falling LCFS and RIN credit prices are resulting in customers halting their CapEx spending. With new investments being limited in our core energy end markets, including oil and gas and renewable natural gas, module utilization is being favored by our largest customers, who are employing a wait-and-see approach. In North America, this demand halt has resulted in a significant decline in profitability that has impacted group margins. Revenues for the quarter were NOK 93 million, with negative margins of 49%. Now, outside of North America, the results delivered remain steady compared to the prior quarter.

Now moving to our aftermarket segment, which is our most resilient segment. Aftermarket delivered steady revenues of NOK 97 million in Q3, on par with the same quarter last year. Our parts and services business delivered solid volumes in the quarter across both FleetCare and Hexagon Digital Wave. Profitability, while stable, came in lower at 8% EBITDA margin due to an unfavorable mix of internal services and one-off charges. As mentioned previously, 2025 has been a known down year for our modal acoustic emissions technology. At these low levels, the unit actually delivered close to EBITDA break-even this quarter, with cylinder inspection and testing activity picking up in 2026 as the five-year requalification cycle reaches their next annual milestone. To counteract and navigate the headwinds we are experiencing in our cyclical businesses and with continued uncertainty on the timing of demand recovery.

We are accelerating our actions on three targeted major themes. The first one, key, preserving liquidity through 2026 and beyond. The second one, lowering the break-even point of our group operations through significant indirect and fixed cost reductions, and in turn, lowering our reliance on demand recovery. The third, as you’ve heard from Philip, increased measures to stimulate the adoption of natural gas transportation in North America, Europe, and the rest of the world. As an extension of these actions and to strengthen our balance sheet, announced in September, our refinancing arrangements with the banks have resulted in a suspension of leverage covenant testing up until Q3 2026. At that point the target will be 4.2x on that quarter, based on net interest-bearing debt divided by the last four quarters’ rolling EBITDA, with some allowance for certain one-off adjustments.

The steep falloff in demand that we have experienced in 2025 has significantly reduced our EBITDA levels and made it technically difficult to show normal leverage until EBITDA levels are steadily built up again over time. In light of this development, we secured a covenant holiday to counter that difficulty and the relevance of the test in such situations. As a condition, our banking partners implemented a conditional reduction in debt levels, commitments, and availability. A capital raise was a necessary condition to secure this flexibility and was successfully executed in September, again raising NOK 590 million. Key changes to the financing facility are described in the Q3 report and include a total facility reduction by NOK 200 million down to NOK 2 billion, of which NOK 1.6 billion is fully accessible and NOK 400 million accessibility is dependent on leverage being less than 2x.

Also, that NOK 400 million will be reduced to NOK 200 million progressively through 2027. You also see the reduced covenant levels shown. Also introduced is a minimum liquidity requirement of NOK 200 million. I will also note that M&A investments and financial support will be subject to the lender’s consent. These updated terms, alongside the capital raise, have strengthened our balance sheet. While July trading performance was roundabout break-even levels, August results generated losses with continued weakness in realized mobile pipeline sales versus our probability-weighted expectations. With the reduced visibility impacting both core businesses and increasing debt and leverage levels, a maximum capital raise under the authority of the board was executed to ensure that we can best navigate these market headwinds. Hexagon will continue to focus on responsible actions within our control, focused on balance sheet resilience as we face these uncertainties in our markets.

Here we illustrate the impact ranges of our additional cash flow and profitability initiatives for the four quarters through to that important milestone of Q3 2026. These are split between balance sheet and profitability drivers. On the balance sheet side, we expect between NOK 150 million-NOK 200 million in working capital reductions as we intentionally reduce our built-up carbon fiber, raw materials, and other key inventories through negotiated pauses in purchase commitments and, of course, the pull-through of sales. We can reduce CapEx in the short term by a further NOK 50 million-NOK 80 million from an annualized run rate of around NOK 130 million. We should not hold to those levels in 2027. Interest costs can be reduced by NOK 20 million-NOK 30 million, with benefits from the reduction in our absolute debt levels. Of the NOK 150 million cost saving target disclosed in connection with the cap raise in September.

An estimated NOK 70 million of positive run rate effects have already been realized by the end of quarter three. We expect to realize the remaining NOK 80 million over the coming quarters. We are also actively working on that additional ambition of NOK 50 million communicated in September, which would give us a range then of NOK 80-130 million over the next four quarters. Total potential cash improvement is as shown, and both before any additional cash generation from sales. Again, I’ll reiterate, these are before any additional cash generation from sales. In summary, we expect to reduce our interest-bearing debt levels over the next four quarters. While our cost savings initiatives will give a good boost to EBITDA, we will also be dependent on sales and mixed developments in the year ahead.

We therefore need to keep laser-focused to hit our covenant target at Q3 2026, which technically is highly sensitive then to the EBITDA development. Hexagon has a market-leading position and a history of profitable growth, and the market will recover over time. We will, of course, keep close and continuous dialogue with our banking partners in this period. With that, I’ll hand it back to Philip to share more on our outlook. Thank you, David. Let’s turn to the outlook. Overall uncertainty continues to provide limited visibility on how quickly the market will rebound. We are confident that Q4 will come in better than this quarter, with several orders being delivered during the fourth quarter of this year. Our cost saving program will also have a growing positive impact over the next few months and will improve our margins.

Beyond Q4, we will continue the delivery of our strategy. Entering 2026, our visibility beyond our current backlog is limited for our cyclical segments. Our aftermarket and public service segments of transit and refuse will continue to provide a baseload of relatively stable cash flows. However, based on our experience and market seasonality, we expect the first quarter of 2026 to be a weaker one. With our cost savings program, we are focused on our cost optimization program. We will deliver efficiency improvements. Alongside this, this will bear fruit. We have a sound liquidity position, as you have heard. Active cost management will help us as well. That means, despite the current market softness, our growth ambition remains firmly intact. We see three major drivers for when our markets will rebound.

The first driver is the US Class 8 truck market is at a cyclical low with an aging fleet. Those truck assets will need to be replaced at some point in time. The fact underpins recovery will happen, but the timeline and how quickly they get replaced is largely dependent on the macroeconomic situation and how fast freight rates recover. The second driver of our cyclical rebound is pure economics. Natural gas is the only cost-effective and widely available solution to decarbonize long-haul trucking. It offers an economic payback over traditional diesel trucks. The third driver lies in the positive signals from fleets. The X15N is changing the game. It is expected to unlock CNG adoption. In talking to fleets and seeing the positive response to our own demo truck program, we are very confident that this technology will scale.

The industry ambition remains unchanged at 8-10% CNG adoption of Class 8 trucks. In addition to these drivers, we are focusing on key strategic priorities. Driving the adoption of natural gas vehicles is one of those strategic priorities. We are also actively working to broaden our geographic and end market exposure with the purpose of smoothing the current cyclicality and growing our business. Our current opportunities represent market entries, which require limited capital that, again, can provide us with additional volumes and broaden our market exposure. It remains a question of when, not if, this market cycle rebounds. When it does, we, as the market leader for natural gas fuel system, with then an improved cost base, are in the pole position to capture growth more profitably. To sum it up.

Our key markets are in a cyclical downturn that is being compounded by overall macroeconomic uncertainty. We are, as Hexagon, doing our utmost to weather the storm and remain focused on driving further cost reduction and cash discipline to secure our liquidity and improve EBITDA break-even. We remain confident in the long-term growth of Hexagon. That growth story is firmly intact. We are taking measures to both accelerate the adoption of natural gas and diversifying our geographic, customer, product, and end market outreach. With that, I will hand back to Berit-Cathrin Høyvik for the Q&A.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you, Philip. We’ll start with the first question. It is for you, Philip. How have you managed to get in this situation? Shouldn’t you have started to cut costs a lot sooner? What signals are you getting from customers on orders?

Philip Schramm, CEO, Hexagon Composites: Okay. Thank you for that question. Since I started, we started to adjust to changing market dynamics. Already in Q1 and Q2, and as I also communicated, we have reduced the cost base. Nevertheless, with the weak result of August, we have taken one of our negative scenarios and initiated more. That was the start point of this major cost reduction program to preserve liquidity, improve our EBITDA level due to the fact that we are seeing more and more fleets being on the fence, the wait and see, to respond to this macroeconomic uncertainty and this unprecedented downturn in trucking in the United States. Nevertheless, the uncertainty is in the market. I cannot deny that. Our growth story is intact. CNG is the only alternative now to replace the base fuel diesel for heavy-duty trucking in the United States. The growth story is intact.

We are adjusting to the new reality. We are adjusting to a declining outlook. I am confident that we will weather the storm and come out of the storm stronger than we entered it.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. I’ll move over to you, David. A question on cash flow. Can you drag us through what the cash flow from investment activities relates to? What is included in the NOK 43 million of CapEx, the NOK 18 million in loan to CryoShelter, and the NOK 15 million in other investments?

David Bandele, CFO, Hexagon Composites: Sure. The $15 million was a modest investment into Pioneer, a strategic relationship in order to boost adoption of natural gas trucks. On CryoShelter, and CryoShelter, remember, is a pre-revenue company. They are actually working on a contract, also on a customer of ours. We supported their ability to do so. On CapEx, it is fair to say it is a normal CapEx that we have been, that we need to do. We will also note that we have had quite a few ERP programs actually coming to conclusion in Q3. Moving to a cloud system, which has been successful globally for the company, and also another ERP project within Digital Wave.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. Continue with you, David. Questions on SES. There are two questions, so I’ll start with the first. Could you please indicate the net interest-bearing debt you took on when you consolidated SES?

David Bandele, CFO, Hexagon Composites: SES was a debt-free transaction. It’s, like, pleased to say.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. The second, in round numbers, what will SES contribute to the Q4 numbers for EBITDA?

David Bandele, CFO, Hexagon Composites: That’s a good question. Obviously, when you do due diligence, we’re not yet our feet under the table properly. Of course, as announced, it was reporting around about EUR 30 million in top line and around about EUR 2 million in EBITDA. We’ll progress along that basis over the next few quarters.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. And then also another one for you, David. Why did payroll increase from the second quarter to the third quarter in 2025? The second, may we expect other operating costs to stay between NOK 100 million-NOK 105 million per quarter for the fourth quarter in 2026?

David Bandele, CFO, Hexagon Composites: Yeah, the other operating costs, as disclosed in the report, that’s a fair assumption from the ask of the question. On the other matter, it’s just technical. We have our long-term incentive program costs. We had a credit in Q2 and then more of a normal but reduced run rate in Q3. That reflects the financial performance projections. It’s just some accounting between Q2 and Q3.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you.

David Bandele, CFO, Hexagon Composites: Oh, one other thing. In Q3, we also booked EUR 9 million of severance cost.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: We will continue with questions on working capital, also for you, David. You have more than NOK 1 billion tied up in working capital. Why are you expecting so little working capital release? The second part of the question, are you committed to purchase some raw materials beyond 2026?

David Bandele, CFO, Hexagon Composites: We, of course. We have stated that we expect at least EUR 200 million. We do also expect market recovery in 2026. Yes, there is good reason to take down working capital as much as we can.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. We’ll continue questions on Mobile Pipeline. There are two questions. There’s one for you, David, and one for you, Philip. First, David. In your investor presentation in relation to the equity raise, you show Mobile Pipeline is not expected to reach 2024 levels before 2028. Why did you expand capacity by 50% last year?

David Bandele, CFO, Hexagon Composites: The capacity program was essential also in terms of flexibility of operations. We have quite a good program of new products coming online, and that gives us increased flexibility. There were also productivity gains, as we mentioned at the time. At the end of the day, Mobile Pipeline delivered $40 million in EBITDA in 2024 for a $3-$4 million investment. We feel that’s the right way to set us up also going forward. Of course, we did come into the year with elevated levels of backlog, which we successfully reduced.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. Then the second part for you, Philip, on Mobile Pipeline. You control 50% of the market according to the same slide. Do you not have a dialogue with your largest customers?

Philip Schramm, CEO, Hexagon Composites: No, we do have a dialogue with every one of our customers. As we stated, and I said multiple times before, customers within the gas transportation industry are highly impacted by the oil and gas prices, first for shelf activities. On the other hand, the RNG side is impacted by lower credits, as we stated also in this presentation today. This is focusing these companies on asset utilization. These discussions we are having. One thing which has changed is now these customers are also truck customers. Every customer who has a CNG unit, one of our Mobile Pipeline trailers, can haul these trailers with an X15N engine truck. We are combining this and approaching all of our customers with every one of our product offerings. This is a change which we have not had last year.

This is what we are moving forward with, to offer our customers the entire portfolio, of course. These discussions are ongoing. In an unprecedented macroeconomic environment where there is a lot of uncertainty, where there is a lot of wait and see. If the utilizations and some of the uncertainty are going away, we see also momentum from the discussions with our customers that this might change. This is what we are preparing for. As I said, we are doing our utmost to weather the storm, to improve our cost base, secure liquidity, because we are prepared. We have the capacity to do so. We can scale up. As I said, it is not about the if. It is about the when.

We trust in the market of 8-10%, as every other industry player does, of CNG adoption of the entire Class 8 fleet.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. Move back to you, David. Even with cost cutting of EUR 119 million, the Q3 covenant looks tight, implying revenue run rate must also come up. How do you see that happen with truck volumes weakening further?

David Bandele, CFO, Hexagon Composites: Yes. Obviously, we mentioned the maximum effect we expect from the cost initiatives of up to EUR 130 million additional for the next four quarters. The rest, as mentioned there, should come from sales. That’s a fair statement. If you just repeat that question, sorry.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Even with the cost cutting of €190 million, the Q3 covenant looks tight, implying revenue run rate must also come up. How do you see that happen?

David Bandele, CFO, Hexagon Composites: Right. In terms of the recovery, I think you heard it in the presentation, that we believe the assets are close to being replaced on trucks. We look for a truck recovery far closer than we look for a Mobile Pipeline recovery. In Mobile Pipeline, there is also split geographies. North America is obviously our biggest. We see promising increases in Mobile Pipeline in the rest of the world and Europe, particularly the Jordan contract, for example. Those are sort of brighter elements of potential recovery.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. And then for you, David, also on working capital. The working capital reductions, is that relative to third quarter 2025 level?

David Bandele, CFO, Hexagon Composites: Correct. On the slide, we presented additional cash, P&L, and the balance sheet initiatives. Those are all in addition to Q3 run rate.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Yep. And then we have a question for you, Philip. Hexagon Purus will need more cash or be bought. Will you let anyone buy them? And what is the best-case scenario with regards to Hexagon Purus, as you see it?

Philip Schramm, CEO, Hexagon Composites: I think it’s an evaluation. As I stated before, we believe that we have provided Hexagon Purus with enough liquidity to get through this challenging time. As with every one of our minority shareholdings, we are looking for opportunities to generate and improve shareholder value. We evaluate situations closely as opportunities come by. That is the same also with our shareholding in Hexagon Purus.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. A question for you, David, on gross margin. Could you please elaborate on why the gross margin improves significantly from the second quarter to the third quarter?

David Bandele, CFO, Hexagon Composites: It’s a pretty technical answer, but I’m happy to maybe take that more offline. Of course, any improvement is good.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Let’s see. There is a question for you, Philip. Why are you so bullish on truck recovery when the data you are presenting shows further decline in truck orders in 2026?

Philip Schramm, CEO, Hexagon Composites: Because I trust first in our case. Secondly, the numbers speak for itself. It’s an unprecedented downturn in Class 8 truck decline in the United States. The age of the fleets is increasing. At some point, there will be a turning point that trucks need to be replaced. That makes me confident that this will change. It’s not me saying this. If you listen to other market players in this area, they are also seeing that there might be a change. When it is, that’s the question. That’s my role as the CEO of Hexagon Composites to prepare us for this. That’s why we have initiated the cost reduction program and the preservation of liquidity. This is my goal, that we are weathering these times and preparing us for the future. Because, as I said before, the adoption in other markets for CNG.

Is possible. I truly believe, why should it be different from our main market in the United States, where the regulations, as I said before, with the, yeah, move away from the zero emission mandate, is actually putting CNG in the spot to be the alternative to replace the base fuel diesel for heavy-duty trucking and heavy long-haul and high-energy intensive mobility applications.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. A question for you, David, on backlog. Why do you not provide any order backlog information, which would really help outside shareholders close some of the information gap between insiders and outsiders?

David Bandele, CFO, Hexagon Composites: Sure. I do not think it is relevant in the truck industry with the frame agreements, LTAs that we have. It is a long-running question when it comes to Mobile Pipeline. We have chosen not to do that historically for those reasons.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. One question for you, David, on the cyclicality. Given the immense cyclicality you apparently are exposed to, should you ideally have financial debt at all?

David Bandele, CFO, Hexagon Composites: It’s a good question to have, but obviously, it’s always a balance of your capital structure between equity and debt. I’ll leave it there.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. I think that’s. We have one final question here for you, Philip. In terms of, can you comment on new contracts and the pipeline for Pioneer?

Philip Schramm, CEO, Hexagon Composites: For Pioneer?

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Mm-hmm.

Philip Schramm, CEO, Hexagon Composites: I cannot comment for our partner, it’s an independent company. What we see and what I hear, there is interest, and it’s the same interest which we see. As I heard, there might be something coming, but I cannot. It’s just speculation. And it’s up to Pioneer to comment on that.

Berit-Cathrin Høyvik, Moderator, Hexagon Composites: Thank you. Great. I think that concludes our presentation for today. Thank you for joining.

David Bandele, CFO, Hexagon Composites: Okay. Thank you very much.

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