Hexatronic Group AB (publ) Year-end report January – December 2022

Hexatronic Group AB (publ)
Year-end report January – December 2022

Events during the quarter

• Hexatronic completed the acquisition of Impact Data Solutions Ltd.
  
  
• Hexatronic has signed a binding asset purchase agreement to acquire all business activities of Rochester Cable, from TE Connectivity, for an enterprise value of MUSD 55.
  
  
• Hexatronic acquires leading micro duct business KNET for an expected enterprise value of MUSD 63.
  
  
• Hexatronic has signed a three-year strategic supply agreement with Eltel for the Finnish market, to a value of approximately MEUR 20.
  
  
• Hexatronic has signed a four-year Strategic Partner agreement with Grizzly Broadband in Montana, USA, to a value of over MUSD 15.
  
  
• Hexatronic syndicated credit facilities have increased by MSEK 1500 to finance published acquisitions and increase unutilized credit facilities.
  
  

Events since the end of the quarter

• Hexatronic adjusted the profitability target to an EBITA-margin of 15% to 17% over a business cycle. The previously set profitability target was at least 12% EBITA-margin over a business cycle
  
  
• The Board of Directors will propose a divided of 0.10 SEK (0.10) per share for the financial year 2022 to the Annual General meeting
  
  

Comments from the CEO

A great finish to the year

The year was another record year in terms of both sales and profitability. We continued to grow very strongly, particularly in the US and UK, but also in Germany. Sales grew by 88% in 2022 with 53% organic growth compared to 2021. Profitability (EBITA) increased 177% to a margin of 16.6% for the full year 2022. The profitability target of 12% was significantly exceeded and given the trends we see ahead, we have decided to increase the target to 15-17% EBITA over a business cycle.

The fourth quarter followed the trend we have seen throughout the year, with solid sales growth. We achieved sales growth of 54%, of which 36% organic growth, compared to the same quarter last year. Profitability (EBITA) increased by 153%, resulting in a margin of 17.3%. We continue to see a positive impact on profitability due to a favorable geographic sales mix and positive scale effects with high-capacity utilization in our factories.

Sales in our largest market, North America, continued to develop very strongly in the fourth quarter, with a growth of 100% compared to the same quarter last year. Both duct sales and our FTTH systems developed strongly. During the quarter, a 4-year contract of MUSD 15 was signed with Grizzly Fiber for our FTTH system. Our new duct plant in Clinton, South Carolina, began small-scale production during the quarter. We expect full-scale production to be achieved by the end of the second quarter of 2023.

Sales in Europe, excluding Sweden, continued to develop strongly in the last quarter of the year, mainly thanks to the UK and Germany. Sales in the region increased by 56% compared to the corresponding quarter last year. During the quarter, a three-year contract of MEUR 20 was signed with Eltel Finland for our FTTH system.

Sales in Sweden remained strong and increased by 11% compared to the same quarter last year.

Sales in the rest of the world grew by 9% in the fourth quarter compared to the corresponding quarter last year, mainly due to the acquisition of KNET, which was consolidated as of December 1, 2022.

With the acquisition of the micro duct manufacturer KNET in South Korea, we enhance our position in our strategic growth markets in the US and Europe, as well as opening up new selected markets in Asia. Further we secure capacity and strengthen the groups competence in plastics and production processes.

The acquisitions, during the year, of homeway in Germany, strengthened our indoor offering and the acquisition of IDS in the UK strengthened our data center offering. We have also signed an agreement to acquire Rochester in the US, which strengthens our Harsh Environment business offering (fiber optic solutions in demanding environments) and we expect closing in the first quarter of 2023.

Our acquisition efforts in 2023 will primarily focus on building the Harsh Environment, Wireless, and Data Center businesses. We continue to have an attractive pipeline for further acquisitions in 2023.

Order intake has continued to develop strongly. At the end of the year, we have an order book that is organically 67 percent higher than the corresponding time last year. We have yet to see any signs of a slowdown in order intake. During the last month, we have noticed that a few smaller and relatively new players have had difficulties to finance planned FTTH-projects. We assess that it will not negatively affect the rollout pace on the market as the limited factor is still expected to be trained installers. In the event of a potential recession, we expect to see some negative impact.

Welcome to join us on our growth journey.

Henrik Larsson Lyon
President and CEO Hexatronic Group AB (publ)

Please direct any questions to:
Henrik Larsson Lyon, CEO Hexatronic Group, +46 706 50 34 00
Pernilla Lindén, CFO Hexatronic Group, +46 708 77 58 32

This information comprises disclosures that Hexatronic Group AB (publ) must publish according to the Swedish Securities Market Act The information was submitted for publication, through the agency of the contact person set out above, at 07:00 CET on February 9, 2023.
This is a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails.

Hexatronic creates sustainable networks all over the world. We partner with customers on four continents – from telecom operators to network owners – and offer leading, high-quality fiber technology for every conceivable application. Hexatronic Group (publ.) was founded in Sweden in 1993 and the Group is listed on Nasdaq OMX Stockholm. Our global brands include Viper, Stingray, Raptor, InOne, and Wistom®.

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• Hexatronic Group - Year-end report 2022

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