Hexagon Composites Q4 Call: Recovery Amid Headwinds

HEXAGON COMPOSITES ((NO:HEX)) has held its Q4 earnings call. Read on for the main highlights of the call.

Hexagon Composites’ latest earnings call painted a picture of cautious optimism, as management highlighted a strong Q4 rebound, solid cost-cutting progress and strategic wins in new markets, while acknowledging that full-year results were weak, key segments remain below breakeven and balance-sheet risks still hang over the next phase of the turnaround.

Q4 rebound driven by strong revenue momentum

Hexagon Composites reported Q4 2025 revenue of NOK 831 million, a 50% jump versus Q3, underscoring a sharp sequential rebound in activity, including NOK 97 million from the October acquisition of SES Composites and 37% organic growth, which suggests that demand is slowly returning after a very challenging year across core markets.

Adjusted profitability improves but remains modest

Quarterly EBITDA reached NOK 156 million, boosted by a NOK 119 million noncash accounting gain and NOK 13 million in severance, while adjusted EBITDA of NOK 49 million translated into a 6% margin, making Q4 the company’s best quarter of 2025 but still pointing to only modest underlying profitability relative to historic levels.

Refuse segment delivers record performance

The Refuse business stood out as a clear bright spot, posting record annual revenue of roughly NOK 800 million and Q4 EBITDA of NOK 61 million, equal to an 11% margin, driven by resilient public-sector demand, better product mix and materials efficiencies that partially offset weakness in other parts of the portfolio.

SES acquisition adds scale and early synergies

The SES Composites acquisition, completed in October, contributed NOK 97 million in revenue and NOK 4 million in EBITDA in Q4, with a NOK 119 million purchase accounting gain recognized, and management emphasized that further financial synergies are expected to materialize in 2026 as the asset is fully integrated into Hexagon’s operations.

New orders showcase diversification and technology edge

Management highlighted a sizeable order of around NOK 110 million from a leading Mexican truck operator for 100 sleeper cab systems and the company’s first commercial space application contract valued at slightly over USD 7 million, signaling both geographic diversification and validation of Hexagon’s composite technology in higher-value segments.

Cost cuts and structural optimization lower breakeven

Hexagon has launched a broad cost and cash optimization program, targeting a 25% workforce reduction and delivering around NOK 200 million in personnel and SG&A savings so far, including NOK 100 million of structural cuts, alongside visible working capital release in Q4 and strict 2026 CapEx guidance capped at NOK 80 million to reduce the group’s structural breakeven point.

Liquidity shored up by cash flow and financing

The company generated positive operational cash flow in Q4, supported by NOK 37 million of working capital release and other noncash add-backs, which together with a NOK 100 million debt drawdown lifted quarter-end cash and left Hexagon with available liquidity of NOK 561 million and an equity ratio of 50% as it navigates a still fragile recovery.

Regulatory backdrop turning into a potential tailwind

Confirmation of the EPA 2027 NOx rule has provided long-awaited regulatory clarity, prompting a positive reaction in Class 8 truck sales in December and January and strengthening the investment case for compressed natural gas solutions, which management believes will support demand from 2027 onward even if the near-term operating environment remains subdued.

Full-year revenue contracts sharply versus 2024

Despite the stronger finish to the year, full-year 2025 revenue fell to NOK 2.9 billion, significantly below 2024 levels, as Hexagon grappled with broad-based demand weakness across its core activities, especially in Mobile Pipeline and truck-related businesses that were hit by lower freight activity and delayed investment decisions.

Profitability for 2025 materially depressed

Adjusted EBITDA for 2025 came in at just NOK 65 million, representing a thin 2% margin compared with 13% in 2024, highlighting how the volume downturn and pricing pressure overwhelmed cost actions and leaving investors focused on whether the Q4 margin improvement can be sustained and built upon in 2026.

Mobile Pipeline recovery incomplete and below breakeven

Mobile Pipeline delivered about NOK 200 million in Q4 revenue, more than doubling Q3 but still significantly lower year-on-year, and the segment continues to operate below financial breakeven due to weaker shale activity, slower roll-out of renewable natural gas projects and heightened pricing pressure in a competitive market.

Aftermarket and MAE services stuck in a cyclical trough

Aftermarket revenue reached NOK 105 million in Q4 and NOK 433 million for 2025, both down year-on-year, as lower truck volumes, deferred maintenance and a cyclical low in MAE trailer requalification activity combined to suppress service demand that typically provides a stabilizing counterweight to equipment cycles.

North American market headwinds weigh on demand

Management underscored that core North American markets remain challenged by multiyear low freight rates, fleets postponing replacement cycles, low oil prices, high interest rates and generally weak investment appetite, all of which dampen near-term demand for vehicle retrofits and broader fleet upgrades using Hexagon’s solutions.

Balance-sheet leverage and covenant risk under scrutiny

Net debt remains slightly above NOK 1 billion and net working capital close to NOK 1.2 billion, with the financing package including a leverage covenant waiver only until Q3 2026, and management openly acknowledged a nonzero risk of a technical covenant breach once the 4.2x EBITDA covenant is reinstated, while stressing that discussions with lenders are ongoing.

Margin recovery hinges on volume comeback

Hexagon reiterated that meaningful margin recovery will depend primarily on volume growth, with recent cost measures lowering the breakeven but unlikely to restore profitability to 2024 levels without a sustained upturn in order flow, leaving the company highly sensitive to the timing and strength of a broader market recovery.

Cautious outlook and back-loaded 2026

Management’s near-term guidance remains guarded, as they expect core markets to stay soft through the first half of 2026 and view the year as back-end loaded, with revenue projected to be broadly in line with or only moderately above 2025, implying limited short-term upside and continued execution and market-timing risk.

Forward-looking guidance focuses on stability and cash

For 2026, Hexagon guides revenue to be roughly flat to slightly higher than 2025’s NOK 2.9 billion, with improved profitability versus the weak 2% EBITDA margin and an expectation of positive operating cash flow, supported by around NOK 200 million in cost reductions to date, a tight NOK 80 million CapEx cap and an anticipated NOK 100–150 million working capital reduction as the company works within a covenant framework that tightens after Q3 2026.

Hexagon Composites’ earnings call left investors weighing an encouraging Q4 recovery, tangible cost savings and promising new orders against a still-soft market, depressed full-year profitability and leverage constraints, and the story now hinges on whether management’s disciplined execution and emerging regulatory tailwinds can intersect with a cyclical upswing to turn cautious optimism into a durable earnings recovery.