Hexatronic Group AB (publ) Year-end report January – December 2021

Hexatronic Group AB (publ)

Year-end report January – December 2021

Events during the quarter

•        Hexatronic has acquired all the telecom activities of REHAU Group – one of the main players in the German microduct market.

•        Hexatronic has aquired Data Center Systems who provides fiber connectivity solutions to the US data center market.

•        Hexatronic has signed two contracts with existing customers on the German market amounting to a total order value of MEUR 21.

•        Hexatronic invests 18 MUSD in a new micro duct plant in the US.

•        Hexatronic has carried out a directed share issue and raised proceeds of SEK 550 million.

Events since the end of the period

•        Hexatronic adjust the profitability target to at least 12 percent EBITA-margin over a business cycle. The previously set profitability target was at least 10 percent EBITA-margin on a rolling 12-month basis.

•        Hexatronic’s growth target has been adjusted to annual growth rate of at least 20%, over a business cycle. Previously set growth target was to grow more than its market organically and with an annual growth rate of at least 20 percent.

•        The board of Directors will propose a dividend of SEK 0.50 (0.50) per share for the financial year 2022 to the Annual General Meeting.

COMMENTS FROM THE CEO

A year of impressive development!

2021 can be summed up as a record year, with very strong growth both in terms of sales and profitability. The year also marked a breakthrough for our system sales in the USA and Germany. Sales increased by 68 percent, of which 39 percent was organic growth. Profitability (EBITA) increased 92 percent equating to a margin of 11.3 percent, which exceeds our target of 10 percent by a good margin. We have therefore decided to revise our goal for the EBITA margin to at least 12 percent.

Sales during the quarter were very strong with an increase of 95 percent on the same quarter the previous year, of which 48 percent was organic growth. Profitability for the quarter showed an ongoing positive trend with an EBITA margin of 10.5 percent, equating to an increase of 87 percent. Adjusted for a remeasurement of outstanding share-based incentive programmes, the EBITA margin totalled 12.3 percent, corresponding to an increase of 119 percent. The adjustment, which totals MSEK 21, is a direct result of the share price development during the quarter.

We continue to see rising costs for raw materials, which burdened the gross margin for the fourth quarter by around one to two percentage points, and will probably also impact negatively on the first quarter of 2022. We are working actively to pass on the cost increases to our customers.

Sales in Europe excluding Sweden increased by 112 percent for the year. The main drivers of this growth are Great Britain, Germany and Norway. We had a breakthrough in Germany during the quarter, with two major contracts worth a total of MEUR 21. In Great Britain, an extension of the framework agreement with CityFibre was signed after the end of the quarter with an expected order value of

100 MGBP over three years. We remain positive in our outlook on developments in these markets for the years to come.

Sales in our largest market, the USA, grew by 89 percent during the year, primarily driven by a strong underlying infrastructure market for duct, although our system sales in FTTH (Fiber to the home) are also growing well. We retain our very positive view of the North American market for the years ahead, particularly the major infrastructure programmes to be implemented towards the end of the year.

Sales in Sweden remained on a high relatively unchanged level compared to the previous year. A slightly weaker FTTH market was balanced out by expansion in the transport networks.

We have considerably bolstered and developed our microduct business during the year. With the acquisition of REHAU’s telecom business in Germany and Austria, and the acquisition of Weterings in the Netherlands earlier in the year, we now purchase far higher volumes of materials, have a broader product offering and a completely different level of market presence in Europe. Along with the upcoming duct factory in the USA, we have in a short time become a far larger player on the global microduct market, with a whole new level of proximity to our customers on our growth markets.

2021 has been an intensive year for acquisitions, with a total of seven companies acquired. In addition to REHAU’s telecom business, we also acquired US company Data Center Systems (DCS) during the quarter, active in fiber optic solutions for data centers. All our acquisitions during the year provide exciting growth opportunities over the next few years. We will remain active in acquisitions in order to boost our presence in growth markets and expand our offering.

The order book has continued to develop very positively. We ended 2021 with an order book that was 179 percent higher organically than at the same point in the previous year. The strong order book is well distributed across most of our companies, with those in the USA accounting for the largest increase.

With the strong order book and a continued positive view of the market’s development, we will continue to invest in increased production capacity. During the quarter we carried out a directed share issue which raised MSEK 550. The main aim was to strengthen the balance sheet for further acquisitions, as well as investments in higher capacity.

Welcome to join us on our growth journey.

Henrik Larsson Lyon

President and CEO Hexatronic Group AB (publ)

Publication

This information comprises disclosures that Hexatronic Group AB (publ) must publish according to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, under responsibility of the contact persons named below, on 24 February 2022 at 07:00 CET.

Please direct any questions to:

• Henrik Larsson Lyon, President and CEO, + 46 (0)70-650 34 00

• Pernilla Lindén, CFO, + 46 (0)70-877 58 32

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