2024-02-01 14:35:03 ET
Hexagon AB (publ) (HXGBF)
Q4 2023 Earnings Conference Call
February 1, 2024 04:00 AM ET
Company Participants
Paolo Guglielmini - President and CEO
Ben Maslen - CSO
David Mills - CFO
Conference Call Participants
Joachim Gunell - DNB Markets
Sven Merkt - Barclays
Daniel Djurberg - Handelsbanken
Nay Soe Naing - Berenberg
Olof Cederholm - ABG Sundal Collier
Viktor Trollsten - Danske Bank
Daria-Ioana Sipos - JPMorgan
Mikael Laséen - Carnegie Investment Bank
Magnus Kruber - Nordea
Presentation
Paolo Guglielmini
Thank you very much for joining this Q4 2023 and Full Year Report. Welcome. We're pleased to report another good growth quarter, -- carries us throughout the last couple of years is continuing, is driven by the efforts that we're making in innovation.
Automation sensor fusion cloud technologies are carrying growth throughout most of our divisions and that's also coming with margin expansion, which underlines good execution, good discipline and strength of the business model.
In Q4, we were pleased to report a strong cash conversion and overall for the full year 2023 results came on track with our 2026 objectives, which we're going to review in a second.
As a result, the Board proposes an increased dividend of €0.13 per share. Indeed, Q4 represented a growth of 5 percentage points on an organic basis with adjusted gross margin up to 67%, which, of course, is a very important metric for us, driven by improvements, not only in volume, but also in mix and a growing prevalence of our software-centric solutions. Operating margin came in at 31% in the quarter with cash conversion of 103 percentage points.
For the full year 2023, growth on an organic was up 7% with an adjusted gross margin of 66%, operating margin of 29 percentage points in cash conversion within the guidance range.
If we move on to Slide 5, of course, Q4 as well was the opportunity to meet a lot of you also face-to-face at Capital Markets Day back in December in London. We've discussed a series of things during that day. We restate the confidence in the targets -- in the midterm targets for 2026. We plan to keep on growing the business on an organic basis between 5 and 7 percentage points.
Growth from structure is planned to come in around the 3 to 5 percentage mark. Operating margin will need to keep on ticking up, and we plan for that to land above 30% inclusive of PPA amortization by 2026.
We've also laid out plans by areas and by division in terms of how innovation, commercial execution, operational discipline will need to help us to leverage the strong value proposition that we are sitting on.
Q4 has been a reconfirmation of the fact that the macro trends that we help our customers with in terms of quality of the output, in terms of financial viability, productivity of their operations in terms of safety, and security of the operations, but also decarbonization really underline that we are at the right spot in the market....
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Hexagon AB (publ) (HXGBF) Q4 2023 Earnings Call Transcript