Earnings call transcript: Hexagon Purus sees revenue drop in Q2 2025

Hexagon Purus reported a significant 63% year-over-year revenue decline to NOK193 million in Q2 2025, resulting in a negative EBITDA of NOK161 million, primarily attributed to weak demand in the hydrogen infrastructure and mobility sectors. This poor performance triggered a 15.52% drop in its pre-market stock price. In response, the company is implementing aggressive cost reductions, including a 30% workforce reduction, and anticipates a stronger second half of 2025 driven by a 33% increase in its order book and an expanded partnership with Hino, aiming for EBITDA breakeven by 2026 despite ongoing cash burn.

Analysis

Hexagon Purus (HPUR) reported a severe contraction in its Q2 2025 performance, with revenue plummeting 63% year-over-year to NOK 193 million and EBITDA deteriorating to a negative NOK 161 million. The poor results, which triggered a 15.52% pre-market stock decline, were driven by a significant 95% YoY drop in the Hydrogen Infrastructure segment and reduced activity in heavy-duty trucking due to project delays and economic uncertainty. In response, management is executing an aggressive turnaround strategy centered on an expanded cost-reduction program aiming for NOK 350 million in savings, including a planned 30% workforce reduction in Germany. The company is also undergoing a strategic review of its Battery Systems and Vehicle Integration (BVI) business, bolstered by an expanded partnership with Hino for Class 6 and 7 electric trucks.

Despite the operational and financial distress, forward-looking indicators present a mixed but potentially improving picture. The order book grew 33% from the previous quarter, providing improved revenue visibility for the second half of 2025, with management expecting a material pickup in the hydrogen distribution segment. However, the company's liquidity is a primary concern, as it is rapidly burning through cash with a balance of NOK 527 million after a negative operating cash flow of NOK 197 million in the quarter. While the stock trades at a low 0.68x price-to-book ratio, suggesting potential undervaluation, its 75% decline over the past year and high beta of 1.17 reflect significant market skepticism about its ability to achieve its targeted 2026 EBITDA breakeven amid regulatory delays and challenging market conditions.

Key Decisions for Investors

• Investors should treat Hexagon Purus as a high-risk, speculative turnaround opportunity, weighing the low 0.68x price-to-book valuation and strengthening order book against significant operational headwinds and ongoing cash burn.
• The primary focus should be on the company's liquidity runway; closely monitor cash burn and the NOK 527 million cash balance in the upcoming quarters to assess the viability of reaching the targeted 2026 EBITDA breakeven point without further financing.
• Positive catalysts to watch for include the conversion of the H2 2025 order book into realized revenue, concrete outcomes from the strategic review of the BVI business, and signs of stabilization in the hydrogen infrastructure market.
• Given the company's exposure to policy, investors must track external factors such as the pace of EU hydrogen regulation implementation and the durability of state-level zero-emission vehicle incentives in North America, as these are critical drivers for future demand.