Hexagon announces financial adjustments related to its business operations in Russia and the acquisition of ETQ

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NACKA BRANCH, Sweden, April 1, 2022 /PRNewswire/ — Hexagon AB, a global leader in digital reality solutions combining sensors, software and autonomous technologies, today announced financial adjustments related to a decision to freeze business operations in Russia and the completion of the acquisition of ETQ. Hexagon will take a one-time charge of approximately 63 MEUR which will have an impact on the first quarter of 2022. The majority relates to the freezing of operations in Russiawhich includes both a write-off of assets on the balance sheet and personnel costs.

Freeze business operations in Russia
Due to the circumstances following Russia invasion of UkraineHexagon has made the decision to freeze all business activities in Russia. As previously announced, Hexagon has already suspended all hardware and software license exports to Russia and is now taking new steps to adapt to the current business situation. Given the uncertainty of the outlook, these measures are constantly reviewed and will be adjusted if the situation changes. Approximately 2% of Hexagon’s annual revenue can be attributed to activities in Russiawith about 200 people employed in the country.

Hexagon Completes Acquisition of ETQ
ETQ is a leading provider of SaaS-based QMS (Quality Management System), EHS (Environment, Health and Safety) and Compliance Management software. ETQ is expected to generate revenues of approximately $75m in 2022 with an adjusted operating margin of over 35% (cash EBITDA margins of approximately 45%). SaaS is expected to account for half of reservations in 2022 and has been growing at a 3-year compound annual growth rate (CAGR) of 60%. The transaction is expected to generate sales synergies of more than 40 MUSD, with very strong additional margins, by 2026. Completion of the transaction was subject to regulatory approvals and other customary closing conditions, which have now been obtained. ETQ will be consolidated as of April 1, 2022 and will operate within Hexagon’s Manufacturing Intelligence division.

Transaction details

  • Total purchase price of 1,200 MUSD on a cash and debt free basis
  • The cash consideration is fully funded by existing and new credit facilities and the proforma net debt to EBITDA ratio based on the fourth quarter of 2021, including the transaction, is approximately 2.0
  • Excess values ​​in the purchase price allocation (PPA) are estimated at 250 MEUR and will be amortized over 13 years, starting in the second quarter of 2022
  • A deferred revenue adjustment of 5 MEUR will impact the income statement over the next three quarters, starting in the second quarter of 2022

For more information, please contact:
Maria Luthström, Head of Sustainability and Investor Relations, Hexagon AB, +46 8 601 26 27, [email protected]
Christine ChristensenMarketing Director, Hexagon AB, +1 404 554 0972, [email protected]

This is information that Hexagon AB is required to make public under the EU Market Abuse Regulation. The information has been submitted for publication, through the contact person listed above, to 08:00 CET April 1, 2022.

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SOURCE Hexagon

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