April 5, 2022
Hexagon AB reports 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-off charge of approximately 63 MEUR, which will impact the first quarter 2022. The majority relates to the freezing of operations in Russia, which includes a write-off of assets in the balance sheet and personnel costs.
Freezing Business Operations in Russia
Due to circumstances after Russia's invasion of Ukraine, Hexagon has taken the decision to freeze all business activities in Russia. As previously communicated, Hexagon has already suspended all exports of hardware and software licenses to Russia and is now moving to adapt to the current business situation. Given the outlook uncertainty, these steps are constantly under review and will be adjusted if the situation changes. About 2% of Hexagon's annual turnover can be attributed to business in Russia, with approximately 200 people employed in the country.
Hexagon Wraps up Acquisition of ETQ
ETQ is a provider of software-as-a-service-based QMS (quality management system), EHS (environment, health and safety) and compliance management software. ETQ is expected to generate revenues of around 75 MUSD in 2022 with an adjusted operating margin of over 35% (cash EBITDA margins of around 45%). SaaS is expected to account for half of bookings in 2022 and has been growing at a trailing 3-year compound annual growth rate (CAGR) of 60%.
The transaction is expected to generate sales synergies of over 40 MUSD, with strong incremental margins, by 2026. The transaction's completion 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.
Sources: Press materials received from the company and additional information gleaned from the company’s website.