Hexagon’s Q3 shows acceleration

Hexagon, the parent company of brands such as Intergraph, Leica and Vero, just announced that total reported revenue was up 14% in Q3 to €742 million; on an organic and constant currency basis, revenue was up 6%.

In prepared remarks, CEO Ola Rollén said that Q3 showed a slight acceleration from the first half of the year, “despite a weaker world economy. The launch of our new software ‘Captivate’ fueled growth in the Geosystems business to 7 per cent and a strategic win in the shipbuilding industry helped Intergraph PP&M post organic growth of 12 per cent. We do however see a weakening of the North American manufacturing sector, as well as continued weak demand in the oil and gas sector, leading to a slowdown of the order intake in Industrial Enterprise Solutions. Finally, it is pleasing to see a record cash flow in the quarter, which gives us the ability to continue to enhance our underlying growth rate through acquisitions.”

A couple of quick thoughts until I can listen to the earnings presentation for more details: the shipbuilding win Mr.Rollén referred to helped to offset potential slowdown caused by the turmoil in oil and gas — though Intergraph sell most into downstream/refining and not upstream/offshore, where many of the cancelled projects live.

By geo, revenue from Asia was up 10% on good performance in Australia, India and Japan, with modest growth of 5% in China — better than in recent quarters. Revenue from EMEA was up 7% , led by Western Europe, which was up 9%. For reasons I hope to learn later, revenue from Russia was up — that’s counter to what a lot of other companies are reporting, and what Hexagon itself has said for a while. Revenue from the Americas was again mixed; up 2% in total even as revenue from South America was down 15% in Q3.

Intergraph PP&M revenue is now reported as part of Industrial Enterprise Solutions (IES), where revenue was up 7% in constant currencies and on an organic basis to revenues of €371 million. Intergraph PP&M was up 12% including that shipbuilding win; without it the company says growth was “mid-single digit”.  The Metrology business was up 4% (organic, similar structure), of concern is that it saw a negative book-to-bill, which means that the order pipeline shrank, giving little confidence in Q4 and beyond.

More to come … But first, off to Solid Edge University. Hope to see you there! If not, follow along at #SEU15