Hexagon Composites ASA

Jon Erik Engeset - Chief Executive Officer David Bandele - Chief Financial Officer

Fredrik Steinslien - Pareto Securities

Good morning. Welcome to Hexagon Composites Quarterly Three Presentation 2016.

We have the quarter with relatively low sales, but we estimate that the turnover is now reaching the low point. And we will see an increase going forward.

To be frank we had expected somewhat higher turnover also in the quarter, but approximately US$5 million of sales weren’t pushed into quarter four due to a delay from a sub supplier. It has no consequences for our customer relationships it was handled in a very efficient way, but it impacts the numbers somewhat for the quarter.

Otherwise in the quarter very strong year-over-year quarter in the LPG segment, 52% increase and the confirmation of the very positive development that we have seen for some while in that business area. It is especially the mobile pipeline sales that we have been struggling with actually now for two years.

I'll come back to that in the outlook section, but the sales in the quarter were very weak. We've seen a pickup in the heavy-duty truck bus markets and so while Q2 was soft we have seen an improvement now in Q3 and we will also see a continuation of that going into Q4.

And a highlight for us this year is very healthy development in the light-duty segment and also that we took the order with Mercedes, Daimler for the GLC Fuel Cell vehicle. Then we have closed the de-merger and subsequent merger of our CNG heavy-duty automotive business with Agility Fuel Systems and created Agility Fuel Solutions where we then hold 50%.

And last but not least in the quarter we are proud to announce that we acquired xperion. The player that we have considered our main competitor overall globally and of course I'll return to that in the outlook section.

But first David, if you’ll take us through the numbers.

Thank you, Jon Erik. Thanks for joining us for third quarter 2016 Hexagon Composites group financials.

Highlights then we made operating income of NOK266 million slightly up from the same quarter last year, recorded EBITDA, earnings before interest taxes depreciation and amortization of NOK5 million. This is versus the minus NOK31 million results same period last year and written on a net loss of minus NOK11 million versus the minus NOK36 million same period last year.

In terms of profitability again as Jon Eric mentioned it's very important for us to have the Low-Pressure business area. This has been unaffected by the macro the oil price related headwinds and that continues to return very solid performance strong in Q3.

This is obviously opposite to what's been happening on a High-Pressure which has been impacted by those oil price related impacts. And as Jon Eric mentioned weaker mobile pipeline volumes actually acts as anchor or a drag to our profits.

So it's driving the losses here. Good to say that the cost initiatives that were executed in Q4 have helped mitigate that some what and also we should note that hydrogen that’s more a high-tech side, this is an investment into the future.

Hydrogen remains dilutive to our results currently, but in the future this will be a very big business unit for us. So double-digit year-over-year growth in Low-Pressure is positive the pickup in the CNG North America heavy-duty volumes very positive.

This is higher both than the second quarter 2016, but also first quarter 2016. So that's a key underlying driver of future profitability.

Light-duty vehicles continues to grow profitably very good and when we look at the balance sheet we have the same swings that we do suffer from. This has been positive in operating working capital this quarter mainly driven by reducing our inventory levels.

The big impact to the balance sheet of the quarter was drawing down debt right at the end of September 30. We drew down debt in order to fund the acquisition of xperion right after the quarter into quarter four.

Let's take a check of our year-to-date, how we are performing throughout 2016 and very quick to know that we have dropped NOK200 million on our topline, so that's quite a significant volume drop year-over-year again, coming from mobile pipeline volumes, but also lower heavy-duty truck sales first half of the year. However, very key to note that we've matched EBITDA despite the NOK200 million loss, so again testament to the cost initiatives that were executed in Q4, 2015.

We would have, of course, preferred to have at least year-over-year flat sales and be able to demonstrate the increase in profit, but nonetheless an important initiative end of last year. So what are our growth business is?

In 2016 remains LPG, the U.S. transit business has been very strong.

This of course goes over to Agility Fuel Solutions from quarter four and also the light-duty vehicles both CNG and hydrogen beginning to make its mark. In the balance sheet, we’ve had a quite active period, quite an active year.

In quarter one, we had our private placement which really boosted our equity to the tune of over NOK600 million mark. This has also allowed us to make the strategic moves that were done.

And similarly in quarter three, we also reshaped our financial facilities somewhat just to have added flexibility for the shape and business combinations going forward. So NOK60 million in EBITDA versus NOK59 million same period last year and we are holding on to a net profit year-to-date at September of NOK5 million mark versus minus NOK7 million same period last year.

In detail, for quarter three 2016, we recorded NOK266.2 million in operating income versus NOK256.9 million variance of over NOK9 million. The EBITDA was NOK4.6 million versus minus NOK31 million, a positive variance of NOK35.6 million.

Our operating profit or EBIT was minus NOK12.4 million versus minus NOK43.8 million same period last year. We don't like losses, but that was positive variance year-over-year of NOK31 million.

After other financial items, we dropped down to a profit loss before tax of minus NOK18.4 million versus minus NOK55.9 million same period last year. That takes us down to bottom line profit after tax.

This is a loss of minus NOK10.6 million in quarter three 2016 versus a loss of NOK36.1 million same quarter last year. So again, we managed to make a positive EBITDA margin, but we see the net loss position generated by High-Pressure weakness in the quarter.

Looking a little bit more deeply than into operating income starting from the left, 4% growth within High-Pressure, there was a decline of NOK24 million. This has been a lower decline than we've seen certainly in the first half of the year, so minus 12%.

I would say is a positive development of course from the first half of the year. Whereas Low-Pressure 52% growth, we definitely can’t complain about that NOK33 million addition to the topline year-over-year.

On to the next chart which is the EBITDA. We see that High-Pressure has contributed to the positive spread of NOK36 million by NOK21 million.

But it remains a negative margin of course, that's 8.6% negative. In Low-Pressure they have contributed year-over-year NOK15 million positively to EBITDA in the quarter and recording a healthy 19.1% margin that's in a seasonally low quarter for Low-Pressure.

Only difference when we come to operating profit is the NOK4 million growth in depreciation, mainly in the Low-Pressure area following investment program in 2015. And then when we dropped down to net profit some of the other effects that have happened below the line, we have a net NOK6 million positive effect on financial items, NOK2 million by foreign currency effects and NOK4 million by interest, of course, this quarter we’ve only have to pay commitment fees on our facilities.

Last year's quarter was fully-loaded on interest charges. Tax effect, better results, even though still negative so we have a negative year-over-year impact from the tax effect of NOK12 million.

So in this low sales volume environment, the cost savings, cost initiative program has helped dampen the effects significantly, but there's still a way to go in terms of increasing our profitability. Looking at the breakout of our turnover, on the right, quarter three 2016, on the left, quarter three 2015.

If I start with figure we had NOK147 million this is CNG automotive in total globally. That represents a very solid quarter NOK147 million down on last year's NOK172 mainly rest of the world transit bus was – it was going at a record pace last year so we have been able to keep up with that and some softer results in total not by much in the U.S.

overall. When it comes to mobile pipeline, improved results 20 versus 15 last year absolutely, but very low levels to what we expect and have had and recorded in the past.

Hydrogen is the next one, NOK7 million is a fairly good quarter for us, it is lower than last year, last year was quite exceptional in quarter three. There we released a lot of demand for the ground storage cylinders which were the precursor for really kicking off for the hydrogen business unit.

So it was a very good quarter three 2015. Similarly, it’s been a good quarter in quarter three 2016, a little bit less funded development receipts build in the quarter.

Hydrogen at a very much smaller level also be a slightly lumpy business going forward in terms of – we have a phasing of development costs that might hit in different quarters and also phasing of development income that might vary in different quarters. Finally, you see the Low-Pressure as significantly increased as a proportion of the business results.

Looking at High-Pressure, in quarter three we've spoken enough about mobile pipeline. But what that means with this push out.

There is a sound backlog for quarter four that we expect to realize in quarter four. So that's good.

We talked about the heavy-duty volumes very much a very good sign that the heavy-duty is beginning to pick up a little bit. And continued profits in light-duty vehicle is something that we expect going forward.

So we spoke about the Hydrogen business unit and certainly this is one for the future. Our orders are going ahead of our realized sales obviously.

We had the Daimler order that Erik mentioned. We expect to start deliveries at the end of 2017, so that’s a very good positive order for us in hydrogen.

Until then, we will see dilutive results. This quarter was very strongly dilutive I would say for hydrogen.

We had a NOK7 million mark year-over-year impact to EBITDA and again this was just phasing of development income, phasing of development costs. It was particularly unfavorable quarter-over-quarter.

So results in High-Pressure, NOK173.4 million turnover versus NOK197.6 million same period last year, so slightly down by NOK24 million. On EBITDA NOK15 million negative results versus NOK35.5 million, an improvement of NOK20.5 million, but still negative and the operating profit then minus NOK26.2 versus minus NOK45.1, improvement of NOK18.9.

So we are still losing turnover volume as we mentioned before, but trying to regain our profitability nonetheless. When it comes to Low-Pressure, very, very pleased with the 52% growth of course.

The profitability is very important. Despite this low seasonal quarter for Low-Pressure, the profitability was extremely solid.

So definitely the investment program in 2015 which has allowed us to do more of what we do well already productivity wise, but also more in terms of what we haven't been doing before increasing our product portfolio, increasing the branding options to customers. So this flexibility has definitely been part of this increase growth that we're seeing.

Almost every quarter we either have a new order to a new customer or a new geography. I would say every quarter actually.

So this continued geographic spread is definitely helping us deal with the seasonality, but year-over-year growth in total. That's what's being achieved and realized.

When it comes to our cash not lot to say within the total cash flow from operations it's more or less been neutral and we've spoken about that before. But regarding the loan we drew NOK404 million right at the end of the year as I mentioned and that facilitated the acquisition of xperion, but also we've used free cash in terms of the contribution - the cash contribution which went to Agility Fuel Solutions in terms of finalizing that transaction as well.

So that was about NOK150 million in addition. So free cash used to finance the Agility transaction and loans to finance the xperion transaction.

So our balance sheet increased from NOK1.4 billion in the last quarter previous quarter June 30, and NOK1.795 billion so increase of about NOK382 million again mainly due to drawing the loan. What is that look like a bit too early, great to see a lot of cash of course a lot of that cash went out after the quarter end and that effectively that blue delta there would turn into gray as it becomes investment value of xperion on the balance sheet.

So 61.2% equity share this is around the equity shares that we see going forward as well and obviously very comfortable balance sheet. So if you just give updates then on the Agility transaction.

Please to say we successfully closed no real changes there. So as we mentioned last time this will be equity accounted going forward from quarter four.

So that will be a change in the shape of our P&L. One addition is that on the gain we talked about a significant gain that will arise and that's in the area of around about NOK400 million depending on certain factors.

So we will actually recognize a deferred tax charge of about 35% against that it's prudent to do so and we need to do so. So you'll see net 65% of the gain hitting the net results for the quarter four.

We are progressing with the closeout so at the moment remember it’s a complex carve out of business the CNG business in the U.S., so we continue to do the closing actions there in the middle of November we will have the audit of those figures and then Agility Fuel Solutions has the possibility of scrutinizing that reviewing that we will agree that it's a long process, but it will be the right process. So during the course of Q4 we hope to be able to update you more on that process but certainly by quarter four earnings.

You’ll have a good picture of the new shape of our P&L balance sheet has impacted by the Agility transaction. There is more information on the Q3 release as to pro forma accounts including up to June 30 for Agility.

So please have a look at those. And then maybe just some further information on the xperion transaction another quarter four transaction okay, so this will impact from quarter four growing going forward successful close on the October 4.

Enterprise value for the transaction being €43.5 million we have an additional potential earn-out which will be up to €11.5 million and this earn-out is designed in such a way that the performance of the business increases it's good for both parties. The loan just to be clear as well was drawn up in euro to match this investment acquisition.

We expect significant access to the net assets contributed so that would be probably around €32 million, approximately €32 million and the new venture of course will be consolidated 100% from quarter four onwards. We have more details in the announcement that we released on the October 5.

Jon Erik?

So obviously the main change over the last eight quarters actually has been the mobile pipeline business so also in Q3. Looking forward now, we see full order book for Q4.

And we will make the first deliveries of our new TITAN XL to U.S. customers.

We will have deliveries to the U.S. and Latin America TITAN4 and also we will have our first deliveries with SMARTSTORE to the UK and we see a number of opportunities emerging in Europe primarily based on biogas.

And then we see now that the U.S. oil and gas markets are starting to come back.

And as we speak, we are making an announcement of launch new order with one of our main customers in North America, [Centaurus]. We got the purchase order last night.

The timing is coincidence, but it is a very important order. It's a $10 million order for delivery starting late this year and 2017.

Important because it provides more visibility for us in this business area, but even more importantly, it marks the return of the oil and gas segment for us. If you remember going back to 2014 and 2013 that was the main area that we focused on and we had a lot of success in 2014 and that market disappeared entirely for us from the late 2014 following the oil prices.

And so we see an increased confidence in the U.S. shale plays and we in the meantime have seen costs coming down.

We've seen a lot of operators being much more cost focused now than they were in 2014. And then we think CNG with TITAN transportation is an excellent option.

So we look forward to 2017 with optimism. We think that we should be prepared that the markets may continue to be lumpy for a while.

But we could also experience a boom in the next quarters in this particular segment, so a lot going on. We've seen our margins coming under pressure in this difficult market situation.

You'll see some of that in Q4 as well. But we have now very promising cost initiatives.

So we're going to address that margin challenge with cost initiatives. I think it’s in our interest and in the industry's interest to get the cost of the solutions down in order to make the return on investment for the customers even more attractive.

And we think our role in that is to work on our suppliers and our own processes in order to reduce the cost base. On the light-duty side, also very promising outlook and having restructured this business a year ago, we see now solid growth albeit from a low level, but we will see that growth continuing into 2017 and onwards.

We took a nice order in Indonesia for conversion of taxes and we see a number of opportunities in that field as well. And of course, when I come back to xperion, I will also touch on the light-duty segment of that entity which will then be combined with our own and we will then be the definite market leader in this business area.

The mentioned hydrogen order to Daimler will commence deliveries and towards the end of 2017. On the Agility sides, somewhat slow year through Q2, improvement in Q3 you see a further firming up in Q4.

We don't expect 2017 to be fantastic, but we think it will be rather stable. And looking into 2018, there are a number of new environmental legislations being imposed in the U.S.

that will support the business. And the primary focus of this Company is to go global and create growth that way.

The LPG sides, David said most of it. He mentioned that we are opening new markets almost every quarter.

We expect to announce a couple of new very exciting geographical markets for us in near future. The Q4 sales will be relatively slow seasonally, but 2017 looking very promising so we will produce for inventory in the quarter and utilize our capacity.

Xperion, it has been our radar for quite a while. I have been asked multiple times which companies we are looking at.

Unfortunately, we were not able to comment on that, but now I can tell you that xperion has been our number one targets. I've said a few times that there are really only four industrial players in this market space.

One of them Quantum went into Chapter 11 early this year. We have reckoned xperion to be number two.

In some segments they have been in the lead, for example the LDV. They have given us worthy competition in the mobile pipeline space and also they have been the alternative to Hexagon in hydrogen.

So combining these two for us is a major value creating opportunity. They have the sites in Kassel, Germany and the Company there which we have acquired.

Then we have an option on the facility in the U.S. that is an option that we will then consider upon consulting with relevant stakeholders pertaining to that entity.

On a normalized basis in 2015, approximately €39 million turnover and €5.2 million EBITDA more than 100,000 gas cylinders in operation worldwide. In 2015, approximately 59% was in the mobile pipeline segment.

2015 was a strong year and the mobile pipeline share was higher than it has been previously and also higher than we expected to be this year, but that was the numbers as of 2015. Strong presence in Germany.

We think that is strengthening our strategic position significantly so especially towards the European OEM industry, distribution of gas et cetera. So to have footprint and a strong engineering base in Europe, we think will strengthen us in the competition going forward.

This is our map. This includes Agility Fuel Solutions, where we have 50%.

But we have now good coverage together with our partner Mitsui & Co. We have real reach to most corners in the world and obviously with the xperion acquisition this has strengthened our market presence and I said especially in the European market space.

We have broadened our products and technology portfolio and this in itself gives opportunity for synergies and reduced costs. And we are now in the early stage of an integration program with a target to extract significant synergies.

xperion today is the supplier to the - all the A3 g-tron and the Volkswagen, Golf, Natural Gas, CNG model. Recently exciting orders to countries like Pakistan, Vietnam and Australia, bus contract to South Africa.

And last but not least they have taken two major orders to global distributors of industrial gases and for hydrogen purposes at the total value of €3.4 million. So all of these contracts are supplementing the businesses that we run out of Hexagon.

xperion recently one hydrogen order for German zero-emission train development. They won it in competition with the Hexagon.

And I have to admit we were quite irritated at the time. But we are not irritated any longer.

This is the world’s first hydrogen powered regional train. I thought I'd show you a clip which is all out on YouTube.

So obviously we are excited to be part of this program. And we see very vibrant market situation out there on the hydrogen side.

And I think [Audio Gap] surprised and fascinated to see a number of other applications being discussed in the years to come. And it's not only in Germany that they are looking at trains, also in Japan, India is also a country that's taking an interest.

So I think it is at the very early stage when it comes to what solutions will be applied to solve the environmental challenges. And here in Norway there is almost an article in the papers every day about electric vehicles versus other alternatives.

And while that is a very interesting discussion I think it is also very – it is taking Norway as the reference point which may not be applicable to other markets in the world. One of the arguments that we have frequently is that the electric vehicle is more energy efficient.

And that is correct, if you look at just the tank to wheels, so this is a fuel cell vehicle, this is an electric vehicle, this is a hybrid and this is a gasoline. And if you look mainly at tank to wheel, so what power you get out of a fully charged or fully filled tank then clearly the electric vehicle is an attractive alternative.

I think some of those who run an electric vehicle will question whether the efficiency is really 85%. I hear a lot of people complaining about the driving distance.

So I think this is a very idealized achievement, but nevertheless an efficient alternative. However, as the world is today, it is not electricity or the hydro electric power.

It is electricity based on coal or natural gas or other carbon sources. And if you take that into account then the electric vehicle alternative is not quite as efficient as one may get the impression from the debates in Norway.

As a matter of fact, if you produce hydrogen based on natural gas then you have a very efficient well to tank and the fairly efficient tank to wheel and that is probably the most energy efficient alternative when it comes to vehicle applications. Then that this mainly a discussion of energy efficiency, of course, cost is another important factor, the environment not least an important factor.

But regarding cost, natural gas has actually a negative value in many places in the world. It is flat at oil fields, so if you can capture that flare gas and produce hydrogen then the cost of hydrogen is probably also very competitive.

You have hydrogen as byproduct from a number of applications. So I think the cost side, a lot of players are now looking at how to extract or to produce hydrogen in a cost efficient manner.

There was an announcement last week by the iLint Group that they will do a pilot project together with Statoil and where they will then capture the CO2 and produce hydrogen at very competitive terms. And there are a number of similar programs around the world.

I think their vision as I understand it is to produce ultimately hydrogen on the platforms in the North Sea and then inject the CO2 right back into the oil wells to increase the pressure. So at this stage, based on natural gas it is mainly conventional gas, but we are already moving into gasification of biogas.

And going forward, I think we will see hydrogen produced based on natural gas where the CO2 is captured. So we are not saying that Fuel Cell technology necessarily is the solution, but we are saying that it is far too early to decide whether it will be battery electric or the Fuel Cell electric vehicles.

And the ultimate technology at this stage is a combination like the Mercedes GLC which will be launched next year with our tanks which will be a plug-in hybrid between battery electric and Fuel Cell electric. So you have the best to roads.

And if you look to other parts in the world, hydrogen is very much core to their environmental poses. California being one of the pioneering areas.

They just recently announced a new plan where they are attacking machines from the medium and heavy-duty vehicles. They account for only 3% of the vehicles, but 23% of the greenhouse gas emissions.

And the plan is to by 2030 have 100,000 medium and heavy-duty vehicles on zero-emission bases and hydrogen is very much core to that strategy. So a number of exciting opportunities in the hydrogen field.

So this year clearly if you look at our operational results last year, but we feel we have made very significant strategic steps and prepared the company for growth going forward. Mitsui in the spring creating a strong partnership, creating a financial capability.

The merger with Agility Fuel Systems, separating that out, targeting a global markets. And now recently, the acquisition of xperion as well as certain partnerships with locally smaller joint ventures, but with time, we expect to grow into big opportunities.

So these strategic steps feel are very well timed. We have taken the opportunity downturn in the business, but now it is time for integration, synergy realization.

We see the High-Pressure demand gradually now getting summer and with higher oil price and lower cost base I should add we see the economic CNG value proposition improving. This is the oil price development.

This is the natural gas development. In recent months, we have seen that gap widening again.

So certainly we hope for a wider gap that would be great. But in any case, we will prepare Hexagon Composites for profitable growth because we have so much to offer in terms of environmentally friendly solutions.

And so even without strong oil price, we think we will develop or we will go into growth phase now. The momentum in the Low-Pressure area remains strong.

So summing up, going forward we will focus on growth and harvesting synergies. And that's at least for the short and medium-term.

On that note, please questions, David please join me.

In terms of the cooperation with Mitsui, could you comment on how that helping you to develop the markets in Asia and also within hydrogen in Japan. How is that market developing compared to your previous expectations and getting any further and reaching a conclusion whether or not to build plant in Japan for making vessels to the hydrogen market?

So we have a strategic alliance with Mitsui. So we meet regularly once per quarter.

We have a long list of potential opportunities both in Asia and in other regions South America is also a region where Mitsui is very strongly present. So our joint approach is to do this very thoroughly and so we have not yet come to concrete conclusions, but we do expect that in 2017 we will start harvesting fruits from this co-operation.

And then maybe a small comment Iran is a market that we have not entered. xperion has already started preparing for that market.

Iran is said to be the world's largest CNG market but for obvious reasons has been closed. It is not quite straightforward yet, but we take a keen interest in that particular market.

Regarding Japan we are in the midst of the feasibility study. We don't see any signals that should change the basic assumption that Japan will go for the hydrogen society and as such it is obviously attractive for us, but we are now collecting all sorts of facts and discussing with relevant rent partners and so we expect that decision to be made sometime mid next year.

Thank you.

Fredrik Steinslien from Pareto Securities. You mentioned the full order book on mobile pipelines for Q4.

It's possible to indicate what that might entail in metal sales or in growth year-on-year or how you see that shaping up for the fourth quarter?

We don't normally provide that sort of detail, but it will be robust normal quarter I would say. So but beyond that I think you'll have to wait for the Q4 presentation.

Thank you. You also mentioned you would do some work throughout the value chain in terms of reducing the cost of the solutions for example oil and gas.

Do you have any expectation how much that can be in percentage terms of where we are today? Can you elaborate a bit on that?

I do, but again, allow us to come back on that. We did as you remember significant cost cutting short year ago.

And that has helped us locked through this difficult downturn in the business. And now what we will address and obviously in conjunction with the integration process are further improvements but then primarily based on optimization of the product, weight optimization is very important for us because carbon fiber is a very expensive commodity and the kilo of reduced carbon fiber consumption is saving going straight to the bottom line.

And then, obviously working with our suppliers to also allow them to improve their pricing to us. So I have to admit that after this exercise we did a year ago where we took out $10 million plus and we have been bit refocused on M&A and strategic development.

So now we are very much looking forward to refocusing on this. So some of the initiatives ideally we would have launched earlier, but we have to use our internal capacity for other purposes.

So that's why this now is moving right up to the top of our agenda.

Thank you. One more from me, if I may.

Can you elaborate a little bit on the strategic roadmap in terms of Agility going more global in their presence?

We are at very early stage, but one of the things that we have contributed to Agility. Agility so far has been – I mean the former Agility has been in North American operation.

We have been more international through our bus systems businesses. So Agility will build on that.

South America obviously [convert] gas that we acquired earlier this year has been transferred to Agility targeting South America, but also Africa. We have a business in Russia, Russia for obvious reasons been a little bit less exciting in business terms than we have expected a few years ago, but they have major CNG fleets in the bus system and Europe as well.

And one area that has not yet been addressed is the Refuse market outside North America. So obviously a good solution for environmental reasons, so that's one of the target areas, but we expect to give also more concrete feedback on Agility in these presentations going forward.

Thank you.

Question from the webcast.

We have a question from one of the audience and webcast from Lowland Monterey. Is the 2016 yearly outlook still on target to be significantly better than yearly 2015 as expected two quarters ago?

Would you like to comment?

Yes. Clearly, our year-to-date performance on the topline has been 200 million lower.

So I think that's really addresses that question, but the issue is that from a profitability point of view, we’ve been able to match at least how that same profitability given the lower turnover. So mobile pipeline, we expected – if you go back three quarters, we expected a recovery in second half of the year and that recovery has been slightly delayed.

But again, the good news as we saw earlier today is that North American oil and gas, large opportunity in North American oil and gas has come back and that will begin in 2016 end off and through 2017. So it's been lower than what we expected, absolutely.

But it's not – the market's not going away. It's more has been delayed.

Thank you. There are two more questions from Monterey.

Could you expand your comments on the U.S. oil and gas market is returning after the two-year level?

Thank you.

I think on that note I will just refer to the release that we made this morning. So there is more information there.

But very encouraging that the main player in this segment is coming back with a significant order to us we think that marks a change of times.

And the last question. What factors will determine whether Hexagon will purchase Agility U.S.

or not?

That is not an issue, I would like to debate now. Now we are very much focused together with our partners on the Agility side to make that a success.

We expect that to be the focus for the next few years and then we will make that judgment when that success is achieved.

Thank you. That was the questions from the webcast audience.

End of Q&A

Okay. Thank you.

If there are no more questions, I thank you all for taking the time to spend with us this morning. And have a good rest of the day.