Interim Report January - September 2023
July – September 2023
- Net Sales MSEK 157 (95)
- Order intake* MSEK 145 (53)
- Operating profit (EBITDA) MSEK 19.2 (6.4)
- Operating profit (EBIT) MSEK 8.3 (-4.2)
- Total Comprehensive income MSEK -2.0 (11.6)
- Earnings per share, before and after dilution (SEK) 0.69 (-0.01)
- Cash flow from operating activities MSEK 4.1 (29.0)
January – September 2023
- Net Sales MSEK 403 (333)
- Order intake* MSEK 405 (377)
- Operating profit (EBITDA) MSEK 39.9 (39.7)
- Operating profit (EBIT) MSEK 5.3 (8.6)
- Total Comprehensive income MSEK 12.5 (51.4)
- Earnings per share, before and after dilution (SEK) -0.20 (0.00)
- Cash flow from operating activities MSEK -22.9 (118.8)
*) excluding Middle East remaining procurement award of MSEK 136
Comments from the CEO
Executing on our guidance
We realized a strong order intake this quarter, one of the highest Q3 order intakes in our history. The execution of the two large contracts in Sweden and Netherlands, with a combined contract value of SEK 1.25 billion is on track to drive revenue for many years to come, starting in Q4 this year. Our deliveries to Saudi have successfully resumed and our TRaaS business continues to grow. Altogether, we are on track to meet both our 2023 financial guidance and our 2025 ambition.
Dutch contract increased to SEK 400 million from SEK 250 million
Typically Q3 order intake numbers are low during the summer period. We are happy to see a positive exception this quarter. The order intake in Q3 arrived at SEK 145 million, 174% higher compared to SEK 53 million in Q3 2022. During the quarter we received the first order of MSEK 60 under the SEK 250 million Dutch Procurement Award, which we announced in Q2 2022. Deliveries and revenue generation for this order has started in Q4. After the quarter we announced that the revenue expectations of this contract have grown significantly. Instead of SEK 250 million, we now expect the contract to generate SEK 400 million in revenue, a growth of 60%. Of these SEK 400 million, SEK 200 million of Systems Sales is scheduled to be realized before the end of 2025. The other SEK 200 million of the contract is recurring Service and Maintenance revenue, to be realized over a 6 year contract period.
TRaaS Sales up 13%
Our strategic TRaaS sales for the quarter of SEK 86 (76) million was up by 13%. This recurring business equates to 55% of total sales in the quarter. The growth is mainly related to revenue from our Tasmania Police TRaaS Managed services project in Australia, which we started earlier this year.
Year to date, the total TRaaS sales amounted to SEK 259 (219) million, an increase of 18% and representing 64% of total sales. SEK 23 million, or almost 9% of this year to date TRaaS sales comes from the Tasmanian Police Project. It’s very encouraging to note that the TRaaS Managed Services business model is also resonating with customers outside the USA.
Deliveries to Saudi customer on track
At the end of the second quarter we delivered 75% of the SEK 275 million contract for our unique Vehicle-in-Motion solution to our Saudi customer. Deliveries for the remaining 25% of the contract have started this quarter and we anticipate to complete these by the end of the year. With this, our Saudi customer will be the single largest user of our unique and highly effective in-vehicle speed enforcement solution. Building on the excellent customer relationship and satisfaction with our technical capabilities, we have now started the process of testing new fixed enforcement solutions, potentially adding to our business in the growing Middle East region.
Implementing two significant projects simultaneously
Our order book is strong with large orders from the Swedish Trafikverket of SEK 850 million and the Dutch Public Prosecution Services. As mentioned, we were very pleased to announce that the latter has increased by 60%, from SEK 250 million to SEK 400 million. The fulfillment of both these large orders is labor intensive, involving specific development, project management and other proprietary knowledge to answer the customer enforcement needs. This competitive edge is a high barrier to entry in our market. The ultimate benefit is secured revenue for the next twelve years, giving the company a solid base line revenue. Our 65-year history of automated traffic enforcement, with solutions provided in more than 70 nations, makes us unique in our ability to meet differing customer requirements efficiently. I'm pleased to report that with all the hard work of our teams, our implementation plan is moving along as planned. The roll-out for the Dutch project has started in Q4 of this year and for the Swedish Trafikverket project will start in Q1 of 2024.
EBITDA increase of 200%
This quarter's sales level is SEK 157 million, which is 65% more than it was in Q3 of last year. At this sales level, our EBITDA arrived this quarter at SEK 19.2 million (6.4), an improvement of nearly 200% compared to Q3 of 2022. Later on, after development work for our commercial projects is finished, we anticipate a decrease in our flexible development costs as well as stronger revenues, which will improve EBITDA, in line with our long term ambition.
Financial guidance for 2023 reaffirmed
In order to attract more investors, the AGM voted in May of this year in favour of a 1 to 80 reverse share split. In conjunction with this event we released our financial guidance for the full year 2023 making it easier for investors to analyse the financial performance of the company. On the back of our record breaking order intake we are targeting full year 2023 revenues in the range of SEK 550-650 million and an EBITDA margin of 10-15%. In light of the restart of the deliveries to Saudi Arabia, the beginning of the deliveries for the two significant projects in Sweden and The Netherlands, the rollout of the new programs in the USA, as well as several other smaller deliveries, I reaffirm our guidance for 2023.
Outlook
Combining 2022 and year to date 2023, we added more than SEK 2 billion to our order book. We are currently executing against these orders. This increases our costs, with revenue trailing behind to offset these against. Our profitable TRaaS business continues to grow and our strengthened team in the USA proves to be able to push our topline in this strategic market. On top, we see our new ground breaking roadside platform FLUX coming to further fruition in the market.
We therefore retain our long-term plan and ambition to, by 2025, grow our net sales to more than SEK 1 billion, of which TRaaS revenues is more than SEK 600 million. We also retain our ambition to increase our EBITDA margin to more than 15% in 2025.
Ivo Mönnink
CEO, Sensys Gatso Group
Invitation to a presentation
On 16 November at 10 am CET Sensys Gatso Group invites press, analysts, shareholders, and stakeholders to participate in an audiocast. The company’s CEO Ivo Mönnink and CFO Simon Mulder will present the financial results in English. The presentation in connection with this report will be published on the website.
The presentation/audiocast can be joined online or via telephone and will be available on the company’s webpage: https://www.sensysgatso.com
If you wish to participate via webcast please use the link below.
https://ir.financialhearings.com/sensys-gatso-group-q3-2023
If you wish to participate via teleconference please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.
https://conference.financialhearings.com/teleconference/?id=5001836
This information is information that Sensys Gatso Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person, at 08.30 on 16 November, 2023.
For further information please contact:
Ivo Mönnink, CEO
e-mail: i.monnink@sensysgatso.com
e-mail IR: investors@sensysgatso.com
Telephone: +46 36 34 29 80
Sensys Gatso Group AB is a global leader in traffic management solutions for nations, cities and fleet owners. Sensys Gatso Group has subsidiaries in Australia, Costa Rica, Germany, the Netherlands, Saudi Arabia, Sweden and the USA, and a branch office in the United Arab Emirates and has 284 employees. The Sensys Gatso Group’s shares are listed on Nasdaq Stockholm.
For further information, visit www.sensysgatso.com
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