Interim Report Q3 2024 (January - September)
July – September 2024
- Revenue MSEK 141 (157)
- Order intake and Procurement Awards MSEK 95 (145)
- Operating profit (EBITDA) MSEK 12.0 (19.2)
- Operating profit (EBIT) MSEK 1.1 (8.3 )
- Total Comprehensive income MSEK -18.5 (-2.0)
- Earnings per share, before and after dilution (SEK) -0.71 (0.69)
- Cash flow from operating activities MSEK 8.9 (4.1)
January – September 2024
- Revenue MSEK 433 (403)
- Order intake and Procurement Awards MSEK 831 (541)
- Operating profit (EBITDA) MSEK 40.3 (39.9)
- Operating profit (EBIT) MSEK 7.8 (5.3)
- Total Comprehensive income MSEK 4.7 (12.5)
- Earnings per share, before and after dilution (SEK) -0.33 (-0.20)
- Cash flow from operating activities MSEK 19.7 (-22.9)
Comments from the CEO
Order Intake
Order intake and procurement awards during the third quarter came in at MSEK 95 compared to MSEK 145 in Q3 2023. Of the total order intake, SEK 25 million is from a new TRaaS Managed Services contract with the city of Montgomery Township in Pennsylvania, USA. Year to date, the total order intake, including procurement awards, amounted to SEK 831 million, 55% higher than last year at SEK 541 million. In the first three quarters of 2024, no less than SEK 576 million, or 69%, came from TRaaS order intake from the US market with 13 new contracts, including renewals and extensions. This translates to an average revenue per contract of SEK 44 million.
SEK 1 BN in backlog of large orders in home markets
In 2022, we received two large orders in our home markets, Sweden and The Netherlands. The combined value of the two contracts is SEK 1,250 million. The development phase of the Swedish order of SEK 850 million is nearly completed and our customer Trafikverket is in the final phase of acceptance. We are jointly targeting successful completion of an extensive test program of both the hardware and software of our solution in Q1 2025. This extensive test program is required to align and integrate our new FLUX speed enforcement system with our customer’s various IT systems, some of which are also new or updated. The start of the rollout of this project is now expected to commence in the first half of 2025 with the replacement of existing systems and the installation of new systems in the field. The Service and Maintenance part of the contract will gradually kick-in and continue for an expected twelve years. Implementation continues for the Dutch order, which is worth SEK 400 million, split between SEK 200 million in systems sales and SEK 200 in repairs and maintenance over a 6 year period. The systems installation rollout has really taken on in the third quarter with approximately SEK 145 million delivered year to date. We expect to continue installations into the first half of 2025, depending on the acceptance schedule from our customer. Of the combined SEK 1.25 billion contract value, approximately 12% has been delivered to date, leaving more than SEK 1 billion still in the backlog of just these two programs in our home markets.
TraaS revenue up 15%
Total Revenue for the quarter arrived at SEK 141 million. Compared to SEK 157 million in Q3 2023, this is a decrease of 10%, mainly driven by lower system sales which arrived at SEK 42 million, 29 million or 40% lower compared to the SEK 71 million in Q3 2023. Our TRaaS revenue for the quarter of SEK 99 million was 15% or SEK 13 million higher than Q3 2023 at SEK 86 million. This recurring business equates this quarter to 70% of total sales. The TRaaS revenue is primarily driven by our TRaaS Managed Services business in the USA. Year to date, our TRaas Managed Services revenue grew by 10% from SEK 156 million in 2023 to SEK 172 million in 2024. The revenue from newly signed contracts in the USA this year is not yet part of this. We expect a number of these new contracts to start contributing by the end of 2024.
Legislative changes in Iowa
As of May 17, 2024 the state of Iowa in the USA enacted legislation that provided guidelines for automated speed enforcement programs. The aim is to bring Iowa legislation in line with other states, mostly regarding permitted locations, maximum fine amounts, and speed thresholds. As communities navigated the changes, some programs were temporarily paused between May 17th and late June. As part of the new legislation, each location where automated speed enforcement was already being used had to receive a permit through the Iowa Department of Transportation (IaDOT). The IaDOT has now released its decisions on submitted permit applications for automated speed enforcement systems. Unexpectedly, only 11 out 140 fixed speed location permits throughout the state were approved. For Sensys Gatso customers, 7 out of 75 fixed speed system location permits were approved by the Iowa DOT. In addition, 95 out of 148 submitted future mobile speed deployment location applications were approved. The legislation and permitting process did not apply to automated red light enforcement cameras in the state. Each of those installed systems will continue normal operations. All city authorities are investigating the appeals process allowing for reconsideration of all sites not permitted in the unprecedented decisions by the IaDOT. Our leadership team is in communication with our customers to see how we might be able to provide assistance to fill the void in their traffic safety programs.
In the interim, Sensys Gatso, including our local consultants and legal counsel, will work with our partner communities to seek all options that would reestablish the operations of the speed systems not receiving a permit.
Next phase entered in relationship with Tahakom
In April, we signed a Memorandum of Understanding with our customer in Tahakom in the Kingdom of Saudi Arabia. Following this, our customer provided technical qualification for our fixed & mobile speed and fixed red light solutions. After the quarter Sensys Gatso has signed framework agreements for these 3 types of enforcement as well as a framework agreement for Service & Maintenance on the delivered Vehicle in Motion systems. With these agreements in place Sensys Gatso is now in the position to receive the first purchase order under these agreements which will cater for supply of enforcement solutions during the period 2025-2027 in the Kingdom of Saudi Arabia. With the signing of these new Framework agreements, a year later than initially anticipated, we have entered the next phase of our relationship with Tahakom and the Kingdom of Saudi Arabia.
Stable margin
Our Gross Margin this quarter was 37%, compared to 38% in Q3 2023. This is somewhat lower than our run rate margin of 40% and is driven by the relatively large contribution this quarter of System Sales from the Dutch project. In a contract, like the Dutch tender, we start with the installation of the enforcement equipment alongside the roads. When our customer accepts the individual sites, we recognise the revenue in our System Sales business segment. Margins on System Sales are typically lower and precede the higher margin Service and Maintenance part of the contract. This recurring revenue is gradually phasing in with the installations of the systems and is expected to continue for a minimum period of 6 years. The overall gross margin of the contract will gradually recoup during this phase. Year to date, the margin was 39.1% compared to 39.9% in 2023. Our EBITDA for the quarter arrived at SEK 12 million, compared to SEK 19 million last year. Year to date, the EBITDA arrived at SEK 40 million, similar to last year.
Bond issue increases available cash for investments
In September of this year, Sensys Gatso AB successfully raised EUR 30 million through the issuance of senior unsecured bonds with a four years tenor and a floating rate interest of Euribor 3 months + 4.75% per annum under a framework of EUR 60 million. The net proceeds from the Bond Issue have partly been applied to refinance existing debt and primarily towards general corporate purposes, including investments in working capital and fixed assets in operation to accelerate further growth of Sensys Gatso. At the end of this quarter, the free available cash amounted to SEK 295 million compared to SEK 101 million in Q3 2023.
After the quarter, the Company has successfully applied to have the Bonds admitted to trading on the corporate bond list of Nasdaq Stockholm.
Outlook
Our robust order book and backlog of over SEK 1 billion provide solid revenue visibility well into the future. We expect our TRaaS business to continue delivering profitable growth, driven by our strengthened U.S. team and our ground-breaking FLUX roadside platform.
However, we also recognize that recent market dynamics, such as extended customer testing phases and legislative changes, may temporarily affect our timeline. The Swedish contract rollout is now anticipated to start in early 2025, and we are addressing recent Iowa program suspensions alongside our customers. Additionally, commercial timelines in Saudi Arabia are shifting into 2025.
While these factors affect short-term timing, they do not impact our long-term ambition. We remain confident in our growth trajectory, with our strategic initiatives on track to deliver sustainable, profitable growth.
Ivo Mönnink
CEO, Sensys Gatso Group
Invitation to a presentation
On 15 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-report-2024
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=50049087
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 set out above, at 08.30 on 15 November, 2024.
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 302 employees. The Sensys Gatso Group’s shares are listed on Nasdaq Stockholm.
For further information, visit www.sensysgatso.com
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