Interim report January to March 2023

Press release, Stockholm, Sweden, April 28, 2023

Strong growth and better component situation

First quarter 2023

• Net sales increased during the first quarter by 18,7% to 94,4 MSEK (79,5). The organic and currency adjusted growth amounted to 12,9 %.
• Gross margin was 70,4% (66,3)
• Adjusted EBITDA increased during the first quarter and amounted to 7,9 MSEK (-0,9) corresponding to an adjusted EBITDA margin by 8,3% and -1,2%.
• Operating profit/loss was 39 TSEK (-7,9 MSEK), corresponding to operating margin of 0,0% (-9,9).
• Profit/loss for the quarter was 0,3 MSEK (-8,6).
• Result per share basic and diluted was 0,02 SEK (-0,59).
• Cash flow from operating activities for the period was 15,6 MSEK (-2,6). The positive cash flow from operating activities is mainly explained by the decrease in accounts receivable.

For description and reconciliation of key figures, see pages 19–20.

Comments by the CEO

During the quarter, we experienced good demand for our solutions in combination with an improved situation in terms of component supply and therefore deliver a stable first quarter. The group's sales increased by almost 19 percent compared to the first quarter of 2022, mainly in Europe with an increase of just under 26 percent. In the United States, sales increased by 7 percent, which, however, in local currency means a small decrease.

During the latter part of the quarter, we saw an improved delivery situation for critical components and semiconductors, which improved our delivery capability. However, we have during the period had continued high costs for spot purchases, which is explained by previously ordered components being delivered during the first quarter, while we have seen that the need for new spot purchases has decreased towards the end of the quarter.

We have also happily noted that the lack of capacity at our main European supplier, which previously hampered our delivery power, has been remedied and we are seeing more normal product deliveries. The move of our production from Mexico to local manufacturing in Oakland, California, is now complete, which means we meet the Buy America requirements of the 2021 Infrastructure Investment and Jobs Act. That gives us a big advantage in the US market.

Although, we were still affected by cost increases for both electronic components and consumables during the quarter, we managed to increase our gross margin by just over 4 percentage points to 70.4 percent via price adjustments towards customers, internal efficiency and a favorable product mix,

We completed the efficiency program in France during the quarter, which aims to increase organizational efficiency, simplified structures and reduce costs while continuing to develop industry-leading products and increase our commercial capacity. The program will result in annual cost savings of just over SEK 11 million with full effect from the second quarter of this year, which nets approximately SEK 7 million after the investments in our sales organization.

After completing the efficiency program our latest acquisition, Citilog, shows growth with good profitability. Cost efficiency is necessary to enable investment in technology leadership and to strengthen our resilience.

During the period, we have continued to invest in technology leadership within our focus areas and we are developing more complex solutions that give our offer increased competitiveness. The focus is increasingly directed towards solutions that contribute to a more sustainable transport system where analysis, AI and Deep Learning play an important role. We also see that our investment in energy-saving sensor systems, where most of our solutions can be powered by solar energy and batteries, as well as the simplicity of the sensor systems, configuration via tablet or mobile, creates more business opportunities.

The group's turnover during the first quarter amounted to SEK 94.4 million, which is an increase of 18.7 percent compared to the same period in 2022. The quarter's organic turnover change, with adjustment for exchange rate effects of SEK 4.6 million, amounted to SEK 10.2 million corresponding to an increase of 12.9 percent. The Traffic Solutions business amounted to SEK 77.4 million, which is an increase of approximately 13.5 percent compared to the corresponding quarter in 2022. During the quarter, Traffic Solutions accounted for 82 percent of sales, while Rail Solutions accounted for 18 percent.

The gross margin landed at 70.4 percent with an adjusted EBITDA result of SEK 7.9 million, which corresponds to an adjusted EBITDA margin of 8.3 percent. Cash flow from current operations amounted to SEK 15.6 million and the group's solvency ratio was 61.5 percent at the end of the period.

Our stock has increased sequentially during the quarter by approximately ten percent as a result of the effort to maintain a high level of service towards our customers and to manage imbalances in the delivery supply chain. The work to reduce the working capital has continued focus and accounts receivable have decreased by approximately 21 percent during the quarter.

Today, TagMaster is well positioned in a market with long-term good conditions for growth and good profitability, and we are determined to continue to make TagMaster a stronger and more resilient company while striving for higher growth. The fact that we work to improve the traffic environment in cities and metropolitan areas around the world puts us in a very good position considering the massive investment packages that have been launched in Europe and the USA and which are largely focused on green investments.

Jonas Svensson

CEO

Auditor’s review

This report has not been reviewed by the company auditor.

Reporting

During the business year 2023 TagMaster will report at the following dates:

May 16, 2023:                                  Annual general meeting, Kista

July 14, 2023:                                   Interim report second quarter 2023

October 31, 2023:                            Interim report third quarter 2023

February 2, 2024:                             Earnings release 2023

This report and previous reports and press releases are found at the company home page www.tagmaster.com.

For further information contact:

Jonas Svensson, CEO, +46 8-6321950, Jonas.svensson@tagmaster.com

This information is information that TagMaster AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 8.00 a.m. CET on April 28, 2023.

About TagMaster

TagMaster is an application oriented technical company developing and selling advanced sensor systems and solutions based on radio, radar, magnetic and camera technologies for demanding environments. TagMaster works in two segments - Segment Europe and Segment USA – with the trademarks TagMaster, Citilog and Sensys Networks – with innovative mobility solutions for increased efficiency, security, safety, comfort and to reduce environmental impact in Smart Cities. TagMaster has subsidiaries in England, France and US and exports mostly to Europe, The Middle East, Asia and North America through a global network of partners and system integrators. TagMaster was founded in 1994 and has its head office in Stockholm. TagMaster is a listed company and the share is traded at Nasdaq First North Premier Growth Market in Stockholm. TagMasters certified adviser (CA) is FNCA.