Year End Report 2020

Press release, Stockholm, Sweden, 28 January 2021

TagMaster delivers good gross margins and a strong cash flow

Fourth quarter 2020

  • Net sales decreased during the fourth quarter by 18,8% to 67,8 MSEK (83,5)
  • Adjusted EBITDA decreased during the fourth quarter by 61,5% to 5,5 MSEK (14,3), corresponding to an adjusted EBITDA margin by 8,1% (17,1)
  • Operating profit was -1,0 MSEK (2,7) which correspond to an operating margin of -1,5% (3,2)
  • Profit for the period was -2,6 MSEK (-1,1)
  • Result per share was -0,01 (-0,00)
  • Cash flow from operating activities for the period was 10,6 MSEK (5,2)

January – December 2020

  • Net sales increased during the period by 8,9% to 286,5 MSEK (263,0)
  • Adjusted EBITDA decreased during the period by 24,2% to 27,3 MSEK (36,1), corresponding to an adjusted EBITDA margin by 9,5% (13,7)
  • Operating loss was -14,6 MSEK (2,7) which correspond to an operating margin of -5,1% (1,0)
  • Net loss for the period was -20,4 MSEK (-6,8)
  • Result per share was -0,06 (-0,02)
  • Cash flow from operating activities for the period was 27,4 MSEK (3,9)
  • The Covid-19 pandemic has had a negative impact on turnover from mid-March and measures have been taken for all parts of the business to mitigate the effects of the corona virus.
  • From the start of fiscal year 2020 TagMaster has changed accounting principles from BFNAR 2012: 1 (K3) to IFRS. The effects of the transition are shown in Note 6.
  • As a long-term activity during the period a companywide efficiency program was initiated for the European part of the business. The program is expected to result in a yearly cost saving of around 10 MSEK from the end of quarter 3 2020.
  • No proposed dividends for 2020
Amounts in TSEK 2020
Oct-Dec
2019
Oct-Dec
2020
Full Year
2019
Full Year
Net sales 67 788 83 532 286 453 262 955
Net sales growth, % -18,8 89,6 8,9 34,5
Gross margin, % 68,0 70,0 65,7 66,6
Adjusted EBITDA 5 470 14 251 27 329 36 051
Adjusted EBITDA margin, % 8,1 17,1 9,5 13,7
Equity ratio, % 55,7 56,4
Cash flow from operating activities, MSEK 10,6 5,2 27,4 3,9
Net debt/EBITDA, R12M -0,2 1,1
Number of employees at end of period 98 115

Comments by the CEO

After a certain recovery and a somewhat more stable third quarter the fourth quarter had new challenges with further lockdowns together with the uncertainty around a Brexit with or without an agreement. TagMaster, however, once again resilience and the strong gross margins we delivered during the quarter emphasizes that our actions to increase flexibility, focus, and growth orientation of our businesses have been successful.  We have during the quarter continued to increase our investments in solutions contributing to the necessary conversion to a more durable transport system, giving us a very interesting position since the massive restart packages launched in Europe and the US to a great deal are oriented towards green investments.

During the pandemic we have continued to focus on the health and safety of our employees and also to under the circumstances provide the best possible service to our customers.

The company wide efficiency program launched during the second quarter with structural changes such as reallocation of resources to new business opportunities, optimizing of offices and reduction of staff to adopt the business to a more long term change and a more agile working has resulted in cost reductions of around 5 MSEK during the fourth quarter.

We have during the quarter moved the production we had in China to Europe, partly to reduce the risk of interruptions In the supply chain, partly to reduce long and environmentally impacting component transports.

The changes made, the efficiency program as well as moving of the production are important steps to make the Group more flexible, focused and growth oriented.

We continue to invest in our technical leadership to increase our competitiveness. Our focus is more and more towards solutions which could contribute to more durable transport systems and to move us up in the value chain where analytics, AI and deep tech play an important role.

One example is solutions to handle an increased need for systems for what is called active travel, I. e. cycling and walking. We have during the quarter launched a product family in the British market to support the investments made to make it easier for cycle traffic and to reduce congestion in busses and trains.

Another example is our launch of a radar detection system measuring flows of cyclists and walkers in city environment. The new radar detection system is launched simultaneously in France and in Great Britain and will in an easy way make it easier for cities to develop better solutions for cycle traffic and for walking. The system is simple to implement and since the detectors are mounted at existing poles and traffic signs. This means that the system could be used for temporary as well as for permanent and long-term measurement.

We have during the quarter also launched the first product in a new family of ANPR cameras. The new camera family is IP based with its own software offering solutions based on AI and deep learning. The camera family is specially designed for applications within parking, access and security and for intelligent traffic monitoring systems.

The Group turnover during the quarter was 68 MSEK, which is a reduction with 19% compared to the same quarter 2019. The reduction is explained by our Traffic business decreasing during the quarter among other due to delayed deliveries from our US business and lower activity in our EU units in France and in The UK due to lock-downs. Our traffic business was during the quarter 52 MSEK which is around 75% of the turnover during the fourth quarter 2019. Rail solutions increased the business with some 10% during the quarter compared to corresponding quarter 2019. During the quarter 75% of the sales came from Traffic and 25% from Rail.

The quarter shows a continued strong gross margin of 68% and with an adjusted EBITDA of 5,5 MSEK corresponding to an EBITDA margin of 8,1%. The cash flow from the business has continued strongly with 10,6 MSEK and with a solidity of good 55,7%. The work to reduce working capital has continued successfully and the stock has been reduced by 25% compared to the corresponding quarter 2019.

TagMaster is today well positioned in a market with long term good prerequisites for growth and good profits. To work with improving the traffic environment in cities and metropolitan areas around the world provides a very good position for the massive restart packages launched in Europe and the US and which in great part are directed towards green investments.  That we during the pandemic have succeeded to increase our flexibility, focus and growth orientation makes it look very good for the future.

Jonas Svensson

CEO

Auditor’s review

This report has been reviewed by the company auditor.

Reporting

During the business year 2021 TagMaster will report at the following dates:

April 29, 2021:                                  Interim report first quarter 2021

April 29, 2021:                                  Annual general meeting, Kista

July 16, 2021:                                   Interim report second quarter 2021

October 27, 2021:                            Interim report third quarter 2021

February 3, 2022:                             Earnings release 2021

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 8.30 a.m. CET on January 28, 2021. 

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 and Sensys Networks – with innovative mobility solutions for increased efficiency, security, safety, comfort and to reduce environmental impact in Smart Cities. TagMaster has daughter companies in England, France, US and Sweden 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 Growth Market in Stockholm. TagMasters certified adviser (CA) is FNCA, telephone +46852800399, E-mail: info@fnca.se www.tagmaster.com

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