Interim Report January - September 2022

Comments from the CEO

12-months rolling order intake up 85%
The order intake during the third quarter totalled SEK 53 million compared to SEK 64 million in the same quarter last year. The order intake for the quarter mainly relates to the order received from the LATAM region for SEK 29 million. The Q3 12-months rolling order intake arrived at SEK 543 million, compared to SEK 293 million last year, up by 85%.

Largest order won in the history of the company, worth SEK 850 million
The Q3 order intake excludes the Swedish procurement award, valued up to the amount of SEK 850 million, of which the contract was signed on November 16th.

The tender was won from our long time customer Trafikverket in Sweden, and is of great strategic importance for Sensys Gatso. It was Trafikverket that first introduced to the world the globally adopted concept to aim for zero fatalities in traffic, also known as Vision Zero.

The Vision Zero approach has, since 1997, proven to be highly successful increasing traffic safety in Sweden. As the single technology provider to Trafikverket, we are proud to have been part of this from the very beginning.

The delivery of traffic safety systems and TRaaS service & maintenance are estimated to approximately SEK 400 million over the first six years. The first phase is a development phase to be followed by system deliveries and subsequent maintenance, and calibration services and further system deliveries over the 12 year contract period.

The total contract amount is estimated to be up to SEK 850 millions over the contract period. The split between system sales and TRaaS is estimated at 50/50 over the contract period. With the signing of the new contract, the largest in our history, we are delighted to now continue the relationship with this leading customer in traffic safety.

Introducing FLUX, our new embedded software platform
Swedish Trafikverket’s Vision Zero sets very high standards and Trafikverket has complex and specific technology requirements. This win is a quality stamp for Sensys Gatso and validates FLUX, our new embedded software platform. FLUX is Sensys Gatso’s latest advanced and flexible embedded software platform. FLUX manages a wide range of road side sensor types that collect traffic and violation related data. The new software provides our customers a cost effective and future proof solution.

I am very proud of how our teams worked together to bring in the largest order in the history of Sensys Gatso, extending our relationship with Trafikverket for another 12 years to come.

Historic high order intake of SEK 1.2 billion
Our order book is growing, with two large contracts won in our home markets this year.

In March 2022, we won a procurement award in The Netherlands for the amount of approximately SEK 250 million. This amount will be added to the order intake once the orders are formally allocated. We expect these allocations to start by Q1 2023.

The Swedish Trafikverket procurement amount of SEK 850 million, will already be added to the order intake in Q4 2022. When doing so, we arrive at a historic high year to date order intake of SEK 1.2 billion, more than 2 times higher than full year 2021.

Investing in Saudi Arabia
To date in Q3 we have delivered 75% of this SEK 275 million contract for our unique Vehicle-in-Motion solution and to date we received 90% of payments related to these deliveries. Due to our customer´s dependency on a number of external prerequisites outside of their control, such as availability of vehicles and drivers, we have been asked to temporarily pause the deliveries of the Vehicle-in-Motion contract. The remaining 25% deliveries of the contract are now expected to resume as of the second half of 2023. Meanwhile we are carrying out various Proof of Performance tests for Fixed Speed Systems. Passing these tests will open the door to the much larger and growing Fixed Speed market in Saudi Arabia. As a result of our rapidly increasing activities and a broadening of our relationships with our customer, we have also finalized the incorporation of a new subsidiary in Saudi Arabia and recruited our first employee, Mr. Fawaz Alabri who has joined us as Head of Operations.

TRaas Sales up 16% and 80% of total sales
Sales in the quarter arrived at SEK 95 million, compared to SEK 130 million last year. The third quarter sales in 2021 included significant deliveries to our Saudi customer. Our strategic recurring TRaaS sales arrived at SEK 76 million, up by 16% compared to last year and 80% of total sales. The increase in TRaaS sales is mainly attributable to higher volumes on our USA TRaaS programs and favorable FX. Looking at 12-months rolling, our total sales arrived at SEK 506 million, 8% higher than last year. On a 12-months rolling basis our TRaaS sales increased 24%, from SEK 234 million to SEK 291 million. Our TRaaS sales represents 12-months rolling 58% of our total sales, close to our 2025 strategic target of 60% TRaaS sales.

TRaaS drives Gross Margin to 46%
Due to the large share of the TRaaS business in our topline, with typically higher margins, the overall gross margin arrived at 46% this quarter. Looking at our gross margin on a 12-months rolling basis, we see a 4 percentage points margin improvement from 39% to 43%. This structural gross margin improvement is supporting our strategic choice to focus on the more profitable recurring TRaaS business.

Investing for future growth
The underlying expenses for the quarter, adjusted for foreign exchange effects and Q3 2021 COVID related one off benefits , amounted to SEK 44 million compared to SEK 39 million last year.

The increase in expenses is partially due to increased sales expenses related to implementation of the new proactive sales model in the USA. We are executing on our new US business plan by making demand creation investments in the US market, the region that holds the largest growth potential for Sensys Gatso. With a new leadership and sales team in place and related additional Travel & Expenses, we expect these investments in the USA to temporarily suppress our EBITDA, until we see higher revenues coming through.

During 2021 we initiated implementation of a new ERP system, which aims to connect all subsidiaries in one global system, to support the 2025 strategic plan. This implementation is well underway and is expected to be finalized by the end of the first quarter 2023. The cost of implementation has temporarily increased the expenses in 2022. When fully implemented the ERP system will provide better insight and utilization of global resources as well as enhanced global collaboration on projects.

The third quarter 12-months rolling EBITDA amounted to SEK 77 million compared to SEK 69 million last year. This is an increase of 12%. As a percentage of sales the 12-months rolling EBITDA came in at 15.2% compared to 14.7%. The EBIT for the 12-months rolling period amounted to SEK 36 million compared to SEK 31 million, an increase of 16%.

Free available cash up 70%
At the end of the period free available cash amounted to SEK 177 million. This is SEK 73 million, or 70% higher compared to Q3 last year and SEK 5 million higher than at the end of Q2 2022. Year to date Q3, Sensys Gatso generated a positive cash flow from operating activities of SEK 119 million, compared to negative 2 million last year. The positive movement mainly relates to payments of trade receivables and use of inventories to the amount of SEK 86 million and SEK 36 million in other movements. After Investment and Financing activities, the group added SEK 76 million to its available cash position since the beginning of the year. With our strong available cash position and our low level of debt, the company has a healthy financial position.

Outlook
With the winning of the largest tender in our industry in Sweden and a large procurement award in The Netherlands we have secured our ongoing business in two of our home markets. Already now, we have realized the highest order intake in the history of Sensys Gatso in a single year. At the same time we are investing in the USA and Saudi Arabia to prepare for accelerated growth in these strategic markets.

Our recurring and profitable TRaaS business continues to grow and our financial position remains strong. We continue to see, in the short term, limited impact from supply chain cost increases and the war in Ukraine.

We therefore retain our long-term plan 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 17 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

Link to the presentation/audiocast: https://ir.financialhearings.com/sensys-gatso-group-q3-2022

Dial-in number:
Sweden: +46 8 505 163 86, Pin code: 4831456#
UK: +44 203 198 4884, Pin code: 4831456#
US: +1 412 317 6300, Pin code: 4831456#

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 17 November, 2022.

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, Sweden and the USA, and a branch office in the United Arab Emirates and has 263 employees. The Sensys Gatso Group’s shares are listed on Nasdaq Stockholm.

For further information, visit www.sensysgatso.com