Interim report January to September 2023
Press release Sweden, Stockholm, October 31, 2023
Record high gross margin and strong development for Traffic Solutions segment Europe
July-September 2023
- Net sales increased during the quarter by 0,4 % to 86,9 MSEK (86,5). The organic and currency adjusted growth amounted to -4,1 %.
- Adjusted EBITDA increased during the quarter by 110,5 % and amounted to 11,0 MSEK (5,2) corresponding to an adjusted EBITDA margin by 12,6 % (6,0).
- Operating profit/loss was 0,2 MSEK (-2,6), corresponding to an operating margin of 0,3 % (-3,0).
- Profit/loss for the quarter was 0,2 MSEK (-4,5).
- Result per share basic and diluted was 0,01 SEK (-0,31).
- Cash flow from operating activities for the period was 4,1 MSEK (-16,6).
- On August 31st TagMaster, through its US subsidiary Sensys Networks, acquired the radar division (RTMS) from Image Sensing Systems (ISS). The purchase price was 4,8 MUSD (51,5 MSEK).
January-September 2023
- Net sales increased during the nine-month period by 10,0 % to 279,5 MSEK (254,0). The organic and currency adjusted growth amounted to 3,8 %.
- Adjusted EBITDA increased during the period by 180,7 % and amounted to 34,5 MSEK (12,3) corresponding to an adjusted EBITDA margin by 12,3 % (4,8).
- Operating profit/loss was 8,0 MSEK (-9,7), corresponding to an operating margin of 2,8 % (-3,8).
- Profit/loss for the period was 6,8 MSEK (-13,8).
- Result per share basic and diluted was 0,47 SEK (-0,94).
- Cash flow from operating activities for the period was 25,1 MSEK (-7,9).
| Amounts in TSEK | 2023 July-Sept |
2022 July-Sept |
2023 Jan-Sept |
2022 Jan-Sept |
R12M Oct-Sept |
2022 Full Year |
| Net sales | 86 896 | 86 543 | 279 451 | 254 002 | 384 053 | 358 603 |
| Net sales growth, % | 0,4 | 8,2 | 10,0 | 4,4 | 13,8 | 9,7 |
| Gross margin, % | 73,1 | 67,6 | 71,6 | 68,2 | 70,8 | 68,3 |
| Adjusted EBITDA | 10 979 | 5 215 | 34 512 | 12 293 | 49 189 | 26 970 |
| Adjusted EBITDA margin, % | 12,6 | 6,0 | 12,3 | 4,8 | 12,8 | 7,5 |
| Equity ratio, % | 59,9 | 56,1 | - | - | - | 60,9 |
| Cash flow from operating activities, MSEK | 4,1 | -16,6 | 25,1 | -7,9 | 26,3 | -6,7 |
| Net debt/EBITDA, R12M | - | - | - | - | 1,0 | 0,8 |
| Number of employees at end of period | 118 | 125 | - | - | - | 120 |
Comments by the CEO
During the third quarter, we received further evidence that our strategic investment in the Traffic Solutions area is the right way to go. Revenue for Traffic Solutions increased by approximately 7 percent compared to the same period last year and accounted for 90 percent of the group's total revenue. To further increase the pace, we completed an acquisition within Traffic Solutions during the quarter, when our American operations acquired the radar business from Image Sensing Systems (ISS).
The good development for Traffic Solution was achieved despite that a couple of major customer projects within Segment USA were postponed until 2024. Despite this, the delivered a record high gross margin during the quarter combined with good cost control which gave a doubled result compared to the third quarter of 2022.
One reason for the good development is that the availability of materials has improved during the quarter and that lead times for critical electronic components are decreasing, which improves our delivery capability. However, prices are still at high levels.
Our growth strategy within Traffic Solutions consists partly of organic growth, partly through carefully selected acquisitions according to a model where we prioritize certain selected technology areas. During the quarter, we acquired the radar business from Image Sensing Systems (ISS) via an asset purchase where we obtain all assets related to the ISS radar division.
Through the acquisition, we strengthen our American operations' offering by being able to offer both sensor solutions for ground installation and a series of high-performance radar-based sensor solutions for installation above ground. We will therefore be better positioned to meet the growing demand for multi-sensor solutions. We see great potential in continuing to develop both the products and sales in the US market, also through our global partner network outside the US.
During the quarter, we continued to invest in the group’s joint sales organization and with the work to further integrate our operations. By building ONE TagMaster, we simplify and speed up processes with the aim of being able to better scale up our commercial offer within our various sales units. In concrete terms, it is about integrating CRM systems and our marketing, developing our sales effort and spending more time with our prospective and existing customers both digitally and physically.
The group's turnover during the third quarter amounted to SEK 86.9 million, which is an increase of 0.4 percent compared to the same period in 2022. The quarter's organic turnover change, with adjustment for exchange rate effects and acquisitions, amounted to SEK -3.6 million, corresponding to a decrease of 4.1 percent. The Traffic Solutions business amounted to SEK 78 million, which is an increase of approximately 7 percent compared to the corresponding quarter last year. During the quarter, Traffic Solutions accounted for 90 percent of sales, while Rail Solutions accounted for 10 percent. The positive development for our Traffic Solution business underlines our strategic focus to invest further organically and via acquisitions.
The gross margin at group level landed at 73.1 percent with an adjusted EBITDA result of SEK 11.0 million, which corresponds to an adjusted EBITDA margin of 12.6 percent. The improved gross margin is driven by a combination of a favorable currency situation, implemented price adjustments and efficiency in our supply chain. Cash flow from current operations amounted to SEK 4.1 million and the group's equity ratio was 59.9 percent at the end of the period.
Our stock has decreased sequentially somewhat during the quarter, but including the acquisition of ISS radar operations, it has increased by approximately 37 percent. Accounts receivable have marginally decreased during the quarter and are at a lower level compared to the same period in 2022. The work to reduce the working capital has continued focus.
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 aiming for a higher growth curve.
Jonas Svensson
CEO
Auditor’s review
This report has been reviewed by the company auditor.
Financial calendar
February 2, 2024: Earnings release 2023
Week 13 2024: Annual Report 2023 available on web site
May 2, 2024: Annual general meeting, Kista
April 25, 2024: Interim report first quarter 2024
July 12, 2024: Interim report second quarter 2024
October 23, 2024: Interim report third quarter 2024
February 5, 2025: Earnings release 2024
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, [email protected]
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 October 31, 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.