Interim report January to June 2024
TagMaster's latest acquisition adds value and cash flow is strong
April-June 2024
- Net sales increased during the quarter by 4,8 % to 102,9 MSEK (98,2). The organic and currency adjusted growth amounted to -9,6 %.
- Adjusted EBITDA decreased during the quarter by 25,8 % and amounted to 11,6 MSEK (15,7) corresponding to an adjusted EBITDA margin by 11,3 % (15,9).
- Operating profit was 2,5 MSEK (7,7), corresponding to an operating margin of 2,4 % (7,9).
- Profit/loss for the quarter was 1,2 MSEK (6,3).
- Result per share basic and diluted was 0,08 SEK (0,43).
- Cash flow from operating activities for the period was 15,4 MSEK (5,4).
January-June 2024
- Net sales increased during the first half year by 4,9% to 201,9 MSEK (192,6). The currency adjusted growth amounted to -12,4 percent.
- Adjusted EBITDA decreased during the first half year by 11,8% to 21,0 MSEK (23,5), corresponding to an adjusted EBITDA margin by 10,3% (12,2).
- Operating profit/loss was 0,7 MSEK (7,8) which correspond to operating margin of 0,3% (4,0).
- Profit/loss for the period was -1,9 MSEK (6,6).
- Result per share, basic and diluted was -0,13 SEK (0,45).
- Cash flow from operating activities for the period was 41,2 MSEK (21,0).
| Amounts in TSEK | 2024 April-June | 2023 April-June | 2024 Jan-June | 2023 Jan-June | R12M July-June | 2023 Full Year |
| Net sales | 102 907 | 98 165 | 201 907 | 192 555 | 414 062 | 404 711 |
| Net sales growth, % | 4,8 | 11,6 | 4,9 | 15,0 | 7,9 | 12,9 |
| Gross margin, % | 69,3 | 71,6 | 67,8 | 71,0 | 67,0 | 68,5 |
| Adjusted gross margin, % | 69,3 | 71,6 | 69,1 | 71,0 | 69,2 | 70,1 |
| Adjusted EBITDA | 11 615 | 15 653 | 20 760 | 23 533 | 54 401 | 57 174 |
| Adjusted EBITDA margin, % | 11,3 | 15,9 | 10,3 | 12,2 | 13,1 | 14,1 |
| EBITDA | 11 615 | 15 653 | 17 997 | 23 533 | 42 760 | 48 296 |
| EBITDA margin, % | 11,3 | 15,9 | 8,9 | 12,2 | 10,3 | 11,9 |
| Equity ratio, % | 60,9 | 63,9 | - | - | 60,9 | 60,5 |
| Cash flow from operating activities, MSEK | 15,4 | 5,4 | 41,2 | 21,0 | 48,7 | 28,5 |
| Net debt/EBITDA, R12M | - | - | - | - | 0,4 | 0,9 |
| Number of employees at end of period | 120 | 113 | - | - | 120 | 115 |
Comments by the CEO
I am pleased to report that, even after just a few quarters, our latest acquisition is already adding value to TagMaster's overall offering. With a very strong performance in the second quarter of the year and a 225 percent increase in sales compared to the same quarter last year, the American radar business (RTMS) is already contributing positively to the group. At the group level, net sales increased by just under 5 percent to SEK 103 million in the second quarter. Some application areas, where demand is characterized by long-term investment decisions, had a slightly lower volume during the quarter compared to the previous year due to market fluctuations and strong comparison figures. The group's EBITDA result amounted to SEK 11.6 SEK, corresponding to an adjusted EBITDA margin of 11.3 percent.
The development in the second quarter continued to demonstrate that our strategic focus on a combination of organic and acquired growth is the right path to take. Our latest acquisition of the radar business (RTMS) from the American company Image Sensing Systems (ISS) has developed very well in a short period. Through the acquisition, which was completed in the third quarter of 2023, we have strengthened our offering and can deliver both ground-installed sensor solutions and a series of high-performance radar-based sensor solutions for above-ground installation. Already in the final quarter of 2023, the acquisition developed well, which were once again confirmed in the past quarter when RTMS sales grew by 225 percent compared to the second quarter of last year.
Some of TagMaster's application areas, where demand is characterized by long-term investment decisions often at the governmental level, experienced slightly lower volumes during the quarter due to a lag in investments. This resulted in a negative currency-adjusted organic growth for the quarter at the group level and a slightly lower gross margin. However, I want to emphasize that these are temporary business fluctuations, which are normal given that projects such as tunnels, bridges, subway projects, and tram traffic projects are tied to irregular investment cycles. Additionally, the comparison figures from the second quarter of 2023 were strong.
Looking ahead, I can confirm that TagMaster is well-positioned to contribute to solutions for some of the major challenges facing the world's transportation systems. These include solving traffic issues such as congestion in densely populated areas globally, reducing and preventing accidents, and reducing traffic emissions. This will drive demand for our solutions as necessary investment decisions in infrastructure are made across many parts of the world.
Our latest acquisition in the USA, as described above, also positions us better to meet the growing demand for multi-sensor solutions. We see great potential in continuing to develop both new products and our sales in the American market and through our global partner network. During the quarter, we continued to invest in the sales organization and further integrate our operations with the aim of better scaling up our commercial offering.
The group's sales for the second quarter amounted to SEK 103 million, an increase of 4.8 percent compared to the same period in 2023. The quarter's organic turnover change, adjusted for currency effects and acquisitions, was SEK -9.4 million, corresponding to a decrease of 9.6 percent. Costs were slightly higher compared to the second quarter of 2023, partly due to increased market and sales expenses, which were partly temporary, as well as increased salary costs impacting overall expenses.
The Traffic Solutions business amounted to SEK 91.5 million, an increase of approximately 9.3 percent compared to the corresponding quarter in 2023. During the quarter, Traffic Solutions accounted for 89 percent of sales, while Rail Solutions accounted for 11 percent. The positive development of the Traffic Solutions business underscores our strategic focus to invest further in this segment both organically and through acquisitions.
The adjusted gross margin at group level was 69.3 percent (compared to 71.6 percent), with an adjusted EBITDA result of SEK 11.6 million, corresponding to an adjusted EBITDA margin of 11.3 percent. The slightly lower gross margin is a result of the aforementioned application mix during the quarter. Cash flow from operating activities amounted to SEK 15.4 million, and the group's solvency ratio was 60.9 percent at the end of the period.
The effort to reduce working capital, primarily inventory levels that increased during previous component shortage periods, remains a focus. Sequentially, the inventory has decreased by just under 8 percent, and compared to the same quarter last year, it has decreased by just under 4 percent. Compared to the end of the year, it has decreased by 19 percent.
TagMaster is today well positioned in a market with long-term favorable growth opportunities and good profitability, and we are determined to continue making TagMaster a leading company in Intelligent Transport Solutions (ITS).
Jonas Svensson, CEO
Auditor’s review
This report has not been reviewed by the company auditor.
Financial calendar
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.