Interim report January to September 2024
Strong cash flow in a pending market
July-September 2024
- Net sales decreased during the quarter by 2,4 % to 84,8 MSEK (86,9). The organic and currency adjusted growth amounted to -17,3%.
- Adjusted EBITDA decreased during the quarter by 94,7% and amounted to 0,6 MSEK (11,0) corresponding to an adjusted EBITDA margin by 0,7 % (12,6).
- Operating profit was -6,6 MSEK (0,2), corresponding to an operating margin of -7,8 % (0,3).
- Profit/loss for the quarter was -7,5 MSEK (0,2).
- Result per share basic and diluted was -0,51 SEK (0,01).
- Cash flow from operating activities for the period was 6,4 MSEK (4,1).
January-September 2024
- Net sales increased during the nine-month period by 2,6% to 286,7 MSEK (279,5). The currency adjusted growth amounted to -14,0 percent.
- Adjusted EBITDA decreased during the period by 38,2% to 21,3 MSEK (34,5), corresponding to an adjusted EBITDA margin by 7,4% (12,3).
- Operating profit/loss was -5,9 MSEK (8,0) which correspond to operating margin of -2,0% (2,8).
- Profit/loss for the period was -9,4 MSEK (6,8).
- Result per share, basic and diluted was -0,64 SEK (0,47).
- Cash flow from operating activities for the period was 47,6 MSEK (25,1).
| Amounts in TSEK | 2024 July-Sept | 2023 July-Sept | 2024 Jan-Sept | 2023 Jan-Sept | R12M Oct-Sept | 2023 Full Year |
| Net sales | 84 812 | 86 896 | 286 718 | 279 451 | 411 978 | 404 711 |
| Net sales growth, % | -2,4 | 0,4 | 2,6 | 10,0 | 7,3 | 12,9 |
| Gross margin, % | 66,9 | 73,1 | 67,5 | 71,6 | 65,7 | 68,5 |
| Adjusted gross margin, % | 66,9 | 75,7 | 68,5 | 72,4 | 67,4 | 70,1 |
| Adjusted EBITDA | 583 | 10 979 | 21 343 | 34 512 | 44 006 | 57 174 |
| Adjusted EBITDA margin, % | 0,7 | 12,6 | 7,4 | 12,3 | 10,7 | 14,1 |
| EBITDA | 583 | 8 734 | 18 579 | 32 266 | 34 609 | 48 296 |
| EBITDA margin, % | 0,7 | 10,1 | 6,5 | 11,5 | 8,4 | 11,9 |
| Equity ratio, % | 61,4 | 59,9 | - | - | 61,4 | 60,5 |
| Cash flow from operating activities, MSEK | 6,4 | 4,1 | 47,6 | 25,1 | 19,3 | 28,5 |
| Net debt/EBITDA, R12M | - | - | - | - | 0,4 | 0,9 |
| Number of employees at end of period | 122 | 118 | - | - | 122 | 115 |
Comments by the CEO
The third quarter of the year was, as expected, affected by the weaker demand situation that we have observed over the past nine months, primarily for our European segment. Demand is characterized by long-term investment decisions, often at the governmental level and is impacted by the weaker economy in several geographic markets, and means that our customers postpone their investments decision, mainly in our case the United Kingdom. I assess that the downturn is temporary, and at the same time, I can confirm that despite the downturn, we are maintaining our market share. We also show strength by reporting a good positive cash flow and resilient gross margin during the period.
Looking ahead, I can state 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 problems such as congestion in densely populated areas around the world, increasing traffic safety and preventing accidents, as well as reducing emissions from traffic. This means that demand for our solutions will increase as necessary decisions on infrastructure investments are made across large parts of the world.
Our leading technical expertise in all relevant technologies in the field makes us well positioned to meet the growing demand for multi-sensor solutions. We therefore see great potential in continuing to develop both new products and our sales, both in the U.S. 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.
To leverage our leading technical expertise and thereby drive organic growth, significant investments are being made in product development. During the third quarter, the investment in product development amounted to approximately 15 percent of the group's revenue.
We are already seeing how AI tools have helped us streamline our development work and thereby improve our products and solutions, primarily through support in coding and software development. We also greatly benefit from AI in strengthening and optimizing our sales and marketing efforts. Many of our products have been AI-based for many years, allowing us to quickly take advantage of the advancements happening in the AI field.
Our latest acquisition of the radar business (RTMS) from the U.S. company Image Sensing Systems (ISS) has developed very well in a short time. Through the acquisition, which was completed during the third quarter of 2023, we have strengthened our offering and can now provide both sensor solutions for ground installations and a series of high-performance radar-based sensor solutions for above-ground installations. Already during the final quarter of 2023, the acquisition performed well, which was again confirmed during the past quarter when RTMS sales grew by approximately 170 percent compared to the same period last year. Our Parking and access business has also continued to develop well during the quarter.
The group's sales for the third quarter amounted to SEK 84.8 million, a decrease of 2.4 percent compared to the same period in 2023. The organic revenue change for the quarter, adjusted for currency effects and acquisitions, was SEK
-15.0 million, corresponding to a decrease of 17.3 percent. Costs were at the same level as in the third quarter 2023.
Our Traffic Solutions business amounted to SEK 76.9 million, a marginal decrease of approximately 1 percent compared to the same quarter in 2023. During the quarter, Traffic Solutions accounted for 91 percent of sales, while Rail Solutions accounted for 9 percent. We continued our strategic focus during the quarter by further investing in the Traffic Solutions business, which includes both organic growth and growth through acquisitions.
The adjusted gross margin at group level was 66.9 percent (73.1 percent), with an adjusted EBITDA result of SEK 0.6 million, corresponding to an adjusted EBITDA margin of 0.7 percent. Cash flow from operating activities amounted to SEK 6.4 million, and the group's solvency ratio was 61.4 percent at the end of the period.
The focus on reducing working capital, primarily inventory levels that increased during the previous component shortage, remains strong. Sequentially, inventory has decreased by just over 6 percent, and compared to the same quarter last year, it has decreased by over 34 percent, and by 24 percent compared to the end of the year.
TagMaster is currently well positioned in a market with strong long-term growth prospects and good profitability, and we are committed to continuing to make TagMaster a leading company in Intelligent Transportation Solutions (ITS).
Jonas Svensson, CEO
Auditor’s review
This report has been reviewed by the company auditor.
Financial calendar
February 5, 2025: Earnings release 2024
March 27, 2025: Annual Report 2024 available on web site
April 24, 2025: Annual general meeting, Kista
April 24, 2025: Interim report first quarter 2025
July 18, 2025: Interim report second quarter 2025
October 23, 2025: Interim report third quarter 2025
February 5, 2026: Earnings release 2025
This report and previous reports and press releases are found at the company home page www.tagmaster.com.