Interim Report January - March 2020

30/04/2020 - January – March 2020
∙ Net Sales MSEK 95.6 (78.4)
∙ Order intake MSEK 33.6 (100.0)
∙ Operating profit (EBIT) MSEK -13.7 (-12.2)
∙ Operating profit (EBITDA) MSEK 1.0 (-0.1)
∙ Total Comprehensive income MSEK 4.7 (-2.1)
∙ Earnings per share, before and after dilution (SEK) -0.02 (-0.01)
∙ Cash flow from operating activities MSEK 19.9 (-20.6)

January – December 2019
∙ Net Sales MSEK 406.3 (380.3)
∙ Order intake MSEK 527.5 (480.3)
∙ Operating profit (EBIT) MSEK -24.4 (0.6)
∙ Operating profit (EBITDA) MSEK 28.6 (37.6)
∙ Total Comprehensive income MSEK -6.0 (16.1)
∙ Earnings per share, before and after dilution (SEK) -0.02 (0.00)
∙ Cash flow from operating activities MSEK -3.7 (49.3)

Comments from the CEO
Continuing our business during Covid-19 crisis
Let’s start with the business update on the one topic the world is daily talking about for the last two months; Covid-19. The moment the virus outbreak was declared a pandemic by the WHO, we acted swiftly by protecting our employees and the continuity of our operations. We created Business Continuity Plans for all our entities and asked nearly 80% of our employees to work from home. Our objective is to protect those employees that absolutely need to be in the office or in the field to continue the product and service deliveries to our customers. Because we globally adopted the Agile & Scrum way of working in 2018, our developers can now 100% continue their work remotely. 

In the USA we obtained security clearance to have our operators and customer service staff work from home. As a result our ability to send-out citations is not impacted. The achieved continuity of our business is important to our Customers because we are seen as an essential business to many governments across the world. With emptier roads, drivers may be more tempted to exceed speed limits, risking crashes and putting an unnecessary burden on the already stretched healthcare systems. In line with our mission to make traffic safer, we have actively pushed the message to drive safely, especially now, using our social media channels. Of course, with schools closed and less traffic overall in the USA, we will likely start to see an impact on our TRaaS revenue in that market. To what extent, largely depends on the timing of the gradual reopening of the American economy.

Costa Rica contract in finalization phase 
In February of this year Sensys Gatso, together with our consortium partners, were given a notice of contract award from the Costa Rican government for the country’s Nationwide Intelligent Transportation System. We are now in the process of stipulating the legal details between all parties involved. Due to Covid-19 related communication circumstances this takes more time than initially anticipated. At the moment we do not expect this to have an impact on the overall execution timeline of this SEK 192 million project. 

Covid-19 not expected to impact order intake
The order intake for the quarter has been relatively low  with SEK 34 million (100).  In general, first quarter intakes are lower compared to other quarters, as it is common for our government customers to release their annual budgets for new projects after the first quarter. On top, the delay of the Costa Rica contract signing of nearly SEK 200 million has been delayed into Q2. Because we are seen as an essential business, we do not anticipate that Covid-19 will impact the order intake going forward. 

TRaaS sales continues to grow
The total net sales in Q1 amounts to SEK 96 million, 22% higher than last year (78). The recurring part of our Sales arrived at SEK 53 million, 47% higher than last year (36). TRaaS now represents 56% of total Sales, 10 percentage points higher than last year (46%). With this we continue to see good traction on our strategy to grow our TRaaS business.

Gross Margin temporarily suppressed
In the quarter we started our high volume school zone speed program in Buffalo, Rhode Island, with a one month warning period, where we operate the system without revenue. Shortly after, schools in Rhode Island closed, driven by Covid-19 safety measures. We can only enforce speed during school time and therefore revenue generation for this three year TRaaS program has been delayed. In Australia our business is considered essential and we continue the roll-out of our new in-vehicle solution in the state of Victoria. The margin of this System Sales project in the implementation phase is lower due to contracted development expenses. The project is the enabler for a  6 year SEK 130 million TRaaS contract. Both programs temporarily suppress the total gross margin in Q1 which arrived at 30% (37%).

Solid financial position and additional funding
Our available cash has remained stable during the quarter arriving at SEK 92 million compared to SEK 85 million in the fourth quarter of last year. To facilitate our growth ambition, Sensys Gatso and Rabobank have agreed, during the quarter, on a term sheet for additional funding to a maximum amount of SEK 50 million. The first SEK 12,5 million additional funding will become available upon signing the final contract with Rabobank during the second quarter. Overall our financial position remains strong with an Equity/Assets ratio of 65 percent at the end of the quarter compared to 64 percent at the end of 2019. 

Outlook
For now, we expect the impact of Covid-19 for Sensys Gatso to be limited. With a healthy and motivated workforce, mostly working from home, we can continue the execution of our projects. No projects have been cancelled or delayed as we deal with government customers that value our essential traffic safety solutions. If anything, our long project timelines and multi-year government contracts play in our favour during this crisis. For these reasons we retain our long-term plan to grow our net sales from SEK 400 million in 2019 to more than SEK 1 billion, of which TRaaS revenues is more than SEK 600 million, in 2025. We also retain our ambition to increase the profitability from 7 percent EBITDA margin in 2019 to more than 15 percent in 2025. 

Ivo Mönnink
CEO, Sensys Gatso Group

Financial information
Invitation to a presentation for press and analysts
On 30 April at 10 am CET Sensys Gatso Group invites to a presentation/audiocast. The company’s CEO Ivo Mönnink and CFO Simon Mulder will present the financial results in English.

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://tv.streamfabriken.com/sensys-gatso-group-q1-2020

Call-in details:
Sweden +46 8 505 583 66
UK: +44 333 300 92 62
US: +1 8 335 268 382

The presentation in connection with this report will be published on the website. 

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 30 April 2020.

 The release (pdf)

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, Germany, the Netherlands, Sweden and the USA, and a branch office in the United Arab Emirates. The Sensys Gatso Group’s shares are listed on Nasdaq Stockholm and has 252 employees.

Published: 30/04/2020