TagMaster demonstrates profitable growth and starts program for increased resilience
Second quarter 2020
- Net sales increased during the second quarter by 29,5% to 68,8 MSEK (53,2)
- Adjusted EBITDA increased during the second quarter by 100,7% to 6,3 MSEK (3,1), corresponding to an adjusted EBITDA margin by 9,2% (5,9)
- Operating loss was -12,5 MSEK (-5,4) which correspond to operating margin of -18,2% (-10,2)
- Profit for the period was -12,4 MSEK (3,8)
- Result per share was -0,03 (-0,02)
- Cash flow from operating activities for the period was 5,5 MSEK (-2,3)
- As a long-term activity during the period a companywide efficiency program was initiated for the European part of the business. These long-term actions have led to onetime costs of around 9 MSEK during the second quarter of which most of it impacts the cash flow. The program is expected to result in a yearly cost saving of around 10 MSEK from the end of quarter 3 2020.
First half year
- Net sales increased during the first half year by 52,3% to 147,7 MSEK (97,0)
- Adjusted EBITDA increased during the first half year by 40,5% to 13,2 MSEK (9,4), corresponding to an adjusted EBITDA margin by 8,9% (9,7)
- Operating profit/loss was -16,3 MSEK (-1,2) which correspond to operating margin of -11,1% (-1,3)
- Profit for the period was -21,1 MSEK (-0,1)
- Result per share was -0,06 (-0,00)
- Cash flow from operating activities for the period was 8,0 MSEK (3,0)
- The Covid-19 pandemic has had a negative impact on turnover from mid-March and measures have been taken for all parts of the business to mitigate the effects of the corona virus.
- As of January 1, 2020, TagMaster has changed accounting principles from BFNAR 2012: 1 (K3) to IFRS. The effects of the transition are shown in Note 6 in the interim report.
| Amounts in TSEK | 2020 April-June |
2019 April-June |
2020 Jan-June |
2019 Jan-June |
R12M July-June |
2019Full Year |
| Net sales | 68 834 | 53 158 | 147 695 | 97 006 | 313 644 | 262 955 |
| Net sales growth, % | 29,5 | 4,8 | 52,3 | -9,9 | 69,7 | 34,5 |
| Gross margin, % | 63,6 | 63,7 | 64,6 | 65,1 | 66,1 | 66,6 |
| Adjusted EBITDA | 6 311 | 3 144 | 13 215 | 9 408 | 39 868 | 36 051 |
| Adjusted EBITDA margin, % | 9,2 | 5,9 | 8,9 | 9,7 | 12,7 | 13,7 |
| Equity ratio, % | 53,1 | 51,5 | 56,4 | |||
| Cash flow from operating activities, MSEK | 5,5 | -2,3 | 8,0 | 3,0 | 8,9 | 3,9 |
| Net debt/EBITDA, R12M | 0,7 | 1,1 | ||||
| Number of employees at end of period | 108 | 116 | 115 |
Comments by the CEO
Covid-19 has challenged and influenced us in all ways, but it has not stopped us from keeping deliveries to our customers and to ensure long term financial stability. I am convinced that we together, employees and partners are rightly positioned now when the market is slowly turning upwards again.
During the whole quarter we have had lower activity caused by close down and restrictions in all our main markets.
We have during the quarter taken several actions to capacity adjust our business to the present conditions, among others by implementing the national support packages offered in different countries and also with additional cost adjustments. Most of our employees have since early April been part time laid off and they have worked 60-80% of normal time. This temporary short-term cost saving measures contributed to the resilience of the earnings development and reduced the overheads by 15% on the previous quarter.
As a long term action a companywide efficiency program was initiated for the European part of the business, with structural changes like reallocation of resources to new business opportunities and optimization of offices, as well as reduction of staff to adopt the business to a more permanent change of the future sales mix. TagMaster has taken a onetime cost of around 9 MSEK during the second quarter of which most has impacted the cash flow. The program is expected to result in a yearly cost saving of around 10 MSEK from the end of quarter 3 2020.
We, however, continue to invest in our technology leadership to further increase competitiveness. As an example we work on future solutions to handle an increased presence of bicycles in cities. We have in the US (California and Indiana) started to test “Give Me Green”, a solution which through an APP gives cyclists way before at the traffic lights and which is based on Sensys Networks sensor technology and is combined with a cloud solution. Another example we launch in France is our sensor system for charging stations for electric cars enabling cities and regions to conveniently inform motorists which charging stations are available and where they are located.
To increase transparency and give a more clear view of TagMaster the Group has from quarter one 2020 chosen to show two business segments, Europe and US separated.
The total turnover for the Group during the second quarter was 68,3 MSEK, an increase of 29,5% compared to the corresponding quarter 2019. The increase is explained by the acquisition of the US Sensys Networks (Segment US) finalized in June 2019. The quarter shows a strong gross margin even if somewhat lower than earlier quarters of 63,6% and with an adjusted EBITDA result of 6,3 MSEK corresponding to an adjusted EBITDA margin of 9,2%. The cash flow from the business was still positive with +5,5 MSEK and solidity is good with 53,1%.
Our Traffic solution business was 84% of the business while Rail solution was 16%.
TagMaster is today well positions in a market with long term good prerequisites for growth and good profits. To work daily to improve the traffic environment in cities and urban areas around the world provide us with lots of energy to continue to work hard and targeted also in difficult times like these.
Jonas Svensson
CEO
Auditor’s review
This report has not been reviewed by the company auditor.
Reporting
During the business year 2020 to 2021 TagMaster will report at the following dates:
3rd quarter report October 22
Year-end report January 28, 2021
This as well as previous financial reports could be found at the company homepage www.tagmaster.com
For further information, please contact
Jonas Svensson, CEO, +46 8-6321950, jonas.svensson@tagmaster.com
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 8.30 a.m. CET on July 16, 2020.
About TagMaster
TagMaster is an application driven technology company that designs and markets advanced sensor systems and solutions based on radio, radar, vision and wireless magnetic technology for demanding environments. Business areas include Traffic Solutions and Rail Solutions sold under the brands TagMaster and Sensys Networks with innovative mobility solutions in order to increase efficiency, security, convenience and to decrease environmental impact within Smart Cities. TagMaster has subsidiaries in UK, France and US and exports mainly to Europe, The Middle East, Asia and North America via a global network of partners and systems integrators. TagMaster was founded in 1994 and has its headquarters in Stockholm. TagMaster is a public company and its shares are traded on Nasdaq First North Growth Market in Stockholm, Sweden. TagMasters certified advisor is Erik Penser Bank phone +4684638300, E-mail: certifiedadviser@penser.se www.tagmaster.com
