Press release, Sweden, Stockholm, July 15, 2022
Stable demand and improved gross margin despite continued disruptions in the supply chain
Second quarter 2022
- Net sales decreased during the second quarter by 1,1% to 87,9 MSEK (88,9). Currency translations had a positive effect of 5,4 MSEK on net sales.
- Adjusted EBITDA decreased during the second quarter by 24,8,5% to 8,0 MSEK (10,7), corresponding to an adjusted EBITDA margin by 9,1 % (12,0)
- Operating profit was 0,9 MSEK (4,8) which correspond to operating margin of 1,0% (5,3)
- Profit for the quarter was -0,7 MSEK (4,0)
- Result per share was -0,05 (0,27) SEK
- Cash flow from operating activities for the period was 11,3 MSEK (14,4)
First half year 2022
- Net sales increased during the first half year by 2,5% to 167,5 MSEK (163,3). Currency translations had a positive effect of 11,1 MSEK on net sales.
- Adjusted EBITDA decreased during the first half year by 65,5% to 7,1 MSEK (20,5), corresponding to an adjusted EBITDA margin by 4,2% (12,6)
- Operating profit/loss was -7,0 MSEK (9,6) which correspond to operating margin of -4,2% (5,9)
- Profit for the period was -9,3 MSEK (8,4)
- Result per share was -0,64 (0,58) SEK
- Cash flow from operating activities for the period was 8,7 MSEK (17,8)
| Amounts in TSEK | 2022 April-June |
2021 April-June |
2022 Jan-June |
2021 Jan-June |
R12M July-June |
2021 Full Year |
| Net sales | 87 945 | 88 933 | 167 459 | 163 338 | 331 007 | 326 886 |
| Net sales growth, % | -1,1 | 29,2 | 2,5 | 10,6 | 9,6 | 14,1 |
| Gross margin, % | 70,4 | 62,4 | 68,5 | 64,4 | 70,4 | 68,4 |
| Adjusted EBITDA | 8 012 | 10 661 | 7 077 | 20 527 | 20 508 | 33 958 |
| Adjusted EBITDA margin, % | 9,1 | 12,0 | 4,2 | 12,6 | 6,2 | 10,4 |
| Equity ratio, % | 55,1 | 49,2 | – | – | – | 54,4 |
| Cash flow from operating activities, MSEK | 11,3 | 14,4 | 8,7 | 17,8 | 17,1 | 26,2 |
| Net debt/EBITDA, R12M | – | – | – | – | 0,1 | 0,3 |
| Number of employees at end of period | 126 | 144 | – | – | – | 137 |
Comments by the CEO
Despite major global challenges, we managed to improve our already good gross margin during the second quarter, which is significantly higher than it was during the second quarter last year. Demand for our solutions is stable and in US for example revenues increased by over 6 percent in local currency corresponding to 24 percent in SEK compared with the same period last year. Like so many other technology companies, we were affected by a continued shortage of components. We were also affected by a deficiency of capacity at our main European supplier. We have been able to handle these imbalances in a good way through great flexibility and with price increases towards our customers.
During the quarter, we were affected by cost increases for both electronic components and input goods. We have therefore continued to increase our purchases via the spot market to be able to keep our commitments to our customers. With price increases to customers and internal efficiency, we managed to reach a gross margin that is significantly higher compared to the second quarter of 2021. Given the challenging purchasing situation and deficiency of capacity in our outsourced production, we are very pleased that we continue to have such a good gross margin. This shows that our offer can withstand price increases without losing attractiveness.
We estimate that the loss in sales of delayed deliveries due to component shortages and capacity shortages corresponded to approximately 5 percent of sales during the quarter, which is slightly less than in previous quarters. We are prepared for continued challenges the coming quarters and we will continue to work with price compensation for the cost increases we suffer.
During the period, we continued to invest in technology leadership in our areas and developed more complete solutions that give our offering increased competitiveness and bring us up in the value chain. The focus is increasingly on solutions that can contribute to a more sustainable transport system where analysis, AI and Deep Learning play an important role.
During the quarter, our work to achieve profitability in our latest acquisition Citilog was intensified and we reached break-even during the quarter, which is a good step forward. Citilog's strategy is to focus on the areas where the company is a world leader such as Incident Management and the business model is adjusted towards less risk. We continue the work and assess that profitability at the same level as the other TagMaster Group will be reached at the beginning of next year.
Rail Solutions' sales has been hesitant for most of the quarter, but during the latter part of the quarter we have seen an increased level of activity and increased intake of orders.
The Group's sales during the second quarter amounted to SEK 87.9 million, which is a decrease of 1.1 percent compared with the same period in 2021. Our Traffic Solutions business amounted to SEK 78.2 million, which is an increase of 13 percent compared to the corresponding period 2021. During the quarter, Traffic Solutions accounted for 89 percent of sales, while Rail Solutions accounted for 11 percent.
The quarter shows a gross margin of 70.4 percent with an adjusted EBITDA result of SEK 8.0 million, which corresponds to an adjusted EBITDA margin of 9.1 percent. Cash flow from operating activities amounted to SEK 11.3 million and the Group's solvency ratio was 55 percent at the end of the period. Efforts to reduce working capital have had continued focus and accounts receivable have decreased compared with the corresponding quarter in 2021. Our stock increased during the quarter by approximately 12 percent due to our effort to always maintain a high level of service to our customers and to be able to deliver as well in times of severe delivery disruptions.
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 reaching a higher growth curve. The fact that we work to improve the traffic environment in cities and metropolitan areas around the world gives us a very good position in the face of the massive restart packages that are being launched in Europe and the USA and which are largely focused on green investments.
The strategy and value-creating potential have not changed due to the short-term limitations in the supply chain and our investments in growth through innovation, commercial focus and acquisitions mean that we have a positive view of the company's development for the coming years.
Jonas Svensson
CEO
Reporting
During the business year 2022 TagMaster will report at the following dates:
October 27, 2022: Interim report third quarter 2022
February 2, 2023: Earnings release 2022
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, 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 15, 2022.
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 daughter companies in England, France, US and Sweden 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, telephone +46852800399, E-mail: info@fnca.se www.tagmaster.com
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