Press release Sweden, Stockholm, July 14,  2023

Record results for TagMaster

April-June 2023

• Net sales increased during the second quarter by 11,6 % to 98,2 MSEK (87,9). The organic and currency adjusted growth amounted to 6,2 %.
• Adjusted EBITDA increased during the second quarter by 95,4 % and amounted to 15,7 MSEK (8,0) corresponding to an adjusted EBITDA margin by 15,9 % (9,1).
• Operating profit was 7,7 MSEK (0,9), corresponding to an operating margin of 7,9 % (1,0).
• Profit/loss for the quarter was 6,3 MSEK (-0,7).
• Result per share basic and diluted was 0,43 SEK (-0,05).
• Cash flow from operating activities for the period was 5,4 MSEK (11,3).

January-June 2023

• Net sales increased during the first half year by 15,0 % to 192,6 MSEK (167,5). The organic and currency adjusted growth amounted to 9,0 %.
• Adjusted EBITDA increased during the first half year by 232,5 % and amounted to 23,5 MSEK (7,1) corresponding to an adjusted EBITDA margin by 12,2 % (4,2).
• Operating profit/loss was 7,8 MSEK (-7,0), corresponding to an operating margin of 4,0 % (-4,2).
• Profit/loss for the period was 6,6 MSEK (-9,3).
• Result per share basic and diluted was 0,45 SEK (-0,64).
• Cash flow from operating activities for the period was 21,0 MSEK (8,7). 

Comments by the CEO

The second quarter of the year offered a very positive development for TagMaster with increasing demand for our solutions in combination with reduced cost pressure. The group's sales increased both in Europe and in the US with an average increase of almost 12 percent compared to the second quarter of 2022, while we increased the gross margin to 71.6 percent. All in all, this means that we delivered a record result during the quarter.

During the quarter, we have seen a continued improvement in the delivery situation for critical components and semiconductors, which continued to improve our delivery capability. However, we also had costs for purchases on the spot market during the second quarter, which is explained by the fact that previously ordered components were delivered during the quarter. Although we were still affected by some cost increases we managed to increase our gross margin by just over 1.2 percentage points to 71.6 percent during the quarter, due to price adjustments towards customers, internal efficiency and a favorable product mix. The move of our production for the US market from Mexico to Oakland, California, was completed during the quarter. That means we meet the Buy America requirements of the 2021 Infrastructure Investment and Jobs Act, which gives us an advantage in the US market.

During the quarter, we continued to invest in the group's joint sales organization and further integrated our operations. By building ONE TagMaster, we simplify and speed up processes with the aim of being able to better scale our commercial offers within our various sales units. Concretely, it is about integrating our CRM systems and our marketing, developing our sales efforts and spending more time with our prospects and customers both digitally and physically.

After completing the efficiency program, our latest acquisition, Citilog, showed continued growth in the quarter with good profitability. During the quarter, Citilog launched an update to its automatic incident management system for tunnels, bridges and highways, with additional modules for pedestrian recognition, among other things. The system is based on AI and Deep learning.

During the period, we have continued to invest in technology leadership within our focus areas and develop more complete solutions that give our offer increased competitiveness. The focus is increasingly directed towards solutions that contribute to a more sustainable transport system where analysis, AI and Deep Learning play an important role. We also see that our investment in energy-saving sensor systems, where most of our solutions can be powered by solar energy and batteries, as well as the simplicity of the sensor systems, configuration via tablet or mobile, creates more business opportunities.

The group's turnover during the second quarter amounted to SEK 98.2 million, which is an increase of 11.6 percent compared to the same period in 2022. The quarter's organic turnover change, with adjustment for exchange rate effects of SEK 4.7 million, amounted to SEK 5.5 million corresponding to an increase of 6.2 percent. The Traffic Solutions business amounted to SEK 83 million, which is an increase of approximately 5 percent compared to the corresponding quarter in 2022. During the quarter, Traffic Solutions accounted for 84 percent of sales, while Rail Solutions accounted for 16 percent.

The gross margin landed at 71.6 percent with an adjusted EBITDA result of SEK 15.6 million, which corresponds to an adjusted EBITDA margin of 15.9 percent. Cash flow from current operations amounted to SEK 5.4 million and the group's solvency ratio was 63.9 percent at the end of the period.

Our stock has increased sequentially during the quarter by approximately 18 percent as a result of the investment in maintaining a high level of service towards our customers and to manage imbalances in the delivery supply chain. Accounts receivable have increased sequentially during the quarter by approximately 9 percent but are at the same level as the same period in 2022. The work to reduce working capital has continued focus.

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 aiming for a higher growth curve. The fact that we work to improve the traffic environment in cities and metropolitan areas around the world puts us in a very good position considering the massive investment packages that have been launched in Europe and the USA and which are largely focused on green investments.

Jonas Svensson

CEO

Reporting

During the business year 2023 TagMaster will report at the following dates:

October 31, 2023:                            Interim report third quarter 2023

February 2, 2024:                             Earnings release 2023

This report and previous reports and press releases are found at the company home page https://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 8.00 a.m. CET on July 14, 2023.

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 subsidiaries in England, France and US 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.