Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sensys Gatso Group AB (LTS:0H0U, Financial) reported a significant increase in total order intake for 2024, amounting to SEK992 million, which is 32% higher than the previous year.
- The company has successfully implemented its strategy to establish a solid foundation of recurring revenue, with 71% of the 2024 order intake coming from TRaaS services.
- Sensys Gatso secured major contracts in Sweden and the Netherlands, with a combined backlog of more than SEK1,000 million, ensuring future revenue streams.
- The company has expanded its Managed Services business model into new geographical areas, including Australia and Ghana, and established a strategic partnership in Saudi Arabia.
- Sensys Gatso's global revenue distribution is balanced, with contributions from the Americas, Europe, and APAC-MEA regions, helping to stabilize revenue volatility.
Negative Points
- Order intake for the fourth quarter decreased to SEK161 million from SEK212 million in Q4 2023.
- The company faced legislative challenges in Iowa, resulting in a SEK20 million negative impact on 2024 revenue.
- Gross margin for the quarter decreased to 36% from 42% in Q4 2023, primarily due to lower margins on initial system sales.
- EBITDA for the quarter fell to SEK28 million from SEK45 million in the previous year, reflecting lower profitability.
- Sensys Gatso sees a delay in achieving its ambition of reaching SEK1 billion in revenue with an EBITDA margin of more than 15% by 2025 due to market dynamics and legislative changes.
Q & A Highlights
Q: Are there any changes to the rollout plan for the Trafikverket order?
A: No, the rollout plan remains unchanged. The major hurdle was the acceptance of the golden sample by the customer, and we are past that now. The rollout of the installation of the systems and the service and maintenance part of the contract will start in Q2 2025. - Ivo Monnink, CEO
Q: What was the reason for the buyout of the U.S. minority stake?
A: The minority stake was held by former employees, and we had a call option to buy it. We decided to execute this option to secure 100% ownership of this strategic entity for SEK44 million. - Ivo Monnink, CEO
Q: Can you elaborate on the investment plans for 2025?
A: We expect to continue with similar levels of investment as in 2024, primarily in construction and technical equipment to support new orders and programs in 2025 and beyond. - Simon Mulder, CFO
Q: Is the in-vehicle project in Saudi Arabia part of the new agreement, and what is its potential impact?
A: Yes, the in-vehicle project is part of a framework agreement for service and maintenance. The first order is worth SEK27 million for one year, with expectations for increased orders in subsequent years. Saudi Arabia's infrastructure investments under Vision 2030 could lead to substantial orders. - Ivo Monnink, CEO
Q: What are the plans to overcome the issues in Iowa, and what is the timeline?
A: We are working on solutions, such as ordering new trailers for mobile locations and maintaining Red Light Enforcement. However, full business recovery in Iowa is not expected in 2025. - Ivo Monnink, CEO
Q: What are the drivers behind the lower and higher ends of your guidance range for 2025?
A: The timing and size of Saudi orders, the impact of the Trafikverket rollout, and the activation of new cities in the U.S. are key factors. - Ivo Monnink, CEO
Q: How do you plan to address the stock market's reaction to recent performance?
A: We remain committed to our strategy of sustainable and profitable growth, focusing on recurring revenue, which we believe will create long-term value for shareholders. - Ivo Monnink, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
