Tagmaster sees supply chain shortages improve

Stockholm, Sweden

Tagmaster has released its latest interim report which covers the first quarter, January - March 2023. The figures show that the company has seen an increased demand for its solutions with a sales increase of almost 19%, compared to just 7% for the same period last year.

Jonas Svensson commented on the company's performance for the first part of this year, and explained that the ongoing global supply chain challenges were beginning to show signs of improvement. 

"During the latter part of the quarter, we saw an improved delivery situation for critical components and semiconductors, which improved our delivery capability. However, we have during the period had continued high costs for spot purchases, which is explained by previously ordered components being delivered during the first quarter, while we have seen that the need for new spot purchases has decreased towards the end of the quarter.

We have also happily noted that the lack of capacity at our main European supplier, which previously hampered our delivery power, has been remedied and we are seeing more normal product deliveries."

Manufacturing moves to California

During the quarter the company completed its strategy to move of its production from Mexico to local manufacturing in Oakland, California, and as a result Tagmaster now meets the Buy America requirements of the 2021 Infrastructure Investment and Jobs Act, which Svensson believes will give the company a big advantage in the US market.

French operation reorganised

We completed the efficiency programme in France during the quarter, which aims to increase organisational efficiency, simplified structures and reduce costs while continuing to develop industry-leading products and increase our commercial capacity. The programme will result in annual cost savings of just over SEK 11 million with full effect from the second quarter of this year, which nets approximately SEK 7 million after the investments in our sales organisation.

After completing the efficiency programme our latest acquisition, Citilog, shows growth with good profitability. Cost efficiency is necessary to enable investment in technology leadership and to strengthen our resilience.

During the period, we have continued to invest in technology leadership within our focus areas and we are developing more complex 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.

Turnover and margins

The group's turnover during the first quarter amounted to SEK 94.4 million, which is an increase of 18.7 percent compared to the same period in 2022. The quarter's organic turnover change, with adjustment for exchange rate effects of SEK 4.6 million, amounted to SEK 10.2 million corresponding to an increase of 12.9 percent. The Traffic Solutions business amounted to SEK 77.4 million, which is an increase of approximately 13.5 percent compared to the corresponding quarter in 2022. During the quarter, Traffic Solutions accounted for 82 percent of sales, while Rail Solutions accounted for 18 percent.

The gross margin landed at 70.4 percent with an adjusted EBITDA result of SEK 7.9 million, which corresponds to an adjusted EBITDA margin of 8.3 percent. Cash flow from current operations amounted to SEK 15.6 million and the group's solvency ratio was 61.5 percent at the end of the period.

"Our stock has increased sequentially during the quarter by approximately ten percent as a result of the effort to maintain a high level of service towards our customers and to manage imbalances in the delivery supply chain. The work to reduce the working capital has continued focus and accounts receivable have decreased by approximately 21 percent during the quarter," said Jonas Svensson.

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 striving for higher growth. 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," concluded Svensson.


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