Sensys Gatso Group AB (publ)

Good morning and welcome to CensusGazzo's market presentation of the first quarter of 2025. My name is Ivo Munning. I'm the CEO of CensusGazzo and I will be presenting to you together with Simon Mulder, our CFO. In this market presentation, I will provide you with an update on our business for the first quarter of 2025. We then follow up with a financial update by Simon. And finally, I will finish this presentation with a summary and our financial outlook for 2025. Let's now look at an update of our business. In this business update, I will take you through our order intake, of which 94% has a recurring nature this quarter. Our first recurring revenue order from our Saudi customer. The negligible impact from the tariffs on our US business. the impact we see from a weakened dollar, the continuing growth of our recurring trust business, and finally, our margin and EBDA development. Let's start with the order intake. The order intake and procurement awards during the first quarter came in at 192 million compared to 318 million in Q1 of 2024. Of the total order intake, 62% or 119 million is from orders received in the US market. 65 million is related to renewing a contract with our longstanding customer East Providence in the state of Rhode Island, and the remaining 54 million relates to three new contracts signed during the quarter in three different states, Illinois, Pennsylvania and Colorado. The latter one is our first contract in a new state for San Francisco with the city of Longmont. Opening up a new state is a milestone that potentially could lead to new cities following suit. Of the 192 million total order intake, 94% or 180 million is labeled as recurring revenue. The substantial share of recurring trust revenue within our Q1 order intake demonstrates that we continue to grow our stable recurring revenue baseline in line with our strategy. In January, we received a trust order from our customer Tahacom to the value of 27 million. The order is to provide maintenance and support services on the 1200 in-vehicle systems that have been delivered since 2018. This order is for the first year of service and maintenance under a three year framework agreement. These services include ensuring that the systems are always compliant with regulatory requirements, correctly functioning and up to date. It reinforces the strategic partnership between TARACOM and Census GATSO and marks a significant step towards improving road safety in Saudi Arabia, whilst emphasizing the importance of supporting local content and sustainability initiatives in the Kingdom. After the quarter, the US government has imposed global tariffs on most of the countries that export to the USA. CensusGazzo has a significant business in the USA, representing roughly 40% of our worldwide revenue and growing. The business model we operate in this strategic market through our wholly owned subsidiary, CensusGazzo USA, is a so-called managed services business model. In this model, we own, install, maintain, and operate automated traffic enforcement equipment sourced from the Netherlands and Sweden. When operating the equipment, we evaluate events, send out citations, and collect the money on behalf of our customers, 55 cities, 12 states. The value added for CensusGazzo in this model is generated from the operations part in the value chain. The equipment we use is typically depreciated over five years and has a negligible impact in the value chain. The recent turmoil resulting from the communication on the tariffs has weakened the dollar against the Swedish krona and the euro. These currency translation effects naturally affect our profit before tax during the first quarter. Due to volatility in our main foreign currencies, US dollar, euro and Australian dollar, Census GATSO has been impacted through translation of its foreign currency receivables and cash positions to Swedish krona. This has resulted in a negative impact in the first quarter of approximately 6 million compared to a positive impact in Q1 2024 of 3 million. Adjusting for this, our profit before tax would have been negative 8 million instead of negative 17 million reported. The interest on the euro bond of 30 million euro has resulted in an interest expense of approximately 7 million krona compared to 3 million krona in Q1 2024. In summary, the total financial items amount to approximately 13 million for the quarter. Total revenue for the quarter arrived at 152 million, 22% higher than Q1 2024 at 125 million. The 44% increase in system sales from 41 million to 59 million was mainly related to an increased rollout of the Dutch tender in Q1. The recurring trust revenue arrived at 93 million this quarter, 11% higher than Q1 2024 at 84 million. Our trust managed services revenue remained relatively stable at 57 million versus 59 million in Q1 of last year. From this, we may conclude that our US team managed to compensate for the shortfall in revenue from the Iowa post programs with increased revenues from programs in other states. This quarter, our recurring trust business accounted for 61% of our total revenue. This is in line with our strategic target of more than 60% of total revenue. Our gross margin this quarter was 37% compared to 38% in Q1 2024. This is somewhat lower than our run rate margin of 40% and is driven by the relatively large contribution this quarter of system sales from the Dutch project. System sales margins are typically lower and precede the higher margin service and maintenance recurring revenue, which is expected to continue for at least six years for the Dutch project. The overall gross margin of the contract will gradually recoup during this phase. Our EBDA for the quarter arrived at 9 million, 5 million higher compared to our EBDA of 4 million in Q1 2024, an increase of 125%. On that note, I'd like to hand over to Simon.

Thanks, Ivo. As usually, I will talk you through our group's financial performance, the performance of the segments, and our financial position. Looking at the group's financial performance from the income statement, we focus on revenue margins and profitability. The revenue for the quarter came in at 152 million compared to 125 million, up by 22%. During the quarter, trust sales increased to 93 million from 84 million in Q1 of 2024, an increase of 10%. The sales of systems came in at 59 million compared to 41 million. The increased sales in Q1 2025 is mainly related to deliveries on the Dutch tender and the announced Australian order. The group's gross margin arrived at 37% for the quarter, in line with last year. Operating expenses totaled 59 million, an increase of 4 million compared to Q1 2024. And our operating profit for the period improved by 3 million compared to Q1 2024 and came in at negative 4 million. As the average currency exchange rates were similar to Q1 2024, there is a relatively small impact on the income statement on revenue and EBITDA level. However, due to large currency fluctuations since the end of 2024, the financial performance of the group has been impacted by translation of foreign currency receivables and cash to Swedish krona. The translation impact amounted to negative 6 million in the quarter and is 9 million lower than the reported 3 million positive impact of Q1 2024. Discussing the performance of our managed services segment, it is good to understand that this segment predominantly reports on our US business and the costs associated with software development for our software suites, Zillium and Pulse. The order intake in the quarter amounted to 190 million, consisting of 54 million total contract value over the contract period of new customers and 65 million for contract renewals and expansion possibilities. Revenue came in at 46 million, 4 million lower compared to last year. The impact of Iowa of approximately 10 million per quarter has been partially offset by revenue growth on new and existing customers by improvement of performance. The EBITDA amounted to 5 million compared to 8 million for the same quarter last year, resulting in an EBITDA margin of 10%. 12 months rolling, the sales came in slightly lower than Q4 last year at 191 million and an EBITDA margin of 11%. Looking at the sales development from an annual perspective, the sales in the US have grown from 95 million in 2019 to 191 million in 2024, excluding 20 million impact of Iowa on top line sales. The CAGR over this period is approximately 15%. Moving to our system sales segment, the segment reports on results from our system sales companies with revenues from one-off sales of systems, service and maintenance, and in the case of the Australian entity, also a small part of managed services revenue. Order intake in the quarter for the segment system sales is driven by orders from Australia and several repeat orders from existing customers. The order intake for the quarter amounted to 73 million compared to 44 million last year. The increase in sales from 75 million to 106 million in Q1 2025 is driven by deliveries on the Dutch project and the announced Australian projects. EBITDA improved by 8 million from negative 4 million to positive 4 million in 2025. 12 months rolling, the revenue increased from 437 to 468 million in Q1 2025 with an EBITDA margin of 11%. During the quarter, the segment reached a recurring revenue of 44% of sales consisting of trust service and maintenance and trust managed services. 56% relates to one-off sales of systems. Then discussing the financial position of our company, I would like to focus on cash movements, interest bearing debt and available cash. The largest movement in our available cash position are investments in working capital and fixed assets. The increased cash usage in working capital is caused by buildup of inventory for projects and timing of invoicing of customers. The investment in fixed assets for the period is mainly due to investments in our software products. The available cash amounted to 149 million at the end of the period. Due to currency volatility in the first quarter of 2025, we have seen a significant impact on the translation effects of balance sheet items such as the 30 million euro bond. The bond was valued at 338 million at the end of 2024 and at 390 million at the end of the first quarter, resulting in a translation effect of 19 million on this position. During the quarter, we have prolonged the lease of our headquarters in Jönköping. This has resulted in an increase in the unbalanced lease liabilities and right of use assets of approximately 22 million. The net interest bearing debt has increased from 217 to 274 million at the end of the quarter. On that note, I'd like to hand it over to Ivo.

Thank you, Simon. Census GATSO has made significant progress in several key areas, including obtaining first contracts in new states in USA, expansion of the managed services business model into other geographical areas such as Australia and Ghana, and a strategic partnership in Saudi Arabia with a first order for recurring revenue in hand. Our order book and remaining backlog of more than 1,000 million is robust and will provide solid revenue well into the future. We expect our trust business to continue delivering profitable growth driven by our strengthened US team and our groundbreaking Flux roadside platform. Our long-term strategy remains unchanged, and we are taking proactive steps to address the challenges we've encountered We are confident that these actions will position us to deliver on our ambition in the near future. For 2025, we expect our revenue to arrive between 700 and 800 million. And due to additional sales investments to accelerate the growth in our US market, we anticipate to realize an EBITDA margin between 12 and 14% in 2025. On this note, I now open up for questions.