Hello, and welcome to Sensys Gatso Group audiocast with teleconference Q1 2022. Throughout the call, all participants will be in listen-only mode, and afterward, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I am pleased to present CEO Ivo Mönnink and CFO Simon Mulder. Please begin your meeting.
Yes, thank you. Good morning and welcome to Sensys Gatso's presentation of the first quarter 2022. My name is Ivo Mönnink. I am the CEO of Sensys Gatso, and I will be presenting our Q1 results to you together with Simon Mulder, our CFO. Next slide, please. In this market presentation, we will provide you with an update on our business for the first quarter. We then follow up with a financial update by Simon. Finally, I will finish this presentation with a summary and our outlook. Next slide, please. Now let's look at an update of our business.
In this business update, I will take you through our order intake, including procurement award, which is up by more than 200%, the growth of our proven fast business model, information around the successful Intertraffic show in Amsterdam, the positive development of our profitability with EBITDA, which is up by SEK 21 million this quarter, the steady delivery of our Saudi contract, and the supply chain costs, which are expected to be stable for Sensys Gatso throughout 2022. Next slide, please. Now let's look at our order intake for the quarter. The order intake, including procurement award in Q1, arrived at SEK 328 million, up more than 200% compared to last year.
We were chosen as one of the three vendors to supply, operate, and support fixed systems for speed and red light enforcement in the Netherlands, and we received a procurement award of SEK 250 million. With this investment, the Dutch Public Prosecution Services authority is aiming to replace the existing automated traffic enforcement infrastructure in the Netherlands. I'm also very pleased to see we added significantly to our TRAS order backlog. Of the Q1 order intake, SEK 166 million relates to TRAS recurring revenue, including SEK 26 million from three new cities we added in our strategic U.S. market. This is an increase of SEK 151 million compared to last year. Next slide, please. We had a strong first quarter with total sales of SEK 113 million, up by 45%. Our strategic recurring TRAS sales arrived at SEK 69 million, up by 44%.
In Q1 last year, we had temporary COVID-19-related school closings that suppressed our sales. Our school zone related TRAS business in the USA has returned to normal operations this quarter. This is reflected in our TRAS managed services business, which grew by 82% from SEK 22 million to SEK 40 million. Our TRAS sales arrived at 61% of total sales in the quarter, right on target with our 2025 ambition. Next slide, please. End of March, the largest global show in our industry, the Intertraffic, was held in Amsterdam. It was the first time after 2018 that many suppliers and customers physically came together again. The day before the opening of the show, we organized our partner day in our Haarlem offices. Here, we presented to more than 50 invited partners and customers our TRAS software-based product vision and 13 user stories.
At our booth on the show, we presented a live demonstration of our U.S. full TRAS business model. The show was a great success for Sensys Gatso, renewing many existing customer relationships and developing promising new ones in various regions. Next slide, please. Our EBITDA arrived at SEK 60 million for the quarter, up SEK 21 million compared to last year. The EBITDA growth can mainly be attributed to the rebound of our TRAS managed services business with higher margins in the U.S.A., as explained before. On a 12-month rolling basis, our EBITDA arrived at SEK 105 million, nearly 100% higher than the same period last year. Main contributor is our gross margin, which arrived at 45% for the quarter, compared to 31% last year. On a 12-month rolling basis, our gross margin arrives at 41%, five percentage points higher than last year.
This demonstrates a structural margin improvement as we grow our TRAS business year-on-year. Next slide, please. In the quarter, we delivered yet another 10% of the SEK 275 million contract for our unique Vehicle in Motion solution to our Saudi customer. To date, in Q1, we have delivered 65% of this contract, or SEK 180 million. We expect to keep a steady pace in our deliveries to meet the requirements of our customer. Meanwhile, we engage in discussions and testing to develop and possibly provide additional solutions for this key customer in the Middle East region. Next slide, please. At Sensys Gatso, we have long lead time for sales, delivery and operations processes. Critical components are therefore sourced way in advance and have already been secured for 2022.
Assembly of our systems takes place in our European factories, where most of the added value for our system sales is realized. Our system sales and managed services business models are hardly affected by increases in energy costs, and we have price arrangements in place with suppliers to secure our 2022 sales and margins. Sensys Gatso is therefore not significantly impacted by increases in gas prices. Sensys Gatso is deeply concerned and saddened by the war in Ukraine and the devastating impact on the people of the country. We have no business to date in Russia or Ukraine, no employees working from these countries and no suppliers coming from the region. Today, we expect no delivery issues in the supply chain and our supply chain costs to remain relatively stable throughout 2022. On that note, I'd like to hand over to Simon, our CFO.
Next slide, please.
Okay. Thank you, Ivo. I'd like to take you through the following topics today: our consolidated income statement, the performance of our segments, cash flow and available cash, and finally, our financial position. Next slide, please. The first quarter sales at SEK 113 million are 45% higher compared to Q1 last year. The sales mix in the quarter shows 61% TRAS recurring revenue, which yields a higher gross margin. The gross margin for the quarter ended at 45% compared to 31% in the comparative quarter. In absolute terms, the gross profit has increased from SEK 25 million-SEK 52 million, which equals an increase of 108%. The expenses in Q1 have increased from SEK 39 million-SEK 46 million. This is related to increased sales activities in various regions, as well as costs related to Intertraffic.
The increase in expenses, however, is lower than the increase in sales for the period. Due to a favorable sales mix with more TRAS sales, the margin has improved in the quarter. The gross profit more than compensates for the increase in expenses, leading to a positive EBIT for the period of SEK 6 million compared to SEK -40 million, which is an increase of SEK 20 million. This is the seventh quarter in a row with a positive EBIT, demonstrating our continuous profitability improvement. Next slide, please. Our Managed Services business has seen a strong first quarter, with an increase in sales of 82% ending at SEK 40 million. The increase in sales is mainly due to the release of COVID-19 school measures, which increased traffic volumes. At the same time, we have onboarded several new programs during the quarter, also resulting in an increase in volumes.
Q1 of 2022 is the highest ever first quarter for the Managed Services segment. During the quarter, we've announced three new programs, resulting in an order intake of SEK 26 million total contract value over the contract periods. These contracts will go live during 2022, depending on speed of execution for getting planning permits in place. The Xilium back-office software, however, has already been prepared to support swift onboarding. With a higher level of sales in the quarter, we see a better leverage of our base cost of this segment, resulting in a positive EBITDA for the quarter of SEK 11 million, SEK 14 million improvement compared to Q1 last year. Looking from a 12-month rolling perspective, the order intake reached SEK 214 million, including SEK 145 million relating to Colombia.
Sales has arrived at SEK 148 million, an increase of SEK 37 million or 33%. The 12-month rolling EBITDA has reached to SEK 42 million compared to SEK 40 million for Q1 2021, the highest EBITDA for this segment to date. Next slide, please. The segment System Sales has seen a comparable level of order intake at SEK 57 million compared to Q1 last year at SEK 58 million. The sales for the quarter has increased by SEK 17 million from SEK 56 million to SEK 73 million, driven by Saudi project deliveries. At this sales level, the segment has achieved a positive EBITDA of SEK 4 million compared to -SEK 2 million in Q1 2021. The System Sales segment has more volatile sales from quarter to quarter than our Managed Services segment. Therefore, the 12-month rolling numbers are more suitable for judging the performance of this segment.
From a 12-month rolling perspective, the order intake at SEK 176 million is lower than Q1 2021 12-month rolling numbers. This is due to big order intake on projects like Saudi at SEK 275 million. The sales 12-month rolling were SEK 68 million higher, ending at SEK 394 million, as we are currently still executing on some of the big orders. The EBITDA profitability ended at SEK 63 million compared to SEK 39 million. The increase in EBITDA is caused by the higher levels of sales in the past four quarters. These sales have had a good sales mix between one-off system sales and true recurring service and maintenance sales with a higher margin. Next slide, please.
On this slide, I would like to take you through the main movements in the cash flow of Q1, starting with the opening available cash at the beginning of the year. We started the year with an available cash position of SEK 101 million, adding the positive EBIT of SEK 6 million for the first quarter. Main driver in our closing available cash position is the receipt of trade receivables during the quarter of SEK 56 million. This, among others, is related to payments from our Saudi customer. During the quarter, we've continued to invest in our software platforms and our fixed assets and operations, resulting in a cash out of approximately SEK 9 million. The current repayment of long-term loans and other movements resulted in a cash out of SEK 7 million.
At the end of the quarter, we ended with SEK 149 million in available cash, consisting of SEK 99 million in cash at bank and SEK 50 million in remaining credit facilities. Next slide, please. During the first quarter, we've achieved a significant improvement on our net interest-bearing debt. Due to customer payments and pre-finance inventory positions, the company has used less debt financing from the bank, moving from SEK 64 million to SEK 43 million usage. During the quarter, the loan from shareholders remained stable, consisting of a SEK 20 million loan with no redemption schedule and SEK 9 million of the remaining acquisition financing, also referred to as the vendor loan. Cash at banks has increased during the period by SEK 17 million to SEK 99 million. With this, our net interest-bearing debt improved by SEK 47 million during the quarter, ending at SEK 26 million positive.
With our solvency ratio at approximately 74%, our financial position is strong. On that note, I would like to hand it back over to Ivo. Ivo, next slide, please.
Thank you, Simon. Our order book is strong, our costs are in control, our profitable trust business continues to grow, and our financial position is strong. On top, we see in the short term limited impact from supply chain cost increases and the war in Ukraine. Based on this, we retain our long-term plan to grow our net sales to more than SEK 1 billion, of which TRAS revenues will be more than SEK 600 million in 2025, and we also retain our ambition to increase our EBITDA margin to more than 50% in 2025. On this final note, I'd like to finish this presentation and open up for any questions. Next slide, please.
Ladies and gentlemen, if you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will be a brief pause while questions are being registered. We have one question from Jesper von Koch from Redeye. Please go ahead.
Good morning, guys, and congrats to another strong quarter and also to the large contract win in the Netherlands.
Thank you.
If you could just tell us a bit more about the contract in Netherlands. Like, I mean, you've written some of it in the press release, but like, when will delivery start, and how will delivery look throughout the period?
Yeah. Well, it's a large contract, as you say, in our home market, one of our two main markets, Sweden and the Netherlands. We're really happy that we won this award. There is gonna be three vendors selected for this. We've taken the fair share of the total amount, which then, you know, adds up to SEK 250 million for us. 50% of that will be System Sales. Another 50% of that will be recurring Managed Services. That's another way of looking at it. We're planning to roll this out in Q1 2023.
The objective is to roll it out as quickly as possible because that enables us to get a bigger share of the pie than our fair share. That's what we're aiming at. Very important contract for us. Really, really happy we won this.
Okay, nice. I guess will like a large part of the System Sales come in in 2023 and then, like, after the installation of the systems, like the TRAS contract will more start? Or is that-
Yeah.
Correct interpretation?
No, that's definitely a fair assumption. We start with rolling out the installations, which is System Sales, and then the maintenance, et cetera, and the recurring revenue part will kick in thereafter. Starting is expected to be in Q1 2023.
Good. There's also a possibility to extend the contract beyond this first six-year period. Like, could you elaborate on these possibilities? Would that be like an extension of the TRAS business, or would it be like further System Sales too?
Yeah, we're looking at the current contract that's also being extended, so it is not uncommon, let's put it that way, to get extensions. It's always to be seen, of course, but we have a good high level of confidence level that could happen. What it will mean in terms of new installations, that's not sure at this point in time. We'll see that after six years, if there are gonna be more installations requested by the customer. The extensions are mainly, I would say, around the trust part, the 50% trust part.
Okay. Good. You'll say that you have like an additional dialogue with the Saudi customers or Saudi customer about additional order. Could you please just elaborate on that one?
Yeah. I mean, we have an extreme build-up of very good relationship with this customer. We are a qualified supplier, and we have a unique solution with our T-series in that sense that we don't need specific power supplies going to these systems, which means that the construction costs for the Saudi customer is gonna be less. Also there, you're dealing with all kinds of permitting. They're extremely interested in that solution. They're also interested to look at our S-series solution. Currently, we're conducting what we call first-of-kind tests in the country.
You never know what's coming out of that, but we have, as I said, good relationships and actually discussions also at the fair, Intertraffic, in Amsterdam around this topic. Never know how it's gonna happen, and, of course, but I'm bullish about first of all, this extremely good relationship, and secondly, about our ability to start delivering other solutions apart from the very successful in-vehicle solution we already delivered to them.
Good. In Q1, you delivered about 10% of the total value of the Saudi order. Are you still confident in delivering the full order in 2020?
I mean, I said this a couple of times before, I believe, is that our customer is Tahakom. They have an end customer, and that customer really drives the speed of the deployment. What we do is we are in contact with Tahakom and ask them time after time about, you know, what is the delivery schedule. Up until now, we've gotten the answer that they expect the systems to be demanded by their end customer before the end of the year. That's the information we currently have, and that's why we're writing it down as well in the report.
Okay, good. Just about the rollout of new managed services, the contract, how did this look in the short term, and how do you expect that to impact the gross margin in the short term?
Sami, you wanna answer this one?
Yeah. Hi, Jesper. Yeah, so we closed three new contracts in the quarter. All of them enter engageable miles. One in New York, two in Ohio. As we stated in our press releases, we expect these programs to become operational in 2022. I think the good thing about these contracts looking at Ohio and New York, both states where we currently have projects. That's why we also stated in the market presentation that Xilium, the back-office software is already ready. We don't see any rollout issues on the technology part. It always is depending on how quick can we get permits to put up poles and data. I think that's good.
Furthermore, you know, we fortified our current sales level by signing up with Des Moines again for three years, which I think is a proof of our excellent customer delivery in the U.S.
Good. I'll ask, like, as a final question about the dynamics in the US and the word of mouth between the cities, or partly the word of mouth between the cities of your managed services, but also about your increased sales efforts. How are these going?
Yeah. We announced a new model which we are introducing to the U.S. team. We're in a phase that we are introducing it, so it's too short notice to see any implications of that as well. The change to a more proactive way of selling is, I think, gonna be a huge step forward in the U.S. market. We're not only relying on the word of mouth, which has been very successful for us in the past. If we want to scale up this business, then the more proactive data-driven sales model, which we have been developing and are about to implement in the U.S., is gonna make a huge difference.
Good. I realized that one last question about the establishment of your trust business in Colombia. How is that going?
Yeah.
... the market, taking it?
Yeah. We're still on track. I think we said, Sami, looking at you now, that we are implementing or adding the revenue in the second half of this year from Colombia. That's what we communicated before, and we're still on track in on doing that. There is some development work to do and but we're on track there.
Good. Thanks. That's all for me.
Yeah. Okay. Thank you, Jesper.
We have no further question. Ladies and gentlemen, I would like to remind you that if you wish to ask a question, please dial zero and one on your telephone keypad. It seems that we have no further questions, gentlemen.
Okay. Well, thank you very much. Thank you very much for attending the Q1 results 2022 of Sensys Gatso, and I hope to see you again in the next quarter.