Good day, and welcome to the Sensys Gatso Group Second Quarter and First Half-Year 2022 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing Star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on a touch-tone phone. To withdraw your question, please press Star then two. Please note, this event is being recorded. I would now like to turn the conference over to Ivo Mönnink. Please go ahead, sir.
Good morning, and welcome to Sensys Gatso's presentation of the second quarter and first half of 2022. My name is Ivo Mönnink, and I'm the CEO of Sensys Gatso, and I will be presenting 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 second quarter and the first half year. 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. Let's now look at an update of our business.
In this business update, I will take you through our order intake, which is up by more than 400%, the growth of our proven TRaaS business model, up 19% this quarter, the impact of our growing TRaaS business on our margins and our profitability, the positive development of our EBITDA, which is up 31% this quarter, the steady delivery of our Saudi contract, our supply chain costs, which are expected to be stable for Sensys Gatso throughout 2022. Finally, some words on the ESG business profile of Sensys Gatso Group. Next slide, please. Now, let's first look at our order intake for the quarter. The order intake in Q2 arrived at EUR 240 million, up 411% compared to last year. I'm especially pleased to see that our US Managed Services model will now also be implemented in Tasmania, Australia.
During the quarter, we received an order of EUR 74 million to provide an automated traffic enforcement program to the state of Tasmania for a contract period of three years. This confirms our vision that in the future, more developed countries are looking to outsource the operational part of their automated traffic enforcement activities to commercial parties while still keeping legal control over the process. What is especially noteworthy is that this quarter, nearly 100% of the order intake was TRaaS. Next to the new TRaaS contract in Tasmania, we renewed contracts with two cities in the United States for a total value of EUR 144 million, and a TRaaS contract extension in the Netherlands of EUR 10 million. On a 12-month rolling basis, our order intake now amounts to EUR 583 million.
It's important to note that the Dutch procurement award, amount of EUR 244 million- 245 million in Q1, has not yet been included in these numbers and will be added once the orders under the procurement award are being allotted. Next slide, please. Now, let's zoom in on the Tasmania contract we won last May. I'm particularly excited about this new order. It demonstrates how our Australian team executes on a strategy to expand our TaaS business outside of the United States. The contract won is for a two-year period with an extension of 1 year already budgeted for and further potential extensions thereafter. In this model, Sensys Gatso Australia owns and maintains the enforcement equipment. More importantly, we also operate the vehicles that conduct the enforcement. After that, we do pre-verifications of the events captured before we send those to our customer, the Tasmanian Traffic Enforcement Authorities.
Our customer is then responsible for adjudicating the events using our Xilium back office platform and sending out and collecting the fines. We provide different automated traffic enforcement solutions like mobile point-to-point speed enforcement, roaming speed enforcement, distracted driving enforcement, and Automatic Number Plate Recognition-based solutions. The TRaaS business model is based on a monthly subscription fee for each solution used with a minimum subscription period of two years. We'll be very excited to see this program go into operation in the upcoming months. Next slide, please. Looking at our top line, we had a solid second quarter with total sales of EUR 125 million at par with last year. Our strategic recurring TRaaS sales arrived at EUR 74 million, up by 19%.
The increase in TRaaS sales in this quarter is mainly attributable to higher volumes on our USA TRaaS programs that have started enforcement last year and are now contributing in full this quarter. Our TRaaS sales arrived at 59% of total sales in the quarter, which is on target with our 2025 ambition. Looking at the first half of the year, we see a 70% increase of our top line from EUR 204 million to 238 million. The major part of this year-to-date growth is from TRaaS sales, which grew by 30% from EUR 109 million to 143 million. Next slide, please. Our EBITDA arrives at EUR 18 million for the quarter, up EUR 4 million or 31% compared to last year.
The EBITDA growth can mainly be attributed to the strong performance of our TRaaS managed services business with higher margins in the USA. We further managed to keep our costs in control. In the quarter, the expenses arrived at EUR 44 million or 35% of sales. This compares to EUR 42 million or 43% of sales in Q2 2021. Year-to-date, our costs are stable at approximately 38% of sales. On a 12-month rolling basis, our EBITDA arrives at EUR 109 million, 100% higher than in the same period last year, and 20% of sales on the same basis. Our operating profit, EBIT, improved by EUR 2.5 million or 54% from EUR 4.6 million to 7.1 million. I'm proud to state that 12-month rolling, this is the eighth consecutive quarter we managed to arrive at a positive EBIT.
Next slide, please. To date in Q2, we have delivered 75% of this EUR 275 million contract for our unique Vehicle-in-Motion solution. We keep a steady pace in our deliveries to meet the requirements of our customers. Meanwhile, we progress in discussions and testing to develop and possibly provide new solutions to this important customer in the Middle East region. Next slide, please. At Sensys Gatso, we have long lead time for our 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.
We also have no business to date in Russia or Ukraine, no employees working from these countries, and no suppliers coming from the region. To date, we expect no delivery issues in the supply chain and our supply chain costs to remain relatively stable throughout 2022. Next slide, please. Finally, in this business update, I would like to highlight how Sensys Gatso contributes to a better world. We are probably all familiar with the 17 United Nations Sustainable Development Goals to which all United Nations member countries in 2015 signed up to achieve by 2030. As a company, we are committed to pay our contribution to this global agenda. We're especially in a special position to do so. United Nations Sustainable Development Goal number 11 is about making cities and human settlements inclusive, safe, resilient, and sustainable.
By using automated traffic enforcement solutions like ours, we help reducing speed. By doing so, we make cities and roads safe and we help to reduce emissions from cars. One example of this is Sensys Gatso's point-to-point speed solution, which we deploy, for instance, in the Netherlands. This solution promotes lower emissions by bringing about a behavioral change in the way people drive. This solution developed to measure and ensure adherence to local speed limits between two points, cause drivers to maintain lower speeds for long stretches, and thereby changing how people behave in traffic. The reduced speeds lead to lower emissions and a reduction in pollutants. Reducing speed limits from, for example, 120 kilometers per hour to 100 kilometer per hour, results in a 25% reduction in emissions.
Another example is our installed speed enforcement solution in Cedar Rapids, Iowa, in the United States. After careful analysis of the traffic patterns and the crash data, Sensys Gatso presented a successful comprehensive plan to improve road safety. This TRaaS solution, fully operated by Sensys Gatso, led to a significant reduction in road casualties. As traffic is projected to grow substantially, enforcing speed will become even more important. With Sensys Gatso's TRaaS business model, we support customers in the transformation towards sustainable and safe transportation environments with limited investments and resources. On that note, I'd like to hand over to Simon, our CFO, for the financial update. Next slide, please.
Thank you, and good morning, all. I would 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 second quarter sales of EUR 124 million is in line with Q2 last year. The sales for the first half year has seen a steady increase of 17% compared to H1 last year. We've continued the year with strong margins, which were 41% for the quarter and 43% for the first half year, an improvement of 8 percentage points compared to 2021. In absolute terms, the growth profit has grown by 11% in the quarter and has increased from EUR 71 million to 103 million in the first half year, which equals an increase of 45%.
The expenses in Q2 are stable compared to the same quarter last year. On a half-year basis, we see an increase in costs related to increased sales activities and expenses related to the Intertraffic event in April of this year. The improved gross profit due to higher margins on TRaaS sales compared to system sales more than compensates for the increase in expenses. The operating profit EBIT for the quarter is up by EUR 2 million to 7 million. On a half-year basis, our EBIT landed at EUR 13 million compared to - 10 million, an increase of EUR 23 million. The profit for the period increased by EUR 5 million to 9 million, and for the first half year, the increase was EUR 21 million from - 6 million tom + 15 million. Next slide, please.
Our Managed Services business has continued to grow in the second quarter with increased sales of EUR 12 million. The increase in sales is mainly attributable to higher volumes on our TRaaS programs that started enforcement last year and that are now contributing in full. During the quarter, we've announced two contract extensions in Iowa, resulting in an order intake of EUR 144 million total contract value over the contract periods. Sensys Gatso USA has retained and strengthened its market position with contract renewals in both Cedar Rapids and Des Moines. With these extensions and the onboarding of a new customer, Altoona, in February of 2022, Sensys Gatso now has a market share of more than 50% of total programs in Iowa.
During the quarter, we've increased our sales efforts and strengthened the sales team, as well as improved the sales strategy based on a more data-driven approach. These higher expenses will contribute to continued order intake. With a higher level of sales in the quarter, we see a better leverage of our costs in this segment, resulting in a positive EBITDA for the quarter of EUR 10 million, 3 million improvement compared to Q2 last year. Looking from a 12-month rolling perspective, the order intake reached EUR 343 million. Sales has arrived at EUR 160 million, an increase of 46 million or 40%. The 12-month rolling EBITDA has reached to EUR 45 million compared to 16 million for Q2 2021, an increase of 180%. Next slide, please.
The Systems segment sales has seen a higher level of order intake in the second quarter at EUR 96 million compared to last year at EUR 32 million. The order intake for the quarter mainly relates to the TRaaS order intake in the Netherlands, EUR 10 million, and the TRaaS contract in Australia worth EUR 74 million over the contract periods. The sales for the quarter came in lower than Q2 last year at EUR 81 million, but with a higher margin and therefore an increased EBITDA by EUR 1 million. The segment has seen another strong quarter in deliveries to our Saudi customer, driving the revenue in this segment, as well as continued deliveries to our European and Australian markets. From a 12-month rolling perspective, the order intake at EUR 239 million is lower than Q2 2021 12-month rolling numbers.
When taking into account the procurement award related to the Dutch tender announced to the market in Q1 worth EUR 245 million, the total order intake would reach EUR 484 million, EUR 50 million higher compared to the 12-month rolling of last year. The sales 12-month rolling ended EUR 25 million higher at 381 million, with the EBITDA profitability arriving at EUR 64 million compared to 38 million. The increase in EBITDA is caused by the higher levels of sales in the past four quarters with a favorable mix between true recurring service and maintenance sales with a higher margin and one-off system sales. Next slide, please. On this slide, I would like to take you through the main movements in the cash flow of the first half year, starting with the opening available cash at the beginning of the year.
We started the year with an available cash position of EUR 101 million, and it ended the first half year EUR 71 million higher, arriving at EUR 172 million. In the first half year, we've added a positive EBIT of EUR 13 million. The main driver, however, in our closing cash, available cash position is the receipt of trade receivables and lower inventories of EUR 68 million. During the first half year, we've continued to invest in our software platforms and our fixed assets and operations, resulting in a cash out of approximately EUR 60 million. We have repaid approximately EUR 9 million on our external financing during the period. The available cash of EUR 172 million at the end of the period consists of EUR 107 million in cash at bank and EUR 65 million in remaining credit facilities.
Next slide, please. During the first half year, we've achieved a significant improvement on our net interest-bearing debt. Due to customer payments and pre-financed inventory positions, the company has used less debt financing from the bank, moving from EUR 64 million to 35 million usage. After the balance sheet date, the company has made the final payment on the vendor loan in connection with the acquisition of Gatso Beheer B.V. to the amount of EUR 840,000, approximately SEK 8.5 million. With this milestone, the acquisition is now financially completed. Cash at bank has increased during the first half year by EUR 35 million to 107 million, and with this, our net interest-bearing debt improved by EUR 63 million, ending at +EUR 42 million. With our solvency ratio at approximately 76%, our financial position remains strong.
On that final note, I would like to hand it over to Ivo. Next slide, please.
Thank you, Simon. Our order book is strong and growing. Our costs are in control. Our profitable TRaaS 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. We therefore retain our long-term plan to, by 2025, grow our net sales to more than EUR 1 billion, of which TRaaS revenues is more than EUR 600 million. We also retain our ambition to increase our EBITDA margin to more than 15% in 2025. On this final note, I'd like to finish this presentation and open up for any questions. Next slide, please.
We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Jesper von Koch with Redeye. Please go ahead.
Hi, gentlemen, and congrats to another good quarter. My first question is about the Saudi customer and the additional potential in additional orders that you see there. Could you just talk about that for a bit?
Yeah. I mean, we are the preferred customer for what we call the Vehicle-in-Motion solution, the solution in the car. They have also been doing testing with our fixed solutions, and those are two, a Swedish solution and a Dutch solution, technically. They seem to have raised a lot of interest from the customer. What we are doing now is doing what we call first of kind testing. They test it on closed roads and thereafter on open roads. Obviously, you know, meaning that we have to close roads, it's causing all kinds of restriction and absorbing some time. We're confident about that being positive, and that opens up a potential new solution for this customer.
All right. Could you say anything about the, like, the potential sum of this? Is it, like, substantial compared to the other orders from this customer?
Yeah, I mean, it's gonna be substantial because it's a large country. You know, they have their Vision 2030, which is all about, you know, basically repositioning Saudi Arabia. The United Nations Sustainable Development Goals are also part of that vision. Traffic enforcement, therefore, is also part of what they want to do. I believe there will be potentially substantial business coming from a new fixed solution in Saudi Arabia for us.
Also, could you elaborate on the development for managed services in the USA, like both regarding your increased sales efforts, and also the regulatory tailwind that is expected to come into force?
Yeah. Well, first of all, we hired a new managing director. His name is Bill Braden. He joined us by mid-May. He's got a very solid industry experience, having worked 10 years in the industry before. We also developed a new strategic plan how to grow this business in this market where we see a lot of potential for Sensys Gatso. The way we're gonna do that is basically focusing on a more proactive sales approach using data coming from our existing installed base. Combining that with data coming from generally available data.
By using that data, the sales approach is going to be much more data-driven and will help the decision-making process in cities where, you know, they might not even have plans to introduce traffic enforcement. We're not waiting for customers to potentially come to us, but by using this methodology, we will approach them proactively. That also means that we're spending it in the front-end side of our organization, meaning adding more sales resources in the U.S. to be able to enable this new approach. On your second question, well, clearly, I mean, the infrastructure bill has been signed, as you know, and that means that there's gonna be more funding available to enable traffic enforcement solutions.
That, mostly for our customers, would mean more funds available to do the investigation about, you know, the potential impact for them. Because, you know, we have a fully managed services model in the U.S. The investments in that model are actually on our plate and not the responsibility of the cities. There's definitely going to be, because of the availability of these funds, more interest coming from the cities. If you combine that with a more proactive sales approach, likely more doors will be opened to our salespeople.
All right. I mean, the infrastructure bill says what it says. But do you have any idea of, like, when will this affect, like, customers' decision-making, like, with the additional funding from?
I don't know. I mean, quite frankly, we don't know.
Okay.
There's gonna be a lot of rumor around it, and that in itself is a potential door opener to conversations of our salespeople. That's the way I look at it.
Okay, also regarding the TRaaS contract in Australia, it seems that you see, I mean, potential to further increase the recurring revenue from that customer. Could you just elaborate on, like, what kind of potential are we looking at?
Well, first of all, let's get this started first, and that's gonna happen in the upcoming months. Typically when you see with customers this being successful and operationally working well, then after that, we will have discussions about further solutions. Right now I think it's a little bit too early, too premature to talk about, you know, what potentially could be the follow-up solutions to be implemented by the Tasmania Police. I think the most exciting part here really is that we operate a trust model in the United States, and you know that we do everything there. We also send out the fines and collect the funds when we do so.
That part we're not doing in the Australian situation, but all the other stuff we're doing there as well. Now we have the long-term vision that, you know, what starts in the U.S. eventually will also come to other markets. The under-developed markets is more logical, but it's really very interesting to see that we're now actually seeing this model also coming to a developing country like Australia. That's, I think, very encouraging.
Nice. Then my last question is regarding your investments and that level. Like in the quarter, investments amounted to just below EUR 7 million, compared to 20 million in Q2 last year and EUR 9 million in Q1. I mean, do you view this kind of EUR 7 million level as sustainable, or do you see any changes there going forward?
Simon, why don't you take this one?
Yeah, I think the difference in investment level is mainly related to the investments in the fixed office assets and operations in last year. Like we explained, right, we onboarded some significant programs last year that are now contributing in full into our revenue, and those were those investments. This year, the investments are more geared towards the task force investments in Australia and our software platforms, Flux and Xilium and Puls.
Okay.
So in-
Basically, when new customers are onboarded, that's where we draw.
Exactly right. Once we start with the construction, then we will see increased investments again, yeah, on that side.
All right. Good. Thanks. That's all from me. Once again, congrats to a good quarter.
Yeah. Thank you, Jesper.
Again, if you have a question, please press star then one. As there are no more questions, this concludes our question and answer session. I would like to turn the conference back to Ivo Mönnink for any closing remarks.
Yes. Well, thank you everybody for joining the call, and hope to see you next time around. Have a nice day.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.