Welcome to the Sensys Gatso Q2 presentation for 2023. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to CEO, Ivo Mönnink, and CFO, Simon Mulder. Please go ahead.
Good morning, everybody, welcome to Sensys Gatso's presentation of the second quarter and first half of 2023. My name is Ivo Mönnink. I'm the CEO of Sensys Gatso, 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 second quarter and the first half of 2023. We follow up with a financial update by Simon, and finally, I will finish this presentation with a summary and our outlook. Let's now look at an update of our business. In this business update, I will take you through our order intake, where we can report five new customers in our strategic U.S. market. The development of our TRaaS business that grew by 18% and represents 65% of the total sales in this quarter.
The onboarding of our new programs in the U.S. market, how we are tracking on carrying out our historical order intake, developments at our Saudi customer, where we resumed the deliveries to. Our EBITDA margin, which is in line with our mission, our growth investments in the USA, finally, our view on the financial guidance for 2023 and our tracking towards our 2025 ambition. Let's first look at our order intake for the quarter. The order intake in Q2 arrived at $ 117 million, compared to $ 214 million in Q2 2022. The order intake excludes the Middle East procurement award of $ 152 million, which was won in Q2 2023. Including this procurement award, the order intake for the quarter is $ 322 million, up by 34% compared to 2022 Q2.
For the first half year, the total order intake, including procurement awards, amounted to $412 million, mainly driven by TRaaS order intake from the U.S. market and system sales order intake from the Middle East. With our strengthened U.S. sales team, we managed to sign no less than five new customers in the first half of this year, and we've extended one contract with an existing customer. It's really encouraging to see that our stepped-up sales efforts in the crucial U.S. market are beginning to be visible in the order intake. TRaaS represents 65% of total sales and is up by 80%, 80%. Our total sales for the quarter arrived at $133 million and was up by 6%. Our TRaaS sales for the quarter of $87 million was up by 18%.
This recurring business equates to 65% of total sales. The growth is mainly related to our U.S. TRaaS managed services business and revenue from Australia TRaaS project for the Tasmania Police. Year- to- date, the TRaaS sales amounted to SEK 117 million, an increase of 24%. During the first half year, TRaaS sales represented 70% of our total sales, ahead of our ambition of 2025, which is 60% of total sales. We started executing on our plan for the U.S. market in Q2 2022. We have since added three sales managers to our U.S. sales force. The investment is paying off. Since the beginning of this year, we closed six contracts in the strategic market, of which five in new cities, for a total contract value of SEK 112 million, demonstrating the effectiveness of the strategy.
We are now in the implementation phase of these new contracts, which typically incur one-off costs for installations and warning tickets that temporarily will suppress the EBITDA margin in the segment. With this high activity level, we are on track with our U.S. sales strategy. At the end of the second quarter, we have delivered 75% of the SEK 275 million contract for a unique in-vehicle in motion solution to our Saudi customer. Due to our customer's dependency on a number of external prerequisites outside of their control, such as availability of vehicles and drivers, we were asked in Q3 2022 to temporarily pause the deliveries of the in-vehicle in motion contract. We now agreed to deliver the remaining 25% of the contract in the second half of 2023.
For the whole year of 2022, we received a record high order intake totaling EUR 1.5 billion. During the first half of 2023, we added another EUR 412 million. This total order intake of nearly EUR 2 billion includes two large contracts: the Swedish Trafikverket order of EUR 850 million and the Dutch Public Prosecution Service procurement award of EUR 250 million. Before revenue can be realized, the fulfillment of these orders always requires upfront development work and expenses. These investments will be leveraged over the anticipated 12-year contract periods. I am pleased to report that our implementation is moving along as planned. Our solutions are accepted, and first revenues have been recorded at the end of Q2.
It displays our in-depth comprehension of our customers' needs for automated traffic enforcement and our ability to put these needs into practice using our advanced technologies. We reported in Q1 that the reason for the quarter's low EBITDA was not structural in nature, but rather a result of implementation expenses and the additional development costs required to simultaneously complete a number of significant projects and build the new FLUX platform at the same time. Compared to Q1, we now see in this quarter a EUR 20 million higher sales level, a 2 percentage point better gross margin, and our expenses improving by EUR 4 million. As a result, EBITDA arrived this quarter at EUR 19.2 million, an 8% improvement compared to Q2 of 2022. At 14.5%, our EBITDA margin approaches our 2025 ambition.
Later on, after development work for our commercial project is finished, we anticipate a further decrease in our development costs, as well as stronger revenues, which will further improve our EBITDA. In our strategic U.S. market, we operate a managed services business for our customers. In this TRaaS business model, we own, we install and maintain the equipment where we issue these citations with. Due to our increased sales efforts in the U.S. market, we were successful in signing six new contracts. We are now rolling out these programs, and we have started investing in photo enforcement equipment and in construction work. These investments are listed in our investment activities overview as fixed assets in operations. The total investment in fixed assets in operations in the quarter amounted to SEK 17 million, compared to zero in the last period last year.
The investments in fixed assets in operations for the first half of the year totaled SEK 31 million, or 63% of our total investment for the year. I'm pleased to see that these investments are rising, since it demonstrates that we are successfully expanding into the critical U.S. market. In order to attract more international investors, the AGM voted in May of this year in favor of a one to 80 reverse stock split. In conjunction with this event, we released our financial guidance for the full year 2023, to make it easier for new international investors to analyze the financial performance of the company.
On the back of our record-breaking order intake, we are targeting full year 2022 revenues in a range of SEK 550 million-SEK 650 million, and an EBITDA margin of between 10%-15%. We restarted the deliveries to Saudi Arabia. We began the deliveries for the two significant projects in Sweden and the Netherlands. We started the rollout of the new programs in the United States, and on top, the second half of the year typically has higher sales and EBITDA numbers. I can therefore reaffirm our guidance for 2023. In 2020, we communicated our midterm financial ambition to the market of SEK 1 billion in revenue by 2025, whereof 60% is recurring trust revenue and an EBITDA margin of at least 15%.
Today, we see that the interest in our combined software and hardware solutions continues to be high in all regions in which we're active, in Europe, in the Americas, in Asia Pacific, as well as in the Middle East and Africa. Especially the activity level around our TRaaS business model as the key driver for success is increasing. I therefore reaffirm our commitment to our 2025 goals. On that note, I would like to hand over to you, Simon.
Okay, thank you, Ivo. I'd like to take you through the following topics today: our consolidated income statement, the performance of our segments, and finally, our financial position. Looking at the consolidated income statement, we focus on sales, margins, and profitability. The second quarter and the first half year have been positively impacted by currency fluctuations. Sensys Gatso benefits from sales in Euro, U.S., and Australian dollars, which have been strong compared to the Swedish krona. Second quarter sales have been positively impacted by SEK 8 million and EBIT by SEK 1.3 million. Looking at the sales for the quarter, we can see an increased sales of SEK 9 million, with TRaaS sales growing by 17.5% compared to last year. Growth in TRaaS sales is mainly attributable to growth in our managed services program for the Tasmania Police.
For the first half year, sales are up by $8 million. Trust sales increased by 21%. The margin for the period was 42%, and 41% for the first half year. Our expenses have increased by $6 million compared to last year's second quarter. The increase is related to currency translation and currency transaction effects, totaling $5 million. Underlying, the expenses have increased due to increased sales activities and development expenses. For the first half year, the expenses are up by $14 million. Our operating profit for the period came in at positive $6 million and negative $3 million for the first half year. The segment managed services consists of our U.S. business and the software entity that designs, builds, and maintains our software suites, Xilium and Puls.
This segment does not report on our Australian Managed Services business, as this is part of a system sales entity, Sensys Gatso Australia. Order intake came in at EUR 77 million through signing three new programs in the quarter. These programs will contribute to sales towards the back end of 2023, when the programs have been fully implemented. For the first half year, we signed a total of five new programs and have extended one contract with an existing customer. Our managed services business has picked up its pace again in Q2 compared to the slower first quarter. The sales came in at EUR 45 million compared to EUR 44 million last year. From a 12 months rolling perspective, sales remained at EUR 187 million compared to Q1 of this year. We have continued to develop our software suites, Xilium and Puls, in the second quarter.
For the Xilium back-office software suite, we have been focusing on creating a more flexible integration with local and municipal courts. This will enable us to facilitate a more efficient process with our customers, authorities, and courts. At the same time, we've integrated multiple new sensors into Puls analytics platform, such as FLUX. This will enable us to offer different solutions to our customers with more ease going forward. Some of these developments have been capitalized on the balance sheet, and some have been developed as part of customer requests and have been taken through the profit and loss. This has had an impact on the profitability of the segment in the first half year. The EBITDA for the segment landed at SEK 4 million compared to SEK 10 million in Q2 of 2022.
From a 12 months rolling perspective, the EBITDA landed at SEK 19 million compared to SEK 26 million in Q1 of this year. Moving to the segment system sales, starting with order intake. The order intake in the quarter came in at a similar level as Q2 2022. During the second quarter, we also received a procurement award from Dubai worth SEK 152 million, to be delivered over several years. We expect the first order under this procurement award to be granted soon, with the expectation to make first deliveries in 2023. Including this procurement award, the order intake amounts to SEK 322 million. Sales also came in higher at SEK 88 million compared to SEK 81 million. Sales in the quarter consists of SEK 46 million in project sales, consisting of manufacturing and delivering of our enforcement equipment.
The remaining SEK 42 million is related to trust revenues, mainly for service and maintenance of SEK 32 million. Starting the fourth quarter of 2022, this segment also has trust managed services from our Australian entity on the Tasmania Police project. This project has a sales of AUD 8 million in the quarter. Twelve months rolling, the sales came in at SEK 324 million compared to SEK 317 million in Q1 of 2023. As mentioned in our first quarter, the segment has been focused on developing efforts for big projects awarded in 2022, specifically Trafikverket and the Dutch tender. This has continued in the second quarter. For the Trafikverket project, we will deliver the so-called golden sample in 2023 and anticipate the rollout to commence in the first quarter of 2024.
The development on the Dutch project was completed in the second quarter with a type approval as a result. In the third quarter, the rollout of this project will start. For this, we've already built up significant inventory to be able to benefit as much as possible from a quick rollout. The speed of rollout is dependent on customer-specific requirements, and we anticipate completing the rollout in 2024. The EBITDA came in at SEK 16 million for the quarter, up SEK 8 million compared to Q2 last year. From a 12-month rolling perspective, EBITDA landed at SEK 41 million compared to SEK 33 million in Q1 of this year. Discussing the financial position of our company, I would like to focus on free available cash and interest bearing debt as key metrics, as well as our new financing deal with Rabobank.
Starting with the latter, in the second quarter, we signed an additional facility agreement of $100 million to support the growth of our U.S. business. This facility can be taken up for investments in fixed assets and operations in the U.S. market. On the back of this new agreement, we've also agreed to separately finance our outstanding bank guarantees for customer projects, resulting in additional credit facility headroom of $21 million. During the first half year, we've built up inventory and work in progress to the amount of $50 million, relating to customer contracts expected to be delivered in 2023. We have continued to invest in fixed assets and operations and our software platforms, FLUX, Puls, and Xilium, to the amount of $49 million.
In combination with repayments of loans and other movements, the closing available cash at the end of the second quarter amounted to SEK 110 million. Our adjusted net interest bearing debt ended at SEK 37 million compared to +SEK 47 million. The additional investments in inventory are expected to convert into cash in the second half of the year, while the investments in fixed assets and operations are expected to convert to cash over a longer period of time. With the new facility agreement in place and a strong solvency ratio of 72%, we remain financially healthy. On that note, I'd like to hand it over to Ivo.
Thank you, Simon. In 2022 and the first half of 2023 combined, we added almost SEK 2 billion to our order book. We are currently executing against these orders. This temporarily increases our costs, mainly in our global development team. Our profitable TRaaS business continues to grow. Our strengthened team in the USA proves to be able to push our top line in this strategic market. On top, we see our new groundbreaking roadside platform, FLUX, coming to fruition in the market. Many projects across all our regions have now reached the delivery phase. We're therefore confident in our ability to deliver on our financial guidance for 2023 of a revenue level between SEK 550 million and SEK 650 million, an EBITDA margin between 10% and 15%.
Longer term, we retain our ambition to, by 2025, grow our net sales to more than SEK 1 billion, of which TRaaS revenues is more than SEK 600 million. We also retain our ambition to increase our EBITDA margin to more than 15% by 2025. On that note, I would like to open up for questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Jesper von Koch from Redeye. Please go ahead.
Hi, guys, congrats to a good quarter.
Hello.
Hi. Let's just start with CapEx in the quarter, which was rather high at EUR 25 million. I was just wondering, was this solely due to the FLUX development project, or was there any other projects that impacted? What do you also see as a kind of normalized level on CapEx going forward?
Well, part of it, of course, is, is related to FLUX, but also to Puls and Xilium, as we add on the new features in, in those software suites, as well. Now, we will continue to develop those projects, products, of course. FLUX, of course, now, is coming to a, to a peak, so we really ramped up development there, but over time, that should come down, more. I think the more important CapEx investment in the quarter is related to our fixed assets and operations in the U.S.
Okay, good.
Yeah, to add to this, Jesper, I mean, investments in fixed assets and operations means that we are expanding in the U.S. It's it's a really good thing.
Good. Then, I mean, you also remain committed to your, to your 2025 targets of reaching EUR 1 billion SEK sales and at least, EUR 600 million TRaaS, TRaaS sales. I mean, considering where, where you are today, and obviously you have, you have some, some projects on ongoing and, and already received some orders, but i t's still kind of a far away to there. What do you see as the key elements to reach your, especially the TRaaS part, of the of the financial targets?
Well, a couple of things. Well, first of all, we have been investing in the U.S. market. We've grown the team, and we see the effects of that. We also see that the U.S. market is opening up more and more on automated traffic enforcement. A recent example is Florida, state of Florida, where up until recently, it was only allowed to do traffic, automated traffic enforcement on red light. They now have opened up for automated speed enforcement as well around school zones, and that's a great example because it's a large state, and that could potentially add quite a lot to the overall market in terms of revenue in the United States. That's an important part.
Another important part is that, as I mentioned in the presentation, we, we are finishing the deliveries to the Saudi market, a long-standing customer since 2018. In total, 1,200 systems delivered. That, those systems, you know, they require support in terms of maintenance and spare parts, and that's also something which we anticipate eventually coming towards us. So both are TRaaS related. Then, of course, there is a sales pipeline, which we don't provide visibility on, but there is a sales pipeline, which is, which is, which is kind of large enough to be able for us to be confident about, about this revenue level of SEK 1 billion, specifically on the SEK 600 million of TRaaS business.
If you look at the EBITDA part of that, you know, adding more TRaaS, you can also see it now in the quarter with, the, the, the EBITDA level we have at this, at this revenue level. Adding more TRaaS to our top line will also increase the EBITDA. Beyond the 15-
Naturally.
Beyond the 15% we actually promised to the market.
Yes, yes, understood. I was also wanted to go on further on what you said about in the beginning about new states opening up for traffic, traffic enforcement services, such as Florida. Could you just like elaborate on what the biggest movements are there in terms of new states opening up, except for Florida?
Yeah, well, I mean, there is in general, I would say, more and more talk about allowing for automated traffic enforcement, because what we've seen in the U.S. is that fatalities in traffic are going up. We have a democratic government in place, so that, that also helps. In general, there is a lot of talk about states opening up for automated traffic enforcement. I would like to, you know, spend a bit more time on that topic when we go into Q3, if, if you allow me to do that, instead of just not answering that right now.
Yeah, of course, of course. That sounds good. Then, also just, last on, on the projects in the Netherlands and Sweden that have both started. How do you expect the ramp up to occur?
Yeah, I mean, I, I would say for, for Sweden, we have a pretty specific schedule because that's a conflict we, we basically know very well. We have started with a first smaller delivery at the beginning of the year. In H1, there will be what we call a delivery of the golden sample at the end of the year. That's sort of preparing us for the delivery of the new products in 2024 and beyond. There is a delivery schedule in place there. Yeah, I mean, the exact details of that, I, I don't think there we need to disclose those, or we don't want them to disclose. On the Dutch procurement award, it's important that we have been qualified.
It was a procurement award. It means that the product needs to be accepted. We've passed that stage, and that's an important milestone, and now we will start rolling out the products starting now in H2, and then following on in 2024. The expectation is that we have rolled out the products to the customer by the end of 2024. How that will typically phase into the different quarters is also depending on the customer. The timing of that is not entirely in our control. As I said, by 2024, we will have delivered EUR 250 million to the customer in the Netherlands.
All right, good. Thanks so much. That's all the questions I have for now.
Thank you, Jesper.