Welcome to the Sensys Gatso Q1 presentation for 2024. For the first part of the conference call, the participants will be in listen-only mode. During the questions-and-answer session, participants are able to ask questions by dialing hash 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 and welcome to Senmsys Gatso's market presentation of the first quarter of 2024. 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 first quarter of 2024. We then 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, which is up by 253% this quarter, the strong backlog in our home markets, Sweden and the Netherlands, strong revenue growth of 11%, an explanation for the typical Q1 seasonality in the U.S. market, our gross margin, which is suppressed this quarter due to the startup of system sales deliveries in the Netherlands, an update on our enhanced relationship with our Saudi customer, and finally an impression of our successful Intertraffic show. Order intake and procurement awards during the first quarter came in at SEK 380 million compared to SEK 90 million in Q1 2023, an increase of 253%. Of the total order intake, SEK 217 million, or 86% of the total order intake, is U.S. TRaaS Managed Services. This is nearly eight times higher than the U.S. TRaaS Managed Services order intake in Q1 2023 of SEK 35 million. In total, there were nine new contracts signed during the first quarter in our strategic U.S. market. Of these contracts, four are new cities with a total contract value of SEK 154 million, and five are renewal contracts with existing cities with a total contract value of SEK 121 million. Overall, we see a strong order intake this quarter, especially when looking at our TRaaS order intake in the U.S. It demonstrates that our increased sales efforts in the strategic markets are paying off. In 2022, we received two large orders in our home markets, Sweden and the Netherlands. The combined value of these two contracts is SEK 1.25 billion. The Swedish order of SEK 850 million is in its final development phase. The rollout of this project will commence in the third quarter and will continue for the next five years. The Dutch order worth SEK 400 million has started its rollout and will continue into the first half of 2025, depending on the acceptance schedule from our customer. Of the combined contract value of SEK 1.25 billion, approximately 5% has been delivered so far. The remaining revenue for these two large contracts still is in the backlog and is therefore approximately SEK 1.2 billion, or 95%. Overall, our strong order intake this quarter and large backlog combined provide for solid revenue generation in the coming years. Total revenue for the quarter arrived at SEK 125 million compared to SEK 113 million in Q1 2023. This is an increase of 11%. Looking at revenue by nature, our system sales for the quarter arrived at SEK 41 million compared to SEK 27 million in Q1 2023. This is an increase of 51%. Our TRaaS revenue for the quarter of SEK 84 million was slightly lower than Q1 2023 at SEK 86 million. This recurring business equates to 67% of total sales in the quarter. The TRaaS revenue is primarily driven by our TRaaS managed services in the U.S., which was up by 16% to SEK 50 million compared to SEK 43 million in Q1 2023. Our Tasmania Police project has contributed SEK 10 million, or 12%, to our TRaaS sales. We normally see fewer citations in managed services at the beginning of the year. This is due to seasonal effects brought on by extreme weather, particularly in Ohio, Iowa, and Rhode Island, our top revenue-generating states. As a result of the extreme weather, people drive less and more slowly. In addition, during the holiday season, schools are closed for several weeks, and automated traffic enforcement is deactivated by law. In Q2, we usually observe a return to increased citations and revenue levels. Our gross margin this quarter was 37.5% compared to 40% in Q1 2023. This is mainly due to lower margins on deliveries of system sales in the initial phase of a new contract. We typically start a rollout of a new system sales program with the delivery and installation of systems, followed by acceptance by our customers. Only after customer acceptance, the systems go into operation and the service and maintenance part of the contract commences. This is a gradual process ov er a period of 12-18 months. The program will come to full fruition when all new systems have been installed and are in operation. The overall gross margin of the contract will gradually recover during this phase. Mid-april, the largest global show in our industry, the Intertraffic, was conducted in the Amsterdam RAI. 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 TRaaS software-based product vision and 13 user stories. At our booth at the show, we presented a live demo of our new FLUX Roadside system. The show was a great success for Sensys Gatso, renewing many existing customer relationships and developing promising new ones in various regions. After a successful delivery of our unique Vehicle in Motion solution to our Saudi customer, we are extending our relationship to potentially introduce new enforcement solutions and service-level agreement to maintain the installed base. During the Intertraffic industry show, we signed a memorandum of understanding with Tahakom, our Saudi customer. With this MOU, Sensys Gatso will collaborate with Tahakom in multiple initiatives across Saudi Green Initiative, local content, and the Road to Saudi Vision 2030, reinforcing the strong partnership between the two entities that dates back to 2016. Sensys Gatso and Tahakom will provide the kingdom with next-generation traffic safety solutions, which can handle a variety of smart mobility features in all environments and weather conditions. On that note, I would like to hand over to Simon Mulder. Okay, thank you, Ivo. We have three topics for today: our consolidated income statement, the performance of our segments, and finally our financial position. Looking at the consolidated income statement, we focus on revenue, margins, and profitability. The revenue for the quarter came in at SEK 125 million compared to SEK 113 million, an increase of 11%. The TRaaS revenue has shown a decline of 2% compared to Q1 2023 due to a one-off impact on additional repair and maintenance requests in Sweden, resulting from demolished cameras in late 2022. 12 months rolling, the TRaaS revenue is up by 10%, driven by growth in our U.S. and Australian managed services programs. The group's gross margin is impacted by lower margins on initial deliveries of the Dutch project, with the expectation that this will return to normal margins on this project once the project is in full operation. The gross margin amounted to approximately 37.5%. 12 months rolling, the margin is at 40%. The operating expenses totaled SEK 55 million in line with Q1 2023. 12 months rolling, there is an increase of SEK 6 million related to investments in the organization in the U.S. mainly. Our operating profit for the period came in at SEK -7 million compared to SEK -9 million in Q1 2023. Our managed services segment predominantly reflects our U.S. business, including the costs related to development and maintenance of our software suites, Xilium and Puls. During the quarter, we've had high activity in contract signings, with SEK 275 million in total contract value over the contract periods. The start of these programs depends on receiving legal and construction permits. Revenue has grown by SEK 7 million to SEK 50 million in the quarter. The growth in revenue is driven by new programs contributing in full to the top line. In comparison to the fourth quarter of last year, revenue has declined by SEK 9 million, which is due to seasonality. As our revenue is largely dependent on volume, weather has an impact on the output of the programs. The Managed Services segment has realized an EBITDA of SEK 8 million, a growth of SEK 4 million compared to the same quarter last year. On a 12-month rolling basis, revenue has grown from SEK 178 million to SEK 199 million, a growth of 12%. The EBITDA from a 12-month rolling perspective has increased by 15%, from SEK 26 million to SEK 30 million. During 2023, we have invested in our U.S. organization in the operational as well as sales teams. We can now see these investments paying off. Now on to the System Sales segment, starting with the order intake. Order intake during the quarter landed at SEK 44 million, mainly due to repeat orders of existing customers. During the quarter, we have continued to deliver on the Dutch project, for which we communicated an additional order intake worth SEK 150 million in the fourth quarter, bringing the estimated contract size to SEK 400 million in total. Revenue has increased by 6%, growing from SEK 71 million-SEK 75 million in the quarter. Due to the initial deliveries on the Dutch project, we've seen a lower gross margin impacting our EBITDA. This has resulted in a negative EBITDA of SEK 4 million for the quarter. 12 months rolling, our revenue has increased from SEK 317 million-SEK 436 million, a growth of 37.5%, with our EBITDA increasing by SEK 24 million, approximately 70%. Discussing the financial position of our company, I would like to focus on cash movements, interest-bearing debt, and available cash. The largest movements in our available cash position are working capital and investments. During the first quarter, we have received payments on deliveries to Saudi of approximately SEK 60 million, improving our cash position and lowering our working capital in trade receivables. Due to the pre-financing of big projects, we have invested SEK 70 million in inventory and work in progress. These investments are mainly related to signed projects. The net improvement in working capital amounted to SEK 40 million. The U.S.A. has continued rolling out on signed contracts of 2023, resulting in investments in fixed assets in operations of SEK 60 million. In the first quarter, we have demonstrated FLUX as a new product to the market. On our platforms, FLUX, Puls, and Xilium, we've continued to invest to the amount of SEK 8 million. In 2023, we started investing in our Ghana joint venture. The investment in the quarter amounted to SEK 3 million. Our total investment in fixed assets amounted to SEK 27 million in the quarter. The adjusted net interest-bearing debt has decreased compared to the closing balance of 2023, mainly due to replenishing the credit facility through the receipt of the payments from the Saudi project. The adjusted net interest-bearing debt at the end of the period amounted to SEK 61 million. The available cash has improved from SEK 84 million to SEK 112 million by adding the operational cash flow of SEK 50 million and taking the largest movements in our cash position into account. On that note, I would like to hand it over to Ivo. Thank you, Simon. Our order book is strong with a revenue backlog of nearly SEK 1.2 billion from two large contracts in our home markets, Sweden and the Netherlands. Our profitable TRaaS business continues to grow, and our strengthened team in the U.S.A. proves to be able to push our top line in this strategic market. On top of that, we see our new groundbreaking roadside platform, FLUX, coming to fruition in the market. We therefore retain our long-term plan and ambition to, by the end of 2025, grow our net sales to more than SEK 1 billion, of which TRaaS revenues are more than SEK 600 million. We also retain our ambition to increase our EBITDA margin to more than 15% by the end of 2025. On this note, I now open up to questions. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Örjan Rödén from Carnegie. Please go ahead. Good morning, gentlemen, and thank you for a good presentation. Let me start with the U.S. and the nine contracts you have landed there. What would you say is the normal lead time from signing to revenues? And in general, are these contracts in line with the normal pattern? That's my first question. Yeah, contract to signing is city by city different, the contract signing to operation, I should say. That's depending on the number of cameras that go into the ground and the permissions that need to be granted by the city. But typically, I would say they're not different from any other cities that we have signed up until now, in general. Okay, thank you. On the same topic, is this strong delivery in terms of contract signing, the catch-up effect of earlier hard work that hasn't materialized, or do you see this as a sign of very strong underlying demand? Well, there's a couple of things here. One, we see states and therefore cities opening up for automated traffic enforcement. So that's a market effect. And that's due because of fatalities and injuries in traffic are increasing, actually, in the United States. We all know there's this United Nations initiative to halve the fatalities and injuries by 2030. That's very, very nearby. And the U.S. is not in line with that at all. It's quite the opposite. So there is pressure to increase traffic safety, and our systems, as we know, are a major contributor to that. So that's one aspect. The other aspect is that, well, as examples, we see states like Florida, Connecticut, California now opening up for school speed zone enforcement. So that's a market effect. On top of that, we have increased our sales force because this is the market which is not driven by initiatives from the government, but it's quite the other way around. So with a good sales force, and we have one in the United States, you can push with cities to implement traffic enforcement. And that is, of course, taking time. So the initiatives we took to grow the sales force are now paying off in signing more contracts. On top of that, what we also see our sales force doing is opening up the existing contracts and extending them not only in time but also in more locations. So that also has a positive revenue effect. Okay, thank you. Moving over to the order to Trafikverket, I realize that you have now introduced an expected timing of starting the deliveries to that order. Should I interpret that as you being now quite confident in the ramp-up plan of reaching this timeline? Yes, we are. We do introduce the new FLUX system with Trafikverket. We need to go through all the hoops of approvals, etc. That typically takes time. We're now in a position that we can say that we're ready to start the rollout. It's almost, I wouldn't say a guarantee, but it's close to that, that the rollout pattern will be according to what we expect. Okay. Your cash flow was, in my view, quite strong. Was it the underlying cash flow, or was it one of Simon has already touched upon the working capital, so we can leave that aside? But I see that the financial items are having a quite positive impact, and also non-cash items are also quite positive relative to the first quarter last year. So could you elaborate on that, please? Yeah, so the non-cash items in the cash flow statement are, of course, related to the depreciation. So that is one item. Yeah, and the cash flow was pretty strong. Of course, we built up in inventory, work in progress, trade receivables in 2023, ramping up towards the second half of the year for the deliveries on Saudi. And in Q1, we've received SEK 60 million from that customer on those deliveries. So that has had a huge impact on our cash position. And of course, we see that with the growth of the revenue in the U.S., that it's a big cash generator. There's, of course, upfront investments, but once these programs are operational, the cash contribution is fairly large. Okay, so if I may summarize, you would say that this is a normal pattern. There were no substantial one-offs into this. This is more an effect of how the underlying business has performed. Is that the correct interpretation? Yeah, there's no difference in the underlying business itself. The one-off or big impact in Q1 is received of a fairly large amount from Saudi. Okay, thank you. And the final question, yeah, sorry, Ivo, please. No, that is relating to the fact that we had increased deliveries in the quarters before. And so the timeline of these payments and the due dates of these payments were sort of coinciding. And that's why all that cash came in Q1. Okay, thank you. Final question, Ivo, you're retracting your targets for 2025. You are now also stating towards the end. Could you elaborate a little bit on that wording? Yeah, I mean, we have not restated anything. It's the same 2025. We just wanted to make sure that everybody understands that includes the full year of 2025. So no revision of the ambition, no. So by 2025, meaning for the full year of 2025, our ambition is to be at SEK 1 billion revenue, SEK 100 million TRaaS, and at least 15% of EBITDA. So no revision. Thank you very much. That was all from me. You're welcome. The next question comes from Tim Ehlers from Kepler Cheuvreux. Please go ahead. Thank you. Yes, good morning, everyone. Thanks for taking my questions, Ivo and Simon. First one is about the projects in the Netherlands and Sweden. Maybe just a follow-up question to my colleague from Carnegie. So what you mentioned, that the rollout started in 2023 for the Netherlands and that it will start for Sweden in Q3 2024, that is basically what you had anticipated after the full year results, right? There's no change neither to the positive nor to the negative with regards to the planning? That's correct. Okay, cool. Then one small question, just from my understanding. You mentioned when you were talking about the managed services in the U.S. that the automated traffic enforcement needs to be deactivated during school holidays. Did I understand that correctly, or? No, that's absolutely correct. This is for the market in total. This is not just us. This is a legal requirement. The idea is to keep children safe when going to school, meaning that the traffic needs to slow down during school hours. Meaning that also before school starts, so in the time that kids are not at school or going to or departing from school, those hours you cannot enforce. The same applies to holidays. When there are school holidays, the systems are not in operation. That's always been the case. This is no different from before. Okay, interesting. But that relates to all traffic enforcement, not only school zones? No, this relates to school zones, o nly to school zones. Okay, it was a bit puzzled for a moment. But okay, thanks for the clarification. Then one question with regards to your—I wouldn't say renewed, but continuation of the relationship with Saudi Arabia. Do you have any insights there what the impact could be? So there were no negative experiences in the past. I mean, there was a delayed revenue, but that was, well, not out of your hands, I assume. So you expect there a lot of growth contribution coming from Saudi Arabia going forward? Well, Saudi Arabia, I can recommend to everybody to have a look at what's going on in Saudi Arabia. It's very much for the positive. As you probably know, they have a vision, Vision 2030, which has the objective to make lives better for the Saudi citizens. There is a World Expo scheduled in 2030, and there are tremendous investments in infrastructure in general. They realize that the fatalities in traffic need to come down. They also realize that automated traffic enforcement is the way to do it. It's the quickest way to bring the numbers down. And whatever they do, they do with big numbers. We are a qualified vendor to Tahakom. And Tahakom is the procurement party of the Saudi government. And yes, whatever they do, it's big numbers. So we'll see what happens, but we have an extremely good relationship. They're happy with the technology they bought from us, and we have a memorandum of understanding signed with them. We're in a good position, let's put it that way. Okay. Then one question with regards to managed services markets in the U.S., but maybe also more in general. Do you see a change of market share there? Do you look at competitors and see what they're doing? And are you outperforming them? There is no clear market data. Let's start with that one first. That's an omission. What we do see is market growth in general, and we see our business growing. I think we are doing relatively well compared to some competition, but that's difficult to quantify that. I do believe that our investments in our sales team, they are paying off. We hire a bunch of really good people, and we see the results coming in from new contracts. Yeah. Okay. But do you see... We'll see more stuff coming. Do you see any trends in winning contracts? So let's say, okay, you try to win 10, and suddenly you win nine, and before you used to win five, or vice versa. Is there any trend you see at the moment? It's difficult to say. Maybe because of the relatively still small numbers, it's difficult to apply. Yeah, fair. Yeah, fair. One last question, and then I'll leave you alone. With regards to your free cash flow, any hints what we can expect for the full year? I mean, the explanation for Q1 is pretty clear, but I guess that also means that we see some less intense working capital effects in Q2, Q3, and Q4. Can you give me any vague guidance, at least? Yeah. So if you look at the two big contracts, of course, the investments in inventory and work in progress for the Dutch program is already ongoing, right? So that impact is there, and that will remain. As we've just elaborated, in Q3, we start the rollout on the Swedish systems. So we will see some impact there in building up inventory. And of course, we expect to grow in the U.S., s o the CapEx investments there hopefully are very significant because it means that we've landed considerable contracts and/or contract extensions and expansions. In the U.S., for the U.S. business, we have a separate credit line to finance that. That is not taken into consideration in the free available cash. So we have approximately SEK 75 million in a separate credit facility, not part of available cash, solely for the investments in the U.S.. Okay. But that means that if you win contracts and you have ramp-up costs, that would eventually show up in the CapEx, and? Yes. It will show up in a loan. Okay. Okay. All right. Thanks. Yeah, one more comment maybe from our side. We're doing well in the U.S.A. I just mentioned that to you. I encourage you to look at the latest press release, which we released like 30 minutes ago. You probably haven't seen it yet, but we just signed a contract with the City of Albany worth nearly SEK 200 million, right? So that's nearly $20 million. And it's in addition of next to the red light, which was SEK 160 million Swedish kroner, sorry, $3.7 million. We now have additional SEK 16 million of revenue from that contract. So it's a huge win. We're happy with that. And you see now what happens because this is an existing customer where we did red light, $3.7 million revenue. We do any negotiations, and we have additional functionality, school zone. And that adds another SEK 16 million to that contract. So great win. Yeah. We've received some questions online. Maybe we can go through them now. First off, Oscar has some questions around the credit facility for the U.S.. To answer that first, and I just, I think, explained, we have a CapEx facility with Rabobank of SEK 100 million until the end of 2024. Up until 2023, we've used approximately SEK 25 million. So that leaves us SEK 75 million for investments in this year. Second question from Oscar. What does the timeline look like in general from receiving an order to recognizing revenue in the U.S.? I think we explained the first part, which is it's depending on the number of cameras and the installation time and the permits by the city. So it's difficult to make a statement there. What we can make a statement about is that when do we receive the revenue? Well, once these cameras are in operation, they create events. And the events till we receive payments is approximately 30 days, I would say. Yeah. So one event, 30 days later, revenue. Okay. Where are we here? Yeah. And then another question from Oscar is, are you happy with the financial position? Of course, as a CFO, I would always say I'd like more. But no, I think we have SEK 112 million in available cash at this point in time. That excludes the $75 million in the U.S. CapEx facility line that we have. And of course, depending on when the investments will be made on the new programs and even newer programs to be announced, yeah, we will start using that credit facility. I must also say that we are very happy with the good relationship with Rabobank, which is always willing to support us in our growth needs. Question in Swedish from Jan Andersson. [Foreign language] Ghana? I suppose that's what's the status of Ghana. Pretty good. We are all set up to start the first probe citations to go out, the trials. So we're not going to go into full enforcement until we pass that stage. Another stage we still have to pass is that the government still has to give its final blessing. And those, as we all know, motions are slow. We're very confident that we'll be enforcing in Ghana anytime soon, possibly around the summertime, I would say. Another question from Jan is about the status in Colombia, Uruguay, South America. South America in general, I can say it's a bit of a difficult market for us. It's complex. There are some risks to it, political risks, some other risks. So we go into Colombia and Uruguay and Ecuador in a cautious way through distributors more than anything else. So that's where we are. It's not a major part of our 2025 ambition. I think that's the most important comment to make on this. And then the question is, which another question here in Swedish again is which market has the highest potential in 2025. That is without doubt the United States. We see the highest growth potential, but also the highest contribution to our EBITDA. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. Let me see. Johannes asks, how long does the implementation of a contract take? Hence, when would you expect to see revenues from today's contract win? Today's contract win is related to Albany. Let me see there. So the good thing with Albany is that Albany is an existing customer, I think, for more than five years now. We've renewed the base term of the contract for another five years. We have been enforcing on red light within the city of Albany, and we're now going to add 20 school zones to that contract, adding SEK 160 million over the contract term to the total contract. Because we have a good relationship with that city, and we are already in, it could go relatively smooth putting these school zones up. But of course, implementing 20 school zones in a short period of time is a challenge. In any case, the ambition is that in September of 2024, this year, schools go in session again after the summer holiday. So it is our ambition to aim for that timeline. Yeah. Okay. And then revenues could come in 30 days later after the first event. Then Marcus Munjés had a question. TRaaS revenues were down even though the U.S. part of TRaaS increased. What is the reason for this? Yes, if you look at Q1 2023 and Q1 2024, a special thing happened in Q1 2023, and the people from Sweden would recognize this is that in late 2022, a number of cameras in Sweden were demolished by a group of people. And early 2023, we repaired all of those systems and might even have replaced some of them. Typically, those repairs, either from demolishment or regular repairs, come in gradually, right? So it's spread out over the year or over the years. In this case, we had a bump up because there was a significant event at that point in time. So that's the reason why it's somewhat lower. Of course, if you look at the U.S. TRaaS revenues, it moved from EUR 43 million to EUR 50 million in the quarter. That is a good growth. Okay. I think we're well, maybe a remark, which is about the SEK 1 billion. How do we feel about it? I can tell you we are feeling rather good about that. And the reason for that is that we see tremendous growth in the United States, not only new contracts, but also efficiency gains of the events coming in that will help us with revenue without doing anything, but also a great addition to the EBITDA. So that's a gain which was not foreseen. So huge growth in the U.S.A. expected. On top of that, really good outlook on what happens in Saudi. So I'm really happy with that. And then look at what we brought in in orders in Sweden and the Netherlands, SEK 1.25 billion in total. So we're looking yeah, and that is spread over multiple years, I realized. The outlook on getting to SEK 1 billion is very realistic, so. Thank you all. If there are no further questions, I hand back to the operator. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Thank you all for chiming in and for also pointing out these questions. That's good for us to be able to answer those. So keep doing that for the next sessions as well. And hope to see you back in the second quarter.