Senseonics Holdings, Inc. Price & Performance (SENS)

Order intake and procurement awards during the fourth quarter came in at 161,000,000 compared to SEK $212,000,000 in Q4 twenty twenty three. Of the total order intake, SEK79 million or 37% is from extended trial services and maintenance contract from the state of Victoria in Australia. Year to date, the total order intake, including procurement awards, amounted to SEK $992,000,000 32% higher than last year at $754,000,000 In the full year 2024, no less than $655,000,000 or 71% came from trials order intake. Predominantly from 13 new and extended contracts signed with Citi in our strategically important U. S. Market. The substantial share of recurring trans revenue within our 2024 order intake indicates that we have successfully implemented our strategy to establish a solid foundation for of recurring revenue the future. The backlog from our two large contracts secured in our home market Sweden and The Netherlands, amounts to 1,000 million euros The development phase of the Swedish order of €850,000,000 has been completed during Q4 of this year. With final acceptance by our customer in January 2025. This followed extensive testing required to align and integrate our new FluxSpeed Enforcement System with our customers' various IT systems some of which are also new or updated.

Commencement of the Swedish project rollout is now anticipated in the first half of Sensys twenty five encompassing the replacement of existing systems and the installation of new systems in the field. The service and maintenance component of the contract will be initiated incrementally and is projected to endure for the next twelve years. Implementation continues for the Dutch order, which is worth $400,000,000 split between $200,000,000 in system sales and $200,000,000 in repairs and maintenance, over a six year period. The systems installation rollout started in 2024 and continues during 2025 and is expected to be completed in 2026. Service and maintenance for the Dutch order is slowly facing in, starting in 2024 and ending in six years, with potential contract renewals for another six years thereafter. Of the combined Swedish and Dutch $1,250,000,000 euros contract value, approximately 15% has been delivered today. Leaving more than 1,000 million euros still in the backlog of just these two programs in our whole markets. Total revenue for the quarter arrived at SEK192 million. Euros whereof TRAFF revenue is €100,000,000 and system sales 98,000,000 The decrease in system sales was mainly related to timing of deliveries in Sweden and delay of anticipated orders from The Middle East.

The recurring truss business equates this quarter to 51% of total sales. The TRAS revenue is primarily driven by our TRAS managed services business in The United States. For the full 2024, our trans managed services revenues grew by 2% from €363,000,000 in 2023 to €371,000,000 in 2024. This is notwithstanding the negative impact on our trust [indiscernible] caused by the legislative changes in the state of Iowa and The USA. For the full year 2024, our recurring cost business accounted for 59% of our total revenue. Talking about Iowa, As of May 2024, new legislation in Iowa led to a permitting process for automated speed enforcement systems issued by the Iowa Department of Transportation Unexpectedly, only 11 out of 140 existing fixed speed locations were approved. Including seven out of 75 for Central Castle of customers. 95 out of 148,000,000 speed deployment location applications were approved. Red light enforcement cameras were not affected. We are working with our customers to find solutions to reestablish the operations of the speed systems that did not receive a permit. This process process is both time consuming and laborious. With consequently slow revenue recovery for our programs in Iowa. The estimated negative impact of the legislative changes on our 2024 revenue is DKK20 million.

Adjusted for this, the full year growth of our Managed Services business would have been approximately 14%. In April 2024, we signed a memorandum of understanding with our customer, Tahakom, in The Kingdom Of Saudi Arabia. Following this, our customer provided technical qualification for our automated traffic enforcement solutions And during the fourth quarter, Senzo Caso has signed framework agreements for fixed and mobile speed and fixed red light enforcement as well as a framework agreement for the service and maintenance on the delivered Vehicle Emotion Systems, With these four framework agreements in place, detailed pricing and logistic terms and conditions Sensus Council is now in the position to receive purchase orders under these agreements. In January 2025, we received the first order for the maintenance of the InfEco Systems in Saudi Arabia. This was a first order for one year under a three year framework work agreement. This purchase order is worth €27,000,000 and execution is expected to start in Q2 twenty twenty five. The expectation is that we will receive new purchase orders for the remaining two years under the framework agreement. With an increased level as more systems will be added for service and maintenance. In 2022, we entered into an eleven year contract with the government of Ghana for our 40% pension share in Nationwide Traffic Management and Enforcement Ltd.

A contract in force the design, building, financing, operation and maintenance of a nationwide road safety program. The total revenue for the joint venture is projected to be approximately €800,000,000 over the contract period. The project rollout is progressing well with the first test citation issued in 2024. Social media is picking up on this in a positive way. Due to parliament elections in December, the formal confirmation of the legal framework has been delayed. Issuance of citations is expected to commence no later than July 2025, In our financial reporting, we show results from the project as results from joint ventures. SensorCastro is a globally active European company with a balanced sales mix across different regions. In 2024, revenue was distributed amongst The Americas with Europe with 43%, and ARPUK MERIA with 36%. Compared to full year 2023, the region APACMEA contributed less in 2024 due to the completion of deliveries to Saudi Arabia. This has been compensated by the increased revenue in Europe mainly through the rollout of the Dutch tender. Our global presence helps us at times to even out the volatility that is inherent to the one off system sales part of our business. As we grow our recurring trust revenue, our total revenue growth will become even more stable.

During the fourth quarter, we made strategic investments totaling €75,000,000 This included €24,000,000 allocated to fixed assets in operations primarily for equipment and construction, support our managed services programs in The USA. Additionally, we invested SEK44 million to repurchase a minority shareholding from former employees in our 100% ownership of this key driver of our growth strategy. Looking at our margin. Our gross margin this quarter was 36%, compared to 42% in Q4 twenty twenty three. This is lower than our run rate margin of 40% and is driven by the relatively large contribution this quarter of system sales from the Dutch project. System sales margins from this project are typically lower and precede a higher margin service and maintenance recurring revenue which is expected to continue for at least six years. The overall gross margin of the contract will gradually recoup during this phase. Year to date, the margin was 38.2% compared to 40.5% in 2023. Our EBITDA for the quarter arrived at $28,000,000 compared to $45,000,000 last year, year to date 2024, the EBITDA arrived at €69,000,000 compared to $85,000,000 last year. On that note, I hand over to Simon Miller. I will go through 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 SEK198 million compared to $221,000,000 During the quarter, trans sales were stable at $100,000,000,000 The system sales came in at $98,000,000 nineteen million dollars lower than last year mainly due to delay in deliveries in Sweden and less sales from The Middle East. The full year revenue amounted to $31,000,000 compared to $624,000,000 The full year increase of trust sales by 3% is mainly attributable to growth in the first half year in The U. S. A, The group's gross margin arrived at 36% for the quarter. For the full year, the margin landed at 38%. Lower margins compared to 2023 are mainly attributable to a lower margin on initial system sales in projects such as the Dutch tender. The operating expenses totaled €61,000,000 Sensys increase of dollars an increase of $3,000,000 compared to Q4 Sensys twenty three. The full year expenses totaled €222,000,000 compared to [indiscernible] increase in expenses is driven by sales expenses related to inter traffic fare. In April of this year Increased sales activities in The U. S. A. As well as costs relating to the acquisition of the minority shareholding in our U. S. Entity.

Our operating profit for the period came in at $1,450,000,000 euros compared to 34,000,000 in Q4 twenty twenty three. The full year operating profit landed at €23,000,000 compared to €39,000,000 dollars Our Mini Services segment predominantly reflects our U. S. Business, including the cost related to development and maintenance of our software suites Xilium and Pulse. During the quarter, the segment did not receive any order intake. However, from a full year perspective, the order intake grew from 134,000,000 to $575,000,000 in 2024. Revenue came in lower due to less volume on existing programs. Mainly related to the Iowa legislation. The revenue for the quarter amounted to $54,000,000 compared to $60,000,000 in Q4 twenty twenty three. [indiscernible] The lower revenue has impacted the EBITDA for the quarter amount to €7,000,000 compared to €50,000,000 From a full year perspective, demand and services sales is stable moving from €192,000,000 in 2023 to $194,000,000 with the EBITDA amounting to $23,000,000 compared to $26,000,000 Now on to the segment system sales, starting with order intake. The segment has seen a good order intake during the quarter with €161,000,000 in order intake and procurement awards. Compared to two twelve in Q4 last year. [indiscernible] a full year perspective, the order intake came in at $417,000,000 compared to $620,000,000 The rollout of the Dutch Speed and Wetlight project has continued in the quarter.

Due to a low lower activity level in Saudi Arabia and delayed deliveries in Sweden, the revenue for the quarter came in at $144,000,000 compared to $161,000,000 last year. A full year perspective, the revenue has increased from $4.31 to $40,437,000,000 dollars On a lower revenue level in the quarter, and due to the initial deliveries on the Dutch project, the EBITDA came in at 21,000,000 compared to 30,000,000 last year.

Full year, the EBITDA came in at $45,000,000 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 increased funding through the bond issue, and investments. In September, the to finance investments for future growth. With this €30,000,000 corresponding to $332,000,000, the company has repaid a large part of its long term debt as well as reduce the revolving credit facility totaling $112,000,000 mainly in fixed assets and operations for The U. S. Programs, amounted to $93,000,000 In the fourth quarter, Sensuscatso purchased the minority shareholding in Sensus So you say for 44,000,000 The net interest bearing debt has increased from $109,000,000 at the opening of 2024 to $270,000,000 The available cash has increased from $84,000,000 to $2.00 $3,000,000 at the end of the period. On that note, I would like to hand it over to Ivo.

Thank you, Simon. Due to recent market dynamics such as extended customer testing phases and let's Sensor Hutso sees a delay in achieving its ambition of reaching €1,000,000,000 in revenue with an EBITDA margin of more than 15% in 2025. Despite the delay, San Scotiro has made significant progress in several key areas, including obtaining first contracts in new states in The USA, the expanding of the managed services business model into other geographical areas such as Australia and Ghana and a strategic partnership in Saudi Arabia with the first quarter in hand. Our order book and remaining backlog of more than SEK 1,000,000,000 is robust. Will provide solid revenue well into the future. We expect our TRAS business to continue delivering profitable growth. Driven by our strengthened U. S. Team, and our groundbreaking Flux roadside platform. While we are disappointed to not meet our ambition within the original time frame, we are resolute on our commitment to achieving this goal. Our long term strategy remains unchanged and we are taking proactive steps to address the challenges we've encountered. We are confident that these actions will position us to deliver our ambition the near future. For 2025, we expect euros euros and due to additional sales investments to accelerate growth within The U. S. Market, we anticipate to realize an EBITDA margin between 1214% in 2025.

As mentioned, our long term strategy remains unchanged. And we are taking proactive steps to address the challenges we've encountered. We're confident that these actions will position us to deliver on our ambition in the near future.

Before we go to the questions, I want to comment on the press release that was issued this morning about me stepping down as CEO of Senshradso by 10/01/2025. I started my tenure since HADSO on 10/01/2017. After serving Sensorschatso as CEO for eight years, it's a natural moment for transition in leadership. Sensorschatzo is well positioned for its next phase of growth. And the Board is committed to finding a leader who will drive continued innovation and expansion in global traffic safety solutions. I will help with this process and with the onboarding of the new CEO. I want to thank the global team at Sensys Hatchell and the Board for the trust they have put in me leading this great company. We achieved a lot with a new strategy and a new organizational structure delivering strong double digit revenue growth and consistently positive EBITDA. With an experienced leadership team in place and a company on solid footing, Sensagratso is in a good place to accelerate growth further under the leadership of our new CEO. As mentioned, our long term strategy remains unchanged and we are taking corrective steps address the challenges we've encountered. We are confident that these actions will position us to deliver on our ambition in the near future.

On this note, I now open up for questions.

Please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Auryan Roden from Carnegie Investment Bank. Please go ahead.

Good morning, Arianne. Yes. Hello, everyone. First question is relating to the quarter two To the traffic work order, Do you see any changes in the rollout plan right now? Or is that in is the Olaf plant intact?

Yes, the rollout plan is intact. As I mentioned, the major obstacle has been the approval of what we call the golden sample, so the technical approval by the customer. Okay. There were some strange things happening here.

So repeating the question, the order to traffic The rollout plan, yes.

Okay. Now the roll up plan remains unchanged. Do you hear me, Erjian? Just please confirm.

Hello? Hello. Can you hear me, Urieam?

Operator, can you please step in?

Yes, yes, now I hear you.

Okay. Now the rollout plan remains unchanged. The major hurdle we had to overtake was the acceptance of [indiscernible] And from there on the raw data. Hello?

Yes, now I hear you. I'm not sure, operator.

Can you step in if there's an issue with the line?

Yes, there seems to be some delay between the questions online and the speakers. So, Arjan, can you please try to repeat your question one more time?

There seems to be some problems on the on the telephone line. So Okay. It was about the rollout plan for the traffic market order. If there are any changes to that. As you see it today relative to before.

Short answer is no.

Okay. Let's try with the next question and see if the line is working better.

The next question comes from Tim Allers from Kepler Cheuvreux. Please go ahead.

The second question, the reason for the buyout of The U. S. Minority stake Okay.

Maybe check with another Good morning, gentlemen. Can you hear me?

Yes. Yes, we can.

Can you hear us? [indiscernible] We have a problem with the telephone line So I think we hand the conference back to the speakers for any written questions at this time. [indiscernible] Yes. Okay, great. Yes, I think there's a little bit of a delay. But okay, I'll just ask my questions and then step back.

Yes.

So Tim, can you just repeat your question? And see if we can have the speakers answer If that doesn't work, I think we go over to any written question. But let's try one last time. Okay. And I just I have three questions that I'm going to ask them and then Sebek.

So the first question would be, you already mentioned the investments you've done in 2024, especially in The U. S. Could you elaborate a little bit where we stand at with the investment plan? So what can we Now let's go to any written questions. So I hand the conference back to the speakers.

Okay. I hope you can hear me. Let's maybe go first to the question Erjian was asking, which was about the rollout plan in of traffic ferget. I answered there is no delays or the delay is caused by the acceptance of what we call the golden sample by the customer. We are past that gate now And from there on, the rollout of of the installation of the systems and the service and maintenance part of the contract will remain unchanged. And that will start happening the route will start happening in On The U. S. Minority shareholding, what needs to be understood here is that these were former employees. They were holding a minority share We had a core option to buy the stock it was not an obligation, but we decided to execute on that core option and paid the €44,000,000 in order to get 100% ownership in this very strategic entity for us. It was not a question, are there any one off costs related to this? The ancillary is, of course, they are. They are in the P and L. I would say that approximately SEK5 million in Q4. On the investment plan on the fixed assets in operation, I guess, in The United States, Maybe that's something you can talk to Sam?

Yes. Tim asked that question and when he fell off, so I presume he was wanting to ask how do we see the investments for 2025 happening. Yes, I would say that we will continue in a similar level of investments like in 2024. With the expectation, of course, of new orders coming in, we will need to invest in construction and in technical equipment to support those programs. In 2025 and thereafter. I hope that answers your question.

Please your questions in writing, that probably works due to the bad line better.

Okay. We have questions from Tim. What can we regards to the investments in 2025, similar levels than 2024 or lower. I think I just answered that. It's going to be similar levels. And let's hope that it will be similar levels because it means that the order intake will continue as it has done. Saudi Arabia is the in vehicle project already part of the new agreement. And is it fair to assume that if you have agreement about the other systems, it will be very substantial And are the projects already secured and signed? Okay. Let me take that one.

It's actually three questions. On the Saudi project, the Infohipa project, That is the first order we got under a framework agreement. For the service and maintenance of the 1,200 in vehicle systems, we have delivered to Saudi Arabia. The order was SEK27 million for only one year. With a fairly limited amount of vehicles under that. The framework is for three years, so we would expect a year two, a year three to come in. But also a somewhat higher value there because more vehicles will be under the framework agreement. And saying that, it's for three years, but you can imagine that that might be prolonged going forward because the technical lifetime of these of our products are typically quite long. Okay. So that's one question. Is it fair to assume that if you have that if you have agreements about the other systems, if it will be very substantial. I commented to that before there is four framework agreements in place, one for the in vehicle, one for the fixed speed, one for the mobile speed and one for the red light. Saudi Arabia is right now in a phase of investing in their infrastructure or part of their Efficient 02/1930.

Whatever they do will be very substantial because they almost start from zero. And we are one of the few suppliers that are qualified to deliver and we have the framework agreements in place, meaning that all the pricing, commercial, logistics obligations and commitments are already agreed upon with the customer. So it's waiting for the orders. And that is a timing thing. Okay. So that I think also answers the other question and are the purchase already secured and signed? No. The framework agreements are signed. So from that perspective, yes, signed. The orders will come under these framework agreements. [indiscernible] are there plans in place already how to overcome the issues here? And any updates on the timeline? Yes, there are plans in place. As with any governmental customer, you can imagine that these processes are not very swift So it takes time for these to be executed, but concretely, we are installing or actually ordering new trailers that can go on the mobile locations. Which are still open. So we can and we have the red light enforcement still in place So there is some recovery is going on, but I do not expect us to recover the full business in Iowa within 2025.

I cannot say anything about 2026, but 2025, we will see part of the shortfall in the revenue in Iowa. Notwithstanding that, we have grown our trust service managed services business 2024. And I do foresee this also to happen in 2025. Another question coming from Silverschneiman. Could you give Could you give some more color on what the drivers are behind Iowa and higher end of your lower end and higher end of your guidance range and that we should watch out during 2024. Yes, I think if you look at the guidance, we say we arrive between €700,000,000 and €800,000,000 but also we retain the ambition €41,000,000,000 going forward. It's all about timing. So I think the most is actually coming from the Saudi orders when they will come in and the size of those, of course. And we will also see the impact of the timing in traffic fair gate yes, that's it. And the recovery we see the new cities and the going life of the new cities in The United States.

Yeah. I think, Tim, you you asked the question that in the guidance, we don't mention the part of the trash recurring part of the revenue. And that's right. We didn't provide any guidance on that. But I would say that in the ambition we have 60% of trans recurring revenue. We are at that level almost when you look at 2024. So that is still something that we are targeting very much. Of course, that being said, that if if we end up on the higher end of the guidance, you can imagine that that is more system sales driven. Right? So that could push down that metric towards the end of the year. Potentially. But on average, I would say similar kind of revenue distribution between recurring and non recurring. I believe those were the questions in the I think so. Operator, if you don't have any, are there other people waiting in the queue? And there are no more written questions. Then I want to thank everybody and we're Hold on, there's a new question coming in last minute here. Do you think the market is overreacting? I guess you're talking about the stock market. How are you going to get the stock to increase and not fall like it has recent years 50% in the last five years and 60% today.

Yes, Matthias, I haven't looked at the stock price quite frankly. We have a strategy in place a plan in place how to grow this company in a sustainable way, a profitable way focusing on our recurring revenue. And we keep to that strategy because it it's creating value for the customer for our for our basically our shareholders, our investors. Overreacting, I don't know. We will see what happens in time.

There are no further questions at this time.

So I hand it back to the speakers for any closing remarks.

Okay. Yes. Thank you very much for attending this meeting and looking forward to meeting you again in the next quarterly report. Have a nice day.