Year end report Image Systems January 1 - December 31 2023

Press Release – Regulatory

Challenging 2023 ends with positive signals and increased order intake During a difficult 2023, in which the first three quarters were tough for the RemaSawco business unit, the Group has deliberately continued to invest in developing new products and improved customer service. We feel that confidence in the future, and thus a willingness to invest, increased among customers during the fourth quarter, and RemaSawco received several orders. This trend has continued in the beginning of 2024. At the same time, the Motion Analysis business unit operates in a growing market, which is expected to continue for an extended period.

Fourth quarter
October–December
Full year 2023
January–December
  • Order intake amounted to MSEK 74.3 (41.8)
  • Net sales amounted to MSEK 40.1 (54.0)
  • Gross margin amounted to 69 (64) percent
  • EBITDA amounted to MSEK 3.5 (9.3)
  • Earnings per share amounted to SEK -0.01 (0.05)
  • Order intake amounted to MSEK 150.0 (189.0)
  • Net sales amounted to MSEK 160.7 (171.1)
  • Gross margin amounted to 70 (67) percent
  • EBITDA amounted to MSEK 15.5 (28.4)
  • Earnings per share amounted to SEK -0.08 (0.10)

Financial overview

Oct–Dec 2023 Oct–Dec 2022 Full year 2023 Full year 2022
Order intake, MSEK 74.3 41.8 150.0 189.0
Order backlog, MSEK 73.3 81.9 73.3 81.9
Net sales, MSEK 40.1 54.0 160.7 171.1
Capitalized development expenditure 3.7 1.9 10.0 9.1
Gross margin, %(1) 69 64 70 67
EBITDA, MSEK 3.5 9.3 15.5 28.4
EBITDA margin, % 8.0 16.6 9.1 15.8
Operating profit (EBIT), MSEK -1.3 4.6 -5.3 9.1
Adjusted operating profit (EBIT)(2), MSEK -1.3 4.6 -3.0 9.1
Profit after tax, MSEK -1.0 4.5 -6.8 8.6
Adjusted profit after tax(3), MSEK -1.0 4.5 -3.1 8.6
Cash flow from operating activities, MSEK 14.6 14,5 1.7 32.3
Solidity, % 63 63 63 63
Average number of employees 67 69 67 72
Earnings per share -0.01 0.05 -0.08 0.10

(1)    The definition of gross margin has changed since last year and is calculated as Net sales minus raw materials and consumables in relation to Net sales.

(2)    The operating profit (EBIT) is affected by a one-off cost of MSEK 2.3 during the period January–December 2023.

(3)             The profit after tax is affected by one-off costs of MSEK 3.7 during January–December, of which the operating profit is affected by MSEK 2.3 and net financial items by MSEK 1.4.

A WORD FROM THE CEO

We leave 2023 with a brighter picture of the future than what we had at the end of the third quarter. Market conditions in the sawmill industry have improved, and the RemaSawco business unit ended the fourth quarter with a doubled order intake compared to the previous year.

At the same time, the Motion Analysis business unit continues to see good market conditions with a full-year growth rate of almost twenty percent compared to the previous year.

The Group manages to achieve an improved gross margin despite lower net sales. The operating profit has been negatively affected by targeted investments to improve the offering in both business units further, all in line with the previously communicated strategy.

We have adapted the Group during a challenging 2023

The Group puts a difficult year behind, and I note that the improvements made in recent years in both product and business development have made it possible not only to manage these challenges but also to ensure that we are well-equipped to scale up once the market conditions become favorable.

Some optimism in the sawmill industry

The sawmill industry has experienced an economic downturn during the year, with high interest rates, high raw material prices, and falling demand for sawn wood products limiting sawmills’ profitability and short-term willingness to invest.

During the fourth quarter of 2023 and the beginning of 2024, indications of an improvement have resulted in sawmills showing a renewed investment appetite.

We assess that the market situation will remain challenging for some time. However, we note that a strengthened confidence in the industry’s future means investments will gradually return.

Motion Analysis grows and invests

The Motion Analysis business unit ends the year with increased order intake and net sales compared to the previous year. In recent years, the business unit has accelerated the development of a new product platform. The platform will not only replace the current one with a modern product but also provide opportunities for new functionality to grow both within the existing niche and, at the same time, create opportunities to grow in adjacent areas. The launch of the new platform is planned for the end of 2024.

Ready to deliver

The past year has been characterized by uncertainty in the sawmill industry, but the recent increase in orders indicates a change.

At the same time, Motion Analysis operates in a growing market. With two business units operating in different markets, we feel confident in our ability to navigate changing market conditions.

Thanks to great focus and commitment from employees, we have continued to take major steps in line with our strategy. I now look forward to 2024 with great confidence and would also like to thank our shareholders for trusting us to deliver on our high ambitions.

Johan Friberg, CEO

THE GROUP’S DEVELOPMENT IN THE FOURTH QUARTER

Order intake, net sales, and profit

Order intake amounted to MSEK 74.3 (41.8). Order backlog as of December 31, 2023, amounted to MSEK 73.3 (81.9).

Net sales amounted to MSEK 40.1 (54.0). Capitalized development expenditure amounted to MSEK 3.7 (1.9) and relate to both business units.

Gross margin amounted to 69 (64) percent.

EBITDA amounted to MSEK 3.5 (9.3). Other external charges increased compared with the corresponding period last year, which mainly is attributable to the continued high pace of product development.

Depreciation/amortization amounted to MSEK -4.8 (-4.7). Net financial items amounted to MSEK 0.1 (-0.3).

Result after taxes amounted to MSEK -1.0 (4.5).

Financial position, investments, and cash flow

The Group’s investments in non-current assets during the quarter amounted to MSEK 4.6 (2.4) of which MSEK 3.7 (1.9) is related to capitalized development projects. Capitalization of development projects takes place in both business units.

The operational cash flow during the quarter amounted to MSEK 9.0 (11.9). Solidity as of December 31, 2023, amounted to 63 (63) percent Net indebtedness amounted to 0.1 (0.0) times.

Available liquid funds including the undrawn part of the overdraft facilities amounted to
MSEK 20.1 (38.2) as of December 31, 2023.

THE GROUP’S DEVELOPMENT DURING THE FULL YEAR

Order intake amounted to MSEK 150.0 (189.0). Order backlog as of December 31, 2023, amounted to MSEK 73.3 (81.9).

Net sales amounted to MSEK 160.7 (171.1), and capitalized development expenditure amounted to MSEK 10.0 (9.1), which take place in both business units.

Gross margin amounted to 70 (67) percent.

EBITDA amounted to MSEK 15.5 (28.4). Depreciation/amortization amounted to MSEK -20.8 (-19.3), of which MSEK -2.3 (-) is attributable to a write-down in connection with the termination of a rental contract for office and production premises in Finland. The termination was carried out in order to reduce rental costs in the RemaSawco business unit when parts of the operation are centralized to the head office in Linköping, Sweden.

Net financial items amounted to MSEK -2.1 (-1.1). The change in net financial items is linked to a one-off item of MSEK -1.4 (-) for a write-down of a receivable from Digital Vision.

Result after taxes amounted to MSEK -6.8 (8.6).

ROLLING 12-MONTH ORDER INTAKE, REVENUE AND EBITDA

The Group’s rolling 12-month EBITDA margin decreased during the fourth quarter to just over 9 percent due to lower net sales. The Group’s long-term EBITDA target of delivering a stable 15 percent EBITDA margin requires growth in net sales.

BUSINESS UNIT: REMASAWCO

RemaSawco provides solutions to optimize production in the sawmill industry. The product portfolio includes proprietary software that, with the help of laser, 3D scanning, X-ray, and automation, measures and analyzes timber and boards throughout the sawmill process to maximize value exchange, minimize waste, and thus increase customer profitability.

Performance during the period

As expected, fourth-quarter net sales and operating profit are lower than last year. This is due to a difficult market situation in the sawmill industry during the first three quarters. The sawmill industry has been characterized by low demand for sawn wood products and continued high raw material prices, which resulted in a significantly lower order intake for most of the year than expected. However, the market is showing signs of recovery, resulting in a doubled order intake in the fourth quarter compared to the previous year. We see that our customers in the Nordic region have a continued intention to implement upgrade projects, and we note a strong interest in RemaSawco’s expanded and improved service offerings.

Oct–Dec 2023 Oct–Dec 2022 Full year 2023 Full year 2022
Order intake, MSEK 58.6 27.9 110.6 151.8
Net sales, MSEK 28.0 43.8 121.2 137.7
Capitalized development expenditure 1.3 1.1 4,0 4.2
EBITDA, MSEK -0.5 6.7 7.0 17.8
EBIDTA margin, % neg 14.9 5.6 12.5

Product development

During the quarter, the business unit has implemented improvements on all product lines as part of our basic development. In timber sorting, sawmill lines, and board handling, we have updated the functionality of the products RS-LogScanner3DX, RS-Opt, and RS-BoardScanner. The business unit’s focus on product development has been further intensified through efforts to continue developing timber sorting and a new service concept.

BUSINESS UNIT: MOTION ANALYSIS

Motion Analysis Systems offers its customers software for the analysis of high-speed film, a niche where the Company is the world leader. The software is sold under the product names TEMA and TrackEye, where TEMA has most of its customers in the civil sector and TrackEye within defense-related testing and the aerospace industry.

Performance during the period

Market conditions remain good for the Motion Analysis business unit. Order intake for the quarter increased by approximately 13 percent compared to the previous year, and net sales increased by about 19 percent. Our defense customers are investing in our offering at an increasing rate, and we assess that the market will remain good. During the quarter, a number of larger orders linked to the TrackEye software were received. The French armed forces began call-offs on the 7-year framework agreement signed earlier in the year, and major orders were received from the US, Israeli, and Italian armed forces, among others.

The business unit’s net sales increased by 18 percent for the full year, confirming our growth strategy. The business unit increased its cost base during the year to accelerate the development of a new product platform to be launched in late 2024.

Oct–Dec 2023 Oct–Dec 2022 Full year 2023 Full year 2022
Order intake, MSEK 15.7 13.9 39.4 37.2
Net sales, MSEK 12.1 10.2 39.5 33.4
Capitalized development expenditure 2.4 0.8 6.0 4.9
EBITDA, MSEK 5.4 4.0 14.2 15.2
EBIDTA margin, % 37.2 36.4 31.2 39.7

Product development

During the quarter, the business unit continued the work of productizing the new platform and completed and released several maintenance releases on the existing product platform. Work continues on the further development of a cloud-based customer portal that will handle sales, license management, and customer support of the new platform.

OTHER INFORMATION

Parent Company

The Parent Company’s net sales for the fourth quarter amounted to MSEK 0.9 (1.0). Operating profit amounted to MSEK -1.4 (-1.4). Result after taxes amounted to MSEK 8.6 (18,6). Investments in fixed assets amounted to MSEK 0.0 (0.0). The Parent Company’s available liquid funds, as of December 31, 2023, amounted to MSEK 0.0 (0.3). The Parent Company’s equity as of December 31, 2023, amounted to MSEK 108.6 (105.1) and the solidity was 99 (98) percent.

Significant events after the period

The RemaSawco business unit has received a number of orders for Nordic sawmills totaling approximately MSEK 17.5 and signed a framework agreement with a major group for around MSEK 13.4.

Motion Analysis has received several orders worth approximately MSEK 3.5.

Personnel

The average number of employees was 67 (72). The number of employees at the end of the period was 67.

Number of shares

The number of shares on December 31, 2023, amounted to 89,207,818.

Accounting policies

Image Systems applies the International Financial Reporting Standards (IFRS) as adopted by the EU. The interim report for the Image Systems Group is prepared in accordance with IAS 34, Interim Financial Reporting, and the Swedish Annual Accounts Act. Disclosure in accordance with IAS 34, Interim Financial Reporting, is provided in notes as well as elsewhere in the interim report.

The interim report for the Parent Company, Image Systems AB, is prepared in accordance with the Swedish Annual Accounts Act as well as the Swedish Financial Reporting Board’s recommendations RFR 2 Accounting for Legal Entities.

Image Systems applies the ESMA (European Securities and Markets Authority) Guidelines on Alternative Performance Measures. Definitions of indicators are provided on page 15 and relevant reconciliations on page 14.

Risks and uncertainties

The Group’s significant risks and uncertainties include business risks related to agreements with customers and suppliers as well as other external factors such as currency fluctuations.
The Group’s significant financial and business-related risks are discussed at depth in the management report and under Note 3 in the 2022 Annual Report. No significant new or changed risks or uncertainties have been identified during the quarter.

This year-end report has not been reviewed by the Company’s auditors.

Financial calendar

Interim report January-March 2024         April 26, 2024

Annual General Meeting 2024    May 8, 2024

Interim report January-June 2024            July 19, 2024

Long-term financial objectives

Image Systems aims to create long-term value growth for its shareholders. To achieve this, the Board of Directors has set long-term financial objectives:

EBITDA >15%

Solidity >50%

Dividend 20% of the profit after taxes

Linköping, Sweden, February 9, 2024

The Board of Directors


This disclosure contains information that Image Systems AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 09-02-2024 08:00 CET.

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