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init innovation in traffic systems SE
Quarterly Report • Nov 13, 2024
224_10-q_2024-11-13_a1cb9b96-5d06-4296-b616-e920eacc5eae.pdf
Quarterly Report
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IMPORTANT BUSINESS TRANSACTIONS IN THE THIRD QUARTER 2024
Orders
In the third quarter, init acquired new orders to the value of EUR 57.3m (Q3 2023: EUR 38.3m). In particular, these included a number of orders from new customers in other European countries. Incoming orders for the third quarter are EUR 19.0 m above the previous year's level. Cumulated analysis shows improved incoming orders of EUR 362.3 m as of 30 September 2024; an increase of EUR 213.6 m compared to the previous year's figure (30 September 2023: EUR 148.7m).
The order backlog as at 30 September 2024 amounts to approximately EUR 392.5m and is EUR 226.3m above the previous year's level ( 30 September 2023: EUR 166.2m).
Changes in the basis of consolidation
On 6 September 2024, init acquired the international data management specialist DILAX Intelcom GmbH, Berlin (DILAX), which specialises in the development and implementation of hardware and software solutions for urban areas. The aim of the acquisition is to strengthen init's position in the railway market and to exploit synergies in the areas of research and development and in sales. In FY 2023, DILAX generated revenue of around EUR 20m with six subsidiaries worldwide. DILAX is a wholly owned subsidiary of init SE and was consolidated for the first time on 1 September 2024.
Hansecom BY, based in Minsk, Belarus, in liquidation since 1 December 2022, was deconsolidated with effect from 1 August 2024.
IRIS SMART TECHNOLOGIES SRL, a wholly owned subsidiary of iris GmbH infrared \& intelligent sensors, based in Verona, Italy, was founded on 10 July 2024.
In the third quarter, the wholly-owned subsidiary DResearch Fahrzeugelektronik GmbH, Berlin, was merged into the parent company iris GmbH infrared \& intelligent sensors, Berlin, retroactively as of 1 January 2024.
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IMPORTANT BUSINESS TRANSACTIONS IN THE THIRD QUARTER 2024
With the exception of the DILAX acquisition, the other corporate transactions are not material for the net assets, financial position and results of operations of the init group.
Earnings position
Traditionally, over the course of the financial year, the init group's revenue distribution fluctuates, with the first three quarters generally being weaker in terms of revenue and the fourth quarter being the strongest.
In the third quarter of 2024, the init group generated revenues of EUR 63.6m, which includes revenues of DILAX following its initial consolidation in September (Q3 2023: EUR 53.4m). In nominal terms, this represents an increase of 19.1 per cent compared to an increase of around 27.7 per cent in the first half of the year. This smaller increase compared to the first half of the year was in line with management's expectations although slight delays in the progress of individual projects were observed.
As a result, revenues in the first nine months of the year totaled EUR 178.1m, around 24.5 per cent up on the previous year's figure (EUR 143.0m). Overall, the management continues to assume that the forecast will be achieved.
Breakdown of revenues by region on a nine-month view:
| in million EUR | 01/01-30/09/2024 | $\%$ | 01/01-30/09/2023 | $\%$ |
|---|---|---|---|---|
| Germany | 61.3 | 34.4 | 49.0 | 34.3 |
| Rest of Europe | 38.8 | 21.8 | 25.5 | 17.8 |
| North America | 63.4 | 35.6 | 49.1 | 34.3 |
| Other countries (Australia, UAE) | 14.6 | 8.2 | 19.4 | 13.6 |
| Total | $\mathbf{1 7 8 . 1}$ | $\mathbf{1 0 0 . 0}$ | $\mathbf{1 4 3 . 0}$ | $\mathbf{1 0 0 . 0}$ |
Revenues based on customer's location.
Gross profit in the third quarter of 2024 amounted to EUR 22.2m (Q3 2023: EUR 19.7m). The gross margin of 35.0 per cent is below the previous year's level of 36.8 per cent. This was mainly the result of a slightly weaker business mix compared to the previous year and the build-up of resources to execute the major projects that are starting up. The cumulative gross profit of EUR 60.9 m is still above the previous year's level (30 September 2023: EUR 51.1m).
Sales and administrative expenses in Q3 2024 amount to EUR 14.6m (Q3 2023: EUR 11.6m). The increase in costs is mainly due to the acquisition and first-time consolidation of DILAX, as well as higher personnel costs due to inflation and increased headcount. In the current year to 30 September 2024, sales and administrative expenses are approximately EUR 5.9m higher than in the previous year at EUR 41.8m (30 September 2023: EUR 35.9 m ).
Research and development expenses in the third quarter of 2024 amounted to EUR 3.8m (Q3 2023: EUR 3.3m). In addition, EUR 3.0m were capitalised as development costs in the third quarter of 2024 (Q3 2023: EUR 1.2m). In the first three quarters of 2024, research and development expenses amounted to EUR 9.8m, approximately EUR 0.3 m above the previous year's level of EUR 9.5 m . However, an additional EUR 7.6 m were capitalised as development costs during the year (EUR 4.9 m in the previous year). In the current financial year, approximately 10.0 per cent of revenue was invested in research and development.
Foreign exchange gains amount to EUR 0.8m (Q3 2023: EUR 0.0m) in the third quarter of 2024. As at 30 September 2024, accumulated foreign exchange gains amount to EUR 0.6m (30 September 2023: foreign exchange losses of EUR $-0.5 \mathrm{~m}$ ). The movement is mainly related to unrealised exchange rate gains and losses from the valuation of receivables and liabilities as well as inventories in foreign currencies. This was largely due to the weakening of the US dollar at the reporting date compared to the previous quarter.
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IMPORTANT BUSINESS TRANSACTIONS IN THE THIRD QUARTER 2024
Earnings before interest and tax (EBIT) for the third quarter of 2024 were EUR 5.0 m (Q3 2023: EUR 5.5m) and increased year-on-year to EUR 11.7 m for the year running until 30 September 2024 ( 30 September 2023: EUR 7.1 m ). Despite the increase in revenue, the decrease in the quarter is mainly due to the gross profit effects described above, DILAX acquisition and the increase in sales and administration personnel costs. Currency translation had an offsetting effect in the third quarter. EBIT for the third quarter is in line with management's expectations, taking into account the one-off effects of the DILAX acquisition. However, management still expects to achieve the targets set out in the guidance for the full year 2024.
Net interest income (balance of interest income and interest expense) amounted to EUR $-0.8 \mathrm{~m}_{\text {in the }}$ third quarter 2024 (Q3 2023: EUR -0.5m) and has deteriorated on both a quarterly and a year-to-date basis (30 September 2024: EUR -1.7m; 30 September 2023: EUR -1.0m) due to an increased credit volume.
Net profit for the third quarter of 2024 amounts to EUR 3.3m (Q3 2023: EUR 3.8m). As at 30 September 2024, the accumulated profit is EUR 7.9 m ( 30 September 2023: EUR 5.0m). This corresponds to earnings per share of EUR 0.82 (30 September 2023: EUR 0.51).
Total comprehensive income for the third quarter of 2024 amounts to EUR 0.7m (Q3 2023: EUR 6.3m). As at 30 September 2024 it increased to EUR 7.8 m ( 30 September 2023: EUR 7.0m) as a result of the higher net profit and conversely, the unrealised losses on currency translation of the foreign companies, mainly due to the USD currency.
Cash flow from operating activities in the third quarter of 2024 amounts to EUR 8.1m (Q3 2023: EUR 2.9m). Compared to the same period of the previous year, cash flow increased significantly to EUR 8.0m (30 September 2023: EUR -4.0m). In addition to the higher net profit and higher non-cash expenses for depreciation and amortisation, the increase in operating cash flow is primarily attributable to the advance payments received from major projects.
Cash flow from investing activities in the third quarter 2024 amounts to EUR -12.1m (Q3 2023: EUR -2.1m). For the full year 2024, cash flow from investing activities amounts to EUR -19.3m ( 30 September 2023: EUR -7.5m). The significant increase compared to the previous year is mainly due to the acquisition of DILAX. In addition, there was an expansion of development services for internally generated software and the fitting out of new offices in various branches.
Cash flow from financing activities in the third quarter 2024 amounts to EUR 18.3m (Q3 2023: EUR -5.7m). As at 30 September 2024, cash flow from financing activities amounts to EUR 21.6m (30 September 2023: EUR 3.6 m ) and mainly includes the raising of long-term loans, short-term euro loans and the repayment of existing loans. This also includes the financing of the DILAX acquisition.
Equity amounts to EUR 121.5m and increased compared to the end of the year (31 December 2023: EUR 120.6m). The equity ratio fell to 39.3 per cent (31 December 2023: 46.3 per cent).
Personnel
In the first nine months of 2024, the init group counted on average 1,423 employees (30 September 2023: 1,128 ) including temporary workers, research assistants, and students doing thesis work. Of the 1,423 employees, 225 are employed on a part-time basis (30 September 2023: 210). The increase in personnel serves to secure and strengthen our planned growth. The acquisition of DILAX also led to an increase in the number of employees.
IMPORTANT BUSINESS TRANSACTIONS IN THE THIRD QUARTER 2024
Number of employees by region on a nine-month view:
| $01 / 01 /-30 / 09 / 2024$ | $01 / 01 /-30 / 09 / 2023$ | |
|---|---|---|
| Germany | 1,108 | 873 |
| Rest of Europe | 122 | 73 |
| North America | 168 | 161 |
| Other countries | 25 | 21 |
| Total | $\mathbf{1 , 4 2 3}$ | $\mathbf{1 , 1 2 8}$ |
Opportunities and risks
The opportunities and risks that could have a significant influence on the net assets, financial position and results of operations of the init group are presented in our Annual Report 2023 on pages 55 et seqq. and in particular from p. 59 et seq. onwards. The opportunities and risks described in the Annual Report 2023 essentially continue to exist unchanged.
In line with the IMF's perspective (see above), the init group still sees considerable uncertainty regarding development in the coming months, which could have a particular impact on the award of contracts in tenders.
All risks are regularly analysed and appropriate measures are initiated or precautions taken. In our opinion, there are no risks that are capable of jeopardising the continued existence of the company.
Forecast and outlook
After the first nine months of the fiscal year, the init group is well on its way to achieving the targets set for the year as a whole. The growth prospects were also confirmed in the third quarter of the financial year by the further increase in incoming orders. Usually the fourth quarter is the strongest in terms of earnings and revenue.
The key figures achieved are also in line with Management Board expectations. We therefore confirm our existing forecast for the current financial year: revenue target remains in the range of EUR 240-260 million, while EBIT is expected to be in the range of EUR 24-28 million. The integration of DILAX does not lead to a material change in the outlook.
Based on the macroeconomic and sector-specific developments, we see further opportunities to offer new technologies and IT solutions to our customers in the future. Climate change targets, ongoing demographic change and the associated global skills shortage are driving the demand for intelligent solutions in this area.
In order to drive current trends such as digitalisation, electromobility, mobility as a service and autonomous driving, init will continue to focus strongly on research and development. We see substantial potential for further growth in this technological development. We are confident about the investment programmes launched in Germany, the European Union and the USA for an environmentally friendly transport infrastructure and expect the company to continue its dynamic growth, for which the course has already been set.
Additional information
This quarterly statement and the information contained therein are unaudited.
Overall, we still see major uncertainty in the development of the economy over the next few months, which could have a particular impact on the awarding of contracts in tenders.
The actual results in terms of revenue and EBIT may differ substantially from the forecasted figures if new risk factors occur or assumptions about planning prove to be incorrect.
CONSOLIDATED INCOME STATEMENT
from 1 January 2024 to 30 September 2024 (IFRS) with comparative values (unaudited)
| EUR'000 | 01/07 to 30/09/2024 |
01/07 to 30/09/2023 |
01/01 to 30/09/2024 |
01/01 to 30/09/2023 |
|---|---|---|---|---|
| 63,632 | 53,410 | 178,124 | 143,038 | |
| Cost of sales | $-41,385$ | $-33,735$ | $-117,245$ | $-91,924$ |
| Gross profit | 22,247 | 19,675 | 60,879 | 51,114 |
| Sales and marketing expenses | $-7,472$ | $-5,729$ | $-21,852$ | $-18,685$ |
| General administrative expense | $-7,176$ | $-5,853$ | $-19,979$ | $-17,214$ |
| Research and development expenses | $-3,842$ | $-3,283$ | $-9,829$ | $-9,542$ |
| Other operating income | 561 | 849 | 2,299 | 2,222 |
| Other operating expenses | $-128$ | $-161$ | $-405$ | $-269$ |
| Foreign currency gains and losses | 817 | 2 | 617 | $-479$ |
| Earnings before interest and taxes (EBIT) | 5,007 | 5,500 | 11,730 | 7,147 |
| Interest income | 52 | 64 | 311 | 196 |
| Interest expenses | $-834$ | $-588$ | $-1,976$ | $-1,188$ |
| Earnings before taxes (EBT) | 4,225 | 4,976 | 10,065 | 6,155 |
| Income taxes | $-904$ | $-1,218$ | $-2,155$ | $-1,154$ |
| Net profit | 3,321 | 3,758 | 7,910 | 5,001 |
| thereof attributable to equity holders of parent company | 3,323 | 3,701 | 8,139 | 5,040 |
| thereof non-controlling interests | $-2$ | 57 | $-229$ | $-39$ |
| Earnings and diluted earnings per share in EUR | 0.34 | 0.37 | 0.82 | 0.51 |
| Average number of floating shares | 9,876,143 | 9,889,894 | 9,916,315 | 9,883,254 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
from 1 January 2024 to 30 September 2024 (IFRS) with comparative values (unaudited)
| EUR'000 | 01/07 to 30/09/2024 |
01/07 to 30/09/2023 |
01/01 to 30/09/2024 |
01/01 to 30/09/2023 |
|---|---|---|---|---|
| Net income | 3,321 | 3,758 | 7,910 | 5,001 |
| Items to be reclassified to the income statement: | ||||
| Net gains (+) / losses (-) on currency translation | $-2,659$ | 2,515 | $-155$ | 2,016 |
| Total other comprehensive income | $-2,659$ | 2,515 | $-155$ | 2,016 |
| Total comprehensive income | 662 | 6,273 | 7,755 | 7,017 |
| thereof attributable to equity holders of the parent company thereof non-controlling interests | 664 | 6,216 | 7,984 | 7,056 |
| $-2$ | 57 | $-229$ | $-39$ |
CONSOLIDATED BALANCE SHEET
as of 30 September 2024 (IFRS) with comparative values (unaudited)
| EUR'000 | 30/09/2024 | 30/09/2023 | 31/12/2023 |
|---|---|---|---|
| Cash and cash equivalents | 37,713 | 32,300 | 27,303 |
| Marketable securities and bonds | 30 | 28 | 30 |
| Trade accounts receivable | 35,426 | 38,715 | 43,496 |
| Contract assets | 39,016 | 21,663 | 21,560 |
| Receivables from related companies | 7 | 36 | 0 |
| Inventories | 58,708 | 49,178 | 49,275 |
| Income tax receivable | 438 | 1,927 | 1,440 |
| Other current assets | 5,525 | 5,382 | 4,766 |
| Current assets, total | 176,863 | 149,229 | 147,870 |
| Property, plant and equipment and right-of-use assets | 69,730 | 64,891 | 64,055 |
| Investment property | 1,332 | 1,336 | 1,351 |
| Goodwill and other intangible assets | 55,626 | 34,201 | 37,982 |
| Interests in associated companies | 634 | 634 | 777 |
| Deferred tax assets | 3,093 | 5,470 | 4,826 |
| Other non-current assets | 2,340 | 3,491 | 3,617 |
| Non-current assets, total | 132,755 | 110,023 | 112,608 |
| Assets, total | 309,618 | 259,252 | 260,478 |
| Bank loans | 49,176 | 24,886 | 19,665 |
| Trade accounts payable | 11,554 | 6,615 | 11,961 |
| Contract liabilities | 25,928 | 11,016 | 16,364 |
| Advance payments received | 1,578 | 3,538 | 3,117 |
| Income tax payable | 0 | 2,799 | 3,616 |
| Provisions | 5,301 | 6,204 | 4,009 |
| Lease liabilities | 4,949 | 3,717 | 3,752 |
| Other liabilities | 15,972 | 20,555 | 15,923 |
| Current liabilities, total | 114,458 | 79,330 | 78,407 |
| Bank loans | 31,794 | 28,698 | 25,680 |
| Deferred tax liabilities | 7,640 | 5,584 | 6,297 |
| Pensions accrued and similar obligations | 8,508 | 7,802 | 7,636 |
| Provisions | 2,052 | 2,094 | 1,705 |
| Lease liabilities | 23,510 | 20,759 | 20,187 |
| Other non-current liabilities | 128 | 196 | 0 |
| Non-current liabilities, total | 73,632 | 65,133 | 61,505 |
| Liabilities, total | 188,090 | 144,463 | 139,912 |
| Attributable to equity holders of the parent company | |||
| Subscribed capital | 10,040 | 10,040 | 10,040 |
| Additional paid-in capital | 5,936 | 5,817 | 6,879 |
| Treasury shares | $-4,463$ | $-5,359$ | $-5,441$ |
| Surplus reserves and consolidated unappropriated profit | 107,458 | 96,981 | 106,159 |
| Other reserves | 2,378 | 6,907 | 2,521 |
| 121,349 | 114,386 | 120,158 | |
| Non-controlling interests | 179 | 403 | 408 |
| Shareholders' equity, total | 121,528 | 114,789 | 120,566 |
| Liabilities and shareholders' equity, total | 309,618 | 259,252 | 260,478 |
CONSOLIDATED CASHFLOW STATEMENT
from 1 January 2024 to 30 September 2024(IFRS) with comparative values (unaudited)
EUR '000
01/01 to 30/09/2024 01/01 to 30/09/2023
| Cash flow from operating activities | ||
|---|---|---|
| Net income | 7,910 | 5,001 |
| Depreciation | 9,655 | 8,390 |
| Result on the disposal of fixed assets | 22 | $-8$ |
| Change in provisions and accruals | 43 | $-265$ |
| Change in inventories | $-7,260$ | $-6,835$ |
| Change in trade accounts receivable and contract assets | $-8,945$ | $-9,851$ |
| Change in other assets, not provided by / used in investing or financing activities | 2,344 | $-1,717$ |
| Change in trade accounts payable | $-1,189$ | $-3,562$ |
| Change in advanced payments received and contract liabilities | 7,769 | 3,547 |
| Change in other liabilities, not provided by / | ||
| used in investing or financing activities | $-4,236$ | $-489$ |
| Amount of other non-cash income and expenses | 1,914 | 1,834 |
| Net cash from operating activities | 8,027 | $-3,955$ |
| Cash flow from investing activities | ||
| Payments received on disposal of tangible fixed assets | 67 | 328 |
| Investments in property, plant and equipment | $-4,749$ | $-2,940$ |
| Investments in other intangible assets | $-7,658$ | $-3,921$ |
| Investment in subsidiaries less acquired cash | $-7,136$ | $-1,072$ |
| Investment in associated companies | 143 | 144 |
| Securities | 2 | 0 |
| Net cash flows used in investing activities | $-19,331$ | $-7,461$ |
| Cash flow from financing activities | ||
| Dividend paid out | $-6,913$ | $-6,920$ |
| Payments received from equity contributions | 0 | 245 |
| Cash payments for purchase of treasury shares | 0 | $-1,874$ |
| Payments received from bank loans | 44,856 | 32,214 |
| Redemption of bank loans | $-12,691$ | $-16,665$ |
| Payment of repayment portion of lease liabilities | $-3,308$ | $-3,238$ |
| Interest payment from lease liabilities | $-306$ | $-187$ |
| Net cash flows used in financing activities | 21,638 | 3,575 |
| Net effects of currency translation and consolidation changes in cash and cash equivalents | 76 | 91 |
| Decrease in cash and cash equivalents | 10,410 | $-7,750$ |
| Cash and cash equivalents at the beginning of the period | 27,303 | 40,050 |
| Cash and cash equivalents at the end of the period | 37,713 | 32,300 |
1) Presentation has been changed from the previous year. In the previous year the figures were shown as a single item.
INIT
IMPORTANT BUSINESS TRANSACTIONS IN THE THIRD QUARTER 2024
FINANCIAL CALENDAR 2024/2025
Q4
13 November
Publication Quarterly Statement 3/2024
25-26 November
Equity Forum in Frankfurt / One-on-one meetings
26 November 10:05 am CEST
Presentation room New York
20 March
Publication Annual Report 2024
15 May
Publication Quarterly Statement Q1/2025
22 May
Shareholders' Meeting 2025 in Karlsruhe
14 August
Publication Half-Year Financial Report 2025
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Contact:
init
innovation in traffic systems SE
Kaeppelestraße 4-10
76131 Karlsruhe
Germany
PO Box 3380
76019 Karlsruhe
Ph.+49.721.6100.0
Fax +49.721.6100.399
[email protected]
www.initse.com
Disclaimer:
This quarterly statement and any information contained therein must not be brought into, or transferred to, the United States of America (USA), or distributed or transferred to US-American persons (including legal persons) and publications with general distribution in the USA. Any breach of this restriction may constitute a violation of the US-American securities law. Shares of init SE are not offered for sale in the USA. This quarterly statement is not an offer for the purchase or subscription of shares.
This quarterly statement contains future-related statements, which are based on current estimates of the company with regard to future developments. Such statements are inherently subject to risks and uncertainties, as they may be affected by factors that are neither controllable nor foreseeable by init, such as on the development of the future market environment and economic conditions, the behaviour of other market participants and government measures. If one of these uncontrollable or unforeseeable factors occurs, respectively changes or the assumptions on which these statements are based prove inaccurate, actual developments and results could differ materially from the results cited explicitly or contained implicitly in these statements.