Record turnover in the third quarter
· Net sales increased 20.2 percent to SEK 71.6 (59.6) million (21.9 percent in local currencies)
· EBIT increased to SEK 23.3 (15.3) million
· The EBIT margin reached 32.5 (25.7) percent (33.2 percent in local currencies)
· Profit after tax was SEK 18.3 (12.0) million
· Earnings per share were SEK 0.99 (0.66)
· Cash flow from operational activities was SEK 27.5 (14.4) million
January - September
· Net sales increased 5.4 percent to SEK 170.4 (161.7) million (7.5 percent in local currencies)
· EBIT reached SEK 37.1 (38.2) million
· The EBIT margin reached 21.8 (23.6) percent (22.7 percent in local currencies)
· Profit after tax was SEK 28.2 (29.2) million
· Earnings per share were SEK 1.53 (1.60)
· Cash flow from operational activities was SEK 36.0 (37.1) million
· Cash and cash equivalents and short-term investments amounted to SEK 107.1 (84.9) million at the end of the period
Comments from the CEO
MSAB gave its best third quarter performance ever with a record turnover and a good profit margin. Business deals with long lead times have now become concrete agreements.
Sales during the third quarter grew 20.2 percent and amounted to SEK 71.6 (59.6) million. EBIT increased to SEK 23.3 (15.3) million, corresponding to an EBIT margin of 32.5 (25.7) percent. Sales grew 5.4 percent during the first nine months of the year reaching SEK 170.4 (161.7) million. EBIT decreased to SEK 37.1 (38.2) million, corresponding to an EBIT margin of 21.8 (23.6) percent. The lower EBIT level for the year’s first nine months is attributable to continuing initiatives for growth and thus increased personnel costs. Adjusted for currency effects, sales growth was 7.5 (23.3) percent for the period. This third quarter has demonstrated the strength of our business model. A higher turnover led to increased profits with a stronger EBIT margin.
The third quarter is the most important for our operations in the USA as all federal authorities, i.e. our customers, close their annual accounts on the last day of September. North America became our largest region during the quarter and our operations in North America continue to expand as demand is strong and customer confidence in our product offering is growing.
With a subsidiary in Singapore in place, we now have companies in a total of seven countries outside of Sweden, and our own personnel in an additional four countries. We have chosen to establish offices locally as many of our customers prefer to do business locally. Our success is based largely on having personnel who know the local market and who have the capacity to quickly build trust with our customers. We will continue to expand internationally as potential increases.
Smart phones are becoming increasingly advanced and complex. This means that the judicial system is being challenged in ways that it never has been previously. We have successively expanded our product offering from extraction to analysis of large quantities of data. Our system solutions currently handle the information flow from a significant number of digital units. Through MSAB Ecosystem, we now address the very core of today’s and tomorrow’s criminal investigations. MSAB Ecosystem, which was launched at the end of last year, has received a very positive response from our customers. It is a product offering that caters to the entire police organisation and streamlines police work processes relating to digital evidence and investigative material. The more complete product offering also serves to take us higher in our customers’ value chain thereby generating increased revenue per customer.
The Swedish police and its organisation have been criticised in the media lately. One issue that is often raised is that the police do not have the tools they need, and that they have problems getting mobile phones and computers analysed in time. We are convinced that our products could help the police in their daily work, increasing their efficiency and helping them solve more crimes.
MSAB’s third quarter demonstrated strong growth. However, it is important to remember that the Company’s rate of growth from quarter to quarter will continue to vary due to changes in our customers’ purchasing patterns. Going forward, we feel confident about the future, as the long-term growth trend is strong. The need to extract and analyse the content of seized mobile phones continues to grow. We see how an increasing number of authorities around the world are starting to review their entire digital strategy, and that is exactly what MSAB has been working and planning for.
Stockholm, October 2016
Chief Executive Officer