Tracsis confident after year of transformation

Transport technology specialist Tracsis reported full-year revenue of £81m on Wednesday, a slight 1% decline, while adjusted EBITDA fell 20% to £12.8m, resulting in an EBITDA margin of 15.7%.

The AIM-traded firm said adjusted diluted earnings per share decreased 35% in the 12 months ended 31 July, to 25.1p.

Statutory operating profit dropped 87% to £1m, due to £3m in exceptional costs related to the group’s transformation strategy.

However, cash generation remained strong, with a balance of £19.8m, up from £15.3m in 2023.

Tracsis also increased its total dividend per share by 9% to 2.4p, continuing its progressive dividend policy.

Recurring and repeat revenue in the rail technology and services division grew 10% to £25.5m, highlighting the strength of its subscription-based model.

New contracts were secured across smart ticketing, safety, and operations solutions, and Tracsis successfully deployed its train dispatch product with a US commuter rail provider, expanding its footprint in the North American market.

Operationally, the group said it underwent significant transformation, streamlining its product portfolio to focus on higher-margin activities and creating a scalable platform for accelerated growth.

The changes had doubled its software opportunity pipeline across the UK and North America, with several large multi-year contracts in advanced stages of procurement.

While UK customer activity showed variability in the first half, the group said it anticipated long-term alignment with the new UK government’s rail strategy.

Challenges such as Network Rail funding pressures and upcoming National Insurance and minimum wage increases were expected to impact EBITDA in the 2025 financial year by around £0.5m.

Looking ahead, Tracsis said it was confident in its ability to achieve sustainable growth through its transformed operating model, an expanding pipeline of opportunities, and disciplined evaluation of merger and acquisition prospects.

The group said it was well-positioned to capitalise on increasing demand for rail technology solutions both domestically and internationally.

“Despite our financial results for 2024 being impacted by the timing of the UK General Election and lower yard automation conversion in North America, we have made significant progress over the past 12 months in transforming our operating model and laying the foundations for our future growth,” said chief executive officer Chris Barnes.

“We have delivered further growth in rail technology licence usage and annual recurring revenues, and have a large pipeline of new software opportunities in both the UK and North America, where long-term market drivers remain strong.

“The UK rail industry remains in a period of transition as the new government prepares to provide further detail on its strategic vision for the railway.”

Barnes said Tracsis' products and services were “well placed” to support that, adding that the company was “looking forward” to the legislation relating to Great British Railways, expected in the coming months.

“Some short-term headwinds remain across the UK rail supply chain related to control period 7 funding restrictions from Network Rail, which is impacting our remote condition monitoring hardware activity.

“The changes to National Insurance and minimum wage legislation announced in the October Budget will bring additional cost into our business.

“We are working hard to mitigate these and are continuing to focus on converting our large opportunity pipeline and diversifying our client base both in the UK and internationally.”

Chris Barnes said the company was well positioned to deliver sustainable growth in the 2025 financial year and beyond.

“We have invested in upskilling our commercial, technical and delivery capabilities, and post year-end have delivered the successful go-live of a new train dispatch product in North America as well as the latest deployment of our TRACS Enterprise solution in the UK.

“We remain focused on delivering long-term value through the continued pursuit of both organic and acquisitive growth, supported by a strong balance sheet and healthy cash generation, and look to the future with confidence.”

At 1043 GMT, shares in Tracsis were down 7.05% at 618.15p.

Reporting by Josh White for Sharecast.com.