Traffic Technologies raising $10m to reduce debt and fund future expansion

The extra funding will enable Traffic Technologies to reduce its debt and have greater working capital for acquisitions.

Provider of end-to-end traffic management, IoT and Smart City solutions Traffic Technologies LTD (ASX:TTI) has announced a capital raise of more than $10m through a rights issue in a bid to reduce debt and execute its growth and acquisition strategy.

Funds for debt, working capital, acquisitions

TTI will use the capital raise of up to $10.13m to reduce debt and interest costs. Debt will be reduced by more than 60% and interest costs by 70% or $1.6m.

The company will also execute its acquisition strategy to leverage TTI’s comprehensive traffic solutions to increase revenue and profits through continued expansion and commercialisation of its SaaS platform.

TTI is positioned to be a big winner from the push towards Internet of Things (IoT), big data and digitisation in traffic technology.

The company’s smart city platform harnesses the power of big data and IoT, enabling road authorities, councils, and power companies to use big data to reduce energy and maintenance costs while fully utilising their infrastructure assets in real time.

Notably, TTI believes its platform is the only solution in Australia that can address the combined requirements of all three key customer groups.

Strong demand for big data solutions

In 2020, the global big data industry was worth about US$138.9 billion, and is expected to grow to about US$229.4 billion by 2025.

TTI managing director Con Liosatos said demand for smart city big data solutions was particularly strong in Australia.

“Here in Australia, governments at every level are catching up to the idea of using big data to improve their communities and facilitate strategic planning while also trying to be more energy-efficient – creating huge demand for smart city big data solutions,” Liosatos said.

“We are excited about our future and believe we are in an ideal position to capitalise on significant industry tailwinds as federal, state and local governments look to cut down on emissions and make roads safer while reducing infrastructure and maintenance costs.”

Solid FY21 positions TTI for future growth

TTI recorded a solid FY21 performance with improvements across all key metrics. The company significantly grew revenues, expanded recurring revenue, earnings and profits, and secured numerous long-term contracts.

The company’s EBIT increased 120% and revenue grew 18% to exceed $52 million, including a 27% increase in software sales.

TTI’s FY22 outlook includes a strong order book with its smart city platform being rolled out successfully across the east coast and South Australia.

The company has several solid long-term traffic infrastructure contracts for the next 3-5 years with 40% of revenue marked as recurring.

In August, the company landed a deal for a minimum of three years with a two-year option with major NSW network operator Ausgrid. TTI will supply LED streetlights and “associated hardware” as part of Ausgrid’s broader maintenance program.

Join MD of Traffic Technologies Con Liosatos for an investor briefing where he will discuss the company’s progress and plans for growth. Click here to register.

This article was developed in collaboration with Traffic Technologies, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.