MiX Telematics Reports First Quarter Fiscal 2022 U.S. GAAP Financial Results

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First Quarter Highlights:

  • Subscription revenues of $31.1 million
  • Net subscriber additions of 8,800, bringing the total base to over 753,000 subscribers
  • Net income of $3.5 million
  • Adjusted EBITDA of $8.3 million, at a 23.8% margin
  • Net cash provided by operating activities of $4.7 million
  • Cash and cash equivalents of $46.1 million at quarter end

MIDRAND, South Africa & BOCA RATON, Fla.–(BUSINESS WIRE)–MiX Telematics Limited (“MiX Telematics”) (NYSE: MIXT, JSE: MIX), a leading global Software-as-a-Service (“SaaS”) provider of connected fleet management solutions, today announced financial results, in accordance with accounting principles generally accepted in the United States (“GAAP”), for the first quarter of fiscal 2022, which ended June 30, 2021.

“MiX’s first quarter performance showed improved financial and operational results, highlighted by sequential expansion of our subscriber base and our return to year over year revenue growth. Our success in signing several large and important wins across different verticals and geographies is an exciting early indication of the growth opportunities we see across our business,” said Stefan Joselowitz, Chief Executive Officer of MiX Telematics.

Joselowitz continued, “Our return to growth was an important near-term milestone and reflects in part the benefits of the investments in our customer relationships, products and go-to-market efforts in recent quarters. We are increasingly confident in our ability to achieve our long-term targets as we execute on our strategy, and as global economic conditions normalize.”

Financial Results for the Three Months Ended June 30, 2021

Subscription Revenues: Subscription revenues were $31.1 million, an increase of 20.2% compared to $25.9 million for the first quarter of fiscal 2021. Subscription revenues represented 89.1% of total revenues during the first quarter of fiscal 2022. Subscription revenues increased by 3.5% on a constant currency basis, year over year. During the first quarter of fiscal 2022, the Company’s subscriber base grew by a net 8,800 subscribers.

The majority of our revenues and subscription revenues are derived from currencies other than the U.S. Dollar. Accordingly, the weakening of the U.S. Dollar against these currencies (in particular against the South African Rand) following recent currency volatility, has positively impacted our revenue and subscription revenues reported in U.S. Dollars. Compared to the first quarter of fiscal year 2021, the South African Rand strengthened by 21% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate averaged R14.14 in the first quarter of fiscal year 2022 compared to an average of R17.97 during the first quarter of fiscal year 2021. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the first quarter of fiscal 2022 led to a 16.7% increase in reported U.S. Dollar subscription revenues.

Total Revenues: Total revenues were $34.9 million, an increase of 26.9% compared to $27.5 million for the first quarter of fiscal 2021. Total revenues increased by 9.6% on a constant currency basis, year over year. Hardware and other revenues were $3.8 million, an increase of 134.8%, compared to $1.6 million for the first quarter of fiscal 2021.

The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the first quarter of fiscal 2022 led to a 17.3% increase in reported U.S. Dollar revenues.

Gross Margin: Gross profit was $22.9 million, compared to $18.9 million for the first quarter of fiscal 2021. Gross profit margin was 65.5%, compared to 68.8% for the first quarter of fiscal 2021.

Income From Operations: Income from operations was $4.3 million, compared to $2.7 million for the first quarter of fiscal 2021. Operating income margin was 12.4%, compared to 9.8% for the first quarter of fiscal 2021. Operating expenses of $18.5 million increased by $2.3 million, or 14.1%, compared to the first quarter of fiscal 2021.

Net Income and Earnings Per Share: Net income was $3.5 million, compared to net income of $2.4 million in the first quarter of fiscal 2021. During the first quarter of fiscal 2022, net income included a net foreign exchange loss of $0.1 million before tax, as well as a $0.8 million deferred tax credit on a U.S. Dollar intercompany loan between MiX Telematics Limited (“MiX Telematics”) and MiX Telematics Investments Proprietary Limited (“MiX Investments”), a wholly-owned subsidiary of the Company. During the first quarter of fiscal 2021, net income included a net foreign exchange loss of $0.1 million before tax and a $0.7 million deferred tax credit on a U.S. Dollar intercompany loan between MiX Telematics and MiX Investments.

Earnings per diluted ordinary share was 0.6 U.S. cents, compared to 0.4 U.S. cents in the first quarter of fiscal 2021. For the first quarter of fiscal 2022, the calculation was based on diluted weighted average ordinary shares in issue of 565.0 million compared to 558.7 million diluted weighted average ordinary shares in issue during the first quarter of fiscal 2021. On a ratio of 25 ordinary shares to one American Depositary Share (“ADS”), earnings per diluted ADS was 16 U.S. cents compared to 11 U.S. cents in the first quarter of fiscal 2021.

The Company’s effective tax rate was 14.4%, compared to 3.7% in the first quarter of fiscal 2021. Ignoring the impact of net foreign exchange losses net of tax, the tax rate used in determining non-GAAP net income below was 31.8% compared to 30.2% in the first quarter of fiscal 2021.

Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, was $8.3 million, compared to $7.5 million for the first quarter of fiscal 2021. Adjusted EBITDA margin, a non-GAAP measure, for the first quarter of fiscal 2022 was 23.8%, compared to 27.1% for the first quarter of fiscal 2021.

Non-GAAP Net Income and Non-GAAP Net Income Per Share: Non-GAAP net income was $2.9 million, compared to $1.8 million for the first quarter of fiscal 2021. Non-GAAP net income per diluted ordinary share was 0.5 U.S. cents, compared to 0.3 U.S. cents in the first quarter of fiscal 2021. At a ratio of 25 ordinary shares to one ADS, the non-GAAP net income per diluted ADS was 13 U.S. cents compared to 8 U.S. cents in the first quarter of fiscal 2021.

Cash and Cash Equivalents and Cash Flow: At June 30, 2021, the Company had $46.1 million of cash and cash equivalents, compared to $45.5 million at March 31, 2021.

Net cash provided by operating activities for the first quarter of fiscal 2022 was $4.7 million compared to $9.4 million for the first quarter of fiscal 2021. The Company invested $4.4 million in capital expenditures (including investments in in-vehicle devices of $2.9 million), leading to free cash flow, a non-GAAP measure, of $0.4 million in the quarter. The Company generated free cash flow of $7.2 million for the first quarter of fiscal 2021 when the Company invested $2.1 million in capital expenditures (including investments in in-vehicle devices of $1.0 million).

Net cash utilized by financing activities amounted to $0.3 million for the first quarter of fiscal 2022, compared to $1.1 million utilized during the first quarter of fiscal 2021. The cash utilized by financing activities during the first quarter of fiscal 2022 mainly consisted of dividends paid of $1.5 million, offset by facilities utilized of $1.3 million. The cash utilized in financing activities during the first quarter of fiscal 2021 mainly consisted of dividends paid of $1.2 million.

During the quarter, the South African Rand strengthened against the U.S. Dollar from R14.92 at March 31, 2021 to R14.32 at June 30, 2021 and as a result, cash increased by $0.7 million due to foreign exchange gains.

Quarterly Dividend

The most recent dividend payment of 4 South African cents (0.3 U.S. cents) per ordinary share and 1 South African Rand (7 U.S. cents) per ADS was paid on June 21, 2021, to shareholders on record on June 18, 2021. A dividend of 4 South African cents per ordinary share and 1 South African Rand per ADS will be paid on September 2, 2021 to shareholders on record as of the close of business on August 20, 2021.

The details with respect to the dividends declared for holders of our ADSs are as follows:

Ex dividend on New York Stock Exchange (NYSE)

   

Thursday, August 19, 2021

Record date

   

Friday, August 20, 2021

Approximate date of currency conversion

   

Monday, August 23, 2021

Approximate dividend payment date

   

Thursday, September 2, 2021

Share Repurchases

No shares were repurchased during the three months ended June 30, 2021.

Business Outlook

Due to the uncertainty surrounding the level of business disruption as a result of the spread of COVID-19, the Company has suspended its practice of issuing financial guidance and as a consequence no guidance has been issued for the full 2022 fiscal year and the second quarter of fiscal 2022.

Conference Call Information

MiX Telematics management will host a conference call and audio webcast at 8:00 a.m. (Eastern Daylight Time) and 2:00 p.m. (South African Time) on Thursday, July 29, 2021 to discuss the Company’s financial results and current business outlook:

  • The live webcast of the call will be available at the “Investor Information” page of the Company’s website, http://investor.mixtelematics.com.
  • To access the call, dial +1-855-327-6837 (within the United States) or 0 800 981 705 (within South Africa) or +1-631-891-4304 (outside of the United States). The conference ID is 10015626.
  • A replay of this conference call will be available for a limited time at +1-844-512-2921 (within the United States) or +1-412-317-6671 (within South Africa or outside of the United States). The replay conference ID is 10015626.
  • A replay of the webcast will also be available for a limited time at http://investor.mixtelematics.com.

About MiX Telematics Limited

MiX Telematics is a leading global provider of connected fleet and mobile asset solutions delivered as SaaS to three-quarters of a million subscribers in over 120 countries. The Company’s products and services provide enterprise fleets, small fleets and consumers with solutions for efficiency, safety, compliance and security. MiX Telematics was founded in 1996 and has offices in South Africa, the United Kingdom, the United States, Uganda, Brazil, Australia, Romania, Thailand and the United Arab Emirates as well as a network of more than 130 fleet partners worldwide. MiX Telematics shares are publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and MiX Telematics American Depositary Shares are listed on the New York Stock Exchange (NYSE: MIXT). For more information, visit www.mixtelematics.com.

Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding our position to execute on our growth strategy, and our ability to expand our leadership position. These forward-looking statements include, but are not limited to, Company’s beliefs, plans, goals, objectives, expectations, assumptions, estimates, intentions, future performance, other statements that are not historical facts and statements identified by words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in, or suggested by, these forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved.

Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of known and unknown risks and uncertainties, some of which are beyond our control including, without limitation:

  • the severity and duration of the COVID-19 pandemic, the pandemic’s economic impact on the geographical locations of our regional service organizations and central service organization, the impact of the pandemic on our customers’ ability to meet their financial obligations, our ability to implement cost containment and business recovery strategies during the pandemic, local and foreign government regulations implemented to combat the pandemic and any future developments on the pandemic;
  • our ability to attract, sell to and retain customers;
  • our ability to improve our growth strategies successfully, including our ability to increase sales to existing customers;
  • our ability to adapt to rapid technological change in our industry;
  • competition from industry consolidation;
  • loss of key personnel or our failure to attract, train and retain other highly qualified personnel;
  • our ability to integrate any businesses we acquire;
  • the introduction of new solutions and international expansion;
  • our dependence on key suppliers and vendors to manufacture our hardware;
  • our dependence on our network of dealers and distributors to sell our solutions;
  • businesses may not continue to adopt fleet management solutions;
  • our future business and system development, results of operations and financial condition;
  • expected changes in our profitability and certain cost or expense items as a percentage of our revenue;
  • changes in the practices of insurance companies;
  • the impact of laws and regulations relating to the Internet and data privacy;
  • our ability to protect our intellectual property and proprietary technologies and address any infringement claims;
  • our ability to defend ourselves from litigation or administrative proceedings relating to labor, regulatory, tax or similar issues;
  • significant disruption in service on, or security breaches of, our websites or computer systems;
  • our dependence on third-party technology;
  • fluctuations in the value of the South African Rand;
  • economic, social, political, labor and other conditions and developments in South Africa and globally;
  • our ability to issue securities and access the capital markets in the future; and
  • other risks set forth in our filings with the U.S. Securities Exchange Commission.

We assume no obligation to update any forward-looking statements contained in this press release and expressly disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include references to Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per share, free cash flow and constant currency, which are non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses these measures, please see Annexure A titled “Non-GAAP Financial Measures”. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP is provided in Annexure A.

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

 

 

March 31,

2021

 

June 30,

2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

45,489

 

 

$

46,127

 

Restricted cash

 

854

 

 

1,054

 

Accounts receivables, net

 

19,265

 

 

20,381

 

Inventory, net

 

3,109

 

 

3,541

 

Prepaid expenses and other current assets

 

8,509

 

 

9,826

 

Total current assets

 

77,226

 

 

80,929

 

Property and equipment, net

 

23,463

 

 

24,531

 

Goodwill

 

43,938

 

 

45,284

 

Intangible assets, net

 

18,303

 

 

19,422

 

Deferred tax assets

 

3,782

 

 

4,607

 

Other assets

 

4,434

 

 

4,556

 

Total assets

 

$

171,146

 

 

$

179,329

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Short-term debt

 

$

1,674

 

 

$

2,998

 

Accounts payables

 

6,560

 

 

5,111

 

Accrued expenses and other liabilities

 

17,330

 

 

19,169

 

Deferred revenue

 

5,788

 

 

5,749

 

Income taxes payable

 

1,345

 

 

2,940

 

Total current liabilities

 

32,697

 

 

35,967

 

Deferred tax liabilities

 

9,187

 

 

8,610

 

Long-term accrued expenses and other liabilities

 

5,863

 

 

5,857

 

Total liabilities

 

47,747

 

 

50,434

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

MiX Telematics Limited stockholders’ equity

 

 

 

 

Preference shares: 100 million shares authorized but not issued

 

 

 

 

Ordinary shares: 605.6 million and 606.1 million no-par value shares issued and outstanding as of March 31, 2021 and June 30, 2021, respectively

 

67,401

 

 

67,401

 

Less treasury stock at cost: 53.8 million shares as of March 31, 2021 and June 30, 2021

 

(17,315)

 

 

(17,315)

 

Retained earnings

 

76,710

 

 

78,679

 

Accumulated other comprehensive income

 

1,924

 

 

5,087

 

Additional paid-in capital

 

(5,326)

 

 

(4,962)

 

Total MiX Telematics Limited stockholders’ equity

 

123,394

 

 

128,890

 

Non-controlling interest

 

5

 

 

5

 

Total stockholders’ equity

 

123,399

 

 

128,895

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

171,146

 

 

$

179,329

 

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

Three Months Ended June 30,

 

2020

 

2021

Revenue

 

 

 

Subscription

$

25,875

 

 

$

31,090

 

Hardware and other

1,622

 

 

3,808

 

Total revenue

27,497

 

 

34,898

 

Cost of revenue

 

 

 

Subscription

7,349

 

 

9,127

 

Hardware and other

1,229

 

 

2,916

 

Total cost of revenue

8,578

 

 

12,043

 

Gross profit

18,919

 

 

22,855

 

Operating expenses

 

 

 

Sales and marketing

2,746

 

 

3,512

 

Administration and other

13,491

 

 

15,007

 

Total operating expenses

16,237

 

 

18,519

 

Income from operations

2,682

 

 

4,336

 

Other expense

98

 

 

135

 

Net interest expense

70

 

 

78

 

Income before income tax expense

2,514

 

 

4,123

 

Income tax expense

92

 

 

592

 

Net income

2,422

 

 

3,531

 

Less: Net income attributable to non-controlling interest

 

 

 

Net income attributable to MiX Telematics Limited

$

2,422

 

 

$

3,531

 

 

 

 

 

Net income per ordinary share:

 

 

 

Basic

$

0.004

 

 

$

0.01

 

Diluted

$

0.004

 

 

$

0.01

 

 

 

 

 

Net income per American Depositary Share:

 

 

 

Basic

$

0.11

 

 

$

0.16

 

Diluted

$

0.11

 

 

$

0.16

 

 

 

 

 

Ordinary shares:

 

 

 

Weighted average

547,124

 

 

551,860

 

Diluted weighted average

558,702

 

 

565,020

 

 

 

 

 

American Depositary Shares:

 

 

 

Weighted average

21,885

 

 

22,074

 

Diluted weighted average

22,348

 

 

22,601

 

 

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

2020

 

2021

Cash flows from operating activities:

 

 

 

 

Cash generated from operations

 

$

9,189

 

 

$

5,419

 

Interest received

 

112

 

 

123

 

Interest paid

(83)

 

 

(81)

 

Income tax received/(paid)

 

139

 

 

(735)

 

Net cash provided by operating activities

 

9,357

 

 

4,726

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Acquisition of property and equipment – in-vehicle devices

 

(992)

 

 

(2,946)

 

Acquisition of property and equipment – other

 

(84)

 

 

(64)

 

Proceeds from the sale of property and equipment

 

 

 

12

 

Acquisition of intangible assets

 

(1,044)

 

 

(1,342)

 

Net cash used in investing activities

 

(2,120)

 

 

(4,340)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Cash paid on dividends to MiX Telematics Limited stockholders

 

(1,216)

 

 

(1,549)

 

Movement in short-term debt

 

147

 

 

1,290

 

Net cash used in financing activities

 

(1,069)

 

 

(259)

 

 

 

 

 

 

Net increase in cash and cash equivalents, and restricted cash

 

6,168

 

 

127

 

Cash and cash equivalents, and restricted cash at beginning of the period

 

18,652

 

 

46,343

 

Effect of exchange rate changes on cash and cash equivalents, and restricted cash

 

450

 

 

711

 

Cash and cash equivalents, and restricted cash at end of the period

 

$

25,270

 

 

$

47,181

 

Segment Information

Our operating segments are based on the geographical location of our Regional Sales Offices (“RSOs”) and also include our Central Services Organization (“CSO”). CSO is our central services organization that wholesales our products and services to our RSOs who, in turn, interface with our end-customers, distributors and dealers. CSO is also responsible for the development of our hardware and software platforms and provides common marketing, product management, technical and distribution support to each of our other operating segments.

Each RSO’s results reflect the external revenue earned, as well as its performance before the remaining CSO and corporate costs allocations. Segment performance is measured and evaluated by the chief operating decision maker (“CODM”) using Segment Adjusted EBITDA, which is a measure that uses net income excluding net interest income/(expense), foreign exchange gains or losses, operating lease expenses, stock-based compensation costs, restructuring costs, and gains or losses on the disposal or impairments of long-lived assets and subsidiaries. Product development costs are capitalized and amortized and this amortization is excluded from Segment Adjusted EBITDA.

The segment information provided to the CODM is as follows (in thousands and unaudited):

 

Three Months Ended June 30, 2020

 

Subscription Revenue

 

Hardware and Other Revenue

 

Total Revenue

 

Segment Adjusted EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

13,923

 

 

$

601

 

 

$

14,524

 

 

$

7,245

 

Europe

2,850

 

 

134

 

 

2,984

 

 

1,302

 

Americas

4,175

 

 

155

 

 

4,330

 

 

1,408

 

Middle East and Australasia

3,881

 

 

709

 

 

4,590

 

 

1,918

 

Brazil

1,031

 

 

23

 

 

1,054

 

 

410

 

Total Regional Sales Offices

25,860

 

 

1,622

 

 

27,482

 

 

12,283

 

Central Services Organization

15

 

 

 

 

15

 

 

(1,863)

 

Total Segment Results

$

25,875

 

 

$

1,622

 

 

$

27,497

 

 

$

10,420

 

 

Three Months Ended June 30, 2021

 

Subscription Revenue

 

Hardware and Other Revenue

 

Total Revenue

 

Segment Adjusted EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

18,711

 

 

$

1,215

 

 

$

19,926

 

 

$

8,904

 

Europe

3,373

 

 

1,261

 

 

4,634

 

 

1,751

 

Americas

3,623

 

 

195

 

 

3,818

 

 

539

 

Middle East and Australasia

4,349

 

 

1,105

 

 

5,454

 

 

2,543

 

Brazil

1,020

 

 

32

 

 

1,052

 

 

317

 

Total Regional Sales Offices

31,076

 

 

3,808

 

 

34,884

 

 

14,054

 

Central Services Organization

14

 

 

 

 

14

 

 

(2,587)

 

Total Segment Results

$

31,090

 

 

$

3,808

 

 

$

34,898

 

 

$

11,467

 

The following table (unaudited and shown in thousands) reconciles total Segment Adjusted EBITDA to income before tax expense for the periods shown:

 

Three Months Ended June 30,

 

2020

 

2021

Segment Adjusted EBITDA

$

10,420

 

 

$

11,467

 

Corporate and consolidation entries

(2,330)

 

 

(2,376)

 

Operating lease costs (1)

(392)

 

 

(407)

 

Product development costs (2)

(243)

 

 

(363)

 

Depreciation and amortization

(3,628)

 

 

(3,679)

 

Stock-based compensation costs

(293)

 

 

(364)

 

Increase in restructuring costs (3)

(844)

 

 

(1)

 

Net loss on sale of property and equipment

(1)

 

 

 

Net foreign exchange losses

(105)

 

 

(76)

 

Net interest expense

(70)

 

 

(78)

 

Income before tax expense

$

2,514

 

 

$

4,123

 

 

 

 

 

Description of reconciling items:

  1. For the purposes of calculating Segment Adjusted EBITDA, operating lease expenses are excluded from the Segment Adjusted EBITDA. Therefore, in order to reconcile Segment Adjusted EBITDA to net income before taxes, the total lease expense in respect of operating leases needs to be deducted.
  2. For segment reporting purposes, product development costs, which do not meet the capitalization requirements under ASC 730 Research and Development or under ASC 985 Software, are capitalized and amortized. The amortization is excluded from Segment Adjusted EBITDA. In order to reconcile Segment Adjusted EBITDA to net income before taxes, product development costs capitalized for segment reporting purposes need to be deducted.
  3. For the first quarter of fiscal 2021, $0.6 million and $0.2 million of the restructuring costs related to the Central Service Organization (CSO) and the Africa reporting segments, respectively.

Contacts

Brian Denyeau

ICR for MiX Telematics

[email protected]
+1-855-564-9835

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