MiX Telematics Announces Financial Results for First Quarter of Fiscal 2014
References in this announcement to "R" are to South African rand and references to "U.S. dollars" and "$" are to United States dollars. Unless otherwise stated MiX Telematics has translated U.S. dollar amounts from South African rand at the exchange rate of R9.9655 per $1.00, which was the R/$ exchange rate reported by the South African Reserve Bank as of June 30, 2013.
Total subscription revenue of R194.2 million ($19.5 million), grew 22% year over year
Total vehicles under subscription increased by 29% year over year, bringing the total to over 376,900 subscribers at June 30, 2013
Total revenue of R298.4 million ($29.9 million), grew 6% year over year
Adjusted EBITDA of R65.2 million ($6.5 million), representing a 22% Adjusted EBITDA margin
In August 2013, the Company raised R652.5 million ($65.5 million) in proceeds before expenses through the initial public offering of ADSs on the NYSE
BOCA RATON, Fla. & MIDRAND, South Africa--(BUSINESS WIRE)-- MiX Telematics (NYSE: MIXT, JSE: MIX), a leading global provider of fleet and mobile asset management solutions delivered as Software-as-a-Service (SaaS), today announced financial results for its first quarter of fiscal 2014, which ended June 30, 2013.
"We are pleased with our first quarter fiscal 2014 results, which were highlighted by an acceleration in our subscription revenue growth to 22% as well as a 29% increase in vehicles under subscription," said Stefan Joselowitz, Chief Executive Officer of MiX Telematics. "Our momentum is being driven by strong customer demand in a substantial and highly underpenetrated market. In addition, we believe MiX Telematics is highly differentiated by our leadership position in both fleet and passenger vehicle management, proven history of innovation and powerful global distribution model. The proceeds from our U.S. initial public offering will enable MiX Telematics to better capitalize on these strengths as we now have greater resources to execute our growth strategy and further expand our global market leadership position."
Revenue: Total revenue was R298.4 million ($29.9 million), an increase of 6.4% compared to R280.4 million ($28.1 million) for the first quarter of fiscal 2013. Subscription revenue was R194.2 million ($19.5 million), an increase of 21.8% compared with R159.4 million ($16.0 million) for the first quarter of fiscal 2013. Hardware and other revenue was R104.2 million ($10.5 million), a decrease of 13.8% compared to R121.0 million ($12.1 million) for the first quarter of fiscal 2013 due primarily to the expected elimination of connection incentive revenue associated with our old cellular data package which ended in July 2012.
Gross Profit: Gross profit was R198.2 million ($19.9 million), an increase compared to R167.9 million ($16.9 million) for the first quarter of fiscal 2013. Gross profit margin was 66.4%, an increase from 59.9% for the first quarter of fiscal 2013 due primarily to the increase in subscription revenue and the elimination of higher costs relating to the cellular connection incentive plan mentioned above.
Operating Profit: Operating profit was R36.1 million ($3.6 million), representing an operating margin of 12.1% and an increase compared to R34.8 million ($3.5 million) for the first quarter of fiscal 2013 when the operating margin was 12.4%.
Profit for the period: Profit for the period was R26.3 million, an increase compared to R24.6 million in the first quarter of fiscal 2013. Earnings per diluted ordinary share, was 4 South African cents, consistent with the first quarter of fiscal 2013.
On a US dollar basis, and at a ratio of 25 ordinary shares to one ADS, profit for the period was $2.6 million, or 10 US cents per diluted ADS.
Adjusted EBITDA: Adjusted EBITDA, a non-IFRS measure, was R65.2 million ($6.5 million), representing an increase in Adjusted EBITDA compared to R60.6 million ($6.1 million) for the first quarter of fiscal 2013. Operating profit was R36.1 million ($3.6 million), representing an operating margin of 12.1% and an increase compared to R34.8 million ($3.5 million) for the first quarter of fiscal 2013 when the operating margin was 12.4%. Adjusted EBITDA is defined as profit for the period before income taxes, net interest income/(expense), depreciation of property, plant and equipment including capitalized customer in-vehicle-devices, amortization of intangible assets including capitalized in-house development costs, share-based compensation costs, transaction costs arising from the acquisition of a business, restructuring costs, profits/(losses) on the disposal or impairments of assets, certain non-recurring initial public offering costs, and unrealized foreign exchange profits/(losses).
A reconciliation of Adjusted EBITDA and Adjusted EBITDA margin for the three months ended June 30, 2013 and 2012 and twelve months ended March 31, 2013 are provided in the financial tables that accompany this release.
Statement of Financial Position and Cash Flow: At June 30, 2013, MiX Telematics had R150.3 million ($15.1 million) of cash and cash equivalents, an increase from R147.7 million ($14.8 million) at March 31, 2013.
MiX Telematics generated R26.7 million ($2.7 million) in cash from operating activities for the three months ended June 30, 2013 and invested R31.1 million ($3.1 million) in capital expenditures during the quarter, leading to negative free cash flow of R4.4 million ($441,423) for the first quarter of fiscal 2014 compared with negative free cash flow of R2.1 million ($207,215) for the first quarter of fiscal 2013. Free cash flow is determined as cash generated from operating activities less capital expenditure per investing activities.
The Company's cash and cash equivalents balance at the end of the first quarter fiscal of 2014 does not include the net proceeds raised from its initial public offering in the U.S., which was completed after the end of the quarter.
Other First Quarter of Fiscal 2014 and Recent Highlights:
At June 30, 2013, MiX Telematics had over 376,900 vehicles under subscription, an increase of 29% compared to 291,500 at June 30, 2012.
Launched MiX Vision, a highly configurable video recording system that integrates with MiX Telematics' flagship fleet management solution.
Opened a new office in São Paulo, Brazil. The establishment of the new office signifies the Company's focus on increasing its market penetration and growing its market share in Brazil as well as the greater Latin America region.
Successful U.S. initial public offering of American Depositary Shares (ADSs), raising R652.5 million (US $65.5 million) for the Company in net proceeds before expenses through the sale of 4,400,000 ADSs, each representing 25 ordinary shares of the Company. Selling shareholders sold an additional 2,840,512 ADSs, resulting in a total raise prior to underwriting discount of R1,154.5 million (US $115.8 million).
MiX Telematics has translated U.S. dollar amounts in this Business Outlook paragraph from South African rand at the exchange rate of R10.3348 per $1.00, which was the R/$ exchange rate reported by the South African Reserve Bank as of August 31, 2013.
Based on information as of today, September 10, 2013, the Company is issuing the following financial guidance for the full 2014 fiscal year:
Revenue - R1,269 million to R1,299 million ($122.8 million to $125.7 million), which would represent revenue growth of 8% to 11% compared to fiscal year 2013.
Subscription revenue - R814 million to R829 million ($78.8 million to $80.2 million), which would represent subscription revenue growth of 19% to 21% compared to fiscal year 2013.
Adjusted EBITDA - R270 million to R280 million, ($26.1 million to $27.1 million).
Earnings per diluted ordinary share of 15 to 16 South African cents based on 770 million diluted ordinary shares in issue, and based on a effective tax rate of 28 to 31%. At a ratio of 25 ordinary shares to one ADS, this equates to earnings per diluted ADS of 36 to 39 U.S. cents.
For the second quarter offiscal 2014 the Company expects subscription revenue to be in the range of R198 million to R203 million ($19.2 million to $19.6 million), which would represent subscription revenue growth of 20% to 23% compared to the second quarter of fiscal year 2013.
The key assumptions used in deriving the forecast are as follows:
Growth in subscription revenue and vehicles under subscription are based on expected growth rates related to market conditions and takes into account growth rates achieved previously.
Costs have been increased to take into account the Company's strategy of investing in sales and marketing and development and also include costs necessary to operate as a US listed company.
The forecast is the responsibility of the board of directors and has not been reviewed or reported on by the Company's auditors.
The information disclosed in this "Business Outlook" paragraph complies with the disclosure requirements in terms of paragraph 8.38 of the JSE Listings Requirements which deals with profit forecasts.
Conference Call Information
MiX Telematics' management will host a conference call today, September 10, 2013, at 8:00 a.m. (Eastern Time)/ 2:00 p.m. (South African time) to discuss the Company's financial results and current business outlook. A live webcast of the call will be available at the "Investor Relations" page of the Company's website, http://mixtelematics.com/investor-relations. To access the call, dial 888-224-1164 from within the U.S. or +1913-312-0710 from South Africa and other countries. A replay of this conference call will be available for a limited time at 877-870-5176 (within the U.S.) or 858-384-5517 (from South Africa and other countries). The replay conference ID is 6251125. A replay of the webcast will also be available for a limited time at http://mixtelematics.com/investor-relations.
About MiX Telematics Limited
MiX Telematics is a leading global provider of fleet and mobile asset management solutions delivered as SaaS to customers in 112 countries. The Company's products and services provide enterprise fleets, small fleets and consumers with solutions for safety, efficiency and security. MiX Telematics was founded in 1996 and has offices in South Africa, the United Kingdom, the United States, Uganda, Brazil, Australia 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 (NYS: MIXT) . For more information visit www.mixtelematics.com.
This press release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning our financial guidance for the second quarter of fiscal 2014 and the full year of fiscal 2014, 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, plans, objectives, expectations and intentions and other statements contained in this press release 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 those 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 risks and factors that are beyond our control including, without limitation, the Company's ability to attract, sell to and retain customers; the Company's anticipated growth strategies, including its ability to increase sales to existing customers, the introduction of new solutions and international expansion; the Company's ability to adapt to rapid technological change in its industry; competition from industry consolidation; loss of key personnel or the Company's failure to attract, train and retain other highly qualified personnel; the Company's ability to integrate any businesses it acquires; the Company's dependence on its network of dealers and distributors to sell its solutions; the Company's dependence on key suppliers and vendors to manufacture its hardware; businesses may not continue to adopt fleet management solutions; the Company's future business development, results of operations and financial condition; expected changes in the Company's profitability and certain cost or expense items as a percentage of its revenue; changes in the practices of insurance companies; the impact of laws and regulations relating to the Internet and data privacy; the Company's ability to protect its intellectual property and proprietary technologies and address any infringement claims; significant disruption in service on, or security breaches of, the Company's websites or computer systems; the Company's dependence on third-party technology; fluctuations in the value of the South African rand; economic, social, political, labour and other conditions and developments in South Africa and globally; the Company's ability to issue securities and access the capital markets in the future; and other risks set forth under the caption "Risk Factors" in the Company's final prospectus related to its initial public offering filed pursuant to Rule 424b under the Securities Act of 1933, as amended, with the Securities and Exchange Commission (the "SEC") on August 12, 2013, as updated by the Company's filings that it makes with the SEC. The Company assumes no obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.
Non - IFRS financial measures
To provide investors with additional information regarding the Company's financial results, it has disclosed within this press release Adjusted EBITDA, which is a non-IFRS financial measure. Adjusted EBITDA is defined as the profit for the period before income taxes, net interest income/(expense), depreciation of property, plant and equipment including capitalized customer in-vehicle-devices, amortization of intangible assets including capitalized in-house development costs, share-based compensation costs, transaction costs arising from the acquisition of a business, restructuring costs, profits/(losses) on the disposal or impairments of assets, certain non-recurring initial public offering costs and unrealized foreign exchange profits/(losses). The Company presents in the financial tables that accompany this release a reconciliation of Adjusted EBITDA to profit for the period and Adjusted EBITDA margin to profit for the period margin, the most directly comparable financial measures presented in accordance with IFRS.
The Company has included Adjusted EBITDA and Adjusted EBITDA margin in this press release because they are key measures that the Company's management and Board of Directors use to understand and evaluate its core operating performance and trends; to prepare and approve its annual budget; and to develop short-and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA and Adjusted EBITDA margin can provide a useful measure for period-to-period comparisons of the Company's core business. Accordingly, the Company believes that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating its operating results.
The Company's use of Adjusted EBITDA (and measures such as Adjusted EBITDA margin that are derived from it) has limitations as an analytical tool, and investors should not consider this performance measure in isolation from, or as a substitute for, analysis of the Company's results as reported under IFRS. Some of these limitations are:
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs;
Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to the Company;
Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest payments on the Company's debt or any losses on the extinguishment of its debt;
Adjusted EBITDA does not include unrealized foreign currency transaction gains and losses;
Adjusted EBITDA does not include certain non-recurring initial public offering costs; and
other companies, including companies in the Company's industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Because of these limitations, investors should consider Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including operating profit, profit for the period, profit for the period margin and the Company's other results.
The statements of financial position, income statements and statements of cash flows included in this announcement have been prepared in accordance with IFRS accounting policies.
The accounting policies are consistent in all material respects with those applied in the preparation of the consolidated financial statements for the year ended 31 March 2013, except where the Company has adopted new or revised accounting standards none of which had a material impact on the Company's results.
MiX TELEMATICS LIMITED
CONSOLIDATED INCOME STATEMENTS
Cost of sales
Other (expenses)/income - net
Sales and marketing
Administration and other charges
Profit before taxation
Profit for the period
Shareholders of the parent
Earnings per share
Earnings per American Depositary Receipt
Weighted average ordinary shares outstanding:
Weighted average American Depositary Receipt
* Amount less than R1000/$1000
# Amount less than R/$.01
South African rand amounts have been translated to US Dollars at the exchange rate of R9.9655 per $1.00, which was the R/$ exchange rate reported by the South African Reserve Bank as of June 30, 2013.
MiX TELEMATICS LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
June 30, 2013
March 31, 2013
June 30, 2013
March 31, 2013
Property, plant and equipment
Finance lease receivable
Deferred tax assets