Second Quarter Highlights:
- Subscription revenues of $27.6 million, representing 89.3%
of revenue
- Net subscriber base of over 767,000 subscribers
- Net income of $3.5 million
- Adjusted EBITDA of $8.9 million, or a 28.7% Adjusted EBITDA
margin
- Net cash provided by operating activities of $11.4 million
leading to positive free cash flow of $8.8 million
- Cash and cash equivalents of $33.8 million at quarter
end
MiX Telematics Limited ("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, in accordance with accounting
principles generally accepted in the United States (“GAAP”), for
the second quarter, which ended September 30, 2020.
“MiX Telematics’ second quarter results were highlighted by
profitability and cash generation that was significantly ahead of
expectations. We experienced modest signs of improvement
within some customer verticals and fleet segments due to increases
in usage activity from the COVID-related shutdowns seen in the
spring,” said Stefan Joselowitz, Chief Executive Officer of MiX
Telematics.
Joselowitz continued, “Our sharp focus on customer success and
the tangible ROI our comprehensive telematics platform can provide
to fleet operators has reinforced MiX’s strategic value in the
market. We are confident this will generate a return to meaningful
subscription revenue growth once economic conditions
normalize.”
Financial Results for the Three Months Ended September 30,
2020
Subscription Revenues: Subscription revenues were $27.6
million, a decrease of 13.9% compared to $32.1 million for the
second quarter of fiscal 2020. Subscription revenues represented
89.3% of total revenues during the second quarter of fiscal 2021.
Subscription revenues decreased by 7.0% on a constant currency
basis, year over year. The decline in constant currency
subscription revenue was primarily due to the contraction in the
Company’s subscriber base as a result of economic conditions
attributable to the COVID-19 pandemic. During the second quarter of
fiscal 2021, the Company’s subscriber base contracted by a net
20,000 subscribers.
The majority of our revenues and subscription revenues are
derived from currencies other than the U.S. Dollar. Accordingly,
the strengthening of the U.S. Dollar against these currencies (in
particular against the South African Rand) following currency
volatility arising from the economic disruption caused by COVID-19,
has negatively impacted our revenue and subscription revenues
reported in U.S. Dollars. Compared to the second quarter of fiscal
year 2020, the South African Rand weakened by 15% against the U.S.
Dollar. The Rand/U.S. Dollar exchange rate averaged R16.91 in the
second quarter of fiscal year 2021 compared to an average of R14.68
during the second quarter of fiscal year 2020. The impact of
translating foreign currencies to U.S. Dollars at the average
exchange rates during the second quarter of fiscal 2021 led to a
6.9% reduction in reported U.S. Dollar subscription revenues.
Total Revenues: Total revenues were $30.9 million, a
decrease of 15.6% compared to $36.7 million for the second quarter
of fiscal 2020. Total revenues decreased by 9.1% on a constant
currency basis, year over year. Hardware and other revenues were
$3.3 million, a decrease of 27.1%, compared to $4.6 million for the
second quarter of fiscal 2020 as a result of a global economic
slowdown following the disruption caused by the COVID-19
pandemic.
The impact of translating foreign currencies to U.S. Dollars at
the average exchange rates during the second quarter of fiscal 2021
led to a 6.5% reduction in reported U.S. Dollar revenues.
Gross Margin: Gross profit was $20.7 million, compared to
$24.2 million for the second quarter of fiscal 2020. Gross profit
margin was 66.7%, compared to 66.1% for the second quarter of
fiscal 2020.
Income From Operations: Income from operations was $4.6
million, compared to $6.5 million for the second quarter of fiscal
2020. Operating income margin was 14.8%, compared to 17.6% for the
second quarter of fiscal 2020. Operating expenses of $16.1 million
decreased by $1.7 million, or 9.5%, compared to the second quarter
of fiscal 2020.
Net Income and Earnings Per Share: Net income was $3.5
million, compared to net income of $3.3 million in the second
quarter of fiscal 2020. Net income included a net foreign exchange
loss of $0.1 million before tax, as well as a $0.3 million deferred
tax credit on a U.S. Dollar intercompany loan between MiX
Telematics and MiX Telematics Investments Proprietary Limited ("MiX
Investments"), a wholly-owned subsidiary of the Company. During the
second quarter of fiscal 2020, net income included a net foreign
exchange gain of $0.04 million and a $1.3 million deferred tax
charge on a U.S. Dollar intercompany loan between MiX Telematics
and MiX Investments.
Earnings per diluted ordinary share was 0.6 U.S. cents,
consistent with 0.6 U.S. cents in the second quarter of fiscal
2020. For the second quarter of fiscal 2021, the calculation was
based on diluted weighted average ordinary shares in issue of 559.0
million compared to 570.0 million diluted weighted average ordinary
shares in issue during the second quarter of fiscal 2020. On a
ratio of 25 ordinary shares to one American Depositary Share
(“ADS”), earnings per diluted ADS was 15 U.S. cents consistent with
15 U.S. cents in the second quarter of fiscal 2020.
The Company’s effective tax rate was 22.0%, compared to 47.8% in
the second quarter of fiscal 2020. Ignoring the impact of net
foreign exchange gains and losses net of tax, the tax rate which
was used in determining non-GAAP net income below, was 28.4%
compared to 29.6% in the second quarter of fiscal 2020.
Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, was
$8.9 million, compared to $11.0 million for the second quarter of
fiscal 2020. Adjusted EBITDA margin, a non-GAAP measure, for the
second quarter of fiscal 2021 was 28.7%, compared to 29.9% for the
second quarter of fiscal 2020.
Non-GAAP Net Income and Net Income Per Share: Non-GAAP
net income was $3.2 million, compared to $4.5 million for the
second quarter of fiscal 2020. Non-GAAP net income per diluted
ordinary share was 0.6 U.S. cents, compared to 0.8 U.S. cents in
the second quarter of fiscal 2020. At a ratio of 25 ordinary shares
to one ADS, the non-GAAP net income per diluted ADS was 14 U.S.
cents compared to 20 U.S. cents in the second quarter of fiscal
2020.
Cash and Cash Equivalents and Cash Flow: At September 30,
2020, the Company had $33.8 million of cash and cash equivalents,
compared to $18.0 million at March 31, 2020.
Net cash provided by operating activities for the three months
ended September 30, 2020 was $11.4 million compared to $8.8 million
for the three months ended September 30, 2019. The Company invested
$2.6 million in capital expenditures (including investments in
in-vehicle devices of $1.6 million), leading to free cash flow, a
non-GAAP measure, of $8.8 million in the quarter. The Company
generated free cash flow of $2.4 million for the second quarter of
fiscal 2020 when the Company invested $6.4 million in capital
expenditures (including investments in in-vehicle devices of $4.8
million).
Net cash provided by financing activities amounted to $0.1
million for the second quarter of fiscal 2021, compared to $8.6
million utilized during the second quarter of fiscal 2020. The cash
provided by financing activities during the second quarter of
fiscal 2021 consisted of proceeds of $0.8 million from the issue of
ordinary shares in relation to the exercise of stock options and
$0.6 million from facilities utilized, offset by dividends paid of
$1.3 million. The cash utilized in financing activities during the
second quarter of fiscal 2020 consisted of $8.2 million for the
repurchase of ordinary shares, dividends paid of $1.5 million
offset by facilities utilized of $1.1 million.
Quarterly Dividend
The most recent dividend payment of 4 South African cents (0.2
U.S. cents) per ordinary share and 1 South African Rand (6 U.S.
cents) per ADS was paid on August 24, 2020 to shareholders on
record on August 21, 2020. A dividend of 4 South African cents per
ordinary share and 1 South African Rand per ADS will be paid on
December 8, 2020 to shareholders on record as of the close of
business on November 20, 2020.
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, November 19, 2020
Record date
Friday, November 20, 2020
Approximate date of currency
conversion
Monday, November 23, 2020
Approximate dividend payment date
Tuesday, December 8, 2020
Share Repurchases
No shares were repurchased during the three months ended
September 30, 2020.
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 2021 fiscal
year.
Conference Call Information
MiX Telematics management will also 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, October 29, 2020 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 +1-877-451-6152 (within the United
States) or 0 800 983 831 (within South Africa) or +1-201-389-0879
(outside of the United States). The conference ID is 13712007.
- 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 13712007.
- 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 fleet and mobile
asset management solutions delivered as SaaS to customers managing
over 767,000 assets in approximately 120 countries. The Company’s
products and services provide enterprise fleets, small fleets and
consumers with solutions for safety, efficiency, risk 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:
- our ability to attract, sell to and retain customers;
- 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 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,
2020
September 30,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
17,953
$
33,836
Restricted cash
699
798
Accounts receivables, net
24,100
18,876
Inventory, net
3,271
3,742
Prepaid expenses and other current
assets
7,375
6,802
Total current assets
53,398
64,054
Property and equipment, net
30,019
27,167
Goodwill
37,923
39,603
Intangible assets, net
15,007
16,059
Deferred tax assets
3,108
3,497
Other assets
4,200
4,070
Total assets
$
143,655
$
154,450
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Short-term debt
$
2,367
$
3,185
Accounts payables
5,251
4,863
Accrued expenses and other liabilities
14,839
18,835
Deferred revenue
5,077
4,521
Total current liabilities
27,534
31,404
Deferred tax liabilities
11,436
10,540
Long-term accrued expenses and other
liabilities
5,660
5,053
Total liabilities
44,630
46,997
Stockholders’ equity:
MiX Telematics Limited stockholders’
equity
Preferred stock: 100 million shares
authorized but not issued
—
—
Common stock: 600.9 million and 604.9
million no-par value shares issued and outstanding as of March 31,
2020 and September 30, 2020, respectively
66,522
67,347
Less treasury stock at cost: 54 million
shares as of March 31, 2020 and September 30, 2020
(17,315
)
(17,315
)
Retained earnings
67,482
70,846
Accumulated other comprehensive loss
(11,070
)
(7,425
)
Additional paid-in capital
(6,599
)
(6,005
)
Total MiX Telematics Limited stockholders’
equity
99,020
107,448
Non-controlling interest
5
5
Total stockholders’ equity
99,025
107,453
Total liabilities and stockholders’
equity
$
143,655
$
154,450
MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In thousands, except per share
data)
(Unaudited)
Three Months Ended September
30,
Six Months Ended September
30,
2019
2020
2019
2020
Revenue
Subscription
$
32,099
$
27,623
$
63,737
$
53,498
Hardware and other
4,562
3,325
9,207
4,947
Total revenue
36,661
30,948
72,944
58,445
Cost of revenue
Subscriptions
9,417
7,676
18,712
15,025
Hardware and other
3,028
2,621
5,961
3,850
Total cost of revenue
12,445
10,297
24,673
18,875
Gross profit
24,216
20,651
48,271
39,570
Operating expenses
Sales and marketing
3,148
2,447
6,729
5,193
Administration and other
14,616
13,631
29,402
27,122
Total operating expenses
17,764
16,078
36,131
32,315
Income from operations
6,452
4,573
12,140
7,255
Other (expense)/income
(52
)
(77
)
323
(175
)
Net interest income/(expense)
4
(70
)
77
(140
)
Income before income tax
expense
6,404
4,426
12,540
6,940
Income tax expense
3,058
974
4,198
1,066
Net income
3,346
3,452
8,342
5,874
Less: Net income attributable to
non-controlling interest
—
—
—
—
Net income attributable to MiX
Telematics Limited
$
3,346
$
3,452
$
8,342
$
5,874
Net income per ordinary share:
Basic
$
0.01
$
0.01
$
0.01
$
0.01
Diluted
$
0.01
$
0.01
$
0.01
$
0.01
Net income per American Depositary
Share:
Basic
$
0.15
$
0.16
$
0.37
$
0.27
Diluted
$
0.15
$
0.15
$
0.36
$
0.26
Ordinary shares:
Weighted average
554,781
548,008
558,401
547,569
Diluted weighted average
570,011
558,951
574,606
558,829
American Depositary Shares:
Weighted average
22,191
21,920
22,336
21,903
Diluted weighted average
22,800
22,358
22,984
22,353
MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended September
30,
2019
2020
Cash flows from operating
activities:
Cash generated from operations
$
17,218
$
22,295
Interest received
419
206
Interest paid
(156
)
(153
)
Income tax paid
(2,915
)
(1,590
)
Net cash provided by operating
activities
14,566
20,758
Cash flows from investing
activities:
Acquisition of property and equipment –
in-vehicle devices
(8,422
)
(2,590
)
Acquisition of property and equipment –
other
(516
)
(160
)
Proceeds from the sale of property and
equipment
1,327
—
Acquisition of intangible assets
(2,641
)
(1,972
)
Loans to external parties
(350
)
—
Net cash used in investing
activities
(10,602
)
(4,722
)
Cash flows from financing
activities:
Proceeds from issuance of ordinary shares
in relation to stock options exercised
—
825
Cash paid for ordinary shares
repurchased
(8,222
)
—
Cash paid on dividends to MiX Telematics
Limited stockholders
(3,084
)
(2,506
)
Movement in short-term debt
539
740
Net cash used in financing
activities
(10,767
)
(941
)
Net (decrease)/increase in cash and cash
equivalents, and restricted cash
(6,803
)
15,095
Cash and cash equivalents, and restricted
cash at beginning of the period
27,838
18,652
Effect of exchange rate changes on cash
and cash equivalents, and restricted cash
(294
)
887
Cash and cash equivalents, and
restricted cash at end of the period
$
20,741
$
34,634
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 which uses net income, determined under
International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board, as a starting point.
Prior to the publication of the financial results for the year
ended March 31, 2020, the Company published results under IFRS
only, which is the reason for the CODM using a performance measure
based on IFRS.
The segment information provided to the CODM is as follows (in
thousands and unaudited):
Three Months Ended September
30, 2019
Subscription
Revenue
Hardware and
Other Revenue
Total Revenue
Segment Adjusted
EBITDA
Regional Sales Offices
Africa
$
17,868
$
1,438
$
19,306
$
8,585
Europe
2,862
760
3,622
1,367
Americas
5,675
454
6,129
3,006
Middle East and Australasia
4,317
1,623
5,940
2,814
Brazil
1,350
286
1,636
671
Total Regional Sales Offices
32,072
4,561
36,633
16,443
Central Services Organization
27
1
28
(2,530
)
Total Segment Results
$
32,099
$
4,562
$
36,661
$
13,913
Three Months Ended September
30, 2020
Subscription
Revenue
Hardware and
Other Revenue
Total Revenue
Segment Adjusted
EBITDA
Regional Sales Offices
Africa
$
14,855
$
1,635
$
16,490
$
7,249
Europe
2,919
474
3,393
1,536
Americas
4,786
240
5,026
2,170
Middle East and Australasia
4,118
948
5,066
2,405
Brazil
928
28
956
363
Total Regional Sales Offices
27,606
3,325
30,931
13,723
Central Services Organization
17
—
17
(1,674
)
Total Segment Results
$
27,623
$
3,325
$
30,948
$
12,049
Six Months Ended September 30,
2019
Subscription
Revenue
Hardware and
Other Revenue
Total Revenue
Segment Adjusted
EBITDA
Regional Sales Offices
Africa
$
35,554
$
2,819
$
38,373
$
16,942
Europe
5,649
1,317
6,966
2,438
Americas
11,337
1,340
12,677
5,364
Middle East and Australasia
8,578
3,246
11,824
5,568
Brazil
2,567
447
3,014
1,294
Total Regional Sales Offices
63,685
9,169
72,854
31,606
Central Services Organization
52
38
90
(5,175
)
Total Segment Results
$
63,737
$
9,207
$
72,944
$
26,431
Six Months Ended September 30,
2020
Subscription
Revenue
Hardware and
Other Revenue
Total Revenue
Segment Adjusted
EBITDA
Regional Sales Offices
Africa
$
28,778
$
2,236
$
31,014
$
14,494
Europe
5,769
608
6,377
2,838
Americas
8,961
395
9,356
3,578
Middle East and Australasia
7,999
1,657
9,656
4,323
Brazil
1,959
51
2,010
773
Total Regional Sales Offices
53,466
4,947
58,413
26,006
Central Services Organization
32
—
32
(3,537
)
Total Segment Results
$
53,498
$
4,947
$
58,445
$
22,469
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 September
30,
Six Months Ended September
30,
2019
2020
2019
2020
Segment Adjusted EBITDA
$
13,913
$
12,049
$
26,431
$
22,469
Corporate and consolidation entries
(2,221
)
(2,507
)
(3,977
)
(4,837
)
Operating lease costs (1)
(419
)
(399
)
(727
)
(791
)
Product development costs (2)
(299
)
(271
)
(690
)
(514
)
Depreciation and amortization
(4,401
)
(3,836
)
(8,653
)
(7,464
)
Impairment of long-lived assets
—
(1
)
—
(1
)
Stock-based compensation costs
(178
)
(301
)
(289
)
(594
)
Decrease/(increase) in restructuring costs
(3)
1
(153
)
1
(997
)
Net profit/(loss) on sale of property and
equipment
40
(7
)
356
(8
)
Net foreign exchange (losses)/gains
(36
)
(78
)
11
(183
)
Net interest income/(expense)
4
(70
)
77
(140
)
Income before tax expense
$
6,404
$
4,426
$
12,540
$
6,940
Description of reconciling items:
- For the purposes of calculating Segment Adjusted EBITDA,
operating leases have been capitalized, except for leases with a
term of no more than 12 months or leases of low value assets. Where
operating leases are capitalized for segment purposes, the
amortization of the right-of-use asset and the interest on the
operating lease liability are excluded from the Segment Adjusted
EBITDA. Therefore, in order to reconcile Segment Adjusted EBITDA to
income before taxes, the total lease expense in respect of
operating leases needs to be deducted.
- 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.
- For the three months ended September 30, 2020, $0.1 million of
the restructuring costs related to the North America reporting
segment. For the six months ended September 30, 2020, $0.6 million,
$0.2 million and $0.1 million of the restructuring costs related to
the CSO, Africa and North America reporting segments,
respectively.
Annexure A: Non-GAAP Financial
Measures
We use certain measures to assess the financial performance of
the business. Certain of these measures are termed “non-GAAP
measures” because they exclude amounts that are included in, or
include amounts that are excluded from, the most directly
comparable measure calculated and presented in accordance with
GAAP, or are calculated using financial measures that are not
calculated in accordance with GAAP. These non-GAAP measures include
Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP net income and
non-GAAP net income per share, free cash flow and constant
currency.
An explanation of the relevance of each of the non-GAAP
measures, a reconciliation of the non-GAAP measures to the most
directly comparable measures calculated and presented in accordance
with GAAP and a discussion of their limitations is set out below.
We do not regard these non-GAAP measures as a substitute for, or
superior to, the equivalent measures calculated and presented in
accordance with GAAP or those calculated using financial measures
that are calculated in accordance with GAAP.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA margin are two of the profit
measures reviewed by the chief operating decision maker (“CODM”).
We define Adjusted EBITDA as the income before income taxes, net
interest income, net foreign exchange gains/(losses), depreciation
of property and equipment including capitalized customer in-vehicle
devices, amortization of intangible assets including capitalized
internal-use software development costs and intangible assets
identified as part of a business combination, stock-based
compensation costs, restructuring costs and profits/(losses) on the
disposal or impairments of assets or subsidiaries. We define
Adjusted EBITDA margin as Adjusted EBITDA divided by total
revenue.
We have 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.
A reconciliation of net income to Adjusted EBITDA, the most
directly comparable financial measure presented in accordance with
GAAP, for the periods shown is presented below (in thousands and
unaudited):
Three Months Ended September
30,
Six Months Ended September
30,
2019
2020
2019
2020
Net income
$
3,346
$
3,452
$
8,342
$
5,874
Plus: Income tax expense
3,058
974
4,198
1,066
(Less)/plus: Net interest
(income)/expense
(4
)
70
(77
)
140
Plus/(less): Foreign exchange losses/
(gains)
36
78
(11
)
183
Plus: Depreciation (1)
3,465
2,946
6,742
5,782
Plus: Amortization (2)
936
890
1,911
1,682
Plus: Impairment of long-lived assets
—
1
—
1
Plus: Stock-based compensation costs
178
301
289
594
(Less)/plus: Net (profit)/loss on sale of
property and equipment
(40
)
7
(356
)
8
(Less)/plus: Restructuring costs
(1
)
153
(1
)
997
Adjusted EBITDA
$
10,974
$
8,872
$
21,037
$
16,327
Adjusted EBITDA margin
29.9
%
28.7
%
28.8
%
27.9
%
- Includes depreciation of owned equipment (including in-vehicle
devices).
- Includes amortization of intangible assets (including
intangible assets identified as part of a business
combination).
Our use of Adjusted EBITDA and Adjusted EBITDA margin have
limitations as analytical tools, and you should not consider these
performance measures in isolation from, or as a substitute for,
analysis of our results as reported under GAAP.
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, our 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;
- other companies, including companies in our industry, may
calculate Adjusted EBITDA differently, which reduces its usefulness
as a comparative measure; and
- certain of the adjustments (such as restructuring costs,
impairment of long-lived assets and others) made in calculating
Adjusted EBITDA are those that management believes are not
representative of our underlying operations and, therefore, are
subjective in nature.
Because of these limitations, you should consider Adjusted
EBITDA and Adjusted EBITDA margin alongside other financial
performance measures, including income from operations, net income
and our other results.
Non-GAAP Net Income and Non-GAAP Net Income Per Share
Non-GAAP net income is defined as net income excluding net
foreign exchange gains/(losses) net of tax.
We have included non-GAAP net income per share in this press
release because it provides a useful measure for period-to-period
comparisons of our core business by excluding net foreign exchange
gains/(losses) net of tax and associated tax consequences from
earnings. Accordingly, we believe that non-GAAP net income per
share provides useful information to investors and others in
understanding and evaluating our operating results.
The following tables (in thousands, except per share data, and
unaudited) reconcile Net Income to Non-GAAP Net Income and Diluted
Net Income Per Ordinary Share or ADS to Non-GAAP Net Income Per
Ordinary Share or ADS for the periods shown:
Three Months Ended September
30,
Six Months Ended September
30,
2019
2020
2019
2020
Net income
$
3,346
$
3,452
$
8,342
$
5,874
Net foreign exchange losses/(gains)
36
78
(11
)
183
Income tax effect of net foreign exchange
gains/losses
1,150
(305
)
618
(1,003
)
Non-GAAP net income
$
4,532
$
3,225
$
8,949
$
5,054
Net income per ordinary share –
diluted
$
0.01
$
0.01
$
0.01
$
0.01
Effect of net foreign exchange
losses/(gains) to net income
#
#
#
#
Income tax effect of net foreign exchange
gains/losses
#
#
#
#
Non-GAAP net income per ordinary share –
diluted
$
0.01
$
0.01
$
0.02
$
0.01
Net income per ADS - diluted
$
0.15
$
0.15
$
0.36
$
0.26
Effect of net foreign exchange
losses/(gains) to net income
#
#
#
0.01
Income tax effect of net foreign exchange
gains/losses
0.05
(0.01
)
0.03
(0.04
)
Non-GAAP net income per ADS – diluted
$
0.20
$
0.14
$
0.39
$
0.23
# Amount less than $0.01
Free Cash Flow
Free cash flow is determined as net cash provided by operating
activities less capital expenditure for investing activities. We
believe that free cash flow provides useful information to
investors and others in understanding and evaluating the Company’s
cash flows as it provides detail of the amount of cash the Company
generates or utilizes after accounting for all capital expenditures
including investments in in-vehicle devices.
The following table (in thousands and unaudited) reconciles Net
Cash Provided by Operating Activities to Free Cash Flow for the
periods shown:
Six Months Ended September
30,
2019
2020
Net cash provided by operating
activities
$
14,566
$
20,758
Less: Capital expenditure payments
(11,579
)
(4,722
)
Free cash flow
$
2,987
$
16,036
Constant Currency
Constant currency information has been presented to illustrate
the impact of changes in currency rates on the Company’s results.
The constant currency information has been determined by adjusting
the current financial reporting period results to the prior period
average exchange rates, determined as the average of the monthly
exchange rates applicable to the period. The measurement has been
performed for each of the Company’s currencies, including the South
African Rand and British Pound. The constant currency growth
percentage has been calculated by utilizing the constant currency
results compared to the prior period results.
The constant currency information represents non-GAAP
information. We believe this provides a useful basis to measure the
performance of our business as it removes distortion from the
effects of foreign currency movements during the period.
Due to the significant portion of our customers who are invoiced
in non-U.S. Dollar denominated currencies, we also calculate our
subscription revenue growth rate on a constant currency basis,
thereby removing the effect of currency fluctuation on our results
of operations.
The following tables (in thousands, except year over year
change) provide the unaudited constant currency reconciliation to
the most directly comparable GAAP measure for the periods
shown:
Subscription Revenue:
Three Months Ended September
30,
Year Over Year
Change
2019
2020
Subscription revenue as reported
$
32,099
$
27,623
(13.9)
%
Conversion impact of U.S. Dollar/other
currencies
—
2,229
6.9
%
Subscription revenue on a constant
currency basis
$
32,099
$
29,852
(7.0)
%
Total Revenue:
Three Months Ended September
30,
Year Over Year
Change
2019
2020
Total revenue as reported
$
36,661
$
30,948
(15.6)
%
Conversion impact of U.S. Dollar/other
currencies
—
2,377
6.5
%
Total revenue on a constant currency
basis
$
36,661
$
33,325
(9.1)
%
Subscription Revenue:
Six Months Ended September
30,
Year Over Year
Change
2019
2020
Subscription revenue as reported
$
63,737
$
53,498
(16.1)
%
Conversion impact of U.S. Dollar/other
currencies
—
6,033
9.5
%
Subscription revenue on a constant
currency basis
$
63,737
$
59,531
(6.6)
%
Total Revenue:
Six Months Ended September
30,
Year Over Year
Change
2019
2020
Total revenue as reported
$
72,944
$
58,445
(19.9)
%
Conversion impact of U.S. Dollar/other
currencies
—
6,330
8.7
%
Total revenue on a constant currency
basis
$
72,944
$
64,775
(11.2)
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029005173/en/
Investor Contact Brian Denyeau ICR for MiX Telematics
ir@mixtelematics.com +1-855-564-9835
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