An explanation of non-IFRS measures used in this press release is set
out in the Non-IFRS financial measures section of this press
release. A reconciliation of these non-IFRS measures to the most
directly comparable IFRS measures is provided in the financial tables
that accompany this release.
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 an exchange
rate of R14.4789 per $1.00, which was the R/$ exchange rate reported by
Oanda Desktop trading platform as at March 31, 2019.
Highlights:
Fiscal year 2019:
- Subscription revenue of R1,693 million ($116.9 million), up 16.3%
year over year on a constant currency basis - Net subscriber additions of 73,600, compared to 54,800 additions in
fiscal 2018 - Adjusted EBITDA of R603 million ($41.6 million), up 36% year over
year and ahead of guidance - Adjusted EBITDA margin of 30.5%, up 470 basis points year over year
- Diluted adjusted earnings per share of 44 South African cents, or
75 U.S. cents per diluted ADS, up 63% year over year - Net cash from operating activities of R464 million ($32.0 million)
- Free cash flow of R177.4 million ($12.3 million), up from R14.9
million ($1.0 million) in fiscal 2018
Fourth quarter fiscal 2019:
- Subscription revenue of R444 million ($30.7 million), up 13.1% year
over year on a constant currency basis - Net subscriber additions of 14,400 bringing the total base to over
750,000, up 11% year over year - Adjusted EBITDA of R168 million ($11.6 million), up 29% year over
year - Adjusted EBITDA margin of 33.0%, up 430 basis points year over year
- Diluted adjusted earnings per share of 14 South African cents, or
24 U.S. cents per diluted ADS, up 40% year over year - Net cash from operating activities of R129 million ($8.9 million)
- Free cash flow of R80 million ($5.5 million), up from R58 million
($4.0 million) compared to the fourth quarter of fiscal 2018
MIDRAND, South Africa–(BUSINESS WIRE)–MiX Telematics Limited (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
fourth quarter and for its full fiscal year 2019, which ended March 31,
2019.
“Our fourth quarter marked a solid continuation of trends we have
experienced throughout the year. The strong performance was driven by
the continued growth in our premium fleet subscriptions globally,
improvements in ARPU and ongoing operating leverage in the business,”
said Stefan Joselowitz, Chief Executive Officer of MiX Telematics.
“During fiscal 2019, we upwardly revised our long-term adjusted EBITDA
margin target to 35% plus, as we expanded our margins by almost 500
basis points to 30.5% and generated record positive free cash flow of
R177 million. We remain confident in our ability to achieve our
long-term goals given our strong pipeline and ability to further enhance
margin accretion across the business.”
Financial performance for the three months ended March 31, 2019
Subscription revenue: Subscription revenue was R443.8 million
($30.7 million), an increase of 18.8% compared with R373.6 million
($25.8 million) for the fourth quarter of fiscal 2018. Subscription
revenue increased by 13.1% on a constant currency basis, year over year.
Subscription revenue benefited from an increase of 73,600 subscribers
from April 2018 to March 2019, representing an increase in the
subscriber base of 10.9% during that period. Subscription revenue also
benefited from higher average revenue per user.
Total revenue: Total revenue was R507.9 million ($35.1 million),
an increase of 12.0% compared to R453.5 million ($31.3 million) for the
fourth quarter of fiscal 2018. Total revenue increased by 6.3% on a
constant currency basis, year over year. Hardware and other revenue was
R64.1 million ($4.4 million), a decrease of 19.8%, compared to
R79.9 million ($5.5 million) for the fourth quarter of fiscal 2018.
Gross margin: Gross profit was R339.8 million ($23.5 million),
compared to R296.0 million ($20.4 million) for the fourth quarter of
fiscal 2018. Gross profit margin was 66.9%, compared to 65.3% for the
fourth quarter of fiscal 2018.
Operating margin: Operating profit was R97.8 million ($6.8
million), compared to R73.8 million ($5.1 million) for the fourth
quarter of fiscal 2018. Operating margin was 19.3%, compared to 16.3%
for the fourth quarter of fiscal 2018. In addition to the gross margin
improvement above, the margin expansion was also attributable to
improved economies of scale and ongoing cost management initiatives.
Operating expenses of R242.3 million ($16.7 million) increased by R18.6
million ($1.3 million), or 8.3%, compared to the fourth quarter of
fiscal 2018. Operating expenses represented 47.7% of revenue compared to
49.3% of revenue in the fourth quarter of fiscal 2018.
Adjusted EBITDA: Adjusted EBITDA, a non-IFRS measure, was R167.6
million ($11.6 million), compared to R130.2 million ($9.0 million) for
the fourth quarter of fiscal 2018. Adjusted EBITDA margin, a non-IFRS
measure, for the fourth quarter of fiscal 2019 was 33.0%, compared to
28.7% for the fourth quarter of fiscal 2018.
Profit for the period and earnings per share: Profit for the
period was R77.0 million ($5.3 million), compared to R64.3 million ($4.4
million) in the fourth quarter of fiscal 2018. Profit for the period
included a net foreign exchange loss of R0.1 million ($0.01 million)
before tax. During the fourth quarter of fiscal 2018, profit for the
period included a net foreign exchange loss of R1.2 million ($0.1
million).
Earnings per diluted ordinary share were 13 South African cents,
compared to 11 South African cents in the fourth quarter of fiscal 2018.
For the fourth quarter of fiscal 2019, the calculation was based on
diluted weighted average ordinary shares in issue of 580.1 million
compared to 580.8 million diluted weighted average ordinary shares in
issue during the fourth quarter of fiscal 2018.
The Group’s effective tax rate was 22.1%, compared to 13.7% in the
fourth quarter of fiscal 2018. Ignoring the impact of net foreign
exchange gains and losses net of tax and share based compensation costs
related to Performance Share Awards net of tax, the tax rate which was
used in determining adjusted earnings below, was 20.4% compared to 26.9%
in the fourth quarter of fiscal 2018.
During the fourth quarter of fiscal 2019, the Group recognized deferred
tax assets of R3.6 million ($0.3 million) in respect of a portion of the
available tax losses in the Americas, Brazil and Europe segments. These
tax losses were incurred in prior years. An ongoing improvement in these
regions’ results has resulted in these deferred tax assets being
recognized in respect of the future utilization of the historical tax
loss considered probable at period end. The recognition of these
deferred tax assets reduced the Group’s effective tax rate in the
quarter by 3.6%.
On a U.S. Dollar basis, using the March 31, 2019 exchange rate of
R14.4789 per U.S. Dollar, and a ratio of 25 ordinary shares to one
American Depositary Share (“ADS”), profit for the period was $5.3
million, or 23 U.S. cents per diluted ADS compared to $4.4 million, or
19 U.S. cents per diluted ADS in the fourth quarter of fiscal 2018.
Adjusted earnings for the period and adjusted earnings per share:
Adjusted earnings for the period, a non-IFRS measure, was R81.0 million
($5.6 million) compared to R55.3 million ($3.8 million) for the fourth
quarter of fiscal 2018. Adjusted earnings per diluted ordinary share,
also a non-IFRS measure, were 14 South African cents, compared to 10
South African cents in the fourth quarter of fiscal 2018.
On a U.S. Dollar basis, using the March 31, 2019 exchange rate of
R14.4789 per U.S. Dollar, and a ratio of 25 ordinary shares to one ADS,
the adjusted profit for the period was $5.6 million, or 24 U.S. cents
per diluted ADS, compared to $3.8 million, or 16 U.S. cents per diluted
ADS in the fourth quarter of fiscal 2018.
Statement of Financial Position and Cash Flow: At March 31, 2019,
the Group had R353.2 million ($24.4 million) of net cash and cash
equivalents, compared to R290.5 million ($20.1 million) at March 31,
2018.
The Group generated R129.4 million ($8.9 million) in net cash from
operating activities for the three months ended March 31, 2019 and
invested R49.6 million ($3.4 million) in capital expenditures during the
quarter (including investments in in-vehicle devices of R24.6 million or
$1.7 million), leading to free cash flow, a non-IFRS measure, of R79.8
million ($5.5 million) compared to free cash flow of R57.9 million ($4.0
million) for the fourth quarter of fiscal 2018. The Group utilized R18.0
million ($1.2 million) in financing activities, compared to R8.9 million
($0.6 million) utilized during the fourth quarter of fiscal 2018. The
cash utilized in financing activities during the fourth quarter of
fiscal 2019 mainly consisted of dividends paid of R16.8 million ($1.2
million) and the payment of lease liabilities of R1.1 million ($0.1
million). The cash utilized in financing activities during the fourth
quarter of fiscal 2018 mainly consisted of dividends paid of R14.1
million ($1.0 million) offset by proceeds from the issuance of shares in
respect of employee share options of R5.2 million ($0.4 million).
Financial performance for the fiscal year ended March 31, 2019
Subscription revenue: Subscription revenue increased to R1,693.2
million ($116.9 million), an increase of 18.0% compared to R1,434.6
million ($99.1 million) for fiscal 2018. On a constant currency basis,
subscription revenue increased by 16.3%. Subscription revenue benefited
from an increase of 73,600 subscribers from April 2018 to March 2019,
representing an increase in subscribers of 10.9% during fiscal 2019.
Subscription revenue also benefited from a higher average revenue per
user.
Total revenue: Total revenue for fiscal 2019 was R1,975.9 million
($136.5 million), an increase of 15.4% compared to R1,712.5 million
($118.3 million) for fiscal 2018. On a constant currency basis, total
revenue increased by 13.5%. Hardware and other revenue was R282.6
million ($19.5 million), compared to R277.9 million ($19.2 million) for
fiscal 2018.
Gross margin: Gross profit was R1,320.0 million ($91.2 million),
an increase of 17.3% compared to R1,125.5 million ($77.7 million) for
fiscal 2018. Gross profit margin was 66.8%, compared to 65.7% for fiscal
2018.
Operating margin: Operating profit was R338.9 million ($23.4
million), compared to R215.0 million ($14.8 million) in fiscal 2018. The
operating margin was 17.2%, compared to the 12.6% in fiscal 2018. The
margin expansion was attributable primarily to the revenue growth
leveraging the Group’s fixed overheads, and ongoing cost management
initiatives. Operating expenses represented 49.7% of revenue compared to
53.4% of revenue in fiscal 2018.
Adjusted EBITDA: Adjusted EBITDA was R602.8 million ($41.6
million), compared to R441.9 million ($30.5 million) for fiscal 2018.
The Adjusted EBITDA margin for fiscal 2019 was 30.5%, compared to 25.8%
in fiscal 2018.
Profit for the year and earnings per share: Profit for fiscal
2019 was R202.3 million ($14.0 million), compared to R181.2 million
($12.5 million) in fiscal 2018. Profit for the year included a net
foreign exchange gain of R0.4 million ($0.03 million) before tax. During
fiscal 2018, a net foreign exchange loss of R5.1 million ($0.4 million)
was recognized.
Earnings per diluted ordinary share were 35 South African cents,
compared to 32 South African cents in fiscal 2018. For fiscal 2019, the
calculation was based on diluted weighted average ordinary shares in
issue of 583.6 million, compared to 574.0 million diluted weighted
average ordinary shares in issue during fiscal 2018.
The Group’s effective tax rate was 40.5%, compared to 15.7% for fiscal
2018. Ignoring the impact of net foreign exchange gains and losses net
of tax and share based compensation costs related to Performance Share
Awards net of tax, the effective tax rate, which was used in calculating
adjusted earnings, was 26.3% compared to 28.7% in fiscal 2018.
During the fourth quarter of fiscal 2019 the Group recognized deferred
tax assets of R3.6 million ($0.3 million) in respect of a portion of the
available tax losses in the Americas, Brazil and Europe segments. These
tax losses were incurred in prior years. An ongoing improvement in these
regions’ results has resulted in these deferred tax assets being
recognized in respect of the future utilization of the historical tax
loss considered probable at period end. The recognition of these
deferred tax assets reduced the Group’s effective tax rate for the year
by 1.1%.
Adjusted earnings for the year and adjusted earnings per share: Adjusted
earnings for fiscal 2019, a non-IFRS measure, was R254.4 million ($17.6
million), compared to R156.8 million ($10.8 million) in fiscal 2018.
Adjusted earnings per diluted ordinary share, also a non-IFRS measure,
were 44 South African cents, compared to 27 South African cents for
fiscal 2018.
On a U.S. Dollar basis, using the March 31, 2019 exchange rate of
R14.4789 per U.S. Dollar, and a ratio of 25 ordinary shares to one ADS,
adjusted earnings were $17.6 million, or 75 U.S. cents per diluted ADS,
compared to $10.8 million, or 47 U.S. cents per diluted ADS in fiscal
2018.
Statement of Financial Position and Cash Flow: The Group
generated R463.8 million ($32.0 million) in net cash from operating
activities for fiscal 2019 and invested R286.5 million ($19.8 million)
in capital expenditures during the year (including investments in
in-vehicle devices of R191.6 million or $13.2 million), leading to free
cash flow of R177.4 million ($12.3 million), compared to free cash flow
of R14.9 million ($1.0 million) for fiscal 2018. Capital expenditures in
fiscal 2018 were R338.3 million ($23.4 million) and included in-vehicle
devices of R229.8 million ($15.9 million).
The Group utilized R138.7 million ($9.6 million) in financing
activities, compared to R62.5 million ($4.3 million) utilized during
fiscal 2018. The cash utilized in financing activities in fiscal 2019
mainly consisted of the repurchase of 9.2 million ordinary shares, which
resulted in a cash outflow of R73.5 million ($5.1 million), dividends
paid of R67.5 million ($4.7 million) and the repayment of lease
liabilities of R11.4 million ($0.8 million), offset by proceeds from
issuance of shares in respect of employee share options of R13.8 million
($1.0 million). The cash utilized in financing activities in fiscal 2018
included the repurchase of 5.0 million ordinary shares, which resulted
in a cash outflow of R18.7 million ($1.3 million) and dividends paid of
R53.2 million ($3.7 million).
Segment commentary for the fiscal year ended March 31, 2019
The segment results below are presented on an integral margin basis. In
respect of revenue, this method of measurement entails reviewing the
segmental results based on external revenue only. In respect of Adjusted
EBITDA (the non-IFRS profit measure identified by the Group), the margin
generated by our Central Services Organization (“CSO”), net of any
unrealized inter-company profit, is allocated to the geographic region
where the external revenue is recorded by our Regional Sales Offices
(“RSOs”).
CSO continues as a central services organization that wholesales our
products and services to our RSOs who, in turn, interface with our
end-customers and distributors. 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. CSO’s operating expenses are not
allocated to each RSO.
Each RSO’s results reflect the external revenue earned, as well as the
Adjusted EBITDA earned (or loss incurred) by each operating segment
before the CSO and corporate cost allocations.
| Segment | Subscription Revenue Fiscal 2019 R’000 |
Total Revenue Fiscal 2019 R’000 |
Adjusted EBITDA Fiscal 2019 R’000 |
Adjusted EBITDA
% change on prior year |
Adjusted EBITDA Margin Fiscal 2019 |
|||||
| Africa | 969,377 | 1,044,406 | 484,497 | 9.9% | 46.4% | |||||
| Subscription revenue increased by 11.1% in the segment as a result of a 10.4% increase in subscribers since April 1, 2018. Total revenue increased by 9.1%. The region reported an Adjusted EBITDA margin of 46.4% (up from the 46.0% Adjusted EBITDA margin reported in fiscal 2018). |
||||||||||
| Americas | 292,577 | 328,963 | 152,575 | 92.8% | 46.4% | |||||
| Subscription revenue growth on a constant currency basis was 41.9%. Subscribers increased by 15.7% since April 1, 2018. Subscription revenue continued to receive assistance from the market’s ongoing preference for bundled deals across new and existing customers. Total revenue improved by 36.6% on a constant currency basis as hardware and other revenues increased by 11.2%. The region reported an Adjusted EBITDA margin of 46.4% (up from the 34.8% Adjusted EBITDA margin reported in fiscal 2018). Americas is currently the fastest growing geographical region both at a subscription revenue and Adjusted EBITDA level. |
||||||||||
| Middle East and Australasia | 226,020 | 323,494 | 145,887 | 36.6% | 45.1% | |||||
| Subscription revenue increased by 9.6% on a constant currency basis. Subscribers increased by 8.1% since April 1, 2018. Total revenue in constant currency improved by 13.0% as hardware revenues were higher than in fiscal 2018. The region reported an Adjusted EBITDA margin of 45.1% (up from the 38.3% Adjusted EBITDA margin reported in fiscal 2018). |
||||||||||
| Europe | 140,539 | 209,757 | 67,796 | 3.8% | 32.3% | |||||
| Subscription revenue growth on a constant currency basis was 16.4%. However, total revenue only increased by 3.6% on a constant currency basis due to lower hardware revenues compared to fiscal 2018. Subscribers increased by 9.0% since April 1, 2018. The region reported an Adjusted EBITDA margin of 32.3% (down from the 33.8% Adjusted EBITDA margin reported in fiscal 2018). |
||||||||||
| Brazil | 63,987 | 68,408 | 27,598 | 64.8% | 40.3% | |||||
| Subscription revenue increased by 40.1% on a constant currency basis. The increase was due to the market’s preference for bundled deals and an increase in subscribers of 28.2% since April 1, 2018. On a constant currency basis, total revenue increased by 39.6%. The segment reported Adjusted EBITDA of R27.6 million ($1.9 million) in fiscal 2019, at an Adjusted EBITDA margin of 40.3% (up from the 30.8% Adjusted EBITDA margin reported in fiscal 2018). |
||||||||||
| Central Services Organization | 745 | 835 | (156,894) | (4.7%) | — | |||||
| CSO is 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. The negative Adjusted EBITDA reported arises as a result of operating expenses carried by the segment. |
||||||||||
Preliminary financial information
The reviewed but unaudited financial information set forth above is
preliminary and subject to potential adjustments. Adjustments to the
consolidated financial statements may be identified when audit work has
been finalized for the Group’s year-end audit, which could result in
potential differences from this preliminary reviewed but unaudited
condensed financial information. Any changes to the financial
information from the completion of the audit will be announced on SENS.
Business Outlook
MiX Telematics has translated U.S. Dollar amounts in this Business
Outlook paragraph from South African Rand at an exchange rate of
R14.3842 per $1.00, which was the R/$ exchange rate reported by
Oanda.com as at May 8, 2019.
Based on information as of today, May 14, 2019, the Group is issuing the
following financial guidance for the full 2020 fiscal year:
- Subscription revenue – R1,935 million to R1,955 million ($134.5
million to $135.9 million), which would represent subscription revenue
growth of 14.3% to 15.5% compared to fiscal 2019. On a constant
currency basis, this would represent subscription revenue growth of
12.8% to 14.0%. - Total revenue – R2,182 million to R2,212 million ($151.7 million to
$153.8 million), which would represent revenue growth of 10.4% to
12.0% compared to fiscal 2019. On a constant currency basis, this
would represent revenue growth of 8.9% to 10.5%. - Adjusted EBITDA – R680 million to R701 million ($47.3 million to $48.7
million), which would represent Adjusted EBITDA growth of 12.8% to
16.3% compared to fiscal 2019. - Adjusted earnings per diluted ordinary share of 45.1 to 50.2 South
African cents based on a weighted average of 585 million diluted
ordinary shares in issue, and based on an effective tax rate of 28.0%.
At a ratio of 25 ordinary shares to one ADS, this equates to adjusted
earnings per diluted ADS of 78.4 to 87.2 U.S. cents.
For the first quarter of fiscal 2020 the Group expects
subscription revenue to be in the range of R451 million to R457 million
($31.4 million to $31.8 million) which would represent subscription
revenue growth of 15.5% to 17.1% compared to the first quarter of fiscal
2019. On a constant currency basis, this would represent subscription
revenue growth of 10.5% to 12.1%.
The key assumptions used in deriving the forecast are as follows:
- Growth in subscription revenue and subscribers are based on expected
growth rates related to market conditions and takes into account
growth rates achieved previously. - Achieving hardware sales according to expectations, as hardware sales
are dependent on the volumes of bundled solutions selected by
customers. - An average forecast exchange rate for the 2020 fiscal year of R14.3000
per $1.00.
The forecast is the responsibility of the Board of Directors and has not
been reviewed or reported on by the Group’s external auditors. The
Group’s policy is to give guidance on a quarterly basis, if necessary,
and does not update guidance between quarters.
The Group provides earnings guidance only on a non-IFRS basis and does
not provide a reconciliation of forward-looking Adjusted EBITDA and
Adjusted Earnings per Diluted Ordinary Share guidance to the most
directly comparable IFRS financial measures because of the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliations, including adjustments that could be
made for foreign exchange gains/(losses) and related tax consequences,
restructuring costs, share-based compensation costs, and other charges
reflected in the Group’s reconciliation of historic non-IFRS financial
measures, the amounts of which, based on past experience, could be
material.
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.
Quarterly Reporting Policy in respect of JSE Listings Requirements
Following the listing of the Group’s ADSs on the New York Stock
Exchange, the Group has adopted a quarterly reporting policy. As a
result of such quarterly reporting the Group is, in terms of paragraph
3.4(b)(ix) of the JSE Listings Requirements, not required to publish
trading statements in terms of paragraph 3.4(b)(i) to (viii) of the JSE
Listings Requirements.
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 Tuesday, May 14, 2019 to discuss the Group’s financial
results and current business outlook:
- The live webcast of the call will be available at the “Investor
Information” page of the Group’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).
Contacts
Investor Contact
Brian Denyeau
ICR for MiX Telematics
[email protected]
+1-855-564-9835
