First Quarter Highlights:
- Subscription revenues of $25.9 million, representing 94% of
revenue
- Net subscriber base of over 787,000 subscribers
- Net income of $2.4 million
- Adjusted EBITDA of $7.5 million, or a 27.1% Adjusted EBITDA
margin
- Net cash provided by operating activities of $9.4 million
leading to positive free cash flow of $7.2 million
- Cash and cash equivalents of $24.5 million at quarter
end
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, in accordance with accounting principles generally
accepted in the United States ("GAAP"), for the first quarter ended
June 30, 2020.
“MiX Telematics’ first quarter performance was relatively solid
given the challenges presented by the COVID-19 pandemic. I am
pleased by the progress we made on our three core goals this year
of providing the best-in-class software and support to our
customers, preserving profitability and continuing to invest in our
strategic growth initiatives.” said Stefan Joselowitz, Chief
Executive Officer of MiX Telematics.
Joselowitz continued, “Although the near-term demand environment
is difficult and uncertain, we are encouraged by the strong
activity we see in our pipeline. We continue to believe that our
comprehensive fleet management platform is a high-ROI and mission
critical investment for many companies.”
Financial Performance for the Three Months Ended June 30,
2020
Subscription Revenues: Subscription revenues were $25.9
million, a decrease of 18.2% compared to $31.6 million for the
first quarter of fiscal 2020. Subscription revenues represented
94.1% of total revenues during the first quarter of fiscal 2021.
Subscription revenues decreased by 6.1% on a constant currency
basis, year over year. The decline in constant currency
subscription revenue was primarily due to the impact of pricing
concessions granted to customers combined with contraction in the
Company’s subscriber base as a result of economic conditions
attributable to the COVID-19 pandemic. During the current quarter,
the Company’s subscriber base contracted by 30,700 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 first quarter of fiscal
year 2020, the South African Rand weakened by 25% against the U.S.
Dollar. The Rand/U.S. Dollar exchange rate averaged R17.97 in the
first quarter of fiscal year 2021 compared to an average of R14.38
during the first quarter of fiscal year 2020. The impact of
translating foreign currencies to U.S. Dollars at the average
exchange rates during the first quarter of fiscal 2020 led to a
12.1% reduction in reported U.S. Dollar subscription revenues.
Total Revenues: Total revenues were $27.5 million, a
decrease of 24.2% compared to $36.3 million for the first quarter
of fiscal 2020. Total revenues decreased by 13.4% on a constant
currency basis, year over year. Hardware and other revenues were
$1.6 million, a decrease of 65.1%, compared to $4.6 million for the
first 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 first quarter of fiscal 2020
led to a 10.8% reduction in reported U.S. Dollar revenues.
Gross Margin: Gross profit was $18.9 million, compared to
$24.1 million for the first quarter of fiscal 2020. Gross profit
margin was 68.8%, compared to 66.3% for the first quarter of fiscal
2020.
Income From Operations: Income from operations was $2.7
million, compared to $5.7 million for the first quarter of fiscal
2020. Operating income margin was 9.8%, compared to 15.7% for the
first quarter of fiscal 2020. Operating expenses of $16.2 million
decreased by $2.1 million, or 11.6%, compared to the first quarter
of fiscal 2020.
Net Income and Earnings Per Share: Net income was $2.4
million, compared to net income of $5.0 million in the first
quarter of fiscal 2020. Net income included a net foreign exchange
loss of $0.1 million before tax, as well as a $0.7 million deferred
tax credit on a U.S. Dollar intercompany loan between MiX Limited
and MiX Investments, a wholly-owned subsidiary of the Company.
During the first quarter of fiscal 2020, net income included a net
foreign exchange gain of $0.05 million and a $0.5 million deferred
tax credit on a U.S. Dollar intercompany loan between MiX Limited
and MiX Investments.
Earnings per diluted ordinary share was 0.4 U.S. cents, compared
to 1 U.S. cent in the first quarter of fiscal 2020. For the first
quarter of fiscal 2021 the calculation was based on diluted
weighted average ordinary shares in issue of 558.7 million compared
to 579.2 million diluted weighted average ordinary shares in issue
during the first quarter of fiscal 2020. On a ratio of 25 ordinary
shares to one American Depositary Share (“ADS”), earnings per
diluted ADS was 11 U.S. cents compared to 21 U.S. cents in the
first quarter of fiscal 2020.
The Company’s effective tax rate was 3.7%, compared to 18.6% in
the first 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 30.2%
compared to 27.4% in the first quarter of fiscal 2020.
Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, was
$7.5 million, compared to $10.1 million for the first quarter of
fiscal 2020. Adjusted EBITDA margin, a non-GAAP measure, for the
first quarter of fiscal 2021 was 27.1%, compared to 27.7% for the
first quarter of fiscal 2020.
Non-GAAP Net Income and Net Income Per Share: Non-GAAP
net income was $1.8 million, compared to $4.4 million for the first
quarter of fiscal 2020. Non-GAAP net income per diluted ordinary
share was 0.3 U.S. cents, compared to 1 U.S. cent in the first
quarter of fiscal 2020. At a ratio of 25 ordinary shares to one
ADS, the non-GAAP net income per diluted ADS was 8 U.S. cents
compared to 19 U.S. cents in the first quarter of fiscal 2020.
Cash Flow: At June 30, 2020, the Company had $24.5
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 June 30, 2020 was $9.4 million and the Company invested $2.1
million in capital expenditures (including investments in
in-vehicle devices of $1.0 million), leading to free cash flow, a
non-GAAP measure, of $7.2 million in the quarter. The Company
generated free cash flow of $0.6 million for the first quarter of
fiscal 2020 when the Company invested $3.6 million in in-vehicle
devices.
The Company utilized $1.1 million in financing activities for
the first quarter of fiscal 2021, compared to $2.2 million utilized
during the first quarter of fiscal 2020. The cash utilized in
financing activities during the first quarter of fiscal 2021 mainly
consisted of dividends paid of $1.2 million. The cash utilized in
financing activities during the first quarter of fiscal 2020
consisted of dividends paid of $1.6 million and a repayment in
short-term debt of $0.6 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 June 22, 2020 to shareholders on record
on June 19, 2020. A dividend of 4 South African cents per ordinary
share and 1 South African Rand per ADS will be paid on September 8,
2020 to shareholders on record as of the close of business on
August 21, 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, August 20, 2020
Record date
Friday, August 21, 2020
Approximate date of currency
conversion
Monday, August 24, 2020
Approximate dividend payment date
Tuesday, September 8, 2020
Share Repurchases
No shares were repurchased during the three months ended June
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 is
suspending its practice of issuing financial guidance for the full
2021 fiscal year and the second quarter of fiscal 2021.
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, July 30, 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 13706978.
- 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 13706978.
- 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 787,000 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. Forward-looking statements also
include statements regarding the projected impact of the recent
global outbreak of COVID-19 on our business activities, operating
results, cash flows and financial position. 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, non-GAAP net income, non-GAAP
earnings 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
June 30, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
17,953
$
24,513
Restricted cash
699
757
Accounts receivables, net
24,100
21,554
Inventory, net
3,271
3,674
Prepaid expenses and other current
assets
7,375
6,774
Total current assets
53,398
57,272
Property and equipment, net
30,019
28,317
Goodwill
37,923
38,825
Intangible assets, net
15,007
15,772
Deferred tax assets
3,108
3,533
Other assets
4,200
4,009
Total assets
$
143,655
$
147,728
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Short-term debt
$
2,367
$
2,550
Accounts payables
5,251
4,299
Accrued expenses and other liabilities
14,839
17,860
Deferred revenue
5,077
4,563
Total current liabilities
27,534
29,272
Deferred tax liabilities
11,436
10,537
Long-term accrued expenses and other
liabilities
5,660
5,312
Total liabilities
44,630
45,121
Stockholders’ equity:
MiX Telematics Limited stockholders’
equity
Preferred stock: 100 million shares
authorized but not issued
—
—
Common stock: 600.9 million and 601.0
million no-par value shares issued and outstanding as of March 31,
2020 and June 30, 2020, respectively
66,522
66,522
Less treasury stock at cost: 54 million
shares as of March 31, 2020 and June 30, 2020
(17,315
)
(17,315
)
Retained earnings
67,482
68,687
Accumulated other comprehensive loss
(11,070
)
(8,986
)
Additional paid-in capital
(6,599
)
(6,306
)
Total MiX Telematics Limited stockholders’
equity
99,020
102,602
Non-controlling interest
5
5
Total stockholders’ equity
99,025
102,607
Total liabilities and stockholders’
equity
$
143,655
$
147,728
MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In thousands, except per share
data)
(Unaudited)
Three Months Ended June
30,
2019
2020
Revenue
Subscription
$
31,638
$
25,875
Hardware and other
4,645
1,622
Total revenue
36,283
27,497
Cost of revenue
Subscriptions
9,295
7,349
Hardware and other
2,933
1,229
Total cost of revenue
12,228
8,578
Gross profit
24,055
18,919
Operating expenses
Sales and marketing
3,581
2,746
Administration and other
14,786
13,491
Total operating expenses
18,367
16,237
Income from operations
5,688
2,682
Other income/(expense)
375
(98
)
Net interest income/(expense)
73
(70
)
Income before income tax
expense
6,136
2,514
Income tax expense
1,140
92
Net income
4,996
2,422
Less: Net income attributable to
non-controlling interest
—
—
Net income attributable to MiX
Telematics Limited
$
4,996
$
2,422
Net income per ordinary share:
Basic
$
0.01
$
0.004
Diluted
$
0.01
$
0.004
Net income per American Depositary
Share:
Basic
$
0.22
$
0.11
Diluted
$
0.21
$
0.11
Ordinary shares:
Weighted average
562,060
547,124
Diluted weighted average
579,241
558,702
American Depositary Shares:
Weighted average
22,482
21,885
Diluted weighted average
23,170
22,348
MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended June
30,
2019
2020
Cash flows from operating
activities:
Cash generated from operations
$
5,775
$
9,189
Interest received
218
112
Interest paid
(59
)
(83
)
Income tax (paid)/received
(203
)
139
Net cash provided by operating
activities
5,731
9,357
Cash flows from investing
activities:
Acquisition of property and equipment -
in-vehicle devices
(3,605
)
(992
)
Acquisition of property and equipment -
other
(231
)
(84
)
Proceeds from the sale of property and
equipment
29
—
Acquisition of intangible assets
(1,340
)
(1,044
)
Net cash used in investing
activities
(5,147
)
(2,120
)
Cash flows from financing
activities:
Cash paid on dividends to MiX Telematics
stockholders
(1,554
)
(1,216
)
Movement in short-term debt
(596
)
147
Net cash used in financing
activities
(2,150
)
(1,069
)
Net (decrease)/increase in cash and cash
equivalents, and restricted cash
(1,566
)
6,168
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
376
450
Cash and cash equivalents, and
restricted cash at end of the period
$
26,648
$
25,270
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 June 30,
2019
Subscription Revenue
Hardware and Other
Revenue
Total Revenue
Segment Adjusted
EBITDA
Regional Sales Offices
Africa
$
17,686
$
1,381
$
19,067
$
8,357
Europe
2,787
557
3,344
1,071
Americas
5,662
886
6,548
2,358
Middle East and Australasia
4,261
1,623
5,884
2,754
Brazil
1,217
161
1,378
623
Total Regional Sales Offices
31,613
4,608
36,221
15,163
Central Services Organization
25
37
62
(2,645
)
Total Segment Results
$
31,638
$
4,645
$
36,283
$
12,518
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
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,
2019
2020
Segment Adjusted EBITDA
$
12,518
$
10,420
Corporate and consolidation entries
(1,756
)
(2,330
)
Operating lease costs (1)
(308
)
(392
)
Product development costs (2)
(391
)
(243
)
Depreciation and amortization
(4,252
)
(3,628
)
Stock-based compensation costs
(111
)
(293
)
Increase in restructuring costs (3)
—
(844
)
Net profit/(loss) on sale of property and
equipment
316
(1
)
Net foreign exchange gains/(losses)
47
(105
)
Net interest income/(expense)
73
(70
)
Income before tax expense
$
6,136
$
2,514
Description of reconciling items:
1.
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.
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.
$0.6 million and $0.2 million of
the restructuring costs related to the Central Service Organization
(CSO) and the Africa reporting segment, 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 Adjusted EBITDA to net income, 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 June
30,
2019
2020
Net income
$
4,996
$
2,422
Plus: Income tax expense
1,140
92
(Less)/plus: Net interest
(income)/expense
(73
)
70
(Less)/plus: Foreign exchange
(gains)/losses
(47
)
105
Plus: Depreciation (1)
3,277
2,836
Plus: Amortization (2)
975
792
Plus: Stock-based compensation costs
111
293
(Less)/plus: Net (profit)/loss on sale of
property and equipment
(316
)
1
Plus: Restructuring costs
—
844
Adjusted EBITDA
$
10,063
$
7,455
Adjusted EBITDA margin
27.7
%
27.1
%
1.
Includes depreciation of owned property
and equipment (including in-vehicle devices).
2.
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 June
30,
2019
2020
Net income
$
4,996
$
2,422
Net foreign exchange (gains)/losses
(47
)
105
Income tax effect of net foreign exchange
gains
(532
)
(698
)
Non-GAAP net income
$
4,417
$
1,829
Net income per ordinary share -
diluted
$
0.01
$
0.004
Effect of net foreign exchange
(gains)/losses to net income
#
#
Income tax effect of net foreign exchange
gains
#
(0.001
)
Non-GAAP net income per ordinary share -
diluted
$
0.01
$
0.003
Net income per ADS - diluted
$
0.21
$
0.11
Effect of net foreign exchange
(gains)/losses to net income
#
#
Income tax effect of net foreign exchange
gains
(0.02
)
(0.03
)
Non-GAAP net income per ADS - diluted
$
0.19
$
0.08
# Amount less than $0.001 (2019:
$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:
Three Months Ended June
30,
2019
2020
Net cash provided by operating
activities
$
5,731
$
9,357
Less: Capital expenditure payments
(5,176
)
(2,120
)
Free cash flow
$
555
$
7,237
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 June
30,
Year Over Year Change
2019
2020
Subscription revenue as reported
$
31,638
$
25,875
(18.2
)%
Conversion impact of U.S. Dollar/other
currencies
—
3,833
12.1
%
Subscription revenue on a constant
currency basis
$
31,638
$
29,708
(6.1
)%
Total Revenue:
Three Months Ended June
30,
Year Over Year Change
2019
2020
Total revenue as reported
$
36,283
$
27,497
(24.2
)%
Conversion impact of U.S. Dollar/other
currencies
—
3,924
10.8
%
Total revenue on a constant currency
basis
$
36,283
$
31,421
(13.4
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200730005072/en/
Investors Brian Denyeau ICR for MiX Telematics
ir@mixtelematics.com +1-855-564-9835
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