MiX Telematics Reports Second Quarter Fiscal Year 2024 U.S. GAAP Financial Results

Second Quarter Highlights:

• Net subscriber additions of 47,400, bringing the total base to over 1,089,000 subscribers
• Total revenue of $37.8 million, up 12% year-over-year (constant currency)
• Subscription revenue of $32.4 million, up 10% year-over-year (constant currency)
• Net income of $0.2 million, up from the $1.2 million loss in the prior year
• Adjusted EBITDA up 41% year-over-year to $8.5 million, at an adjusted EBITDA margin of 22.5% (up 550 basis points from the prior year)
• Cash and cash equivalents of $29.5 million at quarter end
• Net cash provided by operating activities of $8.5 million during the quarter
• Free cash flow of $2.1 million generated during the quarter

MIDRAND, South Africa & BOCA RATON, Fla.–(BUSINESS WIRE)–MiX Telematics Limited (“MiX Telematics” or the “Company”) (NYSE: MIXT, JSE: MIX), a leading global Software-as-a-Service (“SaaS”) provider of connected fleet management solutions, today announced financial results, in accordance with accounting principles generally accepted in the United States (“GAAP”), for the second quarter of fiscal year 2024, which ended September 30, 2023.

Management Commentary

“We delivered another strong quarter with record subscriber growth, increased profitability and solid free cash flow,” said MiX Group CEO Stefan Joselowitz. “With the macro-environment remaining uncertain and volatility persisting across many of our markets, our model continues to be resilient, and our balance sheet remains a strategic asset. Our subscriber base is now well over the one million mark and adjusted EBITDA has increased in line with our profitability objectives. We are making steady and sustainable progress towards achieving a Rule of 40 performance in the medium-term.”

Joselowitz continued, “On the 10^th of October, we announced a transformative business combination with Powerfleet (Nasdaq: PWFL). This merger will result in one of the largest global providers of connected vehicle SaaS solutions and I firmly believe that this is the ideal path forward for our organization and shareholders. Post close, we anticipate the direct Nasdaq listing will provide us with significantly increased market exposure and an expanded investor base. The combination is expected to unlock further shareholder value through its meaningfully increased scale, enhanced R&D activities, and leveraging our combined best-in-class SaaS solutions to further capitalize on the significant global market opportunity.”

Financial Results for the Three Months Ended September 30, 2023

Subscription Revenue: Subscription revenue increased to $32.4 million, compared to $30.7 million for the second quarter of fiscal year 2023. The Field Service Management (“FSM”) business acquired on September 2, 2022 contributed $1.9 million to the subscription revenue for the second quarter of fiscal year 2024, compared to $0.9 million for the second quarter of fiscal year 2023. Subscription revenue increased by 10.4% on a constant currency basis, year over year, of which 2.9% is attributable to the FSM business acquisition. During the second quarter of fiscal year 2024, the Company’s subscriber base increased by a net 47,400 subscribers, mainly due to the Africa segment. Subscription revenue represented 85.9% of total revenue during the second quarter of fiscal year 2024.

The majority of the Company’s total revenue and subscription revenue 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), has negatively impacted the Company’s revenue and subscription revenue reported in U.S. Dollars. Compared to the second quarter of fiscal year 2023, the South African Rand weakened by 10% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate averaged R18.65 in the second quarter of fiscal year 2024 compared to an average of R17.01 during the second quarter of fiscal year 2023. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the second quarter of fiscal year 2024 led to a 4.7% decrease in reported U.S. Dollar subscription revenue.

Total Revenue: Total revenue increased to $37.8 million, compared to $35.3 million for the second quarter of fiscal year 2023. During the second quarter of fiscal year 2024, total revenue increased by 11.5% on a constant currency basis, year over year. Hardware and other revenue increased to $5.3 million, an increase of 16.7%, compared to $4.6 million for the second quarter of fiscal year 2023. On a constant currency basis, hardware and other revenue increased by 18.9%.

The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the second quarter of fiscal year 2024 led to a 4.4% decrease in reported U.S. Dollar total revenue.

Gross Margin: Gross profit was $23.3 million, compared to $22.1 million for the second quarter of fiscal year 2023. Gross profit margin decreased 110 basis points to 61.6%, compared to 62.7% for the second quarter of fiscal year 2023. The subscription revenue margin during the second quarter of fiscal year 2024 was 65.4%, compared to 67.9% for the second quarter of fiscal year 2023 and declined primarily due to higher in-vehicle device depreciation charged to the Condensed Consolidated Statements of Income during the current quarter.

Income From Operations: Income from operations was $2.5 million, compared to $1.5 million for the second quarter of fiscal year 2023. Operating income margin increased 240 basis points to 6.6%, compared to 4.2% for the second quarter of fiscal year 2023. Operating expenses of $20.8 million increased by $0.2 million, or 0.8%, compared to the second quarter of fiscal year 2023. Operating expenses in the second quarter of fiscal year 2024 included $0.8 million in strategic costs related to the proposed Powerfleet Transaction (as defined below). See the “Recent Developments” section below for more information about the Powerfleet Transaction.

Net Income and Earnings Per Share: Net income was $0.2 million, compared to the net loss of $1.2 million in the second quarter of fiscal year 2023. During the second quarter of fiscal year 2024, net income included a net foreign exchange loss of $0.1 million before tax and a $0.1 million charge from the income tax effect of net foreign exchange losses (which includes a $0.2 million deferred tax charge 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, offset by a $0.1 million deferred tax credit on other foreign exchange losses). During the second quarter of fiscal year 2023, net loss included a net foreign exchange gain of $0.7 million before tax and a $2.0 million charge from the income tax effect of net foreign exchange gains (which includes a $1.8 million deferred tax charge on a U.S. Dollar intercompany loan between MiX Telematics and MiX Investments and a $0.2 million deferred tax charge on other foreign exchange gains).

Earnings per diluted ordinary share was positive 0.04 U.S. cents, compared to negative 0.2 U.S. cents in the second quarter of fiscal year 2023. For the second quarter of fiscal year 2024, the calculation was based on diluted weighted average ordinary shares in issue of 554.0 million compared to 552.2 million diluted weighted average ordinary shares in issue during the second quarter of fiscal year 2023. On a ratio of 25 ordinary shares to one American Depositary Share (“ADS”), earnings per diluted ADS were positive 1.1 U.S. cents compared to negative 5 U.S. cents in the second quarter of fiscal year 2023.

Adjusted EBITDA and Adjusted EBITDA Margin: Adjusted EBITDA, a non-GAAP measure, increased to $8.5 million, compared to $6.0 million for the second quarter of fiscal year 2023. Adjusted EBITDA margin, a non-GAAP measure, for the second quarter of fiscal year 2024 increased 550 basis points to 22.5%, compared to 17.0% for the second quarter of fiscal year 2023.

Adjusted Net Income and Adjusted Net Income Per Share: Adjusted net income, a non-GAAP measure, was $0.9 million, compared to $0.8 million for the second quarter of fiscal year 2023. Adjusted net income per diluted ordinary share was 0.2 U.S. cents, compared to 0.1 U.S. cents in the second quarter of fiscal year 2023. At a ratio of 25 ordinary shares to one ADS, the adjusted net income per diluted ADS was 4 U.S. cents compared to 3 U.S. cents in the second quarter of fiscal year 2023.

Adjusted Effective Tax Rate: The Company’s effective tax rate was 90.2%, compared to 161.5% in the second quarter of fiscal year 2023. Adjusted effective tax rate, a non-GAAP measure which excludes the impact of net foreign exchange gains and losses, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement, net of tax, is the tax rate used in determining adjusted net income. Adjusted effective tax rate was 71.3% compared to 63.4% in the second quarter of fiscal year 2023.

Cash and Cash Equivalents, Cash Flow and Free Cash Flow: At September 30, 2023, the Company had $29.5 million of cash and cash equivalents, compared to $29.9 million at March 31, 2023.

Net cash provided by operating activities for the second quarter of fiscal year 2024 increased to $8.5 million compared to $2.3 million net cash provided by operating activities for the second quarter of fiscal year 2023. The Company invested $6.4 million in capital expenditures (including investments in in-vehicle devices of $4.5 million), leading to free cash flow of $2.1 million, a non-GAAP measure, in the quarter. The Company incurred negative free cash flow of $5.1 million for the second quarter of fiscal year 2023 when the Company invested $7.4 million in capital expenditures (including investments in in-vehicle devices of $5.8 million).

Net cash used in investing activities for the second quarter of fiscal year 2024 was $6.6 million, compared to $11.1 million net cash used in investing activities for the second quarter of fiscal year 2023, which included $3.7 million paid by MiX Telematics North America for the acquisition of the FSM business.

Net cash from financing activities amounted to $0.9 million for the second quarter of fiscal year 2024, compared to $4.9 million net cash from financing activities during the second quarter of fiscal year 2023. The cash from financing activities during the second quarter of fiscal year 2024 mainly consisted of short-term debt facilities utilized of $2.3 million, offset by dividends paid of $1.3 million. The cash from financing activities during the second quarter of fiscal year 2023 consisted of short-term debt facilities utilized of $6.3 million, offset by dividends paid of $1.3 million and ordinary shares repurchased of $0.1 million.

During the quarter, the South African Rand weakened against the U.S. Dollar from R18.73 at June 30, 2023 to R18.90 at September 30, 2023 and as a result, cash decreased by $0.4 million due to foreign exchange losses.

Quarterly Dividend

The last recent dividend payment of 4.50000 South African cents (0.2 U.S. cents) per ordinary share and 1.12500 South African Rand (6 U.S. cents) per ADS was paid on September 7, 2023 to ADS holders on record on August 25, 2023. A dividend of 4.50000 South African cents per ordinary share and 1.12500 South African Rand per ADS will be paid on December 14, 2023 to ADS holders on record as of the close of business on December 1, 2023.

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

Share Repurchases

No shares were repurchased during the three months ended September 30, 2023.

Recent Developments

As previously disclosed in a Current Report on Form 8-K on October 10, 2023, the Company, entered into an Implementation Agreement (the “Agreement”), by and among the Company, PowerFleet, Inc., a Delaware corporation (“Powerfleet”), and Main Street 2000 Proprietary Limited, a private company incorporated in the Republic of South Africa and a wholly owned subsidiary of Powerfleet (“Powerfleet Sub”), pursuant to which, subject to the terms and conditions thereof, Powerfleet Sub will acquire all of the issued ordinary shares of the Company, including the ordinary shares represented by the Company’s ADSs, through the implementation of a scheme of arrangement (the “Scheme”) in accordance with Sections 114 and 115 of the South African Companies Act, No. 71 of 2008, in exchange for shares of common stock, par value $0.01 per share, of Powerfleet (the “Powerfleet Common Stock”). As a result of the transactions, including the Scheme, contemplated by the Agreement (the “Powerfleet Transaction”), the Company will become an indirect, wholly owned subsidiary of Powerfleet.

The implementation of the Scheme will result in the delisting of the Company’s ordinary shares from the Johannesburg Stock Exchange (the “JSE”) and the delisting of the Company’s ADSs from the New York Stock Exchange. The Powerfleet Common Stock will continue to be listed on The Nasdaq Global Market and will additionally be listed on the JSE by way of a secondary inward listing.

The Powerfleet Transaction is expected to close in the first quarter of calendar year 2024, subject to satisfaction of customary closing conditions including, but not limited to, approval from the Company’s shareholders and approval from Powerfleet’s stockholders.

The Company will also be hosting a joint investor and analyst day with the Powerfleet team on Thursday, November 16, 2023 in New York City. For those who would like to attend the event in-person, please contact MiX’s investor relations team at MIXT@gateway-grp.com. A live webcast will be available on the investor relations section of each company’s website. A replay of the webcast will be available shortly after the event concludes.

Conference Call Information

MiX Telematics management will host a conference call and audio webcast at 8:00 a.m. (Eastern Daylight Time) and 3:00 p.m. (South African Time) on Wednesday, November 8, 2023 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 1-877-300-8521 (within the United States) or 0-800-999-739 (within South Africa) or 1-412-317-6026 (outside of the United States). The conference ID is 10183846.
• 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 10183846.
• A replay of the webcast will also be available for a limited time at http://investor.mixtelematics.com.

About MiX Telematics Limited

MiX Telematics is a leading global provider of connected fleet and mobile asset solutions delivered as SaaS to over 1,089,000 subscribers in over 120 countries. The Company’s products and services provide enterprise fleets, small fleets and consumers with solutions for efficiency, safety, compliance and security. MiX Telematics was founded in 1996 and has offices in South Africa, the United Kingdom, the United States, Uganda, Brazil, Australia, Romania and the United Arab Emirates as well as a network of more than 130 fleet value-added resellers 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, the 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;
• 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 and the use of artificial intelligence;
• competition from industry consolidation and new entrants into the industry;
• loss of key personnel or our failure to attract, train and retain other highly qualified personnel;
• the satisfaction of the closing conditions to the Powerfleet Transaction in the anticipated timeframe or at all including, but not limited to, the ability to obtain approval of the shareholders of the Company and stockholders of Powerfleet, the ability to obtain financing, and the ability to obtain necessary regulatory approvals;
• the ability to integrate businesses and realize the anticipated benefits of the Powerfleet Transaction;
• the introduction of new solutions and international expansion;
• the impact of the global component shortage and supply chain disruptions;
• our dependence on key suppliers and vendors to manufacture our hardware;
• our dependence on our network of dealers and distributors to sell our solutions;
• our ability to navigate and adapt in adverse global economic and market conditions;
• the impact of climate change and increased focus on environmental, social and governance matters;
• 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 ensure compliance with export laws, customs and import regulations, economic sanctions and Export Administration Regulations;
• 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;
• our reliance on electricity generated and supplied by Eskom (the South African Power Utility) and the impact of intermittent electricity supply in South Africa;
• 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 factors discussed in the Company’s and Powerfleet’s filings with the U.S. Securities and Exchange Commission (the “SEC”), which include their Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and in the joint proxy statement/prospectus on Form S-4 to be filed in connection with the Powerfleet Transaction.

For more information, see the section entitled “Risk Factors” and the forward-looking statements disclosure contained in the Company’s and Powerfleet’s Annual Reports on Form 10-K and in other filings. The forward-looking statements included in this press release are made only as of the date hereof and 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, adjusted net income, adjusted net income per share, adjusted effective tax rate, 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 and Key Business Metrics”. 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.

Contacts

Investor Relations Contact
Matt Glover and Cody Cree

Gateway Group, Inc.

MIXT@gateway-grp.com
+1-949-574-3860

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