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

Third Quarter Highlights:

• Net subscriber additions of 52,400, bringing the total base to over 1,142,000 subscribers
• Total revenue of $39.1 million, up 6% year-over-year (constant currency)
• Subscription revenue of $33.7 million, up 6% year-over-year (constant currency)
• Net income of $1.5 million
• Adjusted EBITDA up 13% year-over-year to $9.5 million, at an adjusted EBITDA margin of 24.4% (up 220 basis points from the prior year)
• Cash and cash equivalents of $25.4 million at quarter end

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 third quarter of fiscal year 2024, which ended December 31, 2023.

Management Commentary

“We delivered a strong third quarter and added a record number of net subscribers, bringing our total base to over 1.1 million,” said MiX Telematics CEO Stefan Joselowitz. “Our Africa segment was the primary subscription-growth driver, while continued demand for our solutions globally also resulted in strong hardware revenues. We maintained strict cost discipline throughout our organization, driving further expansion of our adjusted EBITDA margin.”

Joselowitz added, “We continue to progress the previously announced merger with Powerfleet. We’ve crossed a number of important regulatory hurdles including receiving most of the pre-requisite approvals to proceed, and to this end we have set the date of the formal vote by shareholders for February 28th, 2024. This is a very exciting time for both companies, and our entire organization is eager to hit the ground running and start executing our combined strategic growth initiatives. As a large shareholder, I strongly believe that the combined leadership group under Steve Towe’s stewardship, Powerfleet’s Unity strategy, and our combined scale will undoubtedly accelerate the achievement of our shared strategic and financial goals.”

Financial Results for the Three Months Ended December 31, 2023

Subscription Revenue: Subscription revenue increased to $33.7 million, compared to $32.5 million for the third quarter of fiscal year 2023. The Field Service Management (“FSM”) business acquired on September 2, 2022 contributed $1.8 million to the subscription revenue for the third quarter of fiscal year 2024, compared to $2.3 million for the third quarter of fiscal year 2023. Subscription revenue increased by 6.4% on a constant currency basis, year over year. During the third quarter of fiscal year 2024, the Company’s subscriber base increased by a net 52,400 subscribers, mainly due to the Africa segment. Subscription revenue represented 86.1% of total revenue during the third 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 third quarter of fiscal year 2023, the South African Rand weakened by 6% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate averaged R18.74 in the third quarter of fiscal year 2024 compared to an average of R17.64 during the third quarter of fiscal year 2023. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the third quarter of fiscal year 2024 led to a 2.7% decrease in reported U.S. Dollar subscription revenue.

Total Revenue: Total revenue increased to $39.1 million, compared to $37.8 million for the third quarter of fiscal year 2023. During the third quarter of fiscal year 2024, total revenue increased by 5.8% on a constant currency basis, year over year. Hardware and other revenue increased to $5.4 million, an increase of 1.7%, compared to $5.3 million for the third quarter of fiscal year 2023. On a constant currency basis, hardware and other revenue increased by 2.1%.

The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the third quarter of fiscal year 2024 led to a 2.4% decrease in reported U.S. Dollar total revenue.

Gross Margin: Gross profit was $23.5 million, compared to $24.3 million for the third quarter of fiscal year 2023. Gross profit margin decreased 430 basis points to 60.1%, compared to 64.4% for the third quarter of fiscal year 2023. The subscription revenue margin during the third quarter of fiscal year 2024 was 64.5%, compared to 69.6% for the third 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 $4.0 million for the third quarter of fiscal year 2023. Operating income margin decreased 440 basis points to 6.3%, compared to 10.7% for the third quarter of fiscal year 2023. Operating expenses of $21.0 million increased by $0.7 million, or 3.6%, compared to the third quarter of fiscal year 2023. Operating expenses in the third quarter of fiscal year 2024 included $1.2 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 $1.5 million, compared to the net income of $2.8 million in the third quarter of fiscal year 2023. During the third quarter of fiscal year 2024, net income included a net foreign exchange loss of $0.5 million before tax and a $0.6 million credit from the income tax effect of net foreign exchange losses (which mainly includes a $0.6 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, offset by a deferred tax credit on other foreign exchange losses which are not significant). During the third quarter of fiscal year 2023, net income included a net foreign exchange loss of $0.8 million before tax and a $1.3 million credit from the income tax effect of net foreign exchange losses (which includes a $1.1 million deferred tax credit on a U.S. Dollar intercompany loan between MiX Telematics and MiX Investments and a $0.2 million deferred tax credit on other foreign exchange losses).

Earnings per diluted ordinary share was 0.3 U.S. cents, compared to 0.5 U.S. cents in the third quarter of fiscal year 2023. For the third quarter of fiscal year 2024, the calculation was based on diluted weighted average ordinary shares in issue of 554.0 million compared to 555.8 million diluted weighted average ordinary shares in issue during the third quarter of fiscal year 2023. On a ratio of 25 ordinary shares to one American Depositary Share (“ADS”), earnings per diluted ADS were 7 U.S. cents compared to 13 U.S. cents in the third quarter of fiscal year 2023.

Adjusted EBITDA and Adjusted EBITDA Margin: Adjusted EBITDA, a non-GAAP measure, increased to $9.5 million, compared to $8.4 million for the third quarter of fiscal year 2023. Adjusted EBITDA margin, a non-GAAP measure, for the third quarter of fiscal year 2024 increased 220 basis points to 24.4%, compared to 22.2% for the third quarter of fiscal year 2023.

Adjusted Net Income and Adjusted Net Income Per Share: Adjusted net income, a non-GAAP measure, was $2.4 million, compared to $2.3 million for the third quarter of fiscal year 2023. Adjusted net income per diluted ordinary share remained consistent at 0.4 U.S. cents compared the third quarter of fiscal year 2023. At a ratio of 25 ordinary shares to one ADS, the adjusted net income per diluted ADS was 11 U.S. cents compared to 10 U.S. cents in the third quarter of fiscal year 2023.

Adjusted Effective Tax Rate: The Company’s effective tax rate was 34.3%, compared to 7.4% in the third quarter of fiscal year 2023. Adjusted effective tax rate, a non-GAAP measure which excludes the impact of net foreign exchange losses and gains, 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 37.3% compared to 39.2% in the third quarter of fiscal year 2023.

Cash and Cash Equivalents, Cash Flow and Free Cash Flow: At December 31, 2023, the Company had $25.4 million of cash and cash equivalents, compared to $29.9 million at March 31, 2023.

Net cash provided by operating activities, before $1.6 million in strategic costs relating to the Powerfleet Transaction, for the third quarter of fiscal year 2024 decreased to $1.7 million, compared to $11.2 million net cash provided by operating activities for the third quarter of fiscal year 2023. The Company invested $5.7 million in capital expenditures (including investments in in-vehicle devices of $4.2 million), leading to negative free cash flow of $4.0 million, a non-GAAP measure, in the quarter. The Company generated free cash flow of $5.9 million for the third quarter of fiscal year 2023 when the Company invested $5.3 million in capital expenditures (including investments in in-vehicle devices of $3.9 million).

Net cash used in investing activities for the third quarter of fiscal year 2024 was $6.8 million, compared to $5.3 million net cash used in investing activities for the third quarter of fiscal year 2023.

Net cash from financing activities amounted to $2.3 million for the third quarter of fiscal year 2024, compared to $1.1 million net cash used in financing activities during the third quarter of fiscal year 2023. The cash from financing activities during the third quarter of fiscal year 2024 mainly consisted of short-term debt facilities utilized of $3.6 million, offset by dividends paid of $1.3 million. The cash used in financing activities during the third quarter of fiscal year 2023 mainly consisted of short-term debt facilities utilized of $0.2 million, offset by dividends paid of $1.2 million.

During the quarter, the South African Rand strengthened against the U.S. Dollar from R18.90 at September 30, 2023 to R18.30 at December 31, 2023 and as a result, cash increased by $0.5 million due to foreign exchange gains.

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 December 14, 2023 to ADS holders on record on December 1, 2023. A dividend of 4.50000 South African cents per ordinary share and 1.12500 South African Rand per ADS will be paid on March 7, 2024 to ADS holders on record as of the close of business on February 23, 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 December 31, 2023.

As a result of signing the Implementation Agreement with Powerfleet, we have discontinued repurchases under the share repurchase program.

Recent Developments

As previously reported 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.

As announced on January 30, 2024, MiX Telematics has distributed a circular in respect of the Scheme (the “Scheme Circular”), together with the Powerfleet prospectus in respect of the secondary inward listing of Powerfleet on the JSE to MiX Telematics shareholders. The Scheme Circular incorporates a notice of scheme meeting convened for the purposes of approving the resolutions required to implement the Scheme, and will be held at 2:30 p.m. (South African Time) on Wednesday, February 28, 2024, for the purpose of considering and, if deemed fit, passing with or without modification the resolutions required to be approved by MiX Telematics shareholders in order to authorize and implement the Scheme. In connection with the PowerFleet Transaction, PowerFleet has filed, and the U.S. Securities and Exchange Commission (the “SEC”) declared effective on January 24, 2024, a Registration Statement on Form S-4, which includes a joint proxy statement of the Company and PowerFleet and a U.S. prospectus of PowerFleet. The Company and PowerFleet commenced the mailing of the joint proxy statement/U.S. prospectus on January 29, 2024.

The Powerfleet Transaction is expected to close in the first half 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.

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 Thursday, February 1, 2024 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 1-888-886-7786 (within the United States) or 0-800-994-942 (within South Africa) or 1-416-764-8658 (outside of the United States). The conference ID is 49731850.
• 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 49731850.
• 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 over 1,142,000 global subscribers spanning more than 120 countries. The Company’s products and services provide enterprise fleets, small fleets and consumers with efficiency, safety, compliance and security solutions. MiX Telematics was founded in 1996 and has offices in South Africa, the United Kingdom, the United States, Uganda, Brazil, Mexico and Australasia, 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, 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 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.

[email protected]
+1-949-574-3860

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