MiX Telematics : Annual Report 2023

ANNUAL

REPORT

ON FORM 10-K

www.mixtelematics.com

Financial results at a glance

Consolidated results

(in thousands, except percentages, per share data and number of subscribers)

			Year Ended March 31,
		2021		2022		2023
Number of subscribers		744,677		815,165		1,001,881
Revenue	$	126,894	$	143,294	$	144,993
Subscription revenue		113,351		123,573		126,656
Hardware and other revenue		13,543		19,721		18,337
Operating income		18,198		14,449		11,565
Operating income margin		14.3 %		10.1 %		8.0 %
Adjusted net income (1)	$	12,683	$	9,175	$	7,980
Earnings per ordinary share
Basic		0.03		0.02		0.01
Diluted		0.03		0.02		0.01
Earnings per American Depository Share
Basic		0.66		0.41		0.20
Diluted		0.65		0.40		0.20
Adjusted net income per ordinary share - Diluted (1)		0.02		0.02		0.01
Adjusted net income per American Depository Share		0.57		0.41		0.36
- Diluted (1)
Adjusted EBITDA (1)		37,168		31,565		29,636
Cash flow from operating activities		38,572		19,402		21,948
Free cash flow (1)		29,918		(6,815)		(3,173)
Cash and cash equivalents	$	45,489	$	33,738	$	29,876

1. Adjusted net income, adjusted net income per diluted ordinary share, adjusted net income per diluted American Depository Share, adjusted EBITDA and free cash flow are non-GAAP measures. Refer to "Forward looking statements and use of non- GAAP measures - Use of non-GAAP measures in this Annual Report" for further information regarding these non-GAAP measures.

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Segment information

(in thousands)
			Year Ended March 31,
		2021		2022		2023
Subscription revenue
Africa	$	62,453	$	74,778	$	73,924
Europe		12,138		13,509		12,155
Americas		18,211		14,036		18,557
Middle East and Australasia		16,558		16,950		16,313
Brazil		3,922		4,253		5,637
Total Regional Sales Offices		113,282		123,526		126,586
Central Services Organization		69		47		70
Total Segment Results	$	113,351	$	123,573	$	126,656
Hardware and other revenue
Africa	$	5,495	$	8,398	$	5,530
Europe		2,441		3,745		2,328
Americas		770		1,538		1,673
Middle East and Australasia		4,679		5,604		7,625
Brazil		142		401		1,175
Total Regional Sales Offices		13,527		19,686		18,331
Central Services Organization		16		35		6
Total Segment Results	$	13,543	$	19,721	$	18,337
Total revenue
Africa	$	67,948	$	83,176	$	79,454
Europe		14,579		17,254		14,483
Americas		18,981		15,574		20,230
Middle East and Australasia		21,237		22,554		23,938
Brazil		4,064		4,654		6,812
Total Regional Sales Offices		126,809		143,212		144,917
Central Services Organization		85		82		76
Total Segment Results	$	126,894	$	143,294	$	144,993
Segment Adjusted EBITDA
Africa	$	31,781	$	36,467	$	32,721
Europe		6,260		6,337		5,412
Americas		7,077		842		4,087
Middle East and Australasia		9,751		10,034		8,998
Brazil		1,495		1,260		2,133
Total Regional Sales Offices		56,364		54,940		53,351
Central Services Organization		(7,553)		(10,168)		(10,409)
Total Segment Results	$	48,811	$	44,772	$	42,942

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The following table (shown in thousands) reconciles total Segment Adjusted EBITDA to income before income tax expense for the periods shown:

			Year Ended March 31,
		2021			2022			2023
Segment Adjusted EBITDA	$	48,811	$	44,772		$	42,942
Corporate and consolidation entries		(8,879)			(10,243)			(10,722)
Operating lease costs (1)		(1,652)			(1,611)			(1,253)
Product development costs (2)		(1,112)			(1,353)			(1,331)
Depreciation and amortization		(16,559)			(14,951)			(15,609)
Impairment of long-lived assets		(8)			(47)			(104)
Stock-based compensation costs		(1,273)			(1,325)			(502)
Restructuring costs (3)		(1,055)			(164)			(1,022)
Net (loss)/profit on sale of property, plant and
equipment		(13)			36			25
Net foreign exchange (losses)/gains		(959)			(648)			1,110
Net interest expense		(72)			(510)			(287)
Non-recurring legal costs (4)		-			(591)			-
Acquisition-related costs		-			-		(784)
Contingent consideration remeasurement		-			-			504
Income before income tax expense	$	17,229	$	13,365		$	12,967

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 reporting 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 income tax expense, 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 income before income tax expense, product development costs capitalized for segment reporting purposes need to be deducted.
3. During fiscal year 2021, the Company incurred $1.1 million of restructuring costs which comprise of employee termination benefits, as a result of measures to minimize the adverse economic and business effect of the COVID-19 pandemic and to re- align resources with the Company's current business outlook and cost structure. $0.7 million, $0.2 million, $0.1 million and $0.1 million of the restructuring costs related to the CSO, Africa, Americas and Middle East and Australasia reporting segments, respectively. As of March 31, 2022, all of the restructuring costs had been paid. During fiscal year 2023, the Company incurred $1.0 million of restructuring costs. $0.4 million, $0.4 million, $0.1 million and $0.1 million of the restructuring costs related to the Middle East and Australasia, Americas, CSO and Europe reporting segments, respectively. Restructuring costs are included in Administration and other expenses in the Consolidated Statements of Income.
4. Includes legal related costs for a non-recurring patent infringement matter during fiscal year 2022, that has been resolved.

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