MiX Telematics : Annual Report 2021

Annual

Report

on Form 10-K

2021

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,
		2019		2020		2021
Number of subscribers		750,455		818,487		744,677
Revenue	$	143,705	$	145,650	$	126,894
Subscription revenue		123,150		127,570		113,351
Hardware and other revenue		20,555		18,080		13,543
Operating income		24,291		21,048		18,198
Operating income margin		16.9 %		14.5 %		14.3 %
Non-GAAP net income (1)	$	18,277	$	15,625	$	11,897
Earnings per ordinary share
Basic		0.03		0.02		0.03
Diluted		0.03		0.02		0.03
Earnings per American Depository Share
Basic		0.66		0.50		0.66
Diluted		0.63		0.48		0.65
Non-GAAP net income per ordinary share -		0.03		0.03		0.02
Diluted (1)
Non-GAAP net income per American Depository		0.78		0.69		0.53
Share - Diluted (1)
Adjusted EBITDA (1)		41,483		41,726		37,168
Cash flow from operating activities		31,455		28,178		38,572
Free cash flow (1)		12,070		7,806		29,918
Cash and cash equivalents	$	26,941	$	17,953	$	45,489

1. Non-GAAPnet income, non-GAAP net income per diluted ordinary share, non-GAAP 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,
		2019		2020		2021
Subscription revenue
Africa	$	70,503	$	70,886	$	62,453
Europe		10,221		11,682		12,138
Americas		21,279		22,322		18,211
Middle East and Australasia		16,439		17,389		16,558
Brazil		4,654		5,181		3,922
Total Regional Sales Offices		123,096		127,460		113,282
Central Services Organization		54		110		69
Total Segment Results	$	123,150	$	127,570	$	113,351
Hardware and other revenue
Africa	$	5,457	$	5,870	$	5,495
Europe		5,034		3,345		2,441
Americas		2,646		2,207		770
Middle East and Australasia		7,089		5,741		4,679
Brazil		322		614		142
Total Regional Sales Offices		20,548		17,777		13,527
Central Services Organization		7		303		16
Total Segment Results	$	20,555	$	18,080	$	13,543
Total revenue
Africa	$	75,960	$	76,756	$	67,948
Europe		15,255		15,027		14,579
Americas		23,925		24,529		18,981
Middle East and Australasia		23,528		23,130		21,237
Brazil		4,976		5,795		4,064
Total Regional Sales Offices		143,644		145,237		126,809
Central Services Organization		61		413		85
Total Segment Results	$	143,705	$	145,650	$	126,894
Segment Adjusted EBITDA
Africa	$	35,238	$	33,103	$	31,781
Europe		4,931		5,603		6,260
Americas		11,097		10,370		7,077
Middle East and Australasia		10,610		11,031		9,751
Brazil		2,007		2,366		1,495
Total Regional Sales Offices		63,883		62,473		56,364
Central Services Organization		(11,411)		(9,175)		(7,553)
Total Segment Results	$	52,472	$	53,298	$	48,811

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

			Year Ended March 31,
		2019			2020			2021
Segment Adjusted EBITDA	$	52,472	$	53,298		$	48,811
Corporate and consolidation entries		(8,631)			(8,366)			(8,879)
Loss contingency (1)		15			(233)			-
Expected credit losses (2)		64			-		-
Operating lease costs (3)		(988)			(1,610)			(1,652)
Product development costs (4)		(1,449)			(1,363)			(1,112)
Depreciation and amortization		(16,368)			(19,972)			(16,559)
Impairment of long-lived assets		(62)			(6)			(8)
Stock-based compensation costs		(511)			(660)			(1,273)
(Increase)/decrease in restructuring costs (5)		(221)			1			(1,055)
Net profit on sale of property and equipment		43			270			(13)
Net foreign exchange gains/(losses)		28			(610)			(959)
Net interest income		233			67			(72)
Income before tax expense for the year	$	24,625	$	20,816		$	17,229

Description of reconciling items:

1. For segment reporting purposes, a loss contingency (51% probability), had been raised prior to fiscal 2019. As of March 31, 2020, the loss contingency was no longer needed because an outflow was considered remote. For U.S. GAAP, this loss contingency was never recognized because the recognition requirements of ASC 450 Contingencies had never been met. Therefore, in order to reconcile Segment Adjusted EBITDA to net income before taxes, the increases/decreases to the loss contingency, recognized for segment reporting purposes, needed to be added/deducted.
2. For segment reporting purposes, in fiscal 2019 the allowance for doubtful accounts was determined using an expected credit loss model; whereas for U.S. GAAP purposes, an incurred loss model was used. This resulted in a higher bad debts expense in fiscal 2019 for segment reporting purposes, than that recognized in income before taxes. From fiscal 2020, an expected credit loss model is applied for U.S. GAAP purposes, as a result of the early adoption of ASC 326 Financial Instruments - Credit Losses, which is why there is no longer a reconciling item.
3. 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 net income before taxes, the total lease expense in respect of operating leases needs to be deducted.
4. 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.
5. During fiscal 2019, restructuring costs of $0.1 million were recognized in each of the Middle East and Australasia segment, and the Africa segment. During fiscal 2021, $0.7 million, $0.2 million, $0.1 million and $0.1 million of the restructuring costs related to the CSO, Africa, North America and Middle East and Australasia reporting segments, respectively.

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