MiX Telematics Limited (MIXT) research, news, and more from GeoInvesting

Company description

Wed, 29 Apr 2015 04:00:00 GMT

MiX Telematics Limited provides fleet and mobile asset management solutions through software-as-a-service delivery model worldwide. Its solutions rely on its proprietary technology platform, which allows the company to collect, analyze, and deliver data from its customers’ vehicles. The company offers FM Communicator that notifies managers of exceptions in driver behavior and vehicle performance; FM Tracer, a fleet management and GPS fleet tracking system to manage drivers and vehicles in real-time; Beam-e, a wireless tracking and recovery device; Matrix MX1, Matrix MX2, and Matrix MX3, which are stolen vehicle tracking and security products; MiX Rovi that enables fleet managers and drivers communicate with each other; MiX Vision that delivers streaming video through FM-Web, which allows visual clarity at the time of an event; and Trailer Tracking that offers online trailer tracking and monitoring services for fleet managers. Its applications include FM-Web, an information and tracking portal for fleet managers to monitor and manage their vehicles and drivers; Matrix Internet Tracking, a Web-based application backed by a smartphone application; MiX Mobile, a portfolio of smartphone applications; MiX Insight Analyser, which enables self-service data interaction with fleet managers; and MiX Mobitech, a dispatch and service monitoring solution that allows customers to create tasks for their workforce and monitor the progress of these assignments. The company also provides accessories, such as wireless kit, voice kit, satellite communication solution, driver code-plug and safety system, impact sensor, and keypad; and RIBAS display, which provides the driver with real-time event information in a visual and audible form inside the cab. In addition, it offers carbon offset initiative solutions; and recovery, development, integration, consumer, and fleet and driver safety consulting services. MiX Telematics Limited was founded in 1996 and is based in Midrand, South Africa.

Research

Thu, 01 Feb 2018 16:27:31 GMT

MiX Telematics Limited (NYSE: MIXT) ($11.90; $228.8M market cap), a leading global provider of fleet and mobile asset management solutions delivered as Software-as-a-Service (SaaS), announced Q3 fiscal 2018 results:

Revenues of $35.7 million vs $32.5 million in the prior year period and inline with analyst estimates of $35.6 million
EPS of $0.14 vs $0.13 in the prior year and slightly below analyst estimates of $0.15

Quotes from management:

“In Q3, MiX Telematics delivered the strongest quarter in the Company’s history. This is evidenced by over 21% year-on-year subscription revenue growth on a constant currency basis and the addition of 24,700 net new subscribers,” said Stefan Joselowitz, Chief Executive Officer of MiX Telematics. “In addition, we delivered record Adjusted EBITDA of R115 million at a margin of close to 26%. This was the sixth consecutive quarter of margin expansion and continues the great progress towards our longer-term target of 30% plus. MiX remains well positioned to maintain the momentum for the remainder of fiscal 2018 and beyond, given the ongoing strong demand from new and existing customers, as well as the growing pipeline of opportunities worldwide.”

Increased full year 2018 guidance:

Expects full year 2018 revenues to be $141.6 million to $142.0 million up from prior guidance of $117.9 million to $119.8 million. Analyst estimates for full year 2018 revenues are $139.7 million.
Expects full year 2018 Non-GAAP EPS to be $0.48 to $0.51 vs prior guidance of $0.39 to $0.41. Analyst estimates for full year 2018 EPS are $0.51.

On September 20, 2017, we added MIXT to our Buy on Pullback Mock Portfolio 6.0 due to what we felt was a muted reaction to strong Q1 2018 results. The stock was trading at $9.30.

Research

Fri, 19 Jan 2018 17:07:07 GMT

MiX Telematics Limited (NYSE: MIXT) ($12.12; Market Cap $248.2 million), is a leading global provider of fleet and mobile asset management solutions delivered as Software-as-a-Service (SaaS). In early September 2017 we stated we established a long position and issued our RFT on MIXT. Shares were trading at $9.60. We are not long MIXT as this time, but the stock remains a Mock Buy On Pullback Portfolio holding. We are thinking about re-establishing a position.

Below bullish take on the MIXT story, provided to us by GeoInvesting member Matt Kolb who is bullish on MIXT:

The majority of MIXT’s clients are oil natural gas and commodities driven, so increased prices will get them spending on telematics again. Depressed oil and gas prices hurt the company in 2016.
ELD mandate was implemented in late December. The company has said that customers were reaching out to them to be in compliance and that it would provide a tailwind for many quarters out.
The South African Rand has appreciated 12% in the third quarter. Mixt translates the South African Rand back to dollars for US report, which offers a boost to revenues.
There is a $20 million buyback and the company has zero debt. MIXT’s forward EV/EBITDA of 6 is the cheapest in its sector.
MIXT’s CEO has stated he would buy back every share if he could and would be open up to a buyout at a reasonable price.

Research

Thu, 02 Nov 2017 14:59:45 GMT

MiX Telematics Limited (NYSE: MIXT) ($10.03; Market Cap $226.4 million), a leading global provider of fleet and mobile asset management solutions delivered as Software-as-a-Service (SaaS), announced its Q218 results:

Total revenue at $30.3 million vs. $27.1 million in prior year and ahead of analyst estimates of $28.2 million
Adjusted earnings per ADS at $0.10 vs. $0.06 in prior year and ahead of analyst estimates of $0.06

On September 20, 2017 we added MIXT to our Buy on Pullback Mock Portfolio 6.0 due to what we felt was a muted reaction to strong Q1 2018 results.

Comments from management:

“MiX reported a very strong second quarter, highlighted by our ability to exceed expectations across all key operating metrics,” said Stefan Joselowitz, Chief Executive Officer of MiX Telematics. “Our 18% year over year subscription revenue growth on a constant currency basis was broad-based, driven by uptake from our premium fleet customers globally. Additionally, this is the fifth consecutive quarter of adjusted EBITDA margin improvement. We are confident in our ability to maintain the momentum as we continue to execute our strategic initiatives and remain committed to achieving our longer-term adjusted EBITDA margin target of 30% plus.”

The company raised its full year FY18 guidance for both revenue and profit. The company now anticipates full year revenue in the range of $117.9 - $119.8 million and adjusted earnings per diluted ADS in the range of $0.39 - $0.41. Analyst estimates call for sales of $116.2 million and EPS of $0.29 for fiscal 2018.

Research

Wed, 20 Sep 2017 15:40:50 GMT

Adding MIXT to Buy on Pullback Mock Portfolio 6.0

We are adding MIXT ($9.30), a South Africa-based provider of fleet and mobile asset management solutions, to our Buy on Pullback Mock Portfolio 6.0. MIXT joins industrial hardware, security and metal products company EML ($26.50) as our second stock in the portfolio.

While MIXT shares never really pulled back since reporting strong Q1 2018 results on August 3, 2017, we feel the reaction to the strong report was somewhat muted. Recall that this Mock Portfolio series looks for stocks that react negatively or have muted reaction to good news.

Based on P/S multiples closer to peer averages of MIXT, we feel shares could see upside of 50% in the near term.

You can see our full reasons for tracking note from September 5, 2017here.

Research

Tue, 05 Sep 2017 14:46:45 GMT

**RFT (Reasons For Tracking) & Call to Action

We are looking to establish a long position in MIXT ($9.59). MIXT is an interesting microcap selection in that shares are fairly liquid. In our May 26, 2017 email we stated we were keeping a close eye on MIXT as it may have finally reached an inflection point. The company reported strong Q4 2017 results and offered bullish 2018 financial guidance. On August 3 and August 8, 2017 we highlighted the Company’s strong Q1 2018 results and information arbitrage we noticed in the conference call transcript. You can see our past coverage here.

If you have been following our coverage on fleet management company $PNTR (also a GeoBargain), you may recall that we mentioned that we were also interested in MIXT.

Co-founder Maj and GeoInvesting Analyst Siggy Eggert had a chance to speak with management. Since we already discussed the telematics industry in our PNTR report we are just going to offer an outline with some of our takeaways from our conversation with the company.

See our full outline here.

Reasons For Tracking

Tue, 05 Sep 2017 13:36:10 GMT

MIXT Interview Cliff Notes - Reasons For Tracking (RFT)

We are looking to establish a long position in MIXT. MIXT is an interesting microcap selection in that shares are fairly liquid.

If you have been following our coverage on fleet management company PNTR (GeoBargain), you may recall that we mentioned that we were also interested in MIXT.

MIXT first caught our attention when it issued strong 4Q 2017 (Fiscal year ends March) results on May 26th 2017. You can read all our research notes on MIXT here . After a strong first quarter 2018 , which was announced August 3rd, we reached out to the company to expand on our understanding.

Co-founder Maj and GeoInvesting Analyst Siggy had a chance to speak with management. Since we already discussed the telematics industry in our PNTR report we are just going to offer an outline with some of our takeaways from our conversation with the company.

MiX Telematics Limited provides fleet and mobile asset management solutions through software-as-a-service delivery model worldwide. The company offers fleet solutions, including MiX Fleet Manager Premium that provides access to secure information about drivers and vehicles; It also provides consumer solutions, including Matrix that provides vehicle tracking, telematics, and personal safety services; and Beame, a wireless device, which offers mobile asset tracking and recovery services. In addition, the company provides value added services comprising driver communication, collision prevention and reduction, satellite communication, driver identification, trailer tracking, field services management, driver engagement, fuel security, outsourced control room, and driver management solutions, as well as voice kits and keypads, and in-vehicle camera. MiX Telematics Limited was founded in 1996 and is based in Midrand, South Africa.

Management made a solid impression on us and seems keen to develop a solid shareholder base, slowly over time. There is no rush to make an acquisition and management is satisfied to grow the business organically, while at the same time buying back shares to increase shareholder value. Management is conscious about the fact that they are trading at a depressed valuation compared to peers, which makes acquisitions using shares rather unattractive. This aligns with the commentary of Q1 2018 conference call :

“We will continue to look at a couple of things. We've recognized that we have to close this valuation gap to put us in a better position to be able to do acquisitions. In the meantime, we're extremely focused on organic growth. We are awash with opportunities, and we need to unlock those opportunities”

Pre-IPO Highlights

1. The company is located in South Africa.

2. Company was founded in 1995

Created Global System for Mobile (GSM) device that worked through cellular networks by triangulation .

3. Launched first GSM commercial product in 1996

4. Over time, data capacity increased, which created new sales channels

5. A 2006 acquisition gave the company global presence

6. On the heels of modest top line growth and healthy bottom line growth, the company Completed its IPO in 2014.

Post IPO Highlights

1. Very asset light product in that hardware installation is usually carried by customer or third party.

2. 73% of subscription revenue comes from fleet operators

3. 83% Of sales are from software (SaaS)

4. Customer base of over 5,000 fleet operators with steady growth in fleets and subscribers.

5. New contract with a feet operator in Europe has not had significant impact yet

6. At near 70%, gross margins are at tier one SaaS levels

7. EBITDA Goal is 30% vs. current margin of just below 20%

8. Over the last three years, and basically right after the company went public, top line growth was stagnant on a USD basis (March yearend) …

…but on a constant currency basis the business has produced about 10-15% growth across the board, which was being offset by a weakening South African Rand. This trend has been distorted by US financial reporting, and hidden the growth on a constant currency basis for the last three years. Not many investors probably pay attention to this factor. While still a risk, management and economists believe this exchange rate trend will reverse or at least stabilize. We have seen that trend already start in 2017.

9. Over the past three years, management has taken actions to improve its growth profile:

Reduce costs
Retool its product fleet product offering by including a full product suite option

*High margin

*Allowed company to more aggressively pursue larger fleet operators who tend to be sticky customers.

*Majority of new customers opt for the bundled offering

*Comprises over 2/3 of sales, with a 95% retention rate.

10. The company is ahead of cost efficiency actions and has reached a point where the bottom line should begin to materially benefit from these actions.

11. Contributing to the positive margin trend and accelerated revenue is an improving product mix with more software bundle sales as compared to isolated software features and continuedexpansion into international markets. Also, the software component of the product mix is increasing with hardware and other revenue at R70 million ($5.5m) down 4% yoy for Q1 2018, while overall revenues grew by 7% to R405.7 million ($31.5 m), and subscription revenues grew 9.5% yoy from R306 million ($23.7m) to R335 ($26m). After a period of heavy investments into infrastructure and technology management expects margins to improve. 12. The company reiterated its 2018 revenue guidance of $124.5 to $126.7 million on the last earnings call, and increased its EBITDA target slightly from R364 million to R383 million to R375 million to R395 million ($28.6 million to $30.1 million).

12. Info arb from conference call. Here is an exchange between analyst Brian Peterson of Raymond James and Stefan Joselowitz, President and CEO of MIXT which certainly portrays confidence and optimism in the business.

“Brian Peterson

Got it. And maybe one more if I can sneak it in here. Obviously, you bought back some shares this quarter. Just any updated thoughts on how you look to deploy your capital?

Stefan Joselowitz

Yes. So we've got a mandate from our board up to - close to plus R280 million. I think it was off the top of my head. We've spend R20 million of that. So we've got a long way to go, and we certainly view value in our stock. It's no secret to anybody that knows me that I believe our stock despite the progress that we've made in recent months is significantly undervalued. The prior gap comparison remains unacceptable to me, and I will continue to work diligently to close that gap, but we've got a great business. And if I could buyback my whole company at these levels, I would be so in a heartbeat. Clearly, we know that, that's not feasible, but I couldn't think of a better use of that cash right now than our own stock at this valuation level.”

While the business is moving nicely and steadily in the right direction, it currently trades at hefty discounts to peers with a similar business model and circumstances (we used fleet management operators with internationally diversified revenue sources as peers).

Note how MIXT is especially cheap on a forward basis, leading us to believe that if the company can deliver, a stock price appreciation of almost 50% or more can be possible without a multiple expansion.

	EV/EBITDA	P/Sales	P/E
MIXT Trailing	15.7	1.8	23
MIXT Forward	6.2	1.4	17

Peers Trailing	16	2.5	26.6
Peers Forward	14.5	2.1	25.9

It is noteworthy that MIXT has in the recent 3 quarters increased their guidance two times or came in at the high range of it. This trend and momentum is encouraging.

Notable management quotes from recent conference calls regarding guidance:

Q3 2017 February 2nd 2017

“Given the better than expected third quarter results combined with our expectation of continued momentum of our large fleet customers as well as improved operating leverage in the business, we are increasing our subscription revenue and profitability guidance for fiscal 2017”

Q4 2017, May 25th 2017

“In the fourth quarter, total revenue came in at ZAR391 million. Of this total, subscription revenues were ZAR322 million and exceeded the high-end of our guidance range.”

1Q 2018, August 5th 2017

“In the first quarter, total revenue came in at R406 million. Of this total, subscription revenues were R335 million, up approximately 10% and towards the high end of our guidance range.”

“Paul will provide more detail in a few minutes, but we are reiterating our fiscal 2018 subscription revenue guidance given the strong pipeline of firm orders and sales opportunities. In addition, we are increasing our adjusted EBITDA guidance range to reflect the strong Q1 results and the expectation of the margin accretion to continue, given the efficiencies we are achieving through the organization.”

Research

Tue, 08 Aug 2017 04:00:00 GMT

MIXT ($8.59) - On August 3, 2017 we highlighted MIXT’s Q1 2018results. In our morning email we stated:

“Shares have typically had slow reactions to earnings reports.”

Keeping to form, shares opened relatively flat, gaining strength as the day went on, eventually hitting a new 52 week high of $8.85. Today we want to highlight an InfoArb presented in the Q1 2018 conference call. We wanted to highlight this exchange between analyst Brian Peterson of Raymond James and Stefan Joselowitz, President and CEO of MIXT which certainly portrays confidence and optimism in the business.

Brian Peterson

Got it. And maybe one more if I can sneak it in here. Obviously, you bought back some shares this quarter. Just any updated thoughts on how you look to deploy your capital?

Stefan Joselowitz

Yes. So we've got a mandate from our board up to - close to plus R280 million. I think it was off the top of my head. We've spend R20 million of that. So we've got a long way to go, and we certainly view value in our stock. It's no secret to anybody that knows me that I believe our stock despite the progress that we've made in recent months is significantly undervalued. The prior gap comparison remains unacceptable to me, and I will continue to work diligently to close that gap, but we've got a great business. And if I could buyback my whole company at these levels, I would be so in a heartbeat. Clearly, we know that, that's not feasible, but I couldn't think of a better use of that cash right now than our own stock at this valuation level.

Research

Thu, 03 Aug 2017 14:41:55 GMT

MIXT ($8.24) announced Q1 2018 results:

Sales of $31.1 million vs $29.0 million in the prior year
EPS of $0.10 vs $0.04 in the prior year
Raises full year 2018 sales guidance to $124.5 million to $126.7 million from $123.5 to $125.8 million
Raises full year EPS guidance to $0.38 to $0.42 from $0.34 to $0.38

Commentary from management:

“We have booked a solid start to our new fiscal year. In particular, we enjoyed strong performance from our premium fleet portfolio globally which resulted in a return to mid-teen subscription revenue growth on a constant currency basis,” said Stefan Joselowitz, Chief Executive Officer of MiX Telematics. “As is evidenced by our steadily improving bottom-line performance, the company has reached an inflection point in regards to margin accretion, particularly as MiX is moving out of a heavy investment cycle into a phase where we are starting to enjoy the returns on these investments. Looking forward, we are confident in our ability to execute our strategic initiatives to achieve our longer term targeted adjusted EBITDA margin of 30% plus.”

Shares have typically had slow reactions to earnings reports. We are keeping a close eye on MIXT today.

Research

Fri, 26 May 2017 15:30:54 GMT

MIXT ($6.92) - We are keeping an eye on this SaaS company as it may have finally reached an inflection point. Yesterday (pre-market) the company announced its fiscal 2017 Q4 results (Fiscal year end March):

Sales of $29.2 million vs $28.6 million in the prior year and slightly ahead of analyst estimates of $28.5 million
Adjusted EPS of $0.10 vs $0.07 in the prior year and well ahead of analyst estimates of $0.02.

Quotes from management:

"Our fourth quarter marked a strong end to the year. MiX’s ability to exceed expectations was driven by ongoing strength across the portfolio globally which resulted in a return to double digit subscription revenue growth on a constant currency basis,” said Stefan Joselowitz, Chief Executive Officer of MiX Telematics. “During fiscal 2017, the company reached an inflection point in regards to margin accretion, particularly as MiX is moving out of a heavy investment cycle into a phase where we are starting to enjoy the returns on these investments. We are scaling the overall operations and have entered fiscal 2018 with very good momentum. We expect a year of strong subscription revenue growth and margin expansion, and looking forward we are confident in our ability to execute our strategic initiatives to achieve our targeted adjusted EBITDA margin of 30% over the long term.”

The company offered full year 2018 guidance:

Sales to be $123.5 to $125.8 million, analyst estimates call for $121.5 million
Adjusted EPS to be $0.34 to $0.38, well above consensus estimates of $0.07

We have some history with MIXT, when back in 2015 we initiated a long position as a possible takeover play. In early 2015, the Company announced its intent to explore strategic alternatives. However, in August of 2015 MIXT announced it had concluded its strategic review and decided that executing on its growth plan was best path for maximizing shareholder value. See a full summary of our past research on MIXT here.

The stock was trading in the $7 level and briefly breached $8 per share as investors speculated on the possible takeover. Upon the completion of the strategic review with no buyout, shares began a prolonged slump dipping below $4 per share before regaining its footing in mid-2016. We will track MIXT with a cautious eye to monitor if management finally has the company on the right path.

In related news, Canaccord Genuity reiterated MIXT with “Buy” rating and raised price target to $12 from $10.50.

Research

Wed, 09 Sep 2015 14:56:23 GMT

Closed our long position in MIXT ($5.78)

Yesterday, via premium tweet we stated we had closed our long position in MIXT to move on to other opportunities. On April 29, 2015, we initiated a long position in MIXT based on a bullish Seeking Alpha article which echoed our sentiment on the story of the company being a likely SaaS takeover candidate. Shares were trading at $7.00 at the time of our email and reached a high of $8.13 on June 17, 2015. On August 26, 2015 the company announced it had concluded its strategic review and decided that executing its growth plan was best path to maximize shareholder value, taking the buyout possibility off the table.

Research

Wed, 26 Aug 2015 14:24:58 GMT

Reevaluating our MIXT long position; shares may suffer in the near-term but rebound in the mid-term. We will issue alerts if we decide to sell or add more on a pullback.

On April 29, 2015 we initiated a long position in MIXT ($6.32) based on a bullish Seeking Alpha article which echoed our sentiment on the story of a likely SaaS takeover candidate. Shares were trading at $7.00 at the time of our email and reached a high of $8.13 on June 17, 2015. Today, the company announced it has concluded its strategic review process and believes continuing to execute its strategic growth plans was the best path to maximize long term shareholder value. The company also announced it is reintroducing a quarterly dividend. We believe that MIXT shares could take a hit on this news, but its valuation (EV/S of 1.07) compared to others in the space such as FLTX trading at an EV/S of 6 could eventually bring long-term shareholders back into the story as the company continues to execute its turnaround strategy which is expected to accelerate by September of 2017.

Research

Tue, 21 Jul 2015 14:20:53 GMT

Further update on MIXT

On April 29, 2015, we initiated a long position in MIXT ($7.11) based on a bullish Seeking Alpha article which echoed our bullish sentiment on the story. Shares were trading at around $7.00 at the time of our e-mail. Shares had a brief run above $8.00 before retracing to current levels during the Greek drama. On June 18, 2015, we stated that we had added to our long position as we continued our due diligence. Today, another bullish article was published, expanding on many of the catalysts that originally introduced us to the MIXT story.

The author believes shares of MIXT are extremely undervalued, stating that if MIXT reached a low end EV/EBITDA multiple of its competitors, shares would warrant a 121% increase. Highlights of the article include:

MiX's superior geographic reach is a significant advantage as global corporate customers increasingly prefer to use a single vendor for telematics.
Retention rates north of 90% coupled with double-digit subscription growth in an emerging industry present large opportunity for growth.
Cash pile equivalent to 1/3 of the company’s market cap enables them to make strategic moves to increase business momentum.
MiX’s EV/EBITDA multiple reaching the low end of their competitors' would warrant a 121.3% share price appreciation, given depressed valuation.
Multiple cautionary statements indicate that company is considering strategic alternatives, and value could be soon unlocked.

Research

Thu, 18 Jun 2015 13:46:13 GMT

Added to our long position in MIXT

On April 29, 2015 we initiated a long position in MIXT ($8.13) based on a bullish Seeking Alpha article which echoed our sentiment on the story. Shares were trading at $7.00 at the time of our email. The author’s summary included:

MIXT is my best contrarian pick, and my largest portfolio holding, as of writing.
The company issues two consecutive cautionary announcements, indicating that it is "exploring strategic alternatives." We believe that an acquisition is near, and we explain why.
My analysis of precedent M&A transactions concludes that MiX is attractive as an acquisition target, as it is undervalued, and holds unique qualities and assets.
The valuation is absurdly cheap, both as a going concern and as a resource conversion opportunity.
As a stand-alone going concern, I estimate MiX to be worth at least $12, representing 2.5x EV/Sales or 14x EV/EBITDA (using FY'15 projected EBITDA of $22M). Based on precedent M&A transactions in the industry, MiX is worth at least that amount, and maybe even more.

Research

Wed, 29 Apr 2015 04:00:00 GMT

GeoInvesting follows content on public companies all over the web so that you don’t have to. As part of our premium service, we find content that we think is actionable in nature and strong in its diligence, we vett it, and we then pass it along to you.

Today, we’re passing along this article on Mix Telematics (MIXT) by Tal Davidson, submitted to Seeking Alpha as a contrarian pick. MIXT is a stock we’ve been tracking for a few weeks now, due to its appeal as a SaaS-business conversion story. Mr. Davidson’s past articles on MIXT have been accurate and coincide with Geo’s thesis on the company.

Tal Davidson’s Summary on MIXT:

MIXT is my best contrarian pick, and my largest portfolio holding, as of writing.
The company issues two consecutive cautionary announcements, indicating that it is "exploring strategic alternatives." I believe that an acquisition is near, and I explain why.
My analysis of precedent M&A transactions concludes that MiX is attractive as an acquisition target, as it is undervalued, and holds unique qualities and assets.
The valuation is absurdly cheap, both as a going concern and as a resource conversion opportunity.

See the remainder of the article here.