Eroad Limited · NZX:ERD
Eroad — FY2017 Earnings Presentation
34 slides from Eroad's earnings presentation, May 30, 2017
Slide 1: Full Year Results Presentation
Full Year Results Presentation For the year ended 31 March 2017 30 May 2017
Slide 2: Important information
Important information EROAD Limited (“EROAD”) registered a prospectus in July 2014 This presentation may contain projections or forward-looking While reasonable care has been taken in compiling this presentation, (“Prospectus”) in relation to an initial public offering, copies of which statements re
Slide 3: Annual Results, Annual Report and Annual Meeting dates
Annual Results – Tuesday 30th May Annual Report – Thursday 29th June Annual Meeting – Thursday 3rd August
Slide 4: About EROAD
About EROAD • World first GPS based road user charging system in New Zealand • Operations in New Zealand, Australia, USA • Sole heavy vehicle technology supplier for California Road User Charge Pilot • 48,041 units installed across three countries • EROAD’s services offered include: 1. Tax complianc
Slide 5: About EROAD
About EROAD • Tax Compliance EROAD HARDWARE EROAD SERVICES EROAD CUSTOMERS • Calculation and payment of Road User Charges (RUC) • Calculation and payment of Weight Mile Tax (WMT) • Calculation of International Fuel Tax (IFTA) • Calculation of International Registration (IRP) • Electronic Logging Dev
Slide 6: About EROAD: North America market and FAST Act
About EROAD North America market FAST Act • EROAD has widened its focus beyond beachhead in Oregon to greater North America as IFTA, IRP and ELD opened new opportunities for • Federal government passed the FAST (Fixing America’s EROAD solutions Surface Transportation) Act, providing US$95m to states
Slide 7: How EROAD creates shareholder value
How EROAD creates shareholder value 1. Identify and foster market opportunities R&D and Business Development 2. Design, develop and validate solution with stakeholders e.g. California: Road Charge pilot e.g. USA: Electronic Logging Devices (ELD) Establish commercial Build long term sustainable 3. op
Slide 8: FY17 Results Overview
FY17 Results Overview
Slide 9: FY17 Highlights
FY17 Highlights EROAD investing to capture growth opportunities while continuing to grow strongly STRONG GROWTH OVER LAST YEAR DRIVEN BY MULTIPLE FACTORS • Increased revenue by 25% over last year • Strong growth in New Zealand in multiple markets • Total Contracted Units increased by 30% from 36,953
Slide 10: Progress since Half Year (September 2016)
Progress since Half Year (September 2016) Outlook at Half Year* Progress made in second half Continued growth in Australia/NZ market Achieved 41,939 (29% annual growth), despite install backlog Improvements from Ehubo2 countered by renewals, enterprise accounts Downward pressure on recurring revenue
Slide 11: FY17 Full Year Results
FY17 Full Year Results Continued strong revenue growth over last year with increased net loss driven by accounting treatment and US investment Actual Last Year %change Revenue ($000) 32,764 26,165 25% EBIDTA* ($000) 7,056 5,687 24% EBIDTA* margin 22% 22% 0% Net Profit/(loss) Before Tax ($000) (5,257
Slide 12: Future Contracted Income (FCI)
Future Contracted Income* (FCI) Grew FCI by 22%, creating $59m of future income for EROAD FUTURE CONTRACTED INCOME ($Millions) Established market Commercial market * Future Contracted Income is a non-GAAP measure used by EROAD which represents future hardware and SAAS income under non-cancellable lo
Slide 13: EROAD's Six Strategies: Unchanged
EROAD’s Six Strategies: Unchanged FY17 Grew units by 30% across all markets, despite ELD delay & install backlog 1. Grow existing Markets FY18 Expect continued growth in all markets, aided by ELD & clearing backlog FY17 Established sales and marketing to support sales across North America 2. Expand
Slide 14: Research and Development – Market focus
Research and Development – Market focus Focus of R&D investment moved toward ELD market opportunities 13
Slide 15: Outlook – FY18
OUTLOOK – FY18 Established Market (New Zealand & Australia) Development Markets Continued strong growth driven by: Continued engagement with US states considering • Large committed order book of over 6,100 units undertaking RUC pilots, funded by FAST Act • Continued customer focus on Health and Safe
Slide 16: Market Overview
Market Overview
Slide 17: North America – A year of investment for EROAD
North America – A year of investment for EROAD ELD launched in March 2017 Delivered ELD • Leveraged our world class single platform and R&D team • Delivered ELD on time, despite significant complexities • First in-cab ELD on the FMCSA register of ELD providers EROAD is 1 of only 5 fixed in-cab ELD
Slide 18: Commercial Market (North America)
Commercial Market (North America) NEW ZEALAND v NORTH AMERICA GROWTH SINCE • Total Contracted Units (TCU) increased 36% to 6,102 LAUNCH • Years unit growth subdued as market awaited launch of ELD 8000 NZ North America • Still broadly following growth experienced in New Zealand from launch 7000 6000
Slide 19: Established Markets (New Zealand and Australia)
Established Markets (New Zealand and Australia) • Total Contracted Units increased to 41,939 EROAD ANNUALISED RUC COLLECTION • Increased Annualised RUC collection to $485 million and collected $600,000,000 over $1.4 Billion of RUC since 2010 • Grew market share in New Zealand with RUC collected grow
Slide 20: New Zealand - Heavy Vehicle RUC Market and Market share
New Zealand - Heavy Vehicle RUC Market and Market share EROAD continued to grow its market share in the Heavy Vehicle (>3,500kg) market TOTAL HEAVY VEHICLE RUC COLLECTIONS HEAVY VEHICLE ELECTRONIC RUC MONTHLY (ANNUALISED) MARKET SHARE $1,200,000,000 45% 38% 40% 34% $1,000,000,000 35% 29% $800,000,00
Slide 21: New Zealand – the first three months
New Zealand – ”the first three months” Jason Dale (CFO) Review of business systems and processes • Systems near capacity • Processes require automation Review of amortisation • Business model proven • Better match amortisation with revenue Review of funding • Continued high rental demand • Better ma
Slide 22: Operational Performance
Operational Performance [=4
Slide 23: Total Contracted Units (TCU)
Total Contracted Units* (TCU) TCU grew by 30% despite subdued US growth TOTAL CONTRACTED UNITS *Total Contracted Units is a non-GAAP measure used by EROAD which represents the total units subject to a customer contract and includes both Units on Depot and Units pending installation. 22
Slide 24: Pricing Dynamics
Pricing Dynamics Average pricing per unit fell marginally during FY17 RETENTION RATE PRODUCT MIX RENTAL VERSUS SALE 6% 8% 24% 99% 70% 92% For a full description of Retention Rate see page 33 Ehubo/Tubo EhuboLITE Elocate Rented Sold DOWNWARD DRIVERS OF AVERAGE PRICING UPWARD DRIVERS OF AVERAGE PRICIN
Slide 25: EROAD team
EROAD team Staff number growth was impacted by US preparation for FY18 sales FY17 FY16 Increase In-Market Delivery (Sales and customer operations) 111 82 29 Business development, manufacturing, HR & corporate 34 32 2 R&D 84 82 2 Total 229 196 33 DEVELOPMENTS DURING THE YEAR • Increase in staff numbe
Slide 26: Research and Development in FY17
Research and Development in FY17 R&D focused on the North American ELD plus Health and Safety suite for NZ • R&D program on track having: • Released ELD on schedule in March 2017 RESEARCH AND DEVELOPMENT a CAPITALISED* $10.0 • Continued to expand IFTA solution across more US states $9.0 • Begun deve
Slide 27: Financial Performance
Financial Performance
Slide 28: FY17 Revenue
FY17 Revenue REVENUE GROWTH FY16 TO FY17 $35,000 $1,904 $32,764 $30,000 $4,695 $25,000 $26,165 $20,000 (000) $15,000 $10,000 $5,000 $- 2016 Growth Established Markets Growth Commercial Market 2017 • Revenue up 25% on last year * Minor reduction in average prices per unit • Some revenue does not grow
Slide 29: FY17 EBITDA and Net Profit/(loss) before Tax
FY17 EBITDA and Net Profit/(loss) before Tax EBITDA KEY POINTS ('000) FY17 FY16 Movement 1. Established Markets 1. Continued strong demand from both heavy and light markets Established Market* 14.9 12.5 2.4 2. Minor reduction in average price per unit Commercial Market* (3.9) (3.3) (0.6) 3. Grew pen
Slide 30: FY17 Balance Sheet
FY17 Balance Sheet KEY POINTS FY17 FY16 Movement • Cash movement driven by three major components, 1) Cash invested in $m $m $m R&D,$13.4m; and 2) Cash generated from operations (excl. R&D Cash 0.9 7.9 (6.9) expensed) of $10.6m and 3) Partial funding of leased assets along with Restricted bank accou
Slide 31: FY17 Cash Flow
FY17 Cash Flow KEY POINTS FY17 FY16 Movement EROAD continued to invest heavily in Leased Units and Intangible $'m $'m $'m Assets during the year. Cash flows from Operations 6.6 3.4 3.2 Operations Purchase of Property and Equipment (10.5) (12.0) 1.5 • Improved cash flows driven by additional units ad
Slide 32: Cash utilisation for the months to March 2017
Cash utilisation for the 12 months to 31 March 2017 EROAD expect to have sufficient cash and debt facilities to fund growth in FY18 ANNUAL CASH UTILISATION for year to 31 March 2017 a March 2017 June 2017 35.0 Net cash of $2.8m required 30.0 10.8 13.4 to fund operations in FY17, lowering in FY18. 19
Slide 33: Questions?
Questions? [=4
Slide 34: Non GAAP measures
Non GAAP measures 1. Units on Depot The number of EROAD devices installed in vehicles and subject to a service contract with a customer 2. Units Pending Installation The number of EROAD devices subject to a service contract with a customer but pending Installation 3. Total Contracted Units (TCU) TCU