Slide 1: Recapitalising Our Roadmap for Growth: Market Update & Equity Raise
For personal use only EROAD (NZX: ERD ASX: ERD) RECAPITALISING OUR ROADMAP FOR GROWTH: MARKET UPDATE & EQUITY RAISE 7 September 2023
Slide 2: Disclaimer
Future performance Currency DISCLAIMER This presentation includes certain “forward-looking statements”. These forward-looking statements are All currency amounts in this presentation are in NZ dollars unless stated otherwise. not historical facts but rather are based on EROAD’s current expectations,
Slide 3: Executive Summary
EXECUTIVE SUMMARY ▪ During 2022 EROAD commenced a comprehensive strategic review of the business which included significant cost-out initiatives, rationalisation of its product suite and a more focused and disciplined Strategy strategy for executing its growth plan execution For personal use only ▪
Slide 4: Contents
CONTENTS Page reference 1. OVERVIEW OF EROAD Page 5-10 For personal use only 2. INVESTMENT HIGHLIGHTS Page 11-19 3. FINANCIAL PERFORMANCE UPDATE & GUIDANCE Page 20-24 4. EQUITY RAISE & DEBT FACILITIES Page 25-29 EQUITY RAISE DETAILS Page 26-27 TIMETABLE Page 28 COMMITTED 3-YEAR DEBT FACILITY Page 29
Slide 5: Overview of EROAD
For personal use only 01 OVERVIEW OF EROAD NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES PAGE 5
Slide 6: EROAD: More Than Telematics
EROAD: MORE THAN TELEMATICS For personal use only DELIVERING INTELLIGENCE YOU CAN TRUST, FOR A BETTER WORLD TOMORROW. We provide end-to-end technology solutions which connect vehicles, assets and operations to help businesses make real-time decisions from real-time data. Helping run safer, greener,
Slide 7: Our Roadmap for a Better World
OUR ROADMAP FOR A BETTER WORLD WE HAVE IMAGINED THE FUTURE WE ARE HELPING CUSTOMERS CREATE For personal use only SAFER DRIVERS = SMART = PREDICTION = SAFER ROADS SUSTAINABLE PREVENTION We believe that technology can aid We believe that Operators will make We believe that data can be utilised drivers
Slide 8: Empowering Customer Transformations
EMPOWERING CUSTOMER TRANSFORMATIONS OUR SUCCESS SO FAR HAS BEEN BUILT ON CONSISTENTLY DELIVERING OUR VALUE For personal use only INSIGHT, CONTROL PARTNERSHIP FOR SIMPLE, INTUITIVE & ROI GROWTH SYSTEMS EROAD’s value for customers is Our goal is to become a system of EROAD‘s customers generate billion
Slide 9: Focus for FY24 – Execution of Strategy (1/2)
FOCUS FOR FY24 – EXECUTION OF STRATEGY (1/2) WE ARE HERE For personal use only Turnaround the core Future Growth Approach Corporate overhead reduction Efficiency in ANZ / Growth in NA Growth in NA Verticals Timing FY23 FY24 ~3-5 years Headcount reduction Accelerated 3G replacement program Value
Slide 10: Focus for FY24 – Execution of Strategy (2/2)
FOCUS FOR FY24 – EXECUTION OF STRATEGY (2/2) WE ARE HERE For personal use only Turnaround the core Future Growth Approach Corporate overhead reduction Efficiency in ANZ / Growth in NA Growth in NA Verticals Timing FY23 FY24 ~3-5 years Continue customer service segmentation Value focus Customer win
Slide 11: Investment Highlights
For personal use only 02 INVESTMENT HIGHLIGHTS NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES PAGE 11
Slide 12: EROAD – Well Positioned with Strong Market Fundamentals
EROAD – WELL POSITIONED WITH STRONG MARKET FUNDAMENTALS For personal use only 1 2 3 ATTRACTIVE MARKET PROVEN TRACK TANGIBLE ROI Exposure to a large North American RECORD Solutions generate tangible benefits market with attractive growth Leading New Zealand operations and and ROI to customers enablin
Slide 13: Clearly Defined Growth Strategy for Attractive North American Market
CLEARLY DEFINED GROWTH STRATEGY FOR ATTRACTIVE NORTH 1 AMERICAN MARKET For personal use only North American Total Telematics Market1 Key Trends EROAD Focus Today’s US Total 1◼ Demand for advanced Demand for bespoke/custom workflow workflow-based solutions solutions Addressable Market Estimated 2030
Slide 14: Focussed on Three Core Markets, Strong Leadership Position at Home
FOCUSSED ON THREE CORE MARKETS, STRONG LEADERSHIP 2 POSITION AT HOME For personal use only New Zealand Australia North America Solid growth & profitable business with a focus Opportunities to leverage Trans-Tasman fleets Solid growth, with momentum building in one of on multi-product adoption the wo
Slide 15: Solutions Delivering Customers Evidence-Based ROI (1/2)
SOLUTIONS DELIVERING CUSTOMERS EVIDENCE-BASED ROI AS 3 THEY PURSUE SMARTER, SAFER & MORE SUSTAINABLE TRANSPORTATION (1/2) For personal use only COMPLIANCE AND ASSURANCE HEALTH & SAFETY PRODUCTIVITY SUSTAINABILITY • RUC and fuel tax compliance • Driver behaviour monitoring and • GPS tracking and geof
Slide 16: Solutions Delivering Customers Evidence-Based ROI (2/2)
SOLUTIONS DELIVERING CUSTOMERS EVIDENCE-BASED ROI AS 3 THEY PURSUE SMARTER, SAFER & MORE SUSTAINABLE TRANSPORTATION (2/2) For personal use only Vertical Measurable customer benefits1 Select customer testimonials2 “My overall experience with the product has been $50,000 64% positive. Data harvested h
Slide 17: Long Standing, Trusted Partnerships with Blue Chip Clients
LONG STANDING, TRUSTED PARTNERSHIPS WITH BLUE CHIP 4 CLIENTS New Zealand and Australia North America For personal use only 58% 42% split Unit of FY23 total units by market (New Zealand and Australia) of FY23 total units by market (North America) Customer relationships Fleet size of 500 - 6,000+ Flee
Slide 18: Ability to Benefit from Attractive Unit Economics
ABILITY TO BENEFIT FROM ATTRACTIVE UNIT ECONOMICS DRIVEN 5 BY FURTHER GROWTH AND COST OUT INITIATIVES Illustrative fixed and upfront cost break even as a function of units (FY23)1 For personal use only Break-even average connections Actual average connections throughout FY23 Pro-forma 350 annualised
Slide 19: Highly Engaged Team with Significant Capability
HIGHLY ENGAGED TEAM WITH SIGNIFICANT CAPABILITY IN THEIR 6 RESPECTIVE FIELDS For personal use only MARK HEINE MARGARET AKINYEMI KOYI KONRAD STEMPNIAK CEO WARRINGTON PRESIDENT NORTH EXECUTIVE GENERAL CFO AMERICA, CHIEF MANAGER ANZ INNOVATION OFFICER STEEN ANDERSEN AARON LATIMER SHELLEY PRENTICE CHIEF
Slide 20: Financial Performance Update & Guidance
For personal use only 03 FINANCIAL PERFORMANCE UPDATE & GUIDANCE NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES PAGE 20
Slide 21: FY23 Guidance Achieved
FY23 GUIDANCE ACHIEVED REVENUE GROWTH ACROSS ALL MARKETS AND PROGRESSING COST OUT PROGRAM Normalised Revenue1 Operating Costs2 Normalised EBIT3 For personal use only $m $m $m 7 165.3 126.3 Guidance 5.1 (159 to 164) 5 4.5 3 113.6 86.3 91.6 1 81.2 61.2 54.1 -1 -0.9 -3 Guidance -5 (-6 to -3 ) -4.5 -7 F
Slide 22: Trading Update
TRADING UPDATE DELIVERING AGAINST OUR STRATEGY Current trading update as at 31 August • 100,000 connections have been achieved in North For personal use only America ▪ FY24 HAS STARTED Enterprise • Due to the continued growth and right-sizing, customer STRONGLY WITH SUCCESS 5,300 5,250 7,414 ACROSS
Slide 23: Focus for FY24 – Outlook
FOCUS FOR FY24 – OUTLOOK EXECUTION AGAINST STRATEGIC PLAN DELIVERING RETURN TO PROFITABILITY For personal use only Guidance reiterated FY24 Guidance On track for FY24 guidance: Revenue $175m – $180m • Revenue growth of between 6 – 9% Normalised EBIT $0m to $5m • Cost-out program to continue R&D spen
Slide 24: Financials – Key Metrics and Targets
FINANCIALS – KEY METRICS AND TARGETS Targeting Free Cash Flow1 neutrality in FY252, and a positive Free Cash Flow1 in FY26. Implementation of refreshed strategy will provide pathway to sustainable, profitable growth For personal use only Goal Metric FY22 FY23 Strategy FY26 Targets 11% - 13% AMRR $13
Slide 25: Equity Raise & Debt Facilities
For personal use only 04 EQUITY RAISE & DEBT FACILITIES NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES PAGE 25
Slide 26: Equity Raise Details (1/2)
EQUITY RAISE DETAILS (1/2) ▪ $50m fully underwritten Equity Raise, comprising (approximately) a: ― $11.6m Institutional Placement to selected Institutional Investors Offer size and ― $38.4m 1 for 2.06 Entitlement Offer (being the pro-rata accelerated renounceable entitlement offer of New Shares deta
Slide 27: Equity Raise Details (2/2)
EQUITY RAISE DETAILS (2/2) Ranking ▪ New Shares issued under the Entitlement Offer and Institutional Placement will rank equally with Existing Shares ▪ The Equity Raise is fully underwritten by Goldman Sachs New Zealand Limited and Canaccord Genuity (Australia) Limited on customary terms for an offe
Slide 28: Timetable
TIMETABLE Event Key Dates Dates and Times are Subject to Change without Notice For personal use only Record date – Institutional and Retail Entitlement Offer 7.00pm (NZST) or 5.00pm (AEST), 8 September 2023 Institutional Placement, Institutional Offer and Institutional Bookbuild Trading halt commenc
Slide 29: Committed 3-Year Debt Facility
COMMITTED 3-YEAR DEBT FACILITY EROAD has secured commitments for a new 3-year debt facility, which will For personal use only replace the current facility which had been due to mature in FY25. The new facility results in the extension of credit facilities to September 2026 • $80m new facility amount
Slide 30: Key Risks
For personal use only 05 KEY RISKS NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES PAGE 30
Slide 31: Key Risks
KEY RISKS This section describes the key risks that EROAD has identified in connection with the Equity Raise. EROAD considers it is important that these key risks, and their potential effect on the future operating and financial performance of EROAD, and EROAD’s share price, are specifically highlig
Slide 32: Risk: New Zealand's 3G Network Sunset
Risk New Zealand’s 3G New Zealand’s 3G network will start to switch off from 31 August 2024. While the affected EROAD products will work on the 2G network, it is anticipated that this network Network Sunset will also switch off sometime in the future. This requires EROAD and other telematics provide
Slide 33: Risk: Product and Platform Reliability
Risk Product and Platform Platform and product stability is essential for reliable services and customer satisfaction. Any bugs, reliability and data quality issues can impact on customer interactions Reliability Risk and EROAD’s reputation. EROAD’s refreshed strategy aims to create a robust, stable
Slide 34: Risk: Key Person and Cybersecurity
Risk Key person risk EROAD's success depends on the expertise and dedication of its directors, key senior management, and staff as a whole. The departure of any key team member or a high rate of turnover could lead to disruptions in EROAD's day-to-day operations in the short term and potentially adv
Slide 35: Appendix & International Offer Restrictions
For personal use only APPENDIX & INTERNATIONAL OFFER RESTRICTIONS NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES PAGE 35
Slide 36: EROAD at a Glance
EROAD AT A GLANCE EROAD IS A TRANSPORTATION TECHNOLOGY SERVICES COMPANY THAT SIMPLIFIES TAX AND COMPLIANCE FOR ROAD TRANSPORT AND EMISSION REPORTING, CAPTURES DATA AND DELIVERS FLEET MANAGEMENT INSIGHTS THAT TRANSFORM FLEET PERFORMANCE, SAFETY AND VEHICLE MAINTENANCE. For personal use only Key highl
Slide 37: Sysco | Pivoting to Enterprise
SYSCO | PIVOTING TO ENTERPRISE ACCELERATED ROADMAP & STRENGTHENED SOLUTION ALLOWING FASTER PIVOT TOWARDS ENTERPRISE SALES For personal use only • Major North American food service operator with 15,000 delivery vehicles • 5-year agreement for fully-integrated CoreHub SaaS solutions to over 9,000 truc
Slide 38: EROAD Board
EROAD BOARD SUSAN PATERSON, CHAIR, INDEPENDENT DIRECTOR SARA GIFFORD, INDEPENDENT DIRECTOR - Professional Director with 25 years of governance - Director of Spiro, co-founder and Director of experience Activote (both based in NA) - Previously senior executive and consultant to - Previously Chief Sol
Slide 39: Glossary
Glossary AMRR (ANNUALISED MONTHLY RECURRING CY (CALENDAR YEAR) H1 (HALF ONE) NORMALISED REVENUE REVENUE) 12 months ended 31 December For the six months ended 30 September. A non-GAAP measure that excludes the one-off A non-GAAP measure representing monthly Recurring acquisition accounting revenue in
Slide 40: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS This presentation does not constitute an offer of entitlements (“Entitlements”) or new ordinary shares (“New Shares”) of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the Entitlem
Slide 41: For personal use only
For personal use only EROAD acknowledges the Indigenous Nations, First Peoples, Tangata Whenua and Custodians of the lands and waterways on which our offices reside in New Zealand, Australia and the United States of America. We express gratitude and appreciation to these peoples for sharing their cu