Eroad Limited · NZX:ERD
Eroad — Merger or Acquisition (July 2021)
39 slides from Eroad's merger presentation, Jul 14, 2021
Slide 1: Acquisition and Capital Raise Investor Presentation
For personal use only EROAD (NZX: ERD ASX: ERD) ACQUISITION AND CAPITAL RAISE INVESTOR PRESENTATION 14 JULY 2021 EROAD EROAD + CORETEX
Slide 2: Disclaimer
Important notice This Presentation is not an invitation or offer of securities for subscription, purchase or sale in any jurisdiction. The following notice and disclaimer applies to this presentation (Presentation) DISCLAIMER and you are therefore advised to read this disclaimer carefully before rea
Slide 3: Disclaimer
No guarantee Past performance No person named in this Presentation (nor any other person) guarantees the New Investors should note that past performance, including past share price performance of Shares to be issued pursuant to the Offer or warrants the future performance of EROAD EROAD and pro form
Slide 4: Contents
CONTENTS For personal use only 05 Executive Summary 10 Acquisition of Coretex 19 Financial Impact Acquisition Funding and 23 Equity Raising Details 28 Appendices 04
Slide 5: Executive Summary: Strategic Rationale and Acquisition
THE ACQUISITION IS TRANSFORMATIONAL AND SIGNIFICANTLY ACCELERATES EROAD’S KEY GROWTH STRATEGIES For personal use only Strategic EXECUTIVE SUMMARY • Acquisition accelerates EROAD’s key growth metrics by 2 years enabling it to capture the significant growth opportunity in North America and Australia R
Slide 6: Executive Summary: Financial Impact
THE ACQUISITION ADDS NEW STRATEGIC VERTICALS, PROVIDES BROADER PRODUCT MARKET FIT AND INCREASED CUSTOMER BASE DRIVING SYNERGIES AND REVENUE GROWTH For personal use only Financial EXECUTIVE SUMMARY • The acquisition drives synergies and accelerates revenue growth by adding new strategic verticals, p
Slide 7: Strategic Rationale
The Acquisition is transformational and significantly STRATEGIC RATIONALE accelerates EROAD’s key growth metrics by 2 years For personal use only Increased product market fit with proven technology solutions for refrigerated transport, construction, less than a truckload (LTL) and waste & recycling
Slide 8: A Transformational Acquisition
A TRANSFORMATIONAL ACQUISITION FY21 KEY METRICS FY21 CUSTOMER MIX EROAD EROAD + CORETEX EROAD EROAD + CORETEX (PROFORMA) (PROFORMA) For personal use only $91.6m $138.2m 4 Increased scale in North America and Australia REVENUE REVENUE 70% NZ 51% NZ 28% NA 43% NA $30.7m $46.8m 4 2% AU 6% AU EBITDA EBI
Slide 9: EROAD and Coretex Aspire to Create a Safer, More Sustainable Society
EROAD AND CORETEX BOTH ASPIRE TO CREATE A SAFER, MORE SUSTAINABLE AND MORE PRODUCTIVE SOCIETY For personal use only EROAD CORETEX Safer and more sustainable roads Building a safer, greener and more • Solutions that help reduce speed by customers, a significant productive world contributor to acciden
Slide 10: Acquisition of Coretex
ACQUISITION OF CORETEX For personal use only 10
Slide 11: Coretex Overview
CORETEX OVERVIEW TELEMATICS VERTICAL SPECIALIST DELIVERING ENTERPRISE GRADE SOLUTIONS For personal use only FY21 KEY METRICS FY21 CUSTOMER MIX Connected units Connected units 64,177 by in-Cab and Trailer by business size • Focused on growth, high margin and highly UNITS attractive verticals - LTL tr
Slide 12: Coretex Solving Customers' Problems: Refrigerated Transport
CORETEX SOLVING CUSTOMERS’ PROBLEMS CASE STUDY GOLDEN STATE FOODS + QCD REFRIGERATED TRANSPORT Manufactures, supplies and delivers food to restaurants such as McDonald’s, Starbucks, Chick-fil-A, KFC and Taco Bell. For personal use only INDUSTRY PROBLEMS NORTH AMERICA • How can we ensure food deliver
Slide 13: Coretex Solving Customers' Problems: Construction
CORETEX SOLVING CUSTOMERS’ PROBLEMS What CONSTRUCTION Coretex For personal use only are offering INDUSTRY PROBLEMS • How can my driver find where to go on a rural site? NORTH AMERICA ADDRESSABLE • How can we know the state of a cement mix? MARKET • How can we improve dispatch time? • An integrated s
Slide 14: Coretex Solving Customers' Problems: Waste & Recycling
CORETEX SOLVING CUSTOMERS’ PROBLEMS CASE STUDY CITY OF CHARLOTTE WASTE & RECYCLING Waste & Recycling is typically managed by cities & municipalities, and contracted out to private haulers with strict requirements. For personal use only INDUSTRY PROBLEMS • How can we prove waste collection? NORTH AME
Slide 15: EROAD Will Now Provide Proven Tailored Solutions
EROAD will now provide proven tailored solutions for optimising operations in specific verticals, and well-recognised compliance expertise for broader fleet management For personal use only IN-VEHICLE HARDWARE SOLUTIONS ALL VEHICLES ALL ASSETS ONE PLATFORM for end to end visibility Camera options Eh
Slide 16: EROAD's Strategic Priorities: North America
EROAD’s strategic priorities NORTH AMERICA FY21 KEY METRICS • Grow connected units to 50,000 over the next 18 months For personal use only • Extend product offering in the freight, road transportation fleets and the EROAD EROAD + CORETEX areas of health & safety (PROFORMA) • Extend the range of
Slide 17: EROAD's Strategic Priorities: Australia
EROAD’s strategic priorities FY21 KEY METRICS AUSTRALIA • Grow number of connected units to 10,000 over the next 18 months For personal use only EROAD EROAD + CORETEX • Extend product offering in the Civil Engineering, Government fleets, areas of driver fatigue, health & safety and vehicle service
Slide 18: EROAD's Strategic Priorities: New Zealand
EROAD’s strategic priorities FY21 KEY METRICS NEW ZEALAND • Grow connected units to 100,000 over the next 18 months For personal use only EROAD EROAD + CORETEX • Extend product offering in Civil Engineering, Government fleets, (PROFORMA) Health & Safety, Electric vehicles, carbon footprint reduction
Slide 19: Financial Impact
For personal use only 19 FINANCIAL IMPACT
Slide 20: Coretex's FY22 AMRR Forecast Reflects Increasing Growth in North America
Coretex’s FY22 AMRR forecast reflects increasing growth FINANCIAL IMPACT in North America For personal use only FY20 FY21 FY22F • Consistent growth in Coretex recurring revenues expected to continue into FY22 EROAD Coretex14 EROAD + Coretex EROAD Coretex14 EROAD + Coretex Coretex14 (Proforma) (Profo
Slide 21: Growth Acceleration and Synergies
The acquisition substantially increases scale in North America and Australia providing the ability to invest to drive synergies, GROWTH ACCELERATION AND SYNERGIES competitive advantages and accelerated growth For personal use only Growth acceleration and Enhanced Technologies Synergy realisation rev
Slide 22: EROAD FY22 Q1 Trading Update
EROAD FY22 Q1 TRADING UPDATE Accelerating quarterly growth across all markets Key highlights 31 March 30 June Units Added • Contracted units grew by 4,152 in Q1 FY21 reflecting good growth in 2021 2021 in quarter New Zealand and Australia. For personal use only • In NZ 216 customers renewed their co
Slide 23: Acquisition Funding and Capital Raising Details
ACQUISITION FUNDING AND For personal use only CAPITAL RAISING DETAILS 23
Slide 24: Acquisition Funding Overview
ACQUISITION FUNDING OVERVIEW Upfront Consideration of $157.7m comprising: SOURCES AND USES For personal use only • Scrip Consideration ($79.9m) – new fully paid ordinary EROAD shares Sources NZ$m issued at $6 per share, resulting in Coretex shareholders having a 14.2% interest in EROAD post completi
Slide 25: Pro Forma Net Cash Position
Following completion of the Acquisition, EROAD will be well funded PRO FORMA NET CASH POSITION to continue investment in growth For personal use only Net Cash Position EROAD as at Equity Raising Upfront Contingent Pro Forma as at 31 March 2021 Consideration Consideration 31 March 2021 NZ$m Cash and
Slide 26: Capital Raising Summary
Offer Structure CAPITAL RAISING SUMMARY Fully underwritten conditional placement to raise NZ$64.4m (“Placement”). and Size Approximately 11.5 million new fully paid ordinary shares (“New Shares”) to be issued, representing 14.1% of existing shares on issue. For personal use only Settlement of the
Slide 27: Indicative Capital Raising Timetable
INDICATIVE CAPITAL RAISING TIMETABLE Event Date For personal use only Record Date for SPP 13 July 2021 Announcement 14 July 2021 of Placement and Acquisition Placement closes 14 July 2021 Trading halt lifted 15 July 2021 and shares recommence trading SPP Offer opens 20 July 2021 Offer documents sent
Slide 28: Appendices
For personal use only 28 APPENDICES
Slide 29: Coretex Construction Solution Workflow
ReMix: ReaReady dy M ixa:dAyAdvanced dM vaixn:cA eddvjob an jo csetd atjuosbins>adata bstatusing &tudsaicapture ntag c&ap dtautarecapture Real-time Real-time Job status job job and updates status status updates updates contextual and and contextual datalive contextual fordata forlive dispatchers d
Slide 30: Glossary
• ANNUALISED MONTHLY RECURRING REVENUE (AMRR) • FREE CASH FLOW is a non-GAAP measure representing GLOSSARY is a non-GAAP measure representing monthly Recurring Revenue operating cash flow and investing cash flow reported in the For personal use only for the last month of the period, multiplied by 12
Slide 31: Key Risks
• This section describes the key risks that EROAD has identified extra care should be taken when assessing the risks associated KEY RISKS in connection with the capital raise and the acquisition with investment. The rapidly changing COVID-19 situation is For personal use only of Coretex. EROAD consi
Slide 32: Key Risks
Reliance on information provided Business integration risk KEY RISKS While EROAD and its advisors have undertaken a due diligence review in respect A cultural shift will be required to successfully integrate the businesses, as Coretex For personal use only of the acquisition, which encompassed opera
Slide 33: Key Risks
Product development risks The current challenges in conducting in-market research due to travel restrictions KEY RISKS and lockdowns in place in response to the COVID-19 pandemic may have an The development and delivery of new products and upgrading existing products adverse impact on EROAD’s develo
Slide 34: Key Risks
Product and system reliability risks Competition risks KEY RISKS An increasing focus on enterprise customers while maintaining a strong and The telematics industry in which EROAD operates is highly competitive. It For personal use only reliable small and medium business product offering is another k
Slide 35: Key Risks
Sales risks undertaking an operational excellence program. Post-completion, EROAD will KEY RISKS look to introduce a management structure and provide sales, marketing, customer There is a risk that EROAD’s current or future products do not align with potential and operational support across Coretex’
Slide 36: International Selling Restrictions
This document does not constitute an offer of new ordinary shares (“New New Shares may sell, or offer to sell, such securities in circumstances that amount INTERNATIONAL SELLING RESTRICTIONS Shares”) of the Company in any jurisdiction in which it would be unlawful. In to an offer to the public in Ho
Slide 37: International Selling Restrictions (Continued)
United Kingdom United States INTERNATIONAL SELLING RESTRICTIONS (CONTINUED) Neither this document nor any other document relating to the offer has been This document does not constitute an offer to sell, or a solicitation of an offer For personal use only delivered for approval to the Financial Cond
Slide 38: Summary of Acquisition Terms
• The acquisition of Coretex is effected by way of a purchase of all of the shares • EROAD has obtained warranty and indemnity insurance in respect of any claims SUMMARY OF ACQUISITION TERMS in Coretex. Coretex is widely held, with a number of beneficial owners holding under the general warranties a
Slide 39: Thank You
For personal use only THANK YOU