ERoad turns to small profit, beating annual guidance as North American sales soar
By Paul McBeth
May 18 (BusinessDesk) - ERoad returned to profit after beating annual earnings guidance as North American sales more than doubled once the logistics and fleet management firm overcame strong lobbying to delay a favourable regulatory system for its services.
The Auckland-based company reported a profit of $210,000, or 0.34 cents per share, in the 12 months ended March 31, turning around a loss of $5.5 million, or 8.81 cents, a year earlier, it said in a statement. Earnings before interest, tax, depreciation and amortisation more than doubled to $15 million, beating guidance for ebitda to be between $12.8 million and $13.3 million.
"The hard work that has gone into developing a best-in-class ELD (electronic logging device) solution that allows us to address the US-wide opportunity has paid off with annual growth of 191 percent in North America," chair Michael Bushby said. "We have begun planning for our next phase of growth in North America, which may involve deeper strategic partnerships, and have engaged First NZ Capital to help us with this work."
ERoad's sales gained traction in the US after the introduction of compliance regime requiring logistics firms to use electronic logging devices from December last year. That deadline had been delayed as North American buyers lobbied to push out the introduction of the regime, holding up sales of ERoad's systems.
Revenue climbed 57 percent to $51.5 million, also beating guidance, following a 62 percent increase sales of contracted units to 77,600 in the year. The bulk of ERoad's business is in Australia and New Zealand, with unit sales rising 43 percent to 59,843 and generating ebitda of $24.2 million. North American unit sales surged 191 percent to 17,757, and its ebitda loss narrowed to $1.4 million from $3.9 million in the 2017 financial year.
During the year, the company raised $21.5 million in a placement and share purchase plan to support the expansion of its US business, upgrading customer support, repaying debt, and developing new products to capture and analyse transport data. Operating cash flow shrank to $2 million in the year from $6.6 million in 2017 due to research and maintenance costs, while ERoad's investment spending rose to $21.7 million from $19.9 million. After raising capital and drawing down debt, the company held cash and equivalents of $21.9 million as at March 31.
Chief executive Steven Newman said the sales growth put the firm on a "stronger financial footing" with the North American division close to breaking even on a monthly cash flow basis.
The board didn't declare a dividend, with funds retained to bankroll the company's growth plans. No guidance was provided for the 2019 financial year.
The shares last traded at $3.59 and have more than doubled over the past 12 months.