Eroad chief executive Mark Heine - who was promoted from CFO to CEO in June last year following the abrupt departure of longtime head Steven Newman. Photo / Dean Purcell
Eroad chief executive Mark Heine - who was promoted from CFO to CEO in June last year following the abrupt departure of longtime head Steven Newman. Photo / Dean Purcell
“FY2023 was a year of transition after what was a pretty challenging FY2022 when we did lose focus on cost and customers and innovation,” Eroad chief executive Mark Heine told the Herald, soon after his firm delivered its full-year result.
The telematics firm, which merged with rival Coretex in December2021, cut $10 million in costs, with measures that included a reduction in headcount from around 650 staff to around 450.
The firm’s net loss narrowed from the year-ago $9.6m to $3m, in line with guidance. Heine said Eroad is aiming to be cashflow neutral by FY2025 and cashflow postive by FY2026.
Based on early trading after the result, investors were buying his turnaround story.
Eroads shares, which have been punished over the past 24 months, surged 19.0 per cent to 69c after the result - although the gain was relative, given shares were above $6 ahead of the $158m Coretex deal, which Heine earlier said was driven, in part, by the need to regain ground in the key North American market, where Coretex had better products.
“We were focusing less on hardware and more on services. We slowed down our hardware journey. We probably didn’t invest as much there from 2017 to 2019 as we should have,” Heine said.
Another pressure point is telcos around the world switching off 2G and 3G mobile networks (Eroad’s technology, which tracks trucks, monitors mechanical performance, optimises the best routes and calculates road-user charges, uses mobile networks to feed real-time data).
Spark recently said it would switch off its 3G network in late 2025. Earlier, Eroad partner One (formerly Vodafone) NZ said it would switch off 3G in August next year “to reutilise the spectrum for 4G and 5G use”. 2degrees has yet to give a timeline.
Heine has pitched that Eroad has less of a peril and more of an upsell opportunity, given the 4G, Bluetooth and driver camera-enabled CoreHub product that his firm inherited when it bought Coretex.
This morning, the Eroad CEO said “We’re working closely with our telecommunications partners. We’ve currently got 37 per cent of our fleet in New Zealand - 116,000 connections - are already on 4G-capable devices. We’re building out the installer capacity to switch-out the other 63 per cent who are transitioning to 4G.”
Heine said Eroad’s solutions will also work over 2G, which buys it extra time, if necessary. While One NZ will shutter 3G in August next year, its 2G network will live on. “We’ll retain spectrum for 2G to at least 2025 so people on older devices can still access services,” One NZ spokesman Conor Roberts told the Herald.
Earlier today, Eroad reported a net loss of $3.0 million for the year to March 31, from its year-ago net loss of $9.6m. On an ebit basis, the Auckland-based firm squeaked to a $1.7m profit from its FY2022 ebit loss of $4.5m.
Eroad chief executive Mark Heine - who was promoted from CFO to CEO in June last year following the abrupt departure of longtime head Steven Newman. Photo / Dean Purcell
Revenue, swelled by the Coretex deal, increased 52 per cent to $174m.
For FY2024, Eroad forecast revenue growth of 6 to 9 per cent and ebit of breakeven to $5m.
It was the first full year that included a full contribution for Coretex, following a four-month contribution in FY2022. Eroad, which has been culling staff as it merges several Eroad and Coretex operations, said it had cut $10m in costs in FY2023, and was targeting the same amount in cuts during FY2024.
Eroad said it added 404 customers for its fleet management technology in North America (for a total of 2625 subscriptions), 290 in Australia (for 1699 total) and 1556 in NZ (for a total 13,387).
The firm did not announce any big deals today, but Heine said reiterated a 9000-truck deal with US food services giant Sysco, first announced in November last year. The CEO said Sysco’s rollout was now under way.
He also underlined the 500-tanker deal that Eroad signed with Fonterra in January. Eroad technology will be used for telematics, video surveillance with high-resolution dual cameras (with one lens on the driver, the other on the road), and calculating road user charges.
The dairy co-operative is currently piloting its first electric milk tanker.
Heine sees the broader global shift to electric vehicles as a positive for Eroad. The transition to EVs means governments will lose petrol and diesel tax revenue, shifting focus to road-user charges.
