Hey everyone, my name is Alex Sklar. I'm one of the application software analysts here at Raymond James. Very pleased to have MiX Telematics and Powerfleet here with us today. They've recently announced a merger. We have representatives of both companies here. We have Stefan Joselowitz, Jos, the President, CEO, and Founder of MiX Telematics, and David Wilson, Chief Financial Officer of Powerfleet. We also have Paul Dell in the audience, Chief Financial Officer of MiX Telematics as well. Any questions? I'm planning on going through a fireside chat here. If there's any questions, I'll open up to the audience with five or so minutes left. Thanks for joining us, Jos, David, appreciate it. Starting off, you know, you've laid out a really compelling value creation story with the merger between MiX Telematics and Powerfleet. You had a great investor event a couple of weeks ago. Can you just talk about, as an intro, what you saw in each other's respective companies that made this merger really fit, and, and your vision kind of going forward for the combined company? Alex, thank you. It's a pleasure to be here, and thanks everybody for your time. Yeah, you know, we had about a year ago at MiX started looking at transformative transactions or potentials for our business. We started three conversations, but when we started chatting to Powerfleet, it became almost immediately apparent that there was a fantastic values and culture fit between the two organizations, and something that we didn't see as clearly in the other conversations that we were having. We started digging into the details in a formal workshop that we had at a pretty high level within between the two organizations, and it became rapidly apparent that there were fantastic synergies in putting these businesses together. Of course, the obvious is a massive scale-up, so it's kind of a merger of equals. So we from day one, creating a business that's rapidly heading to $300 million of revenue, 1.7 million subscribers, a rapidly accelerating or expanding profitability profile. What we identified was, I guess, three layers of synergies. The first was obvious cost synergies, and I guess we'll address that shortly. What we also saw was that although there's some overlap in our product portfolios, there's some also very nice dovetailing which creates a significant upsell, cross-sell opportunity, so revenue synergies, which is really great. And the third was on the R&D side. So between the two organizations, we're spending about $25 million a year on R&D. We identified that about $7 million-$8 million of that of each company's spend is kind of duplicating what the other party is doing. So there's a big opportunity, and that's not cost, part of the cost synergy story 'cause we don't plan to cut there, is that we can take $7 million and deploy it into more innovation instead of duplication, which will further accelerate the the revenue synergy story. And finally, of course, there's you know, the Unity platform, the strategy that Powerfleet have evolved, and maybe it's a good segue to hand over to David to talk about the strategy. Yeah. So you'll hear a lot about Unity. So Unity will be synonymous with Powerfleet and obviously the combined organization too. And I joined Unity on the back of Steve Towe joining Unity, and he, sorry, he joined Powerfleet on the back of Steve joining Powerfleet. And Steve joined 'cause he wanted to build up a leading business in the space, and M&A was a key component in terms of scaling up. So the benefit of Unity is, firstly, it addresses acute customer pain points, which is fleets, for example, if you just want to focus on that piece of the market, are heterogeneous. So quite often, the decisions in terms of what you buy is devolved down into an organization, so people buy different devices. There's OEM data sets that are out there too, so that's another variability. There's M&A that happens, that's another variability. So if you're running a fleet, you have sharded data. So to the extent you're ingesting all this data from different devices, basically, you don't have a holistic view. And that's an acute customer pain point, and Unity basically brings that together in a single lens, and the power of having everything under a single umbrella is just the data is more powerful. So that works well in terms of addressing customer pain points, but also from an M&A standpoint, it's a massive boon for M&A. So, for example, as we merge with MiX, it's gonna be very straightforward for us to ingest sort of the MiX device data to give customers a holistic view. So it really lowers the barriers in terms of M&A, which means the value you get to a customer is massively foreshortened and de-risked, and it's also an accelerant in terms of just saving money because you have to swap out all the devices too. So it's multifaceted, but it is a solution that basically creates value across many different factors. So we just hit on a lot there. We'll probably get that through the course of our conversation. But on the data monetization and the data strategy that's kind of enabled by Unity, can you just kind of walk through—'cause the TAM, I think you laid out, of a total kind of connected vehicle TAM, $100 billion. I know a lot of that is kind of now enabled through kind of some joint products. How should we think about data as a piece of that specifically in the monetization strategy there? Yeah. So the traditional telematics industry is you buy a device, and then there's recurring revenue attached to it. That's what's traditionally happened. As I said earlier, we're looking to build a strategy where, in essence, we can monetize data that isn't driven by devices that we ourselves have sold. So this ability to sort of ingest third-party data from third-party devices, we will monetize that, and we're monetizing that today, because again, there is a need from a customer standpoint to see everything holistically. So if you think about Unity, and if you think about Net Dollar Retention, there's two things that drive Net Dollar Retention. Firstly, is the volume of things you can sell to a customer. So we have customers today that are sort of desperate to provide their data from third-party devices into Unity, because again, they have a need for that. So it's a way to sort of drive more volume in terms of there's more devices we can go monetize. The other add is, we can do things above and beyond just sort of tracking the device or preemptive maintenance, so we can solve higher level problems, in terms of, for example, ESG reporting, in terms of safety, those types of things, OSHA compliance, efficient fuel use, and, you know, there's others that are out there doing it too. Which basically means not only do we get to monetize more devices, but also with these value-added services, we can earn more revenue per device, and we get to monetize the same piece of data multiple times. So it drives both the volume as well as the actual value we get per device and per data unit. And then the final piece will be, organizations don't run in terms of silos and isolation. That device is part of a system within an organization, whether it be on the employee side, in terms of payroll records, in terms of training, in terms of compliance, there's that piece of it. There's also the ability to ingest that data in terms of planning systems. So when you run a planning system, you have an expectation in terms of what should happen. The benefit of Unity as you ingest all this data is, you can actually tell the truth in terms of what actually did happen. As you think about how artificial intelligence is evolving over time, that ability to have a thesis, actually see the results, test it, understand the variables as to why it changed, and feed that back into the algorithm, it becomes very valuable there as well. So again, it's multifaceted in terms of what it can do. You don't get there in a single step, but basically there are layers and layers of additional value we can provide to our customers, which we'll monetize over time. This isn't just pure hypothetical. This is you're already monetizing data today at both your respective companies, but I think you've laid out some use cases even now, combined with the merger, just... You've talked about maybe already being able to kind of go to customers and talk about that combined vision. So how would you characterize kind of the demand environment now, post the announcement of the merger? Anything's changed, big picture? Yeah, big picture is the merger creates fantastic opportunities. So, I mentioned earlier that we have some very nice dovetailing in our product lineup. We have some things in our technology that Powerfleet don't have, that their customers will find valuable, and vice versa. So I went out on a limb on our Investor Day. I believe we've got enough upside in our cross-sell, upsell opportunity to drive towards double-digit growth without adding any new customers. So that's just not that we're not intending to add new customers, of course we are. But there's enough fuel in the tank to get significant growth by offering our existing expanded portfolio to our customer base. And I'll give one example. At MiX, we have a number of very large retailers globally that are our customers, very large fleets. What we provide those customers is their in-cab solutions in terms of, you know, monitoring how they get from A to B and making sure that happens as safely and efficiently as possible. What we don't have is a sexy warehouse solution, which in fact, Powerfleet do have. So we've got a number of significant customers that we can now take the warehouse piece of the puzzle to and say, 'cause these customers have large, complex warehouses, and offer that. And we've started some of those conversations already. It's a little bit early because we haven't closed yet, but- Yeah ... but we wanna get ahead of this thing because the opportunity is significant. You just kind of alluded to this, but 1.7 million vehicles combined between the two. Is there any way to quantify or frame kind of what the installed base expansion opportunity is, kind of post-merger, just given the synergistic solutions? Well, I think it comes down really to the growth synergy, the growth story. And you know, we've certainly laid out some in terms of our plan, what we think is achievable. Maybe you wanna- Yeah. The only thing I'd add is, there's devices you've sold, and there's devices you monetize. Yeah. Unity, the number of devices we can actually monetize is massively expanded. Yeah. I think it's gonna come down to how do you actually define a device? Yeah. So we're gonna start increasing, we are today, monetizing devices that we never actually sold. The barriers in terms of doing that are obviously significantly lower, because in essence, you don't have to physically go and install the device. You start ingesting it as well. We're seeing that with early adopters of Unity in terms of we're now getting significant volume in terms of devices we monetize, even though we didn't sell it. We don't count that as part of a subscriber count. So the, at some point, there's gonna be a disconnect- Yeah ... 'cause essentially, we're evolving from a device-centric business model to a data-centric business model. As you do that, it's obviously good in terms of just speed of growth, but also just the margin you're earning as well. Yeah, that's a great flags. So maybe taking a step back, I think, respectively, you've both been seeing kind of a natural growth acceleration in your separate businesses. Some of that is kind of execution, some of that is kind of the value proposition. Yeah. So I want to hit on the value prop right now, of kind of, what you're selling. Why is it, and in what is it probably really difficult global macro, 'cause you both operate globally. Why is the value prop resonating so much, with customers today? You know, I have made the statement before that there is kind of a countercyclical element to what we offer as well, because we solve many of the pain points that our customers experience. You know, we have a big focus on safety, and of course, that's a big component of what we do, enhancing the safety of our customers' fleets on the road, and that puts us really in the life-saving business. So, you know, and we dramatically reduce accidents, and hence injuries and fatalities. There's a big cost-saving element to it, so a big part of what we do is around the efficiencies of our customers' fleets, lowering fuel consumption, which of course plays into the ESG story, which is becoming an increasingly important component of it. But it saves a ton of money for the customers, reducing wear and tear on the vehicles, safer fleets bring down underwriting costs, so fewer accidents, ultimately our customers experience, you know, a reduction in underwriting costs, et cetera, et cetera. The bottom line, Alex, is that we have a pretty easy way to demonstrate a fantastic return on investment for our customers. So what our customers would experience is a significant return on the dollars they're paying us. I mean, the simple reality is, from month one, customers spending $20 with us should be saving $100+. So it's not an expenditure decision for a customer. It's actually a, you know, a profit enhancement decision. So maybe going back just to kind of the growth algorithm, David, you laid out at the investor event, the idea of moving from kind of pro forma high single-digit growth to low double to 10% growth to 20% growth. Help us think through the big bridges. We talked about data- Yep. Kind of that's the strategy there. How should we think about it from maybe an expansion opportunity side, new logo? What, what are the kind of other big kind of bridges to get up to that higher growth level? Yep. So in terms of Unity itself, Unity itself should be a driver of best-in-class net dollar retention. So there's every reason to believe that we can be 120+ in terms of net dollar retention, so that gets you 20% growth off the bat. Now, you need to build out the solution and work into that, but to my point earlier, there is an acute need of customers to get that holistic view. So there is ample opportunity to sort of sell in terms of more devices as well as upsell. So we think over time you can get 20% growth from your base, and that's obviously... Many things need to happen and go right to get there, but to Jos's point, he sees 10% just in terms of where we're at today. So that's a driver. The other accelerant will be revenue synergies. So to Jos's earlier point, the datasets that MiX has prepared and produced over time, the ones we have developed over time, they are highly complementary. So we talked about warehouse. There are many customers within the install base of MiX who would love to have a warehouse solution. We provide the best warehouse solution that's out there. The other one would be in terms of in-cab devices for fleet. We don't have a good solution there. MiX leads with that. So we have very happy customers who want to buy more stuff from us, so there's natural revenue synergies there. In addition to that, one thing MiX have been exceptional at is growing multinational customers, and in part, they've done that because they built out a global partnership in terms of resellers of 135 resellers. We can push, for example, our warehouse solution through that distribution channel, and that gets us global reach on a business, to be frank, has really been centered in the U.S. today. So there's that additional piece of it as well. So from a revenue synergy standpoint, there's many things we can do. And then the other point would be in terms of what we discussed earlier, just this dataset, this ability to monetize data. As the Unity platform evolves and becomes more robust, there's the ability to sort of monetize data in many different ways. So all in all, there's a pathway to be a 20%+ growth business in terms of just what we have in hand today and what we're executing against. Got it. And I think maybe with shifting gears, importantly, this improvement in growth is also coming at the same time with what's you all are calling out as improving profitability outlook. So I think there's obviously some natural cost synergies. Jos, you alluded to some of those, but still reinvesting in platform. How should we think about kind of, the identified cost synergies? What, how much of the improvement as you've laid out, kind of a path from $39-$40 million of Adjusted EBITDA pro forma, kind of as you march up towards that $80-$100 million, how much kind of cost synergy size, how much operating leverage? What are some of those big buckets? Yeah. So the expectation is within two years of closing this transaction, we will be a Rule of Forty company. And in terms of achieving that, it'll be +10% organic growth, and again, as we discussed earlier, there's opportunities to overachieve that, and it'll be 30% EBITDA margin. So that's what we're working towards. On a trailing twelve, it's $280 million of revenue and $40 million of EBITDA. So in terms of expanding EBITDA, we have been very public that there's $25 million+ of cost synergies that we can realize that is completely within our control. In terms of the major buckets there, there's probably sort of $8 million-$10 million of duplicative costs, so public company costs, spans and layers, just the standard things you'd expect to see as you do this. There's real opportunity in terms of changing how we work. So, for example, a common ERP that Paul and I will be partnering with and getting a standard way of operating globally is important. Our G&A spend on a combined basis today is north of 30%, so there's a huge amount of efficiencies we can drive, so there's probably $8 million-$10 million there. And then in terms of other areas, there's duplicate platforms in terms of how we provide service. You get to shut those down. In terms of just devices, there's overlap in terms of the devices that we both produce. You get to shed that. You get to have more scale in terms of purchasing power, so again, that's another driver of margin, too. So well north of $25 million in terms of what we can realize. We've talked about doing that within two years. We'd be disappointed if we don't overachieve the 25 and we don't do it shorter than eight quarters. So that is a key driver, and then there's just organic growth in terms of the business, and this is a business that is rich with operating leverage as we grow the top line. Perfect. So I think one of the things that's most exciting about the combined company going forward is that you create this platform for M&A, after, you know, you get past the integration. Obviously, I don't think you're gonna announce anything in March, post-deal, but how should we think about the platform? We talked about Unity and how that's key to it, but how should we think about what the combined company now can do from a longer-term M&A opportunity standpoint? Yeah, so this is an industry that's highly fragmented. It's fragmented regionally, too. So a lot of businesses, like MiX, for example, grew up within a specific region just with the advent of the cellular network. Now, MiX is an exception because they would actually grow globally and build out multinational businesses as well. So they have definitely outperformed the vast majority of people who or organizations started at that point. But there's a lot of businesses out there that kind of lost steam in terms of how they're innovating. So there is. As you bring out new solutions, as businesses have more acute needs and desires, it's a very straightforward way for us to grow, both organically in terms of taking that business away, and you look at someone like Samsara today that's been very successful doing that. In addition to that, there are businesses that are gonna be looking for a new owner. To the extent you've run out of steam, quite often the way is you monetize what you have, and we would be a natural partner in terms of doing that, especially because the Unity platform lowers the barriers in terms of making that both successful in terms of speed, the amount we can actually realize from a value standpoint, and also highly de-risk M&A. And so, I know MiX has been in the market for a while, looking at acquisitions. I think, David, your time at Powerfleet, it seems like you've all been looking for stuff as well, even aside from MiX till now as you close on a couple of deals. How much is out there? So you called out the fragmentation, like, how much is out there in terms of opportunities that would be meaningful to the company that kind of investors might not appreciate? There's a lot of inbounds. Oh. So I would say it's increasingly a buyer's market, and if you have the right model, the joy about being a buyer's market, if you have many people who want to sort of sell, competitive dynamic works for you as opposed to against you. I'd also say that we're focused on growing in North America and Europe. That will be areas where we outperform. And I think from an investor standpoint, increasingly getting our revenue mix in terms of more European, more U.S., I think, goes very nicely to a U.S. dollar investor base as well. Got it. And just any other color in terms of are these kind of opportunities that are most interesting, kind of the tuck-in nature, or could there be more transformative stuff like this kind of merger of equals? Yeah, I think both exist, right? Mm-hmm. I think what I would say, creating a core competency to do tuck-ins, that's a pretty interesting way to create value, create shareholder value. So just switching gears, we kind of hit on a lot of the stuff. The deal hasn't closed yet, though, but there's a lot of fragmentation. The combined companies, I don't think there's any real market concentration risk, but talk about where we are in the merger approval process, confidence kind of the deal getting to the finish line. Yeah, the deal, you know, what's remaining now is really a lot of regulatory stuff. So it's two public companies doing a pretty large merger. There's a process that takes place, and we've got two different regulatory environments, New York and Johannesburg, South Africa, at the moment, which is creating an additional layer of complexity. But in terms of the way we've seen the current timetable, of course, the big gate is shareholder votes. Our shareholders, both on Powerfleet's side and MiX's side, have to independently approve the transaction. We're not expecting any difficulty in that, but it's a, you know, it's a formal process. So the way we see the timetable at the moment is that prospectus and shareholder meeting notices will be distributed early January, shareholder vote scheduled for early February, which will be the stage where the transaction is all but effectively closed, and then there's a very short couple of weeks of regulatory timetable post-shareholder vote to get it formally done. It does bring me, I guess, with all of these complications to one big benefit that from a MiX shareholders perspective that I haven't raised yet, and that I'm not sure a couple of our shareholders are here today. We did an investor outreach about a year ago. Nine out of ten investors said the biggest issue was our structure: Johannesburg listing, secondary ADR program in New York. Pretty small audience for that. This transaction, over and above all of the commercial benefits, MiX shareholders will end up exchanging their current Johannesburg stock for shares in a Delaware-owned, New York-listed company, which really sorts out some significant structural issues on our side. So all of these little complexities in terms of getting it done, I believe, are gonna be proved to be extremely worthwhile at the end of the day. Yeah. No, you definitely hit on some of the structural, the combined company scale, the U.S. direct listing, all those things I know certainly are things the investor base are excited about. Maybe I'll open up the- Just to layer on in terms of just that point, from a shareholder standpoint, certainly on our side, the votes are in. It's concentrated enough, and if you look at how we trade today, pretty much at 1x revenue and enterprise value standpoint. Mm-hmm. Everything we discussed in terms of growing sort of double digits, in terms of EBITDA expanding to sort of 30% over two years, that is not a business that trades at 1x revenue. And if you look at our ability to realize that, so much of that is actually just doing cost synergies. Mm. You know, Steve cut his teeth in private equity. He's done this in terms of leading teams who can go realize significant cost synergy on the back of M&A. The reason I joined is I had every belief that we could both get a deal like this done and actually realize the benefits of the merger, because it's a team who know how to do it deal. So from a valuation standpoint, if you're an existing MiX or an existing Powerfleet shareholder, just the latent value that should be readily achievable and realizable is huge. Yeah. Maybe, maybe before I open to the audience, just elaborate on that last point, because the combined management team, I think a lot of the folks that we got to meet, a couple of weeks ago did have the similar background, where they've, they've been involved in heavy, acquisitive type companies. Can you just give a little bit of background on kind of the combined company management team and, and some of the, the, the synergies between the, the two, the two companies coming together? Yeah. So, obviously, Steve's going to be the CEO post-merger. He spent 15, 16 years in the telematics space in Europe. I think by the time he left, at one point, it was the first or second largest, forgive me, in terms of just the size and scale. But he spent a lot of time in terms of hardware-driven point of sale business that is private equity-backed. That has also been... They also grew that through M&A, and they sold it, I think, most recently to Goldman. There was a massive expansion in terms of EBITDA, as well as organic growth, in terms of really executing this same playbook, albeit in a different industry, but nonetheless, an industry that is both hardware with associated services and really thinking about how that industry was being transformed, just as people change in terms of how they shop. Yeah. It's a great template in terms of both the depth of understanding the telematics space, as well as really understanding how you can build a SaaS business on the back of hardware. Perfect. I'll open up to the audience if there's any questions. Okay. So there's the, from a geographic standpoint, the complementary. Can you- Yeah. So as we think about the long-term business model, we will invest more in terms of go-to-market, for sure. But if you think about the ability to grow, it's way more efficient to sell to an existing customer than go land a new logo. So that ability to be really a leading sort of net dollar retention business, that is great because firstly, it's actually cheaper to do because you have that existing relationship, and you're really sort of addressing needs and wants that they have. Secondly, in terms of just the cycle, the sales cycle, that's foreshortened too, and then the certainty is foreshortened as well. We will be looking to invest more into sales and marketing, but this is a model that is sort of built on an efficiency scale because selling in and expanding to existing customers, that is where we're going to get the bulk of the growth. Great. Well, maybe one last one to wrap up. I'll maybe ask it two different ways - Interrupted by the fire alarm.