ERD - ERoad. (Transport sector technology)

[Jaa]

Good to see Eroad signing large enterprise contracts with Programmed, Kinetic, Boral and Woolworths.

Just as I said, Progammed value Eroad's ability to combine assets into a unified platform. ie integration and software!

In Australia, EROAD signed a new five-year partnership with Programmed, a significant enterprise customer. Programmed is a leading provider of Staffing, Facility Management, Maintenance and Care services, and has signed a five-year contract for the MyEROAD telematics cloud platform to be deployed across a fleet of more than 2000 vehicles and 1000 assets. This is a five-year partnership set to enhance over 3000 Vehicles and Assets in Australia.
..
The value EROAD provides is in large part due to its ability to digitise and combine fleet and assets into one unified platform. Once installed, customers benefit from a complete view of operations, enabling seamless tracking, utilisation reporting and service and maintenance.

“We are also pleased we are expanding our partnership with Kinetic NZ, who were originally a Coretex customer, which is an important vote of confidence in the work we have done to successfully integrate Coretex and EROAD since the acquisition of Coretex in 2021.”

Boral has resigned and expanded with EROAD and Woolworths have selected us as preferred supplier after a competitive tender process. The partnerships span 4,345 units in 5-year deals.

https://www.eroad.co.nz/lp/sharehold...-b428c1a9-f086

Few boxes ticked.

[Mel]

Very difficult to pick the floor on this stock - surely it can't fall much further!

[GTM 3442]

Very difficult to pick the floor on this stock - surely it can't fall much further!

I was buying at $0.55 before the last capital raise. I’ll be interested again at $1.50/odd.

In the meantime. . . I expect a long wait. . .

[ronaldson]

Half year to 30 Sept financial and operational result due 29 November. I wonder if any green shoots will appear? Probably too soon for anything so magical.

[Rawz]

Half year to 30 Sept financial and operational result due 29 November. I wonder if any green shoots will appear? Probably too soon for anything so magical.

wouldnt have done the cap raise if all was honkey dory

was mentioned here after full year that if things continued as is they would need a cap raise. so i am expecting to see much the same. i.e. bleeding cash and small loss

[Rawz]

this is pretty good from Chris Lee:

IF your knowledge of ERoad was gathered only from reading newspaper comment, or from its formal stock exchange releases, you might conclude that its Albany headquarters resembles a funeral house, gloom prevailing.

In short ERoad shares have fallen by 90% as it has continually reported that it needs more time to achieve its global goal, and has continually attracted scorn from random media commentators.
Its New Zealand business is undoubtedly a stunning success, having captured around 80% of the truck market, achieving very positive cash flow and profit. Its value is undoubted. Its users rate the products highly.

Though there have been no reports from ERoad, its investment bankers quietly acknowledge that its NZ business would attract buyers at nearly double the current market capitalisation of the whole business.

The market doubt has stemmed from the slow progress in getting its various hardware products into trucks in Australia and the USA.

Slow progress is not no progress. I will outline progress in the paragraphs below:
Despite its NZ success - undeniable - it has had bad press and endured comment that could be described as ignorant. Much of this press behaviour is understandable.
ERoad handled the long-threatened exit of its founder, Steve Newman, very poorly, virtually dumping the surprise exit on the investment world with far too little explanation and with no comforting strategy to replace him or retain access to his input.

Some of this was Newman's fault. He effectively tossed his rattle, though not selling his shares, because his board was not enabling him to back off his commitment to his own plans.
The company’s chairman at the time behaved as though he was unprepared for the event and its acting CEO, now the CEO, behaved in keeping with his legal training, as though he was dear old Jack Sullivan, chairman of the rugby union in the 1960s, who would continually parrot the words “no comment” to any passing newspaper reporter.
The media attacked. I, too, was very critical of ERoad’s response. The share price tanked.

The next controversy arose when a Canadian investment fund sought to take over the company for a price roughly double what the price had been months earlier.
ERoad’s board dismissed the offer, declined to allow the Canadians access to the business, loftily saying the bid undervalued ERoad but unexpectedly declining to explain why the bid for the underlying business was at an unacceptably high discount.

The explanation was simple. Others would pay for the NZ arm alone more than the Canadians would pay for the whole business. Why did ERoad not disclose this?
Furthermore ERoad was observing real progress in Australia and the USA, given the enthusiasm of trucking companies for the new hardware ERoad had developed.
The NZ business was and is still growing. The Fleet Day that two of our advisors attended provided ample evidence of customer support.
Yet none of this has been well articulated by the ERoad chairperson or chief executive.

The CEO, Mark Heine, is running an impressive, progressive business and is a thoroughly decent, likeable fellow but his commitment to communication has been inadequate. Lawyers are trained to be furtive.

Susan Patterson, the chair of the board, caused a third issue when she advised ERoad needed no new capital, just a few months ago.
But when the company's advisers, Craigs and Goldman Sachs, later promoted to the board the idea of a new fee-heavy rights issue, ERoad accepted the idea, contradicting Patterson's previous statements. Perhaps ERoad accepted that in a deteriorating global economy, capital might be harder to find.

The media waded in, unaware of the underlying business, obviously sensing blood.

None visited the company. None appears to have penetrated ERoad’s apparent dislike of communicating. Is this a commentary on the media or on ERoad?
The board and the CEO hunkered down, focusing solely on progressing sales, cutting costs, and accelerating the day when ERoad will stop burning cash and will begin to eliminate debt.
New Zealand business media is not exactly the equal of the best of the Financial Times people, whose credibility and experience gets them into boardrooms where they are treated respectfully, and given detailed insight into the sector and the business.

Indeed many of NZ’s best business leaders simply do not talk to the media except at superficial levels, some preferring to avoid the risk of being misunderstood or misquoted by media people with little or no experience in the real business world, there being very few exceptions.

As an example, Infratil, an outstanding performer in a narrow range of business activities, for many years would not invite the media to analyst days and spoke mostly at headline level when answering media enquiries. It sticks to platitudinous stuff when briefing the media.

In very recent years it has relaxed its stance a little with no apparent damage, though naturally it never discusses sensitive subjects until they are executed.

The unwillingness to educate the media is understandable but the consequences have been unhelpful, as ERoad’s media relationships have illustrated.

The truth is that ERoad now has a range of hardware products with at least one piece of hardware in at least 100,000 US trucks.

The hardware is leased for monthly amounts, varying from a few dollars to tens of dollars. Hardware is rarely returned. The vast majority of leases continue indefinitely. The software behind the hardware does its job well, a credit to its designers.

ERoad’s hardware includes a computer that calculates road tax, its original product. Other hardware items report on maintenance, another observes the driver behaviour and offers live reports on the driver for safety purposes. The latter technology is well endorsed by market regulators.

Other hardware produces live footage of road traffic and this is used to report definitively on any collision.

Hardware monitors the conditions of sensitive goods; for example, food refrigeration and the rotation of the barrel of a cement truck (cement rotation to avoid solidification is sensitive and needs monitoring).

Other hardware provides live advice on optimal routes for trucks, with deadlines and penalties for late delivery.

You can also assume that the inevitable shift to road taxes for motor cars will be relevant to ERoad.

The company does have a story to tell, and it is a story that is backed by product development and sales successes, albeit at a moderate pace.

ERoad expects that by 2026 it will be significantly profitable, reducing and gradually eliminating debt, funding its hardware from sales rather than from bank debt. It should be cash-flow positive.
It is not a cot case, as the irritated, and often under-informed, media is likely to suggest.
It needs to do two things urgently.

It needs to communicate with its shareholders, including the institutions, and display its progress. If it does not want to be pestered by exploitative takeover offers, it needs to get its share price lifted by achievement.

The other need is to be avuncular to the NZ media, at very least tolerating them, and teaching them about the sector and its planned, profitable future in that sector.
It could make one further concession, showing investors a way to profit from the progress.

I will leave its CEO and board to discuss a suggestion that might help.

ERoad does have some smart people and it does have clever software. It is growing its client base. It needs time.
And it needs to learn how to communicate with the media, even with people not obviously relevant to its progress.

[BlackPeter]

I trust you cleared the copyright issue with Chris? He is sometimes a bit peculiar around that (and so he should );

Apart from that - good to read, and Chris (whom I do highly respect) often provides a different view, sourced through his good connections.

However - one of the lessons I learned the hard way is that none of us (and this includes him as well as ERoad) can predict the future ... i.e. I would take the 2026 prediction with a ton of salt. And remember - too much salt is not good for your health ;

[winner69]

Chris has loved ERoad since the IPO …a faithful follower and probably still hoping like anything it’ll all come right …one day

https://www.chrislee.co.nz/newslette...ober&year=2017

[ronaldson]

The market depth in this stock is currently suggesting a change in sentiment to the upside. If sellers can hold their nerve I think we will see some movement to at least the mid 70's and possibly even more by the time the half year results are announced.

The most compelling factor for this industry is that the shift to battery powered vehicles, whether fully or hybrid, surely means that road user charges must soon be introduced for all rather than some vehicles, to replace the present fuel tax regime. And that should give significant momentum to the suite of products ERoad provides in all jurisdictions, unless vehicle manufacturers can re-engineer to incorporate similar solutions at first instance which doesn't seem to be any sort of priority across the main producers just now.

One of the more interesting companies on the NZX in my view.

[ronaldson]

Heavy turnover already this morning at $0.72. Results announcement due on Wednesday 29th may be supported by some forward looking commentary which could enlighten given there seem to have been several recent client "wins" in various of their jurisdictions lately. Obviously these are capital intensive initially to provide the necessary hardware to underpin and revenue will take time to flow but the general impression is positive.

Anyway, given the hugh overhang of stock held by the underwriter/s and other holders at $0.70 from the recent capital raise the current on-market pricing is encouraging.

Disc. I couldn't resist reentering here and picked up 12k at $0.70 later on 6 November.