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Average Daily Volume (3month): 108K
Issued and Outstanding: 29,828,947
Options: 2,196,127
Fully Diluted: 32,025,074
Market Capitalization: $7M
Insider Ownership: 10% – 2,987,275
Institutional Ownership: 19.95%
TTM Earnings: $713K
TTM Revenues: $5.04M
TTM EBITDAS: $907K
EV/EBITDA: 5x
P/E: 10x
P/S: 1.4x
Debt: $Zero
Cash: $2.2M or $0.07 per share
Last Financing: 2013 – $385K at $0.05
Highlights
- Six years of profitability
- Normal Course Issuer Bid
- Strong share structure
- $2.2M in cash and no debt – has not diluted since 2013
- Growing recurring revenue business
- Undiscovered
What is AirIQ?
AirIQ is a Canadian telematics company based in Pickering, Ontario. Since 1997, AirIQ has been a pioneer in the field of wireless asset management and location services, providing North American customers proven end-to-end wireless Global Positioning Service (GPS) solutions. The Company offers a suite of asset management services, end-to-end wireless solutions, which allows operators for fleets of delivery trucks, service vehicles and rental or company cars the ability to monitor, manage and protect their mobile assets on a simple and cost-effective basis.
Services are available online or via a mobile app, and include: instant vehicle locating, boundary notification, automated inventory reports, maintenance reminders, security alerts and vehicle disabling and unauthorized movement alerts.
What’s the business model and how does it work?
Could you imagine operating a business which included a fleet of rental cars or delivery trucks? Managing the employees and tracking their time is a nightmare and can be costly to the bottom line. But how about managing the expensive assets?
AirIQ’s combined hardware products and software solutions provide the end-to-end platform for their customers to cost-effectively manage their expensive assets. As an example, in 2013, one of AirIQ’s customers, a large rental car business based in Texas, was able to achieve a 145% return on investment in just one year after implementing AirIQ’s solutions.
The rental car business had reported losing a total of six vehicles and wrote off more than $100K in losses, but after installing AirIQ’s solutions announced they had gone an entire year without losing a vehicle. After installing AirIQ’s solution, not only was the customer not losing expensive assets but has also improved utilization and customer satisfaction by easily managing and monitoring their fleet to quickly identify any issues or problems with a rental. This customer was using AirIQ’s Plug & Track™ device, which allows easy install and makes transfers of the unit from one vehicle to another simple and fast. AirIQ’s solution was able to provide several benefits for their customer including:
- Real time location notification
- When the vehicle was overdue
- If the vehicle has crossed a border or travelled outside of a specified boundary
- Vehicle maintenance is due or to view the vehicle’s odometer
- If the vehicle has been stationary for over a set period
AirIQ’s rugged hardware products are designed for all weather environments and have Company backed warranties. These hardware devices are installed into the customers assets, where the devices serve as the communication endpoint using GPS technology. AirIQ’s Online™ system is a web-enabled platform that provides users access to their assets information, complete with maps and detailed locations.
AirIQ’s revenues are primarily earned from the sale of GPS hardware devices and from the wireless airtime fees for communication from the hardware devices. Therefore, for each incremental sale of hardware products there is a corresponding increase in airtime fees. Revenues from hardware components are recognized upon delivery and revenues from airtime fees are recognized as services over the life of the contract as services are provided. Typically, AirIQ’s customers are supported by a two to three-year term service contracts with options to renew thereafter.
In Fiscal 2020, 58% or $2.94 million of the total revenue was classified as recurring revenue. The Company is focusing its efforts and resources on revenue growth and profitability by continuing to offer leading-edge technology solutions for existing and new customers. Looking forward, monitoring the hardware sales will serve as a leading indicator for growth in AirIQ’s recurring revenues, which we believe is the crown jewel of the business.
What’s changed? Why now?
AirIQ is a classic example of a microcap company that tried to grow too quickly. After becoming a public company in 2002, AirIQ was rapidly expanding, leaning heavily on the capital markets to pay for its acquisitions. Revenues ballooned, peaking at roughly $40 million, but the Company was not achieving profitability. As investor appetite waned, the Company began financing its operations through a series of debt financings and eventually hired bankers to strategically review the direction of the Company. At that point in time, the Company began divesting of its assets, selling multiple pieces of the Company to raise capital.
By 2012, AirIQ’s business had been scaled down to only a couple million in annual sales, and under new management, consolidated the shares on a 10/1 basis. After a few financings, both debt and equity, AirIQ achieved positive EBITDAS, a milestone it had not achieved in six years. In 2014, Mike Robb, formerly a consultant with the Company, became the CEO of AirIQ. Finally, by the end of 2015 AirIQ announced a full year of operating profit for the first time in Company history. Under Mike Robb’s leadership, AirIQ has been profitable every year since.
Share Structure
AirIQ currently has 29,828,947 shares issued and outstanding and 32,025,074 on a fully diluted basis. The executives own 2.98 million or roughly 10% of the Company. The two insiders that own those shares are, Vernon Lobo (2.17 million) and Michael Robb (816K).AirIQ does have institutional ownership, with Mosaic Capital Partners owning 5.94 million shares or just under a controlling position of 19.95%. It should be noted that Vernon Lobo is currently the managing director of Mosaic Capital Partners.
Vecima Networks Inc (VCM-TSX) a Canadian telematics company with roughly a $250 million market cap, owned 6.37 million or about 21.37% of AirIQ as of the last information circular. However, Vecima has been selling shares in the open market. On that note, there was a 3 million shares cross on Friday 24th, 2020 and there’s roughly 1 million shares left – which is also likely to be purchased.
Therefore, the total insider ownership, including the executives and Mosaic Capital Partners is roughly 8.9 million shares or 30%. Which leaves a public float of roughly 20.9 million
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