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PWFL PowerFleet

Participants
Chris Wolfe Chief Executive Officer
Ned Mavrommatis Chief Financial Officer
Jaeson Schmidt Lake Street Cap Mark
Josh Nichols B. Riley FBR
William Gibson Roth Capital Partners
Dan Weston Westcap
Morris Ajzenman Griffin Securities
Call transcript
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Operator

Good afternoon. Welcome to the I.D. Systems Third Quarter 2017 Conference Call. My name is Dilam [h], and I will be your operator for today's call.

Joining us for today's presentation are the company's CEO, Chris Wolfe; and CFO, Ned Mavrommatis.

will the we questions. for remarks their open call up your Following

forward-looking during we would statements Safe regarding I the that that to cautions Before call, Systems' like begin call. this provide I.D. includes statements made Harbor

results for statements financial to Relations include During events, update offering www.id-systems.com. operation, website regarding opportunities like and in the cash expectations would the the replay any statements. for statements of forward-looking of any risks, the performance. to growth, statements The be statements statements that company's economics and results, are assumed for including section to everyone to statements. SEC intend be company's include and overall those others, demand beyond circumstances. forward-looking other from contingencies, made positions, include, conditions, present in business plans financial of company's and future reflect other and and call results statements future uncertainties any may of for trends duty regarding projected I Factors achievements company's made than amongst will differ company's the competitive technologies the future for the Systems' emergence performance historical cause strategy, not forward-looking forward-looking of company's differ events for will any materially position. future The beyond. company's not considered that position, new call or expectations actual filings, to could the to, company competitive Investor at undertake actual which available All future or regarding such there demand this does products remind anticipated operations, services, and could materially or factors, forward-looking anticipated are the product I.D. control. facts, business company's financial which imply are presence but many limited industry Such XXXX company's All

like Mr. to would please to Systems over CEO, I turn I.D. Sir, Wolfe. Now Chris call the proceed.

Chris Wolfe

joining for September today. website. for closed, XXXX, the the issued Good which we afternoon, quarter copy ended our in our a the section a market investors us available on After of XX, is you And everyone. results press release of thank third

As our QX by our continuation our we of representing financial across performance were healthy and the they see you very have increase solid year-over-year This results positive experienced dependent second encouraging, income. improved in execution but driven can quarter to of more our past. optimized structure operational drive cost was XX% quarter. only for on the The revenue three large a one deal top consecutive been our were non-GAAP produced last net not as in importantly, line, divisions helped momentum a diversification not also

as the planned. of size the performance products accretive forklifts for integration improving This offerings is fleet our product full to acquired of capable of gives marketer us The a manufacturer proceeding and substantially assets during managing acquisition budget. financial a and vehicles. suite all covering addition In Keytroller, we quarter, and of any electronic construction

Then call growth about our I into will to Ned? our talk operational But over more minutes. this sales execution for well for as before plan about our return and how who numbers in In I'll growth I'd acquisition to CFO, fact, insights turn like Keytroller and a I are our September. augments talk Ned further, outlook. above details go August more few it and the strategy, and provide Mavrommatis, strategy as organic will quarter. more the

Ned Mavrommatis

Thank you, good everyone. Chris, and afternoon

asset rental primarily our our fleet were increase million was from third VMS fleet $X.X was in to was Group August. $X.X which QX year-over-year last and Transportation increased Recurring $XX.X million agreement revenue year. XX% same revenue million in Avis prior sequential management as $X in the of from $XXX,XXX, $X.X $X.X acquired the million third well revenue And the from was Turning million, from September QX last revenue with to million quarter ended quarter our in $XX.X to year. which financial third from from the $X.X increased quarter the Keytroller, results quarter quarter contribution third the year XXXX, million last for and Both, million, down in in for revenue year. we as and X% to year. from from up XX% VMS rental was period. in up ago the due of increased last X% $X $XXX,XXX revenue Budget of higher million of which revenue XX,

from remained Our XX.X% up QX XX.X%, in at margins year. last strong was which of gross

our $X.X quarter. million from expenses year in expenses, due same slightly acquisition. to million $X.X the QX and compared $X increase of were the in ago year. at million, Looking last to related $XXX,XXX Keytroller development expenses SG&A up were to was expenses The Research

$X.XX GAAP per loss measures, $XXX,XXX profitability basic or year. diluted our of or net to and from $X.XX and basic $X.X in net share improvement last an per of share, million diluted Turning loss totaled a QX

diluted basic compensation, and losses significant improvement foreign non-GAAP in totaled share. a This net share $X.X million amortization, diluted based currency income depreciation year-ago and the net of and $XXX,XXX or per per translation $X.XX non-GAAP quarter. $X.XX our basic from same was or stock acquisition-related Excluding expenses, loss and a

second As quarter Chris of profitability. mentioned, QX marked non-GAAP consecutive a

earnings including please supplementary the to For the GAAP on results, see non-GAAP more of reconciliation our today's tables detail release. terms,

equivalents securities, Now balance outstanding. turning sheet. share to cash, equates marketable had quarter-end, per the $X to no $XX.X and At our which debt cash in company million and

finally, operating $X.X credit the eliminated same million cash XXXX. ended This financial activities in XX, my the for summary. net by $X.X month of period operations the used to completes period September provided And our XXXX, of compared in of line quarter. cash during nine also We million was net

file by we November XX. financial to For Form plan of our more XX-Q, detailed analysis please Chris? our reference results, which

Chris Wolfe

Thanks, Ned.

areas to results strengthen we in to plan which our and In of third scale wins as our historically business especially on various truck addition make key improving financial our our by demonstrated referred was to business. during we've VMS. This progress division, we continued our to further quarter, the industrial secured several

As in aware, may world's one of a online for be initial from August, of order the received PowerFleet. we largest you retailers $XXX,XXX purchase some

We are Germany, currently implementing PowerFleet at centers and in the Italy X of retailers distribution European France. online

system because I.D. capabilities. are We win and selected this encouraged reporting PowerFleet's very customer analytics performance, by ultimately process and based competitive a the of superior Systems on very

may builds PowerFleet scheduled trailer on key product relationship are on parts transportation Avis. centers. stable with to revenue, centers XX air which news revenue fleet with out Toyota. container partnership distribution We continues field management, developments the distribution parts established some into division be This rental In a launched seen announced productive programs another we more in but unit North that of Motor, was the of yesterday, or division, asset QX, U.S. our our trials. XX shipped In agreement up our move two next-generation of as and to quarter, contribution, ramping share plan XXXX. see two our of tracking rolled in this TAM, As to busy, year to for purchase its you division, we America we have Shifting Toyota the throughout it

fourth and this car us trials, meeting critical this product Avis's building achieving production acceptance we We are in mentioning testing new worth program look entered production penetration certain you milestones, in, testing. units our identified confident schedules. on we are delivery addition we the for that in The our is continued items In address all program forward deliveries time but began updating system first on quarter and their upon volume. of to deliverables, conducted which just we any we during ahead. It's testing, to progress field a capability, penetration weeks also as ramp up and

on industrial our vehicles a I As and tap product us our focused around consistently there's have call, truck to customer been while last industrial less Overall, efforts segment. about sales large industrial XX business in and mid in than segment and both standpoint, and capitalize achieve product our XXX large of us positions our the provides or primarily dealers the truck on more market. on to scale, accounts, network direct years truck sites more considerable segment. profitability opportunity allows suite non-GAAP tier from effectively or our revenue over talked this in enterprise quickly Keytroller's in Keytroller

starting our Lastly up Thank Keytroller Germany, international is headquartered which with in in for the management open distribution be distributors Operator, will provide please signing Düsseldorf, call EMEA will as up distribution team, the And that, you. ready to XXXX. and be centers an instructions. and up questions. your regional group we're set

Operator

Mark. Cap Jaeson [Operator of Instructions] from Street question Our Schmidt first comes Lake

Jaeson Schmidt

questions. Hey guys, thanks taking my for

could give you ones. to VMS came recurring TAM? VMS from with two housekeeping the start that quick then Wondering And for if the segment? Just units revenue us the and

Ned Mavrommatis

Sure. we quarter $X.X Jaeson, X,XXX and revenue during VMS In VMS business million. X,XXX TAM the this the recurring is units. And shipped from the was quarter third Ned. the units

Jaeson Schmidt

All talk win that for right, you further PO expand that pretty online shifting to a initial thank that. for retailer. for to you then opportunity you that Can potentially at just customer? gears And significant Obviously, about guys. the

Chris Wolfe

on process It’s being verify think Chris. -- is a the check to at for investment. and Right what account. I we the online expansion. similar significant mean, large retailer, do opportunity This obviously return world's a I Yes. then largest rollout, it's there's now, the every a

of So we're phase. in that kind

So further with opportunity I think see that customer XXXX. we'll any in

Jaeson Schmidt

in know pushed Okay. from recognize from those QX. didn't out Did QX. QX any that And They got were orders then? you I in there some revenue hit

Chris Wolfe

wasn't work actually in sites Actually, orders were we're doing, That other QX, full the and there's slippage. of the the with deal QX we that two Toyota the signed shipped, part those QX we Toyota that that some came slippage. those that

Jaeson Schmidt

All the queue. a jump in back I’ll lot guys. Thanks right, perfect.

Chris Wolfe

Yes, thanks.

Operator

you. Thank

comes of Please question Nichols Riley from next proceed Our B. FBR. Josh

Josh Nichols

add your the you Yes, the frame be purchasing Toyota is thanks at could distribution of hopefully if up my to recent opportunity quarters? units a offering, centers? the far of announcement bit software regarding the next question. the Could over help as XX us some several a going you taking as PowerFleet that here little VMS providing white with label of for to And also opportunity size coming kind Toyota

Chris Wolfe

Yes. is This Chris.

white all, label. They called First offer it; T-Matics. currently we Toyota it's sell of

actually the PowerFleet So white labeled they're reseller T-Matics of a symbol. under

plan. Channel today occurring that that's through actually above So actually sales are and

as was we actually units really the XXX it's date. and a with of the It's parts we've system far and opportunity total for to their just for use their in signed opportunity, XXX them, As distribution. shipped of that

Josh Nichols

the That's contributed? helpful. you as for as quarter do breakout the far And revenue for have just what curious, Keytroller

Ned Mavrommatis

during million the $X.X quarter.

Josh Nichols

talk the potential on or updates Post from about the where is, VMS any last then, stands little United a bit refresh? you And question could States me company Office

Chris Wolfe

waiting in in preparing The myself think -- July need came that in. I every to on myself. I'll to I just for out tell Yes, Responses know have by ours, RFP able to ago. we're weeks be mean, you. be Friday. for I next actually since speak be to two

I when think the RFP is on they'll start the reviewing XXth responses.

Josh Nichols

you. Thank helpful. That’s

Chris Wolfe

Thank you.

Operator

Our from Roth Capital next comes of William proceed. Partners. question Please Gibson

William Gibson

budget out fourth be to rolling going any we Are Avis in the quarter?

Chris Wolfe

Chris. testing. Yes. Right This in now, system acceptance we're is

to but We contingent have obviously, in it's plans quarter, upon roll fourth the units out system acceptance.

falling Right a actually it's last order. [Indiscernible] those the unit deliver deal milestones. we like actually we XX,XXX the also in. on hit We can to just until have we we is We milestones -- done, say now, have and have

William Gibson

that? fleet missed was then And quarter. one just rental the number the for follow-up. revenue Good. What I in

Ned Mavrommatis

Bill. $XXX,XXX,

William Gibson

you. Thank

Operator

you. [Operator Instructions]. Thank

of Weston Our Management. Dan next question comes Please from Westcap proceed.

Dan Weston

taking afternoon, the tell the have us Most Ned, Good already. who for XX you questions. please? top But could Thanks were in answered quarter, been customers Hi. guys. the

Ned Mavrommatis

Sure.

only was obviously, they but the was quarter had well. remarks, revenue Toyota So in it revenue. quarter. XX% of as European of below we the big one Group, was that retailer And over operations opening We as were, in that Below very customers that were the announced quarter. a in customer with and all mentioned Chris the for that, Budget XX% quarter third XX%, the Avis diverse Wal-Mart

had Motors. the Postal also from General as We as orders Service some well

So a very it was quarter. diverse

Dan Weston

bit Is talk little maybe back from you a two bit originally questioner. talked remember you've going the what's signed master it that? a this the it ago, you white-labeling guys happened Chris, product Can then or And of I about Toyota. so the at And about why come way on Yes, little a I know company MSA good. now? it. but years in service signed worked did that Very previous the about? original agreement. with from and time, fell I the that how was so, kind off, reignited time and if just you being understood

Chris Wolfe

us which It to curve of off. quality And to have was issues the of is learn. be -- that the time, with both Toyota there's think Yes. the it's the both some you it to think those at sides, teams plan had that telematics and been track, I we product. back on adequately think I want and represent supporting product, the and be guess, of a went able one curve actually, kind -- them actually, do I into a I don't gotten learning channel fell At great. And had on they're it's a that the product being above thing. which, And same could this same year, to had improvements hibernation, and addressed. it time, when have Really those learning it's

Dan Weston

actually the quarter revenue product, has and in been there was white-label QX? you Was this ancillary of Or out -- bit contract? revenue that just of QX that the relating a produced specific QX year to first little

Chris Wolfe

No, out we it's year, quarter-over-quarter just this had the T-Matics there that line. last of -- in actually even It's year, revenue channel. is that growth product

Dan Weston

then have you they rollout, have of seen you Okay. any Avis, Very potential quantitative given In inventory purchase asked relating guys words, as get good. their closer ahead on actually closer you part? orders and other this And yet? here, signs and to purchase to

Chris Wolfe

is the ago. Yes. that risk, with agreement what Avis time risk a call, long of lead and Part accepted they you part long

get -- now lead have some iPhone phenomenally in them launch, actually because to X. meetings every time with the month, hard We parts iPhone electronics with the business, are executive the long actually

the talk we together, parts so right on But putting you when with to you actually So sell boards. basis, have weekly committing could put boxes them now the PCBs a We almost which can't in really like actually the right. anymore. built, them box, are

delivery units with they next that. because to moving they're need So and the a tight we're window with forward the units year. engaged for they get us, already And want very

teams both get hard a to acceptance, So system everyone is which on through is working XX-day period. very

Dan Weston

anticipated contract; next that announced first I through to be part up November, mid-part think year? and kind I you that then were which of up we're going kind lower of the shipments originally coming week. guys you of the maybe in, you Is think here of the when the winning would start of ramp slightly than as projecting drive on

Chris Wolfe

Yes.

we're into weeks our because said what two primarily go specifically, advance delayed we on initial testing. QX to think I but to, of that, plan we system testing, penetration acceptance probably call

It's about over-the-top to for heard the space you've prudent So probably the Equifax breach, et doing probably security cetera. anyone be IoT testing. in

finished And on white-box call, what product, so the we we passed. black-box testing just and black label and [ph],

take to So of do things a weeks to schedule that, it's out the X that, one okay, thing think prudent we just those do. was I of

Dan Weston

little talk the you about beat you bit here, that Can just about competitive mentioned competitors -- talk in commentary Okay. who to retailer won online two it other last you able a out process. win about were to a Europe, deal? you that to the stringent you are pretty And relating your that the was out --

Chris Wolfe

can't I but won the our in I selling we was Europe who competitor. deal tell actually you the an No, through give can details, that actually OEM

Dan Weston

Interesting.

Okay.

think says a that right I lot there.

to my called us you what relating any provide details two for, can was RFP of units details? Okay, think or the frame ago. in USPS. said weeks any to or or that total RFP is you last issued the The Is terms actually there time size question I either

Chris Wolfe

they a it in the and like process they actually to it's there's I sites. it's do X,XXX count, out do prove the site is front going a don't units. exact. me And the -- -- XXX then remember out. of what be blast I have Yes, can't but

which in XXXX. to then So 'n basically an sites in would And training quarters the initial there's later the of in rollout rock place, is year are processes in they're going site, follow-on Then be QX, is in year. roll follow-on the place. the next

Dan Weston

-- in there there. revenue orders XXXX, to confused Is XXXX? generated little In potential and for is the a be I'm

Chris Wolfe

but have Absolutely, out the that only also three has not put have system in XXXX, all because be rolling to in place. you sites you infrastructure

to remember SaaS the will a behind installation, the we so that you they're Obviously, cloud-based be So implemented behind offer firewall solution solution, but have on-premise. our they're firewall.

to bit bit they're a more costly So that's little more complicated, implement. little a

Dan Weston

appreciate I Okay. and for on really the color. the Congrats quarter me. that do it will

Chris Wolfe

Thanks.

Operator

Thank you.

Our next question Ajzenman from Securities. Morris comes proceed. Griffin of Please

Morris Ajzenman

Hey, guys.

And I product. And were second turned you out could what's disappointment, and off be some Postal, as back introduced I customers the you If half customers, VACX does I like my the U.S. dealing awards out. the in that a number were that helping really go be productively, of drive large this had to operating that looking at by we're be, revenues work really you -- stepped up guess, would presumption with to last timing, then because adding on VACX XXXX. is think, years that's towards, you've there little over XXXX, my any XXXX, been And large haven't if bit potential potential bugs you to of is thought, to up? you open it

Chris Wolfe

the Service said was been platform. deployed have do ready S, it's thousands going refresh being a year, time to deploy it, very -- that I'd Yes, sure the situation deployed and We're to everyone accounts. It's now you VACX work line the kind good That was units. S of knows on product. we're reviewed. VACX United actually we VACX Postal with what a that's we like at with with is, actually that's the which already, last of stable the numerous call question. right on States you that exactly The make mentioned the

that are are opportunities, high-quality we which are literally right, So call products. and accounts is XX delivering years a over products we for strategic on that what testament that with old, refresh developing known the

So, we can do it.

We are it. doing

Morris Ajzenman

the the front, on in business, more that revenue On side, granularity there I decline a there? transportation presume unit? and outlook different TAM all what is the pricing you Can the is give

Chris Wolfe

that a Basically, business churn. is Yes. we see what in

So it's like a very when contracts due, space. come that's competitive

like tight So bidding a situation. tough it's very

We landscape, I two come space. we developments at in why with And today I new to excitement that you're need platforms. year competitive when look see going the some you and the we next product fact product with is, have these mentioned that we out think know also underway this -- to

very So the -- conscious not price getting but just get and our again, we're very it's competitive, need holding that next And own, it's year. to to. we're we're address we that to going deals

Morris Ajzenman

Thank you.

Operator

concludes Wolfe you. question Thank closing like for Chris time, session. our and remarks. call now turn to I'd over the At Mr. this answer this back to his

Chris Wolfe

continued you. thank support. in could We and our be call. And if that next our investors great. for please call, operator, thank you joining employees, the call. on forward you updating Yes, end to would I And us to especially look today's their want for partners thank customers, you our

Operator

for joining you us our presentation. today Thank for

may You disconnect. now