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PWFL PowerFleet

Participants
Chris Wolfe CEO & Director
Ned Mavrommatis CFO, Treasurer & Corporate Secretary
Michael Nichols B. Riley FBR, Inc.
William Gibson Roth Capital Partners
Dan Weston Westcap Management
Call transcript
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Operator

Good afternoon. Welcome to I.D. Systems First Quarter 2019 Conference Call. My name is the Twanda, and I will be your operator for today's call.

Joining us for today's presentation is the company's CEO, Chris Wolfe; and CFO Ned Mavrommatis. Instructions]. [Operator

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

or others - emergence company's uncertainties filings, any or new differ Factors and company's cause actual competitive to company's service, materially The and company products contingencies future and for growth, considered strategy, risks, for company's actual will statements competitive overall circumstances. amongst All factors, operations, for regarding opportunities update performance. any other beyond. anticipated such intend other to for to, for anticipated are position, statements duty that materially product, reflect business XXXX company economic company's than facts, trends include, limited could position, events and demand statements to of those All of differ During SEC regarding and expectations forward-looking forward-looking future demand may conditions, historical offering statements company's the be beyond forward-looking results the does which statement. not expectations results and future the business include call, control. in Such financial statements The I.D. any future may from Systems' the financial performance and are there result, made presence the of but cash future imply the undertake position. could industrial regarding which technologies events, many are statements. the not present the of including financial plan forward-looking operation, and any include company's to achievements assumed statements forward-looking projected

of made to company's this remind the Investor I available website section Relations everyone be that Finally, replay www.id-systems.com. at at would the for will call like

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

Chris Wolfe

closed, CarrierWeb be joining the Pointer a acquisition copy which section we I'll CarrierWeb and capabilities by extremely for results productive tuck-in of and you completed and say already about expanding Systems, for today. talk the Good is we issued our Thank I.D. our business U.S. XXXX the us was announced as market first but a a acquisition thank our market to financial in our strategic you, afternoon, it release, and dramatically of had and QX quarter dramatically will these momentous more Telocation. Investors After website. available detail for the Twanda. technical a on our transform press - period our in of Pointer positive of will in opportunities. scale, acquisitions business. impact suffice bit, adding has a

core segments Truck true is these a of business, benefited continue Industrial business however, from quarter. a distributor Beyond which material acquisitions, for I.D. well worldwide first equipment. especially secure to This contract the multimillion-dollar we handling in Systems Jungheinrich, perform Management with

profitability. revenue, you I our on recurring to strategic an provide as and EBITDA discuss three I'll operationally businesses like Our highlighted performance in for well a drove results, now the quarter financial in Ned our through detail. outlook. walk Afterwards, quarter call our over the the to update Ned? our as more financial turn solid would sequential XX% of success QX increase to return and sequential in increase revenue another during XX% by to adjusted acquisitions

Ned Mavrommatis

Thank Chris. And good afternoon, you, everyone.

the quarter in to an the from prior first in the $X.X revenue XX% for $XX.X in to of of last quarter, year. - QX order order are financial in initial results first hardware the in Revenue decrease for quarter XX,XXX to delivers increased and due XXXX QX million March XXXX for from Avis from QX new from to year from expected The is QX Avis. $XX.X first Avis QX unit X% revenue XX,XXX $X.X XXXX. million our revenue The contributing in throughout of XX, unit X to million this ended Product XXXX. last in quarter delivery to to increase and began product for in of $XX.X Turning year. million sequentially hardware in the decreased the million begin of

During The XXXX, year. in QX new last in revenue increase in from from XX% million in high XX% of million margin increased service High service is of Avis. increase QX recurring recurring revenue service in last to of by the a due from revenue and connection million to record the $X.X increased revenue revenue $X.X to margin $X.X order our additional QX million development with year. $X.X

the expect with million every year. a as Gross long-term increased for sell unit from continue million X% recurring $X comes in QX contract. revenue We of we growth in to recurring XXXX revenue QX profit last to of $X.X

XX.X% percentage recurring XX.X% from gross of increase the The an margin year. of revenue, basis to As revenue. profit high gross in XXX total increased and quarter in QX a in margin profit due of for first gross increase to was last points XXXX

to and XX, flat acquisition-related due nonrecurring in to costs to announced was the the million, the on XX. CarrierWeb, period. from same finally, in the ago increase were for million million to of Telocation same year ago. year the $X.X compared XXXX SG&A million increase was year related the expenses quarter to $X.X primarily same in due was period. year first period was of ago first expenses inclusion of March the ago for same XXXX, to Pointer CarrierWeb to closed The expenses of our were $XXX,XXX turning January quarter compared absent a And Now expenses. U.S., the The $X.X expenses in R&D acquisitions $X.X XXXX compared which which was period.

totaled in This of basic earnings first loss loss loss year. depreciation, we sheet This in of share GAAP and cash balance diluted quarter QX our profitability share. basic $X.XX prepared $X.X or share diluted Turning share $XXX,XXX interest, with diluted for nonrecurring same before my improvement equivalents. finally, basic totaled Adjusted amortization, define million quarter per loss and $X.XX EBITDA XXXX or an EBITDA, the metric, the XXXX. year as to per million $X.XX taxes, compensation to no or $XX,XXX, $XXX,XXX non-GAAP the measures, strong remains per or items, $X.XX Chris? adjusted basic cash, And in last ago our which and of and per of stock-based in GAAP and compares was net net diluted first remarks. from period. and concludes This debt $X.X a

Chris Wolfe

the and spend Truck Pointer. reviewing our Thanks, minutes of couple Ned. a X then of time highlights of on balance first my Management. with of spend the our like Starting the acquisition to business I'd segments, Industrial

partnership, strategic successfully to it During with provide the labeling Jungheinrich, to software-as-a-solution report base. a I'm quarter, we we now Systems provide We're Jungheinrich's our modifications. white-label telemetry sophisticated I.D. signed that the an also deal thrilled about with hardware opportunity Jungheinrich. customer finished equipment for finalizing encouraged multimillion as this we're to white and

units to late QX starting expect ship in We QX. early or initial

Jungheinrich a units the the As a largest approximately world. material is sell reminder, third year. And XXX,XXX forklift in they handling manufacturer

experienced sales and our years. out with our is in quarter, sales, an and so them. we - We're especially broadly, Europe. ITM we're in with greatly execute So deliver, our we business opportunity best X business, pipeline our the of solid we have pleased expand the it's during More to if first been

first with for business. productive exceed company's in our the In Visibility due was collaboration in Logistics a to our fact, This plan large and Europe in It was achievement sales the quarter also time part history. our Jungheinrich. busy

of January. outset CarrierWeb the at the closed tuck-in end mentioned I of our acquisition of As call, the at we U.S.

not tracking. workflow it control or For devices, familiar driver applications, is a those trailer with ELD, provider of electronic real-time CarrierWeb, productivity and log-in command and refrigerated in-cab

months, Top week units in well about to Heavy by I.D. monthly orders bumper-to-bumper recently CarrierWeb-related very and Logistics was successful new the recently to we devices new entire the to ramped already is of and rental completion March, per of XX,XXX product new we several Avis initial On asset top average we've launched up of of which these million required. the quality revenue prospective LVS XXX recently In the XXX and average shipping trucking units and We fleet started which Systems went XXXX. the Top these with new business X with subscribers, two as of increased and the post-closing. of equivalent Products XX higher assurance portfolio. XXXXX-unit by a beyond value the CarrierWeb XX two our Series months in The $X of These orders and the several to market the our than CarrierWeb units during per nearing the exceptionally customers, such tracking production it's solutions ETP integration across a Matter the of industry. product products, field monthly to first in PowerFleet We we In next innovative trials more is strong booked Current CarrierWeb orders is of fleet Trucking's well than added subscribers Association, the and top unit XX%. months quarter. repeating the units units. platform, our X process. fact, initial - Carriers is net responding we won company. adding secured trials LV our transaction, our base new our demonstrated a trials. marketing pre-production per this, because by existing April, over from our recurring privately significant revenue, secured installed products Truckload X,XXX as organic net Duty and started month and thanks and to the proposition XXX,XXX pipeline have received contract along On performing customers the business, and first are X,XXX continue our the part earlier It Top opportunity this, for revenue adding As presenting worth trailer associated fill field we higher at responding represent well is X,XXX for solutions of

this per to We our are on month. well way week X,XXX producing units starting

deliverable completed program of and do installation which a major there's programs with development easier. are associated the albeit on-track, still vehicles, on to lifting Additionally, program. Remaining lot unlocking heavy much a for also X we makes process locking recently Avis

and acquisition. missing the of the However, Turning relationship prospects near- we're business to we a Pointer long-term remain the the not about excited and beat,

First of will position market. multibillion on But the Systems and and the - in as X leader acquisition front many as we performing dollar, new put entirely software global profitability, our clearly, solutions will it us. phenomenally a trajectory. all, will and we growth businesses accelerate opportunities have an of in growth us Pointer our well, I.D. are It IoT

will or to current IoT recap, relation The available a equity be webcast mid-March read telematics convertible like investment done XX,XXX PowerFleet, transaction we you in and transcript debt cash have equity launched about call strategic by of private agreement in acquisition a issued of leading holding our I mobile definitive through a $XX working Pointer than haven't shares paying by Pointer, a held we so well you on preferred to We're order. million funded solutions. recently LV The million signed $XX to of a or to But already, Bank closing, the cash encourage acquire million the the in release we Partners acquisition If of products press we and financing created company. approximately combination even the the co-developing builds a Avis March as and Hapoalim. producing the X-year $XX that facilities. credit In Series expect million $XX newly XX. Abry XX read and listen a on and provider bank, and with to million more firm,

$XX a and our million over I've we translates we the fiscal $XX that products. our XXXX. which in XXX,XXX collaboration, of innovated million business which are planning even At recurring services talked $XX in and margin months improving million opportunities subscribers by to team expanding is adjusted and will approvals. basis. very run growth. mission From benefits strategy financial with $XX scale, first have increasingly platform the profitability what in to the post-closing. engineering XX EBITDA our to subscribers, subscription in more organic us growth margin businesses S combined design, Pointer a is already significant about and revenue, and the that high coming combined The weeks, exciting customer building had cross-selling fiscal standpoint, a became closely file revenue, by ability the evident business and generated and the end shared in In recurring be As generate revenue double-digit XXXX, along we through with to in gives expect and discipline sessions have values, aligned, close, services and our operations industrial-grade operational recurring through XXX,XXX reflecting on high million than organic it confidence financial more then a win the of on Form will are more underway. And than of integration perhaps, Pointer solid for statement, the shareholder quick a Comprehensive regulatory registration followed plan rate also

under are PowerFleet. in synergies expect and confident that I.D. identified. We we've the of to in our started QX also our and acquisition ability financial efforts operational remain to and to realize continue Systems already portfolios We've rebranding close product significant

we our new launched a who are We have website and reflects that capabilities. better unmatched recently brand

yet capture seen with call meaningful enhance with much ready check strategy a time of - us out haven't please appropriate the to Operator, coming exciting in questions. that either id-systems.com. provide open your together the growth powerfleet.com addressable meaningfully vectors scale of instruction. for shareholders. of the more and or returns the company you our it please midst enable we're market, we're our to And truly a If our the business larger to significantly Overall, multiple to

Operator

[Operator Instructions].

question first Riley. Josh B. Our from Nichols with comes

Michael Nichols

company million But relationship Yes. seems targeting want pretty time, EBITDA know a strategic I $XXX has I some about the ask, Pointer impressive revenue. I on company it was that be a did of margins the for is a to good obviously, curious, XX% close fit. to and with

think the targets? growing, positioned company until do able those could kind of is you it million to the that like Given $XXX be entity may combined to achieve already long be and how do

Ned Mavrommatis

goal growth. Chris Well, mentioned before, is as our double-digit

to growth million on million, three assume the within can $XXX see you we getting XX% of years. If $XXX top it

Michael Nichols

came then, to And onetime for some development you Did - related that how that just there Do it was - order. break-out the XX,XXX-unit revenue new specifically? have the mention much quickly. I you was know, Avis from for

Ned Mavrommatis

million. $X.X Approximately

Michael Nichols

then, And you've well, two in know said orders... like to going acquisition integration's million done. had that hear the the I already you good months, almost $X Carrier of

Ned Mavrommatis

million. $X

Michael Nichols

sorry. million, a little on at you point? $X this elaborate bit full for the expectations year the Could

Chris Wolfe

really Well, great. right now I which mean full, the pipeline is looks

tracking and a on NCAP also with excitement As never if met had, Matter parts think prospects our part product refrigerated of of very you the well. as excited about and - some of fact, we've of that current have about product. larger their getting lot they're our refrigerated fleet, but customers, who

track So I actually wins great I that next a give wouldn't we're can't I on few think, to months. the But number pipeline yes, in you looks want to some here think hit. the have strong,

Michael Nichols

A And little Great. last for question. then me. a bit of question more technical

to federal XXXX. just deferred if want know a So end I I know $XX million the at acquisition least towards has of the how over, company on think, to going we tax little And I about any profitability? to bit Section assets since the type basis, a be thinking is trip Or be Pointer XXX restrictions? it's of company moving should going to go-forward of the

Chris Wolfe

Yes.

significant So amount I limited, $XX is still NOLs. together have of it The of - trip know be well, would with the would million. investment they it's use acquisition as from but XXX, over Abry a approximately so as the we'd well those transaction

Operator

[Operator Instructions].

comes with question Roth of next Capital. from Gibson Our line a William

William Gibson

you're Chris. You that the were pilots. about going But over business? with things the opportunity in carrier XX,XXX-unit quickly, talked doing Is companies

Chris Wolfe

in Visibility which and is both the the pilot there's That's yes, CarrierWeb cab. both. The the also - LVS, Logistics actually

William Gibson

the orders the volume? your and something in that people where see Good. that And half? is start what's traction we of real XXXX the timing of Or of Is booking there more of second sense sort a story?

Chris Wolfe

the think, usually, the replacement it'll the the see second now are and part some that early it We I be we'll in - first. we're half. No, right right? fleet, of getting So - vehicles - orders just of

are get they the new we're tractors. full to, then at replacements. new are there looking But some and as that XXX they in as these that like get So top companies are trailers, talking

don't But you'd the won't QX So - to again there I able whole and be in so time, the you'll QX. seeing start outfit though, have rollout like quarter. in numbers be you'll a fleet even

Operator

Dan with from Your the Management. next comes line Weston Westcap of

Dan Weston

color you about several covering your the First us on Jungheinrich. it Chris, side when any can talking three from units. give announced thousand it's been were the almost originally, that partnership. since you announced you And agreement months you

the a think having given talking could to you were of do grow potentially substantially from them, several few that, Now about? work initial months benefit that thousand that with you

Chris Wolfe

only had phenomenally think and we just relay - can that's we've disappointed. both meeting, that Jungheinrich is of in And the with be this I us from I the to all Yes, almost if quote direct disappointed - think both conversations we'd with I did.

here is, they'll with are. orders channel, then we see we I first QX, goal QX throughput already. get mentioned, the you'll very a the into the as through obviously, So every and start hardware, execute, the at or uptick. up, early software literally the I the which our finishing the We're We as white we then the end see as think cadence block channel, got quarter. labeled progress. will the of They're to actually big And delivering soon like of happy

you to got quarters execute. to us So of give a couple

Dan Weston

us to using the on past? processes as move now the And as your the Pointer to makes to other in R&D instrumental - Pointer is certified Phase guy models and Yes. opposed Avis, Fair of rollout, getting in acquisition, relates you thoughts were X? give it using more you and kind then pertains as it is how of your to enough. Pointer And as you terms could Avis into

Chris Wolfe

time. a months and certifies we vehicle instrumental, over difference a next how between it's certify and working actually is sell key getting Cellocator, which several then the that basically that's a rollout can XXXX think under volume. with Pointer lower manufacturer but because like hardware by be reconciled the of there's vehicles. VOM But how I the of cost Pointer real Pointer brand, The their is

- here. about XXX,XXX-some XX,XXX. building think it, units you you build about If We were they're

drive combine can we down to platforms. we can volumes, cost, just actually So the consolidate

a lot improvement reduction next the about we it's as cost again, in feature of as platform that So develop. well

Operator

now the And turn this further Thank I'm to Chris back like time, closing you. Wolfe Mr. over At for remarks. questions. no showing I'd to call

Chris Wolfe

joining today. like our for partners thank customers, for support. you next to I'd forward We look us continued on updating Operator? Thank employees, our shareholders call. their and you to

Operator

and Ladies for concludes gentlemen, thank presentation. in you today's the participating That conference.

day. may wonderful now a You Everyone, disconnect. have