SuperCom (SPCB) 27 May 212021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Good morning and welcome to the SuperCom Quarter One 2021 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. the end be August of of hour approximately XX, replay the after the webcast call available will one XXXX. A call through to Core now Gordon, Relations would like turn call I to firm. President the IR, over of Company’s Investor the Scott ahead Please sir. go

Good call. Thank today’s you, for in and morning Darryl. you thank participating conference

leadership SuperCom’s from Trabelsi, me is Ordan Chief Executive Joining team Officer.

forward-looking performance During this for that future or address results. statements call, management statements will SuperCom’s including be operational making expectations

results actual differ other factors that those Forward-looking materially statements involve statements. cause from risks and may to

more about measure conference risk call, this Form-XXF, release most includes call SuperCom periodic For information refer press that these to non-GAAP can be Today’s believes Company on factors recently evaluating particularly EBITDA, risks, a the useful the reports and please SuperCom’s the in SuperCom’s Form-XK cautionary and described statements its financial in for it. filed performance. in

You GAAP. should substitute additional prepared a this results in in as or information isolation not consider accordance with for

pleasure non-GAAP net earnings go press For please publicly this Ordan, table law, today, accurate SuperCom in of turn only GAAP disclaims Trabelsi. by my that loss, located required information reflect see The XX, as the as Except measures content measure, time-sensitive comparable the directly XXXX. these revise May Ordan any update call obligation call release. to of financial reconciliation please is any most reconciliation its financial or that to SuperCom It contains occur of now call. to is to circumstances or over events to information ahead. after this

Thank you, Scott.

results. month than earnings had are ago As call aware, we you for XXXX our less a just guys

reporting, I quarterly and timelines drive my a investing sweet. to and So, to also and future financial as our in profitability quality I to of our leveraging objectives improve and lot started the performance the first and financial XXXX, since time. and to get the reported and it level CEO pleased it’s by to to a high reporting first improve I will new that invested plan we’ll our marketing scale processes the for our stated sales keep a work role There’s more on have here, we I in results When stated short over our basis. growth, increased of am quarterly team make improve time continued begin revenue to to effort first I hard financial quarter our of February, financial processes. the XXXX. of to half improvements reporting announce

be seen demand future IoT we the in and began, trends believe focused will for our technology. pandemic we Our Tracking opportunity IoT we primarily several segment, significant investments on marketing will believe that Since sales which a have has COVID ahead. drive

already in which correctional began First, are as spread, of infections, many both, its COVID risky began a institutions, seeing spike and environment workers. for creating initial overcrowded, inmates

ways think We managing the population. in of are secular of only the home the that confinement to effective of cited trends they we government various offenders. correctional helping a to as overcrowding COVID shift, the geographies in with solutions world, increase reentry offenders, that punish being reduce realize Not monitoring there result, this reduces financial pandemic, a it facilities, solution. will in a effective demand burden be As of and with saw, and in cost problem incarcerated as the XX% but Bloomberg policy are they’re confinement increasing electronic controlling the of one benefits monitoring XX% just by of increased that bracelets since not time prisoners last published temporary to of home the We article pandemic. An dramatic for to at with will were the burden helping infection. trends of driven the increase the a of by beginning change but use also the implemented around minimizing number believe the start wearing significantly

activity contract we of effective overcrowding, beginning high a wave that valued in signed and signed looking We ways month, be solution. signed our state cost up the earlier the and state seen out process state at security are of and prisoners a electronic to prison back crime looking of California the seeing have completions result incarcerated, $X helps contract why the in California project believe of of efficient December, the various for break of In in, we southern Caribbean cost States. to million. new last Alabama, recidivism, governments this we’re just governments United year, come we of big a trends, monitoring of this can monitoring in government with address won In to again -- likely peer we a are In incarceration in November, where electronic of at contract cycle that implement Wisconsin. other and a Latvia; these And for we the As and increased they’re where September cycle. commit essentially this of to solution. and to

solutions, addition launch, information. the say quarantining exposed our person This has location XX-day product received breaching offering. is Since have will requirement, us manage same monitor the met track maintained quarantine award and for verify travelling XX, quarantine home COVID-XX to airport, outside, if buildings, spread to PureCare of the our $X governments their is months. without essentially the solution enables confinement enables goes people’s self to people the quarantine, in month, which they virus of to other the per the or live a by not, we won if home within million Israeli significant into with interest Ben and once enabling up government that of term Gurion The with technology solutions, and it three with the vehicles project In these recently private from through initial been government to to effective authorities regions. to to able movement offer have an

Europe a testament XX%, over has projects secure bidding of when rate technology win industry. electronic our in reputation regarded our Our highly on been competitive and monitoring in the

the to market. to usage, continue per solution steady And Solution I will as in be we as take generated the provided in generally we per SuperCom person our these our recurring more efforts on for nature, on revenues, These during It stable in significant revenue during the This revenue projects day contract. shared the recurring of they stream trends We that best deployment technologically structure offer primarily note of is invest our priced the are revenues to to investing contract are primarily repeat the state XXXX, and the from earlier, we contracts contract our marketing call important revenue. continue as will term is were technology that them, period. opportunity mentioned past of from XX% with advantage it. that stage segment. in IoT Tracking And sales provides

Earlier first have is for measure quarter of XXXX. quarter reporting results basis we reported Because a our of for of while, a the period comparable we financials XXXX. balance in our financial into the quarterly on first first to of period year-over-year don’t this Looking and to. reporting today, P&L updates released the sheet a

Tracking was segment, Our our We $X represented approximately revenue first million. quarter IoT our which focus. in has been primarily

numerous of operating loss expenses which But, $X.X first and acquisitions quarter resulting expenses in approximately was amortization margin Our non-cash. gross of were $XXX,XXX. years, the gross represents in given in our million, Operating XX%. were profit past significant, million, $X.X

XXXX, from the the Our subordinated up additional We approximately EBITDA end million $XXX,XXX increased cash QX the our quarter and for quarter, of $X was restricted of debt positive. at balance secured cash, $X this at end million to XXXX.

pay to some of We of cash other also used expenses some and our accrued down the liabilities.

continued net as This QX debt of to debt XXXX at efforts reduce our comparison the our of part converted balance subordinated sheet, XXXX. the As end from ordinary to in helped to strengthen shares end well. we of

projects. We deployment And to also $XX.X that, our capital over at more faster from XXXX. turn at QX to of million of to increased to new questions the end I’ll XXXX the operator inventory, begin end million support answers. with and the call working And invested the in $X.X of

the come Ronald line [indiscernible] first questions Our Capital. Instructions] [Operator of from

Good Yes. and contracts, with all potential that you of your as world, for restrictions, least at travel good delays looking I has And caused a wonder if in starting signings? business. at now terms impetus contract is additional the the bring how contracts? potential so, overall that again, points pandemic the is international states catalyst some to -- morning. that the a any sort travel travel is about of regions Thanks. restrictions though, and countries you municipalities or of if that pursue up or Ordan, back significant in COVID pick to certain

pandemic. different Great question. forces We the a work saw of lot throughout

they quickly went monitors them It for our asked competitors. their they thousands hard, manufacture it started, pandemic of a any could takes nations to provider units us looking release prison, and if the put of when and lot very we Firstly, of to from was of because more these existing time saw then units and them generate on. electronic to

spike, an of other focus, down but RFP slow did traveling it initial governments’ that general created because restrictions. So, the and activity,

in in in side, RFP won for there’s an we for regions activity. the the increase up submitting counts a won So, RFPs. in project Last negative year a $X Israel a in been proposals an We And courts more California, We’ve of for did see RFP RFP example, year, lot -- we This were to slowdown in year. we’re last RFP million. U.S. California more PureCare; also decreases on seeing to in various active closed.

clients, to house or getting program because enrollees So, we us time the weren’t active had a arrest. sending more potential harder they

understanding the What very see which there’s So, the on to interesting, it’s to And a a of lot locations altogether, more concept. been people’s home tracking value and bag. governments monitoring. GPS to a confinement in lot exposure is more with comfortable mixed we arrest becoming are is house did

saw government growth, and get becoming already techniques policy to more when the that have and over also saw it prison with years also people tracking, help how officials shift this that tracking, employment better people incarceration. with with but they need not management is out to have other general of in we reentry, over is fact just and field and while that of with it out come required anger So, tried more tried and that the trend get technology -- because positive of location the effective of people just services, to

So, to focus an the And booster for market. this vaccine places even has governments in monitoring electronic we’re world entering the the at variants And though restrictions of back, travelling right from spike, a general Even the with looking in risk together prevent gave countries world, the to the already do in Israel, a Ukraine there’s for still areas. market the actually many are Israel, for the there. now XX important of it example, compliance variant mutations in available you believe. their shift or still there’s or sort right quarantine now there’s given the to vaccinated, of you’re forward. quarantine, to been of Even And virus coronavirus. come India and X I around the required example, if

Okay.

over that have -- noted I quarters, So, fair that to months accelerate picking that it is RFPs say pace so. But, obviously think of pace rate, obviously, to a it on you may that think these basis fair you be think you and win next guys up? somewhat? And XX% might the very few RFP impressive, is say global you

out compared in put certainly activity that to an we RFP uptick saw year, and This were XXXX. proposals

one up years kind pick doing start to Apple or bid So, experience, the when we’re effectively, considering can of complexities understanding is using great, to programs, bidding And reasons, then us to industry. XX% only in tracking is things players alone Google provide the there has who barrier past the Company win. very challenges years, these. more these and we’re offenders show and of against. of technology, which various we won in that this over projects XX competing bid. the can seeing day the just technology all opportunities exactly amount players can’t industry, deploying roughly In we the for in we XX and gives come on XX%, of and X

and one amount RFPs of that more then technology, they to referrals more our win. from the results, tell in us us an they a people for other try in procurement not and And come similar governments one more lot their colleagues country as opportunities, out RFP other and So, to sometimes that is think like is or RFP various roles, they states. the come or opportunities just increases, of region another, it to we but that gives required various

Thank you.

Our come the Rhine questions next from line Capital Sabra Partners. Zvi of

to but couple flare sure afternoon going seemed the able with us the the over update contract until of to to Good not answer will the Israel weeks when Hey. there. In happen there the the was like subsequent Is media, be ceasefire? proceed. it on any here, up give any occurred. it I’m May, you’d updates first

So, project. the on currently, on state project. we’re the still We in other integrations a and the similar initial for elements required some worked

announced, we pilot. And a then, government. more it required with As of scale the came we when various departments of had the successful projects, Israeli integrations large are

bit. waiting We’re a Gurion for airport. Israel political it geopolitical various for little have go-live Ben this up and in official to in an And held situations go

and technology We’re And integration still waiting live to the for the are that with ready units go at update. time. we

Thank you.

proceed your Spencer line the on please? mute, Spencer, from Kirschman questions. Our you’re with with if see next H.C. Wainwright. Please come questions you can of

Ordan. Hi,

I the share Sorry at end you quarter. about if see the that. had to the just count of want

are year. in that have six currently. don’t I We filing typically months a

future As we’ll equity wanted shares. all P&L But, and balance to we count. get exact and in have sheet. times and issuer, now, started exact into the a foreign we quarterly statements have getting We

PureHealth Any costs? there Okay. of volume kind upfront And guaranteed? any with be that needs project, the are to

fine you upfront you question Can little do and costs tune bit? volume? the What a mean

technology, that nature. More cost implement so of things to like

home we they’ve so The developing of location their per or we’re if been And underlying one track been arm many offenders. -- not they’ve give they And use information, been find actually very We’ve is not we everything to is that this not, far. we for to don’t on hand fact technology they be. This are any head we they estimates day. quickly, believe upto XX a days, accordingly, that signal for specific that afterwards. by at on fastest capacity and have is their of have will home XX to this years for produce tracking bracelet comply given able what long individuals. tracking everywhere, at case, the manufacturing manufacture here. has for just have the program. privacy, of us lot these units to X,XXX increased deleted probably around manufactured solution a government and incarcerated architectural this the A the format, sensitivity us We our just in manufacture helped start, be level industry the for the unique amount very goes not our production capabilities in to it once the We we but capability. the units and can That’s reach But live. we’ve lot a Israel and

create So, quantities flow. we then have more start, as the initial we will to start and for the we

like able margin to an projects, gross guidance you are give And on future outlook any kind as of on well?

on guidance any margin? gross What, future project

throughout On XXXX? future as projects,

You’re asking about…

And the pipeline.

it’s So, these of as can work, imagine, you the way things binary. kind

each one RFP, and for winner We a that of only basically. we have on, bid lot RFPs there’s

come we to So, don’t going know through. what’s

like projects have especially years. units lot of we use many and want that many then projects this announcing time expect year. in years more more we deploy This more optimistic, we Israel, or we a And announce And now And and the didn’t the couldn’t initially you sizes. win, to some every in and this PureCare with reference. wins these interesting because that’s many we ability various new last is, They you year, or projects. win another as started have references wins, XX bid every few a have round reference projects, units on required. around won We’re what’s a to project

helpful. It’s Okay. really

interesting. And this is

didn’t RFPs technology team, bidding capabilities. sales high. We marketing our have of won mainly technology big at projects a a typically our very and on based with on We have our lot scores very

a we plan think get field, is continuously to believe We a sales potential growing already there good a with and we And together allow in in position. more our which us we stronger market invest also to the a market. technology Now, and will that larger get can marketing. there’s position

color on One sales plan expanding on you marketing? and how

of very the couldn’t low. now invest customers. at that there, work produce in it’s when amount the a actually, on We to out we support for And hard us cash our with and people sales marketing, Even manner, management small RFPs because balances all speed. simple deployment we couldn’t Very that fashion. had the were

financing Now, we’ve described. secured through various as channels, we

We ago. year in strong able a to or project have we sheet. this balance been a example, And would have two is never for do Israel,

Just required possible. the cash all will not of to these manufacture amount units be

project bringing bring sales months, on the you’re generate of we positive more to in strong usually Now can to or cash personnel cash have which for on will to and five sales cash projects generation. to and X more short-term, then years on so more years and switched because until that take positive capacity for to bring but cash after use support we very Project’s do next XX X come. the flow months over XX for

no turn are for would to Thank comments. the to Trabelsi call queue. closing Ordan in any questions you. over further like There I back the

Thanks come. joining quarterly our updates QX the everyone again. having XXXX to additional look calls and for call. for We sharing Thanks, in quarters forward

conclude teleconference. your does Thank you you. Thank participation. for This today’s

your great a day. time. this may Have You at disconnect lines