PowerFleet (AIOT) 11 Nov 192019 Q3 Earnings call transcript

Good afternoon. Welcome to PowerFleet’s Third Quarter 2019 Conference Call.

Joining us for today’s presentation is the company’s CEO, Chris Wolfe and CFO, Ned Mavrommatis.

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

Before we begin the call, I would like to provide PowerFleet’s Safe Harbor statement that includes cautions regarding forward-looking statements made during this call.

will future statements financial there events, regarding call, PowerFleet’s including performance. the be made forward-looking future During All statements future other offering other business for include forward-looking financial any growth, than considered anticipated industrial strategy, present in regarding position, the expectations statements. company’s trends historical competitive the demand position, are plans regarding of for and for results operations, company’s future statements anticipated operation, facts, opportunities which product company’s for to, statements beyond. XXXX but expectations not company’s Such and limited the include, financial are All the such the imply presence of many of risks, contingencies, forward-looking statements uncertainties which company’s and are beyond control. The in may differ any actual materially assumed performance statements. or projected company’s or forward-looking results, from achievements those

and to materially the circumstances. the actual update that for does any forward-looking amongst competitive business company’s events any cause products Factors to to and economic future position. to emergence cash could not and conditions, differ or technologies could intend of new undertake reflect services, demand others, results company include, The factors, company’s overall SEC statements filings, duty

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

Wolfe. call would turn I to Mr. proceed. to please the like CEO, PowerFleet’s Chris Now, Sir, over

On and reflecting QX continued achievements our to broad-based is across coupled profitable growth [Technical third of driving cost with businesses recurring marked $XX.X record this, quarter robust operational quarterly by our and financial were our driven million, our efficiencies, growth revenue Difficulty] revenue consecutive on These management adjusted top improving We execute exciting focus growth. of X EBITDA. plan services continue diligent up of year-over-year. XX% which our on achieving year-over-year. XX% Most a was we’re up

our Pointer these I in results you the and and we XXXX and encouraged demonstrate am by bodes were these beyond. the for results the busy momentum strength strategy well closing because acquisition, core know, particularly as

vertically market. to total also details operational markets turn our Ned financial to that over to a overall solutions more forward ability progress fast-throwing now look IoT major integrated. We you compete but addressable results. This in I provider call to Ned? through our is the shortly, our our walk first I’ll are target increases on sharing our improves and

Thank good everyone. you, Chris and afternoon

you the X, to which October period September Telocation, financial financials prior our As evaluate include on ended they XXXX, of acquisition for on to I.D. XX, from is XXXX. in the results it mind keep important our Systems, Pointer closed

results and for results financial fourth consolidated Pointer. December I.D. both ended include the Our Systems XXXX, for quarter will XX,

$X results. from Now year. turn for quarter from XX% to qualification, revenue $X.X third to million our with recurring high of Recurring last $X.X record year in same revenue last third let’s QX of to Group. $X.X XX% of ago year. revenue the for services revenue increased period. XXXX increase order Budget Services and services from financial Avis XX,XXX-unit QX $XX.X increased the margin of quarter The increased to million that development to the the $XX.X in revenue from million related a increased was to million quarter Revenue million XXXX third in additional XXXX in due of million for XX% the

was the continue of due increased to revenue recurring expect sell additional to We quarter Product third year. XXXX for This long-term to deliveries Avis to every unit contract. continue $X to in from recurring QX comes data we of a $XX.X Budget revenue to telemetry XX% million from with as unit last the Group. million grow revenue

last million due year. $X.X was in to revenue to XXXX. in of the XXXX for of profit million primarily in QX higher gross third quarter $X.X Gross increase XX% The increased from profit

compared XXXX was to Avis, profit gross quarter quarter will lower in the decrease of margin QX of – recurring XX.X% Those is year to due start profit units which future As a revenue, a quarters. in hardware year. of revenue current to percentage generating high for deliveries in have XX.X% The last third gross the percentage.

acquisition for of our of which to $X.X up last million last of $X.X $X.X X. were expenses to in of million to third third closed quarter $XX,XXX year. quarter last related turning QX which were $X.X million, third in expenses, in expenses compared The increase non-cash the higher expenses million Now compared SG&A XXXX QX due of were year. a expense. foreign to finally, The the primarily on was of acquisition in expenses for was in $X.X related year. currency QX XXXX increase expenses SG&A acquisition XXXX Pointer, R&D of in from translation, And million due quarter to our October is

tax, quarter, net in of $X.XX last define stock-based Turning and year. basic diluted basic loss per basic non-recurring per $XXX,XXX $X.XX $X.X before items to totaled share of or compensation in or This share. and XXXX totaled our $XXX,XXX or net $XXX,XXX QX QX $X.XX a for per and and year. depreciation third loss GAAP million to almost profitability adjusted Adjusted and metric, diluted non-GAAP compares diluted of to of per measures, for or interest we the earnings of quarter which share. EBITDA This GAAP last diluted $X.XX basic EBITDA, compares as amortization, share an the third

acquisition prudent structure Pointer our will for our be now we to it new with closed, thought capitalization layout of investors. Finally,

Therefore, X.X which approximately is XX.X outstanding. million million million at equates shares As preferred approximately converts shares. of convertible $XX there million outstanding. The there XX.X per equity converted, investment today, common are to as shares $X.XX share,

remains and also liquid. Our strong balance sheet

growth. investing our debt are and we pay we even while Based and in on for today, in approximately PowerFleet’s matures $XX consolidated we EBITDA room with years, million of million. And the in of loan post-close, months first comfortable debt. debt before cash outlook ample net $XX X down have equivalents As to have $XX cash the million our XX in adjusted the still

line an have $XX of unused available of credit million. also We

before Annual attending. Israel be be on Wainwright in Lastly, PowerFleet are of want conferences to the Capital the Conference will H.C. to call the some XXnd Chris, turn in going talk management The York November I to mid-January. over I we Growth Day about New and and Roth Annual Conference on Needham XX, Aviv the in November Industrials New XX Tel attending Technology

this in tuned are Please Investor concludes Chris? we we planning Additionally, That details of prepared remarks. next to out. as for hold and Day Analyst year. an first the plan my stay quarter more

the month re-branding as of to from exciting period our close NASDAQ to The collective launch belt the closing PowerFleet Thanks, QX bringing acquisition, the first and of Ned. company. of QX hardware our for the was Pointer the and the been many company new months time of company. with busy, the teams of productive and quite celebrate have the highlighted

an then Let businesses of a providing me first provide the today’s our of update call and spend on efforts an rest as and three on outlook integration update each organization. combined

sales from to of Industrial Bridgestone, a several during sites. as and new quarter. Starting mix business, both our existing of enterprise deploy saw who we in activity first Europe U.S. customers follow-on distribution its solution at with for our included X healthy orders such selected PowerFleet the This

simultaneously managers visibility an is requirements. fleet regulatory solution by enabling Our fleet to to them Bridgestone how their giving compliance in it stringent ideal Bridgestone choice as empowers globally, large is enterprise their meet for while utilized

development We from quarter one partners the deployment on the as from important in all our also After manufacturer Jungheinrich. partner another forklift for milestones an you know, ahead an of received new order we many in ours enterprise is successfully received TFS, world. U.S. solution initial Jungheinrich, a our the delivering third of of schedule, in for And largest XXX-unit OEM order of the

We excited coming continue shared quarters expand and with years about partnership opportunities this in business to the to them see be our multiple and ahead.

business was our Company solution, sight in to expansion Jungheinrich, with a momentum the to at also facilities we another line building was in PowerFleet addition to order The of who notable our Scotts refrigerated additional during for be its the We expert and in trailers of designed solid XXXX. secured manage the LV-XXX Perhaps medium cargo. for Initial deployed for It and and In fourth one and monitor for quarter. and product the monitoring purposely well. with Miracle-Gro in opportunities refrigerated fleets. our QX period our was Miracle-Gro QX deployed as anticipate U.S. Scotts customer, productive Knight-Swift, remotely shipped selected the carriers QX which Logistics truckload large with our will existing news in win be most win largest PowerFleet will

adopted most asset NFI LV-XXX innovation, our recent to addition the Knight-Swift, tracking In unit.

of including units delivered to third From and several third B.A.H. NCAP fleet XX,XXX to including telemetry and rental a new Bluetooth Express, of bringing Grocers or Avis platform. to this total our our Associated BLE last quarter QX year shipments. Low existing While, the In major secure through XX,XXX business, in a approximately a standpoint, units the completed Coraluzzo number LV-XXXX Energy, customers state-of-the-art development approximately total year’s in the we related development quarter delivered functionality. and technology Transport project selected XX,XXX

activities completion nearing programs XX on are in We year models. makes different XXXX other major on certification commencing production and

as for We continue any to potential defining XXXX. well our Avis statement as of next on order work work with

we Now XXXX. and strategy, and broader we that taking portfolio, we preparing view vehicles are much our added into a of which global capabilities Pointer connected have and pursue a holistic solutions go-to-market will

our discussing three integration will to spend our with months. early the Now business Pointer that businesses, I XX combined efforts the covered objectives few moments have and a next XX over I

for it’s of been a period productive since month been our about busy it’s acquisition, a and organizations. While the only close the

setting working cost-reduction cross-selling Our maps, consolidating product on synergies are closely combined our have integrated pursuing teams and and well strategic working opportunities. together on road objectives,

delivery management the have for we vehicle, we already introduced from fleet marketplace. service In and U.S. Pointer’s feedback Logistics the to market and solutions encouraging received fact,

realize powerful IoT company, next global and company’s new execute continue our the we bringing us telematics against term XX form will the integrated will enable and together vision global this Over one months, objectives. our to fully to solutions

brand very product We software has well IT received manager areas globally. marketing, partners, and development are organizations. our and integrating – engineering awareness, management, our our XXXX, employees been actively up customers, well power which PowerFleet our G&A be to we’ll as as Throughout with working

PowerFleet in and it whereas is geographies, will see will what our used with strategies. we suffixed the Our I working Mexico go-to-market European customer-facing and the brands And Pointer and vertical to by perspective, will as Cellocator branding and brand. sales largely now, and of in myself well U.S. aligned global and that awesome. unchanged Pointer personally a got From overall support be organizations remain was have Cellocator are PowerFleet. current be as

look our of progress by apprised We are in and early are our we months achieving forward investment quarters efforts to the integration community the the ahead. we traction in encouraged and keeping

of pursuit our that Pointer IoT a closing solutions creating a giant summary, leap in company. In marked and software powerful acquisition global forward telematics

consolidated Looking more growth EBITDA. XX-month confident $XXX achieve our in as business. This to ahead, and XX% of and remain a double-digit than we XX% million includes generating in ability revenue combined adjusted our financial organic driving between and outlook

shareholder financial scale As and And a thing, to positioned through in combined flow last PWFL. in execution, organization, are operational symbol cash one is generate value generation. we now our ideally profitability global ticker significant sustainable

So I please invite appropriate from ready your And profit with Operator, open for provide on to questions. you our portfolio to invest that, we’re powerful the call in success. the instructions. us,

from Our Canaccord Instructions] Genuity. first Mike comes Walkley question [Operator with

with proceed question. your may You

quarter results. last strong the on I.D. System Congratulations of

Thanks, Mike.

just us you, any towards it’s fully been some for, as month, opportunities? the a on milestones cross-selling customers And should know, I for more for from look PowerFleet? more Chris, the what integrated give we major integration feedback, can the but just only initial move – you Question you on

now opportunities, is cross-selling one class seeing called, we solutions I biggest has thing bringing, the think, that the United that States. Pointer to Well, five into what we’re

vehicles. just literally to got kind that. alluded we of, that’s, strategic our session connected what planning so And And I on through with

we to phone service ways. I vehicle So next in kind more And the a can which you’re delivery see today. of, year, that and going go of what of to far the don’t a not as are into us, I want variety how the set, U.S. lower as penetrate big on it think do go call just fleet of do today. in we end we I

locations specifically us acquisition the looking and global command in Secondarily, And that that. the lot applicability we Industrial Brazil opportunities, interesting, have got I literally a of lot refrigeration opportunities and Truck lot of and it’s of Mexico segment has for Pointer of refrigerated, at and X-way are a CarrierWeb geographies kind control has today. in. excitement about the a

XX% with comments, are Okay. EBITDA $XXX adjusted million comfortable and Maybe from for Ned, sounds guys combined a revenue follow-up it over like Chris’ margins. question prepared you

imagine As towards the and could the think some how combined we to quarters Ned, to in also EBITDA some margin, the take build towards that of to course first of XX% maybe of adjusted over, time those company synergies? terms we for XXXX, time scale business say, probably about the some should then the execute XX% cost it

a to But benefits that to take the think once we some the we’ll rate. It’s here the of going be bringing so that’s of couple second and Yes. of some of quarters, U.S., our go quarter, run see existing that in the far, able Cellocator products into selling. product we’re we

of expected already dividends. chain immediately supply to some synergies start the We’re to in the seeing – pay

is This Chris. Yes.

last to question wanted maybe I make – your Just, to sure.

won’t consolidation. those The in finish areas, next We is, have the around the of follow-on year, IT lot platform That’s and right? the in a activities cost on savings of also really thing year. specifically a lot going

continuing just and than the I’ll makes on line. me us seeing revenue QX That we of old part Jungheinrich absolutely. during update the an for the and Systems of Yes, maybe just question you also and see you if update that the into sense. product on were quarter, expecting as some can last that? strength side on I.D. where pass – on you’re Stronger and And you just if

in talk approximately of Chris saw XX,XXX product which But second the actually strength was We let third in so Truck, a the to in quarter, Avis I quarter three about all Sure. to had our good as units we we in logistics change sales. we similar that’s But don’t why Jungheinrich. segments. delivered business, Industrial reason in our quarter. as any of see continued going we quarter. fourth And to well saw, also the revenue

on we actually just be. than with that, was it would milestones. once thought Jungheinrich, greater add all the the to we to order And this again, completed it’s was And significantly it initial

XXX you XXXX XXX. first quarter was the contract, to year has give and need by again, and I’m us been So assume you a sure it

I with think there what they’re phenomenally So pleased so getting far.

Thank you much. very Great.

Mike. Thanks

Thank you.

Street. comes question with Lake next Our from Schmidt Jaeson

proceed You with may your question.

for Thanks taking guys. Hey my questions.

anything standpoint any Just a pricing wondering of of your business seeing ordinary are the in if lines? you from out

possible. so competitive shifted of working get captions, not the is use as is quickly Chris. Avis Obviously, order Obviously, kind but potential, and This with we’re is order, closed it necessarily. intrusion it’s the to all as Avis

On there much is not the that Industrial Truck competition. side, price

on we be aggressive some that where to know just in price we’ll fairly are we However, of have significant potential size. because on deals side the

And really there almost mean, who so is then how which are. logistics are on desperate they depending again, competitive, we I it’s competitors very don’t a board basis see and in and yes, historically it the deal-by-deal across the side, the on

of think They lot of focus I the solution. a the don’t bumper-to-bumper the breadth not have competitors on have solutions. have don’t cargo. They do

So win. the try they are if on only that’s and can going to price, win way they

needed So it we customer get. see not it’s again, we that a but probably to

by under a bit belt originally on out touched you know your growth expected? business business CarrierWeb that in that I quarters, in looking a you’ve it now your the is few playing you that then as had had And at Okay. for prepared remarks,

mean, timeline Yes, well – up it is. XX. the purchases is XX% Mandate, is December yes, everyone kind underway, educational just of ELD maybe – I background is done, already which driving the was in-cab coming it’s further

brand people so. already a XX% buy still are still who buy. was done to new that to So there’s being of That XX% to said, going need fleets there’s anybody in-cab buying, systems still

considering going said is, platform and process. get old just people XG So acquisitions in of the we’ll in that those be we to the consideration in with a networks future. forward ELD on stayed That Mandate through are games lot being their

see we’re we very with and happy product it’s where again, at today. the – So

almost opportunities are We with the are whatever ecstatic that with refrigerated product. and product

Okay. Thanks a lot guys.

Thank you.

next question Thank Nichols from you. Instructions] of Our B. [Operator comes Josh Riley.

may proceed question. with your You

good potential talked how Pointer’s for thing not my – opportunity the Yes outlook, sort guys Do I Pointer be product you – you’ve want one combined already you that taking of a opportunities, the little about know included cross-selling and you’re a product U.S. you that to to offerings thanks for question. could any the differentiator? is driver bringing bit I differentiation think in ask the behavior cross-selling also

other of to the Right that, them what point of software for Absolutely. our these and case forward us because tell bring just maybe, see important. Nessy software should hardware well Turgeman. organizational get center think to now, Zelniker. allows we Kind our move excellence, that, technology He let’s a the and I us on of literally to cost-effectively as and as let’s quickly. I company these He going going leverage consolidate platforms, realignment in and like phenomenal of a of CTO to group leverage do Senior and the was the do able of, is it’s market really are the words, Global consolidate bring being on that’s do CTO Pointer lot VP is selection I that and is through solutions and Moses

And ask LVS of that kind of host Great. market to to I last came you want a had then product year.

said could LVS be something are things you cam, just only are freight just trials – camera in which refrigeration piece. units add-on offerings, or these a like offerings any mentioned in-cab you do XX will a that? can as like – of to the interest and – provide that Are seeing units could you more basic Your freight like you $X couple you opposed just on like like for in-cab the – update top you a as million you unit, these carriers month and

absolutely. is that to answer the Yes,

replace, again, builds. trailer a secured, rip migration, which doing they’re not they already and we’ve new are LVS-XXX, the On means a doing

it’s not in going Unless quarters. faster units next even than two out to necessarily the XX,XXX happens the to lot next that the most actually are units of realize. are people to X,XXX building the you be if for abruptly, going which order, going – sunset may for It’s gate. you happen get not a it the be So in they XG

earlier and are trials others are in we hope. ones to are that soon the that be yes, are in the range. right So mean are a out are finalize I the field will I ready we counting we I call. now, in I – in QX then one the we not am couple probably getting mentioned in And that that we just actually that

that been about just opportunities highlight lot units. think of have refrigeration refrigeration where are know and what you of in particular doing mentioned already ecstatic You opportunities? they the opportunities Could makes have a lot I optimistic but Walmart, business you that of doing you so I units, the the the market you couple lie? with – about a just,

– Well, is one. I in in very Actually market, the from think suspect. that market competitors, few what quality. customers from hear It has been number that we it’s very the there

And that maybe is typically the price So there we versus, high-quality market average you’re platform that gives of the it is more just with gives them versus kind in LTE range control to the right? like us technology a $XX the right opportunity hitting at Bluetooth revenue capabilities. and the unit, command an with and average time per product with $X, the range. a and a So lot $XXX the month – $XXX X reason – per is hardware

data higher railcars, just another that’s big set refrigerator it’s right for United opportunity from value counting a there’s is – not And more units is again, critically coming again going XXX,XXX it’s States, us. in So the be there stickier, I a the proposition, think which unit. needed something now, and again to it’s

of initially opportunity in it fact, the us. got So now we’ve on which right not looks on railcar for focused in as good going matter like but the past, something is we a pilot space, a a

monopolize Solutions? the just And then potential us the it last then is back queue. too potentially the December? And about are thoughts question with venturing you again, Avis, for the don’t to I’ll call remind other opportunity for of or in Could is the the exclusivity sets down me. want exactly I lapse continuing road and hop when with what Vehicle Connected your much

up I December Yes. XX,XXX a like give date, an Exclusivity order lose over, I don’t is exclusivity like month which XX. they it’s actually have to on December think, incorrect coming is to prior here very that, want or to They us XX. for shortly give you an

exclusivity Now sign they around can anywhere extend. and would them again,

So we’re Avis. in active with negotiations

as However, we making are alternative well. actually plans

and So I – was we’re couple knew we it was they have And lived a this deal. months ago, to a think either everyone and that, to be of that ready negotiate – to that through forward able way. year before move other

progress. just say in it’s So a I work

Nice question, Ned.

Yes thank you.

Thank you.

Barrington Our comes Prestopino Gary from next with question Research.

You question. may proceed with your

I maybe just was at Hi, was everyone. good prior and looking Ned quarter from just afternoon Chris, I question. at looking my the last – notes

may to have but answered this want make I sure You I right. am

for pilots carriers with product, Cam this segment, product. X you of the about in the or had And trials? these carriers these that of LVS in – any ongoing? that to any was that You X got Freight the top still for wins, Is related pilot the Freight quarter of Cam

expect and lose. Yes. Actually and – did those those close related was to one we one one related to to was we soon trials very we trials

is X this not market. it’s in still out of X batting average bad So like

can at through us in kind signed in not of each that those segments, new that were give your well, each units all. And is and some the No, there you that any of went the is business quarter? of way you range there – industrial of segments a you the when two logistics, up this anyway won

in then that give X,XXX Industrial Logistics can the X,XXX shipped units units. we quarter units Yes. and go you – during a the was our Truck was the and We

Thank Okay, great. you. that’s

welcome. are You

you. Thank

comes Gibson Capital Partners. with Our Roth next from William question

question. may You proceed with your

Thank you.

didn’t the or have shipments asked, was quarter estimate you question for answer. of the fourth I think a Do catch I could of they be? but range Avis what

to post though. clear do have additional working picture but units we still units exactly a on we’re We third are quantity and did with we of how – the not the not deliveries many are Avis ship quarter, We quarter in fourth yet. ship the

here though, do we lead we time. to know shortly have Due because a holidays will have to

we as something schedule. their So expect it’s ship eminently

And of you then years now sense just say, hope shipments their what talked you get, do early out X or that? the follow-up have annual Heinrich, could of but what something just or a of a you about on you excitement, percent like target

I would now, I tell goal Chris be Düsseldorf, a our we is. – you with I it in But Jungheinrich them have before actually be what meeting do right can meeting here also with – near time. would speculation actually there, we Wolfe’s have in And that’s – Christmas offices is team time. real

ramping So – I next up team. just business think trained we’ll know trained the over shaping because are the whole salesforce, already the – they the they’ve how is up support

globally, not in Jungheinrich. just is right. It’s this So

now sales next they pipe get So they it how the can we’re see pipe. now just engaged get the going now to it – get the they And and they product, through in few their can have team fast actually to months. think here I

Thank Chris. you Alright.

Okay.

Thank call you. I to at further Wolfe am would like turn the I time. this not Chris showing further remarks. back questions over for to any now any

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

joining you us our today presentation. Thank for for

now may disconnect. You