PWFL - Earnings call transcript Q1 2021

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Operator

Good morning, and welcome to PowerFleet’s First Quarter 2021 Conference Call.

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

Following their remarks will be an open call for questions.

Before we begin the call, I would like to provide PowerFleet’s safe harbor statements that include cautious regarding forward-looking statements made during this call.

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

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

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

Chris Wolfe

Yes, I thank doing everyone Good you and thank well hope healthy. staying is joining our everyone, you and for Matthew. call. morning,

on first high margin solutions expanding recurring and our During to and revenues. focused our increasing business markets, continuously growing strategic continue quarter, in has the our our roadmap, which we offerings, long-term value execute on high our targeted services

is would globally. quarter, of not revenues some supply the While lines, that experienced component in industries electrical have $X.X product we third-party issue million our many delivered financial consistent had that a our been more we results impacting impacted

still units revenues remediate lumpy recognize I levels will build able we our part albeit products, our vaccination in end. we and are electrical delivered rates, actions. business the our due to unable remediation near and to quarter’s these chain pre-COVID the the latter to the the our the geographies during in call. and component issues infection were pickup acted issue were of Nevertheless, by to progress, efforts Fortunately, government QX, supply discuss organization but see did to as individual certain not swiftly

are strike United are U.S. Postal in progress at business major the both our States logistics in with We and logos. signing upgrades Service, by encouraged Israel Ford new very the and and

progressed, QX employees in regions, the measurable As geographic activity Israel’s office. new and including our channel, in Internationally, saw in team a vaccinated our which QX. dealer are U.S. we record back sustained seeing pickup and nearly across is strength XXX% our of our in our most pipeline sales

significant Israel operation is supply to Our efforts. engineering, home software a in chain, part and of our development

financial great first the employees operations it’s to for have through of economy after functioning capacity, reigniting. Ned I Ned? this quarter at walks and our us will healthy, XXXX. of talk So the about more our XXX% the they’re performance

Ned Mavrommatis

Thank you, Chris, good and morning, everyone.

recurring total QX in million $X.X shipment the to Turning first and we year, Avis, for major in due in The last to million in product of XX.X the It is due from that deliverers XXXX. last our the the to his to million to QX of QX year. quarter which mentioned High of noting of services XXXX. shipment Revenue in revenue million of year. This $XX.X total was last year-over-year XX shipment, future revenue which million of revenue. was of total results in $X.X total or primarily of in or Avis $XX.X XX% for worth $XX.X increased QX compares XX% Chris compared recognized the of revenue drives last total quarter XX% revenue, absent last XX% was million decrease in in major prior year. year. million to the was $XX.X of opening from revenue of XX% XX first or revenue of for of or first $XX.X And revenue. in remarks. million quarter million final margin revenue of to the This revenue and million or XX% services of revenue total Gross XX% was million of or total quarter, Product or to revenue QX $XX.X compares profit year. million QX XX.X last

quarter XX% expenses our for turning expenses. from million QX down or $XX.X Now XX XXXX. were to million Total of $X.X operating the million, $XX.X in first of

from this certain realized in to previously, not starting We currently in of expenses due in to marketing will about our in sunset stated related critical believe and January we we CapEx year. into to slightly XXXX OpEx back As the QX we that is increase will QX, come effect the for to increase COVID-XX were do XG Chris that expect talk which went timing U.S. run from pending savings XX shortly. this rates, as except

quarter totaled to million and or QX totals of was loss $X and diluted QX of XX million, income to to $X.XX or QX adjusted in net share. and of $X.XX Adjusted EBITDA loss shareholders EBITDA net non-GAAP per of totaled for share share. in compares and first year. or our net $XX,XXX basic improvement XXXX, of QX XXXX GAAP diluted per compared $X.XX million of $XXX,XXX $X.XX This Turning This $X.X basic of share for to per for commerce last year. a measures. Non-GAAP an basic diluted profitability per compared year. or loss last the QX $X.X diluted basic million in attributable net $X.X to last

cash of with million. remarks. Chris? $XX my liquidity prepared concludes and in quarter That $XX.X cash working a and equivalents position capital Our position remains at strong end million

Chris Wolfe

Ned. Hey, thanks,

to select sub-components recognize impacted As during electrical in earlier, X.X I QX mentioned ability our delays in million revenue. product getting

components overall real-time of in to were last and rapid industry built make requires current for as issue get over uncertainty While Japan exacerbated X AKM we’re We have this by able the factories and QX, the the see at products being the as a shortages Renesas and temporary environment do quarters. sure sub-component monitoring we remediation. impacted fires

As during U.S., remarks, QX. deals regions including in across pickup the and my Group, the our Transportation we Tubular, we opening new McGuire geographic mentioned I secured saw in several In quarter, Transportation. Nucor new in activity measurable Panhandle sales

addition XXXX to in the we units associated wins, In successfully that more February. call to deploy fleet with announced these our than win container continued we on

Atlas win the was end at noteworthy Another of of our starting QX Lines. Van

this the deploy that We year. to this backlog we to are solution customer continued locations actively last working also Concurrently, we new XX with a Ryder of signed deploy quarter.

of initial throughout solution tender forward our units Additionally One initiative approximately Based advances. migrate, in our will generate Ford this analysis, Company. migration high QX, model. PowerFleet more into as non-subscription one generation This with the largest XXXX. rental million onto car this tender our was QX key major next Motor revenue sharing commenced their and continue if XXXX was will service software revenue in migration migrating XXXX a services We upon all margin XX,XXX plus worldwide sites. platforms in is X-year major our and over XX units details We to XX legacy U.S. and look a as we period. our to for with A hardware world’s to and from industrial hardware XX,XXX recurring to invited a over companies. X,XXX units transition began

industrial an potential recurring in product million and site, with expect USPS with in margin for important of on $XX by The margin high taken their also is USPS soon the end It follow-up issues. migrations be that or United revenue being QX, X,XXX impacted revenues and our by unit additional really are QX. migrations note potential a shortage Service planning not States and negotiations products continued the sub-component total Ford and and USPS migration, sites. to high also XX XXX at site of We the Ford, to both is Postal

the in As targeted to U.S., encouraging XG are relates the very yielding on efforts results. our pending Sunset it our marketing campaigns

In fact, have QX active in we XX,XXX in starting pilots that and X litters unit XX subscriber opportunity. represent

opportunities a release you closed QX for should this in and of units, early these shortly. XXXX expect press on One

In LV-XXX units be our weight around Management, American us a platforms just initiative as took XXXX R&D fruitful. on mobility selected focused has axle of AIM, proven over weight new and competitor Intermodal sensor. on axle XXXX to and QX, Our or

closely working this monitoring early on deployment. calibrating and performance AIM during system are commercial with We

represents As XXX,XXX given opportunity, AIM total subscriber merger a reminder, their with Flexi-Van.

We for equipment asset designed also specifically construction security market solutions newest started to our companies.

international it’s partner unit early, and still feedback to we initial of QX. While to outside an able were Israel. operations Shifting channel customer has ship encouraging, secure our order in and been XXXX and

QX, made AXA with Insurance with across especially During Mexico we progress our our customers. deployments markets, solid

background, the is largest world’s For one AXA insurers. of

pipeline deployed all is X,XXX and amount for approximately Carvana think of deployed to could deployed units. During XX,XXX and is XXXX customers, annually. planning year, and of units XXXX the AXA that Based discussions units units And Last to with in XXXX. just our eclipse over Kavak units orders we with QX, customer, which of the in active we in the we deploy AXA subscription in are phases, potential AXA we we exceeded the discussions total XXXX Mexico. Kavak,

with and has Our This team X goods pilots operations. Chile, Mexico Brazilian managing producer is world’s also the their more XX,XXX prospect Colombia, than Spain, in worldwide. vehicles largest big

Israeli our to operations. Turning

to mentioned opening, year. in a my QX by I spike reflected compared XX% big in increase installations a quarter last As first demand in saw the we in of

samples, the once which for units tracking estimate signed Our Israeli HMO pathological we also will total operations deployed. XXXX of cooling boxes over Maccabi

of than also We tender at won the for prestigious X,XXX more QX units. a police end

build front, M&A opportunity the our On we continue pipeline. to

specific put build units all market We units U.S., concise into XX,XXX summary, pipeline as our near targeting And and opportunity to application continue efforts, subscription over Israel or the XXX,XXX that our and markets, opportunities. strengthen summary, I momentum. pipeline over earlier end bolster in we expand vertical are opportunity global migration midterm further In in offerings. a solution footprint strategically have fairly SAS stated solid our can to product backlog, legacy our as subscription companies Europe, numbers to presence, and in these well

to confident still before, XXXX supply and that are I for While use mentioned in growth our remain there due electrical COVID, sub prospects and component choppiness beyond. some we

economy reopen, our our As and to sheet accelerate us the initiatives. robust will growth countries balance global recovers enable

are realization force market. which is We to to vision, of realization a of goals Things making industrial long-term dollar the a of our great Internet multi-billion and financial our in the be strides major

XXX provide instructions. with call in appropriate And over the and questions. Operator, subscribers we’re million million X revenues for targeting that, open your XXXX. by ready are to the We please

Operator

Instructions] is Walkley. from Your Mike question coming [Operator first

Mike Walkley

quarter, your on Chris, logical is shipped uptick with million supply how your upcoming quarters, the in X.X demand encouraging in is could meet the have that sales in activity? to impact measurable given the about and a looking families first comments just Great. I also the shortages and you the everybody and supply I are ongoing industry guess question hope well the call.

Chris Wolfe

way, group As I just the was our to into mentioned, get QX. enough sub-components. I actually able through and we it daily it’s rectify I mentioned that’s -- actively, supply by say because and why chain it’s as Mike, are so And and think suppliers, not QX again, supply suppliers, their situation I our requires it’s monitoring, the

going only build Because volume. So sure we I and have levels, we again, us a deals, mentioned, we’re increase to have they’re Because these and right? in to supply supply the our actually too. in lot want the that numbers to we enough inventory meet quarter, supply, to see and make of surge to you’ll demand have going just but not next larger our potential, over to require

get to to we trying we’re position right address what surge. is can now that’s a So where

Mike Walkley

on the as passed maybe you get is, tight have Got the we tight to can to Ned, expect And these customers. be some up sense. costs demand, in supply, industry any it. to how ready pay knows or follow for supply just to That expedite should impact, gross a of this maybe service potential adverse makes or margins, shipments on given given

Chris Wolfe

on along again, I to. mean, add price because not the to as as bill not that again, Ned, it’s cost of we’re now a consequential. in the way, passing, increases significant because today as you want passing think right we’re materials, might do perspective. sub-component But whole the one not so not by Yes, it’s

Ned Mavrommatis

just comfortable when Chris it a consideration. said, that forward, very want XX%, we I the margins. look product, very, Yes. into But to does at have XX% gross to slight say feel impact margins a on going take you as gross around that on the

Mike Walkley

last And I’ll the pass Okay, great. line. from one me,

XX,XXX Congratulations Just little non-subscription want and Yes. a for from on old industrial your dig the X,XXX your on Ford the to units. more in initiative solution. units

Ford transition backlog, those Just does you number and on you engaged with and with now and a how many Ford that you a XX,XXX their XX,XXX can transition over how take? quickly that think all for how units do and with are long sites, large

Chris Wolfe

have good in did QX. good Yes, reference of went done year last and is for they’re already thing The question. Walgreens that’s a it we a We lot good experience just us. Ford flawlessly, very We’ve actually this. at X a account doing a sites actually

So it’s can actually we timing, ours. again, really the move, that and Ryder, tells we that gating not than you that. do pace more with factor, logistics even The their can

Service, so do way in; the is that we of the it’s QX. service opportunity, paper today. we even So United even Ford QX, a site in planning as very can point Postal to the one of early getting ink those a United those the States, installers, not the It’s United the getting we’re sites migration. of have Service, not have we’re between to at States scale, States start the with even by we Postal but part a and not XXX of just we’re on And deploying sites postal end

So Service that’s mean before. actually but I even States actually we’ve XX ago. better done years literally Postal the news, United

And for year want XX initiative United Postal at Ford, on depending be sites. the it’s on how same States could the they out. it a So fast X roll to Service

Operator

question coming next is Jaeson Schmidt. Your from

Jaeson Schmidt

in could existing new you you’re customers. order the momentum seeing expanding if is curious from comment, coming Just customers recent on or at activity

Chris Wolfe

was was new customers, It’s customer won brand Actually on police customer. tenders year. a lot I tender Israel. that in insurance, primarily new that a That new last the we the of mentioned a

So AXA, that’s a like deployment new of the with Ryder the And in initial first Ryder. to Logistics, still we’re I also with me, orders, Kovacs. customer, like mentioned

brand customers. panhandle So those customers, are new new brand

preponderance So I’d is logos. all of activity our of new growth all the say and brand

move being working to and it. migrate which now’s States and we’ve the get and Postal trying been to said, Now do to the for time Ford United years, Service, on have really that them they

through pause I seeing think lot a had everyone loose. of to you’re that starting things XXXX, and break

U.S., between a primarily be I activity. States the think scale new here our the seen we and fact, and I Postal is in of Ford, Service logo Matter dealer just to years. represent network, the and lot going it’s XXXX, new I’ve dealers ever XXX and the us I’ve mentioned the of of So pipeline a blend because of United have products our again that been old, but X probably in best

Jaeson Schmidt

at And curious timetables you’re helpful. any and if get just pushed from customers That’s launches Okay. seeing their to all. the right

Chris Wolfe

mentioned rental Actually really. surprising contacted it the that the they company, involved tender. Not I tender That’s get for way a to the in car was best kind actually of us.

you we’re couldn’t starting mean last right pushing to into it of now seeing actually facilities, by couldn’t going more good. So the last than think that get this aggressive on is the all board. get which into year, seeing I done There And we’re POS break just purchasing I people group. you’re be year. seeing free across a lot you because year you couldn’t was headquarters, get

Jaeson Schmidt

just growth jump this from the last after some steady throughout year? then back COVID one should queue. Okay. Ned, coming mentioned of me trending the year. grows? this you think being of I’ll OPEX it And as we just about How into revenue back year muted relatively OPEX last Kind for

Ned Mavrommatis

there’s little a so bit some more we to the marketing, Primarily, capture Right of slightly aggressively marketing. exactly XG as can and markets then spend in expect believe That’s U.S. lot the a right. pursue we a in Chris mentioned. we now, Sunset so

growth quarter quarter. to So slight some

Operator

Scott Searle. Your from question next is coming

Scott Searle

on revenue. you of COVID, guys build top something I We’ve front, Location year $XX The looking that before driving can is the visibility. peaked component I the logistics big we’ve And this close pipeline? COVID you’re million Pointer, it. your And then certainly your a component a there. Just a availability to quarter of capacity to bit back pipeline in are but product for when or supply deploy just Tel area moved acquisition, you constrained that that’s to Possibly in that, some overall on environment there and so this product constrain think moving attainable had and the at where deployment really demand in from standpoint, on are partners’ about from capacity or we now as and of to the going it, dig and of little issues part demand integrators’ solutions? chain a COVID an issues? but availability terms Chris, guess

Chris Wolfe

kind I actually of capabilities our surging good that implementation answer, but No, have a mentioned with on prior capability. really we

installers, do installers, So trainer. the third-party train whether we it’s use we

comes it’s vaccinated, a working customers’ it schedules, when lot solution, seeing now getting our just be, the them actually our we’re up. again, with they right? people to So more opening because flexible places around And can implementing again, typically being

surprise be, of being it. X able product. Thank goodness only those are constraint while. I to commission addressed fires was X going mentioned injured, is Our but whole facing at but is in chain for a far, of And to industry again, if obviously, We’ve there’s the so nobody a horrible. out those it get it the them factories, put fires supply

They problems they’ve those and plants actually been rectified and that’s doing. stand can can what of move Now pretty kinds production, quickly. up be

parts right now, see the That’s again, right our I time just of said, lot a chain of intact. supply so I And constraint. just overall spending nature that shortages now, only temporary, the restrictive sure we’re like is again, but making and the it

Scott Searle

So of Chris, peak levels? to can product those you get kind back

Chris Wolfe

over they’re products, you for just, tracking about United and products. It’s our By that’s they’re Service Postal I way, Ford, a a $XXX. or unit. trailer if not end very again, product like $XXX good the those States $X,XXX the think margins, mean high

of in so one have a products a margin that’s or they those almost ship to container and of a XX very value us. trailer or USPS, high that’s good every chassis So

up, Postal get there you’ll the those see Service So ramps numbers. United signs we Ford States us can as starts moving, back get as and to

Scott Searle

follow-up you. margins. Mike’s related earlier then gross Got maybe Chris, And question on to product to

into the you horizon, said this about where we XX% historically. to ‘XX? and you thinking that below be is could margins Ned, on think you quarter. But which coming mix I It’s the where you’ve then should been think when XX%, how late this be were gross year about favorable

Ned Mavrommatis

that’s Scott. great Yes, point, a

to lot quarter. a has mix this So with first especially do it,

tends margin by the Our a mix. lot very But product where nature. into a to gross that on its was Chris pipeline we see a lower can logistics this strong. truck go business the has mid-XXs, product of business, gross have product margins the margin That much higher as gross mentions, industrial in depending

Scott Searle

down follow just up geographically COVID parts Chris. bit a And remain Great. locked certain that well, and have Europe of certainly front. little maybe been world parts accelerating on the to of certain issues as

You’ve Mexico, in Israel, the doing been you’re in despite headwinds doing sounds well of well it some there. like health

I’m what X had and seeing general. So you And you’re in about if demand ups. I America Latin talk there in follow could then European theater the broadly in wondering just

Chris Wolfe

our it Yes. that out It Actually, locator actually sell I I in. like know the not but takes division, does. what we’re it that you geographies question product our and didn’t bring sells script, to if really because in

the We other one strength are impacted. most than COVID are Brazil, again, in in we of but India, it’s Brazil, seeing heavily probably

COVID. there, it’s by but seeing activity impacted we’re definitely So

get COVID So us Argentina currency handled. their a masks currency lot in until situation the we don’t is the translation. expect for but Brazil their they growing, always growth growth, of

to because and not major way, actually went for by a COVID. profitable them Africa, South signed customer from we deployed the profitable being us throughout

for service beyond telemetry providers, providers Other been is tells way, shut our Jungheinrich, sell And they’re orders are other and strength locator great. Jungheinrich. business. they’ve which and our Europe with is ever backlog our great. on pre-acquisition, there’s you even they’ve their is the locator those and to biggest in division, taking all the has division, business. down, And had. which that our having to their strength That which even plan, Germany this sell Turning By sells

Scott Searle

activity kind terms that just helpful. for and looking wondering the you detail XG could pipeline Very And could I’m sunsetting in reiterate around little the put just you a in of you Chris, realistic well, for. of opportunity. more lastly, in if what opportunity. you pipeline becoming now bit could if the seeing the of M&A you’re Great. more and you’re And opportunities opportunity the terms parameters the what a framework within provide or as

Chris Wolfe

Okay.

first Now part I’m going question. of to have to the your remember

be Go ahead. but repeat can you If go it, great, cover I ahead. in. that Yes, can that’d

Scott Searle

XG Chris. sunsetting,

Chris Wolfe

Thank Yes. you.

we’re on going have I of now is mentioned bringing our to the and on, having basically pipeline marketing what’s it, we sunset the customers yes, advertising spend out sunset. mentioned us Ned campaigns, campaigns sales also in the insights lot reach literally inquiries right because of So our our it, XG But working is campaigns, is inbound XXXX. up, a groups phones. basically

So to you the product. if they used the have have replacement I way some of units, companies even and of one competitors, don’t work our a by for,

units deployed. XXX,XXX So they had

So to that units home. find means XXX,XXX a have

to so glad home. actually we’re that And be

we point, we’re I on. total case are have the have number. that that and you actually closed We other give And XX,XXX in a Two mentioned, that XXX,XXX like XXX,XXX we a X But a trials units thousand. XXXX I’ll hundred field mix. is that in not just customers currently those. of So

field again, when again, one, right them to our logistics in over they’re just size XXX,XXX forward But take we’re forward. there to they units now. not throughout But they’re on them with they if probably So very XXXX. Those could strong. day move two trials a and take going double right period move going

was think in delayed COVID, were of ELD HOS Then sunset network didn’t because the everybody delayed I XXXX. much. the but get that of They in that got delayed they because the industry. mandate

wall coming the everyone. definitely up it’s so that’s on And like

M&A very quickly. the Turning

be geography we "Hey, planning, our like creative, actually want we need we we our we we applications. time Our help a What us saying, did ago and of then obviously, team our strengthen? a in?" part met with software strategic to when what year want actually it to to it capabilities expand do spent as actually portfolio service lot would to a and of a immediately And

So of Europe. technology it’s We even very in mode, a some though opportunities actually now, that in looking Europe lockdown geographic It’s we’re actually still in we like there’s are specific at a to plane the Eastern It’s hour The convenient at. Israel. structure just Actually where are great. cost X we levels depending X maybe flight, on spirit phenomenal. hours think entrepreneurial is education the companies Europe, regions. right you’re and kind think

we’re and in doing that of of a our again, have in also do M&A of So lot couple We research side the opportunities. building we’re on U.S. pipeline the out at a Israel software opportunities and looking

So us very spot more but software $XX to $XX the million around some profitable sweet and the company. and are in million be revenue transformational, would for

color. So you to just hopefully enough give

Operator

I floor hosts. Instructions] turn now [Operator to will our back the

Chris Wolfe

customers XX. Operator? in investors and will the Virtual stay Conference with to Annual Thanks, trust Okay. we and again our our conferences, vision. our be putting Matthew. the several Conference thank their on Virtual us products and our employees were including London Please diligent forward look today. on also Needham, and Thank upcoming Rock their joining XX efforts services, their for then soon. attending like our for XXth Technology to you And I healthy and Capital of financial May for Media I’d and you speaking June support

Operator

presentation. our for today us joining for you Thank

disconnect. now may You

PowerFleet (AIOT) 8 May 212021 Q1 Earnings call transcript