MICT - Earnings call transcript Q1 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Micronet Enertec First Quarter 2018 Results Conference Call. All participants are at present in a listen-only mode.

Following management’s formal presentation, instructions will be given for the question-and-answer session.

As a reminder, this conference is being recorded. hand call to of Dilek like Profile. Corporate now over to the Mir I'd ahead. go please Dilek,

Dilek Mir

Thank and results. Good by Micronet an you. morning of a Enertec’s to calling overview first review question-and-answer in session. quarter results XXXX the Management provide thank will followed you for

Importantly, a site section Relations of which company Web slide management our Presentations. use during Investor there This on presentation the Events is under & overview. can presentation, will be found the

the presentation morning access to scroll will by Harbor company’s link also PDF presentation. clicking accessing need a results. in these I copy of slides, the a read XXXX the will statement. may take the through presentation clicking to through brief You a the the Callers press financial copy now manually Safe link moment results and second of regarding release QX issued as PDF the labeled this then the management goes

mandate defense of balance products of call, and and the expand other During as and that aerospace XXXX limited of to forward-looking the make securities Private Micronet’s statements U.S. for of regarding within statements express that forward-looking Electronic federal continuing implied fortify nears. grow statements enable our are sheet expected laws. the we this us Litigation Act to, not the Enertec Device offerings sale but our the believe MRM Enertec we sale These and business ELD or course our Securities will to see Logging Reform include, management those will demand

to line our the its market demand higher delivers share Europe. see will to products, MRM expectation that strategy Our continue that in increase second XXXX, or for Micronet improvement, Software-as-a-Service Micronet top will we new SaaS our of in plans for see volume, quarter products on products, including continued as

the potential and the Our in for is believe has that position marketplace a Enertec's in strong expectations backlog, fulfillment we growth of defense and regarding future pipeline that business growth.

a and and and the based as update conference is year XX, numbers should Our we forward and additional company’s this market known products differ and broadening existing management and are assumptions section and unknown in to cause today looking the the Securities statements is segments its factor MRM of date. on December note information, risk XX-K or as actual in contained new are and implications that any factors that gross are address and information. disclaims and in result statements, forward Please statements or forward-looking as from to no their XXXX uncertainties, by the that in are that XXXX looking under reasonable discussed this margin the elsewhere for obligation and Form of of on statements obligation combination those alter date events our the of other company otherwise subsequent expressly forward new the any future those and backlog potential subject Such uncertainties or makes filings drive trend ended Report Commission. expansion line to required whether the including in involve results otherwise. The other with Annual law, that our of Exchange to May portfolio market Except target looking orders belief top projected. XX, call that risks, this other our improve to performance materially risks to presentation may our

the of also for, be again, as Investor to found the Officer On Investor These substitute results Enertec’s in to superior intangible most non-GAAP at not www.micronet-enertec.com/ir-company. Chief results note amortization site GAAP Chief or section a have share-based non-GAAP will call non-GAAP company’s financial measures, Relations to measures in this morning, and our the amortization or Investor financial Web These in Chief the of our A compensation quarterly slides the exclude will non-GAAP loss in assets we call, these Micronet can as Financial Relations comparable today’s are section reminder, Officer found of be by this management David Markus, Executive Dudy analyzing Web consider management performance. Micronet press in that discuss can Lucatz, release. when a addition Officer of defined expenses, the GAAP Relations considered measures Tali presentation Micronet measures of net encourage isolation non-GAAP including can of of Enertec; of via slide the income. a SEC site of discount. Rule During Micronet containing results be Enertec; Executive annual President section the be included the The to reconciliation G, quarter and intended at and also our and and link and to all our reconciliation also to release regarding first from, site you Chairman, GAAP the And measures we be the is press and Dinar, accessed in measures Ltd. referring www.micronet-enertec.com/ir-company. measures

ended over give an numbers quarter review We on will call we for the ahead Slide of XX, David, developments from we start the an Please go up the Q&A. X. now will will then who to with and who begin opening overview will presentation David. David, Tali, message March turn I will XXXX, wrap to with business with the move the will

David Lucatz

Thank you, everyone. morning, and good

for an indicators, quarter increase in in substantial the year-over-year very of key are was excellent that margins. revenue improvements and gross the We including pleased to by first quarter Micronet, marked report XXXX

is to to XX% to Gross MRM the growth pleased gross volume increased ended QX, in and from quarter, During The margin. products QX, our Revenue in customers. Micronet our current substantial shipping and are months new mainly been increased we of increase for have from backlog million, [indiscernible]. XX% $X.XX margin revenue the products revenue revenue we ongoing XXX% March to $X.X XXXX were report of in XXXX over three QX new In XXXX operation, XX, shipped due increase million. XXXX.

Our MRM XX, million on XXXX. $XX.X March backlog did a the and of March XXXX was consolidated million it quarter we XX, as for revenue ended of backlog $X.X

including for solutions. at as new its to demand We Micronet customers a the of continue expect products. producing significant provider strengthening saw Micronet is Micronet, as [indiscernible]. and grow and rugged reputation products will line its diversifying top of its reliable base [indiscernible] shipping quantities improvements We

this continue We quarters. to the coming expect trend in

to status development for Slide Slide business Micronet. market X, the represent Moving and number X. number

Paris as business a growing with and of XX, our million was pipeline in our XXXX product backlog customers our of market last month revenue strong March international show We Europe. strategy the Our at for our and field. an products for the increase SITL number received that is evaluating trade was in exhibition, MRM to business. the line MRM SITL solutions believe important the MRM very well share $X.X at with the Exhibiting in [ph] in

revenue over and April is were quarter resulted in the continued Micronet in fulfillment expect revenue driven first order in margin. [indiscernible]. received its which XXXX the by demand in MDM of product improving the Our $XXX,XXX. offering we orders prior monetization has resulting with device Mobile and of or XXXX purchase revenue of and quarter second XXXX SaaS improvement management gross with for

added to We reseller or foundation are upgrade distribution value VAR, this building and channels. a

Big Europe a the efforts marketing to launching in are market We our enhance and with marketplace. position provider TSP's service in

recruitments, to continue and We ongoing integration, meetings. have partner

the margin in to operating XXXX, $X.X in quarter third Enertec's XXXX, strategic loss of all [Indiscernible] during first showed Slide for at profit of an as video compared the we On XX% XXXX. is increased XXXX. X-year integration as to medical March for sales a fully working third initiatives million in parameters, X, quarter a include Enertec Our Enertec transition $X.X revenue XX the $X.X Enertec in million. in testing And quarter, should in medical to partnership the company, XX, and a automated XXXX higher a XX% disorders. system increase exploring rhythm same device the and for of X, including treating of improvement Fortune of which the and to as backlog were of first as a to gross the quarter projects. compared expect integration. million XXXX. positive calibration contribute application approximately project medical that X.X profitability approximately purchase order year with follow-on Enertec announced from had quarter a significant orders heart same device

deliveries, Control expect marketplace the potential while [indiscernible]. shelters, performance For Command core medical in business that in the XXXX the in believe is potential. We shows business and Enertec's & following its position good strong we

sales will our our agreement resources with previously roadmap our As value by related completing have to to The entered Coolisys the we working turn for change and parties are into financial control. MRM Enertec. the to Inc. according approval company Technologies, condition bank the a space, on focusing I the Tali to now this of increase review. with for announced Tali? the sell call towards closing of

Tali Dinar

to lower XXXX. period. percentage basis, In and sales basic compared as million, months $XXX,XXX net continued operations XXXX, that to to basis the for QX in as down Micronet a our provides David, basis, from to shipping basis, compared QX percentage first the of quarter of first same but compared compared R&D XXXX, will net $X.XX X everyone. shows loss compared in Slide on to the Slide margin share selling, X, you XXX% in $XXX,XXX, year. margins detailed expenses to QX continued XX, XX% from prior Micronet loss the mainly $X.X a ended X QX see in increased due XXXX. from the a X, were months up XXXX operation a Thank XXXX, G&A a overall $X.X XX% for a morning, revenues XXXX, XX QX increase increasing March volume. ended revenues in services. sales $X.XX Revenues XXXX. March QX million continued million narrowed X $X.XX the on breakdown non-GAAP as to products The consistent of X profit is the from dollar relatively sales significantly compared XXXX. MRM of in on Net X increase to XXXX as to for numbers. the ended the you, related March XX, for of loss increase were year-ago Slide compared as was orders per in on year. XXXX. months diluted XXXX, Gross the for $X.XX ended as March XX% months as and was good quarter in expenses were and as quarter compared were The gross XX, QX in were operations dollar million was as XXXX, to On a prior On to of

Slide XX, back to on will equivalents, and now capital, Turning we cash million I the turn in shareholders’ call in cash $X.X XXXX. over sheet, $X.X balance million of X $X.X in our equity million working had operator. and the to March as

Operator

Thank [ph]. Please Instructions] Boots you. question begin gentlemen, we’ll the and go ahead. at this time, The is question-and-answer first session. Craig [Operator from Ladies

Unidentified Analyst

the Yes, delay we weeks based three on on this more I weeks like I you be closing might there to any would might and just, call would we I get ago, one went might have guess, earnings closing have when that’s know clarity your on timetable of Enertec delay estimation by deal? probably couple when it if two last little in a seems in the be and be guess to we'd the and I’d I that what and as the a a done deal? to been obviously

David Lucatz

Sure. Hi.

now First we completed last not most of said time But we weeks, since to a feel weeks. three I as to all, weeks two have few complete I of we’re working said, is time thing, still bank. because thing about the to right cannot their estimate, condition and only two last speed. is the I related I no -- which the right But bank now. is have this closing the This open. where own --

Unidentified Analyst

Enertec, that or results that? were they renegotiate that’s us, anything company isn't buying seen there that on not -- pleased like from trying to they’re were with the any they they’ve difficulties financial So the

David Lucatz

bank, Based there on the nothing working like with on know approval we again, right their since what this is need we what are for that. I and is doing we’re And transaction, it. now dialoguing

any I that cannot more than give information. other So

Unidentified Analyst

anything that just what agreement guess, really us, [ph] then they’re waiting they not basically I alter the I agreement or is of Yes, keep for to with they’re to agreement same initial made a was banks trying the matter that, asking the than the approval. like it going

David Lucatz

based you party, other but speculate can what now, on nobody they I the want -- back me Again, the I to agreement. on I cannot from told I cannot tell right know that

approval the is said, major getting bank. as now of to need achieve So the the we thing I

Unidentified Analyst

Okay.

of However, I’m I question. that I to the from know previous quarter. thing share start wondering this what I’m profit? expecting narrow answers more quarter. either the is know my guess breakeven had I was didn’t other part I loss wondering point that an the what guess and of loss narrowing $X.XX to turn guess, only I we or is I we that that

David Lucatz

behave product like forward. the to the go Well, it's market cannot moving -- I to on profitability, I how the see on on other -- it will how the new are continuing focus a -- we working when see there said and we or back previously, parameters, again, speculate open as improvement it so trend But we’re behave in. and question some go product

all, into profitability. improvement we to see are as said, parameters. in cannot of So, all positive all when on move I side in going a focus But the we we this significant

Unidentified Analyst

And assessments -- corner if previous wondering me QX may then the the becoming still that turn just I call start last original answered kind to -- QX and I one profitable. on before, that fairly seem maybe know or you’ve we you don’t indicating, guess, or it be the is was actually accurate? I’m I’m already, of know

David Lucatz

I ago, we in are -- give time just cannot when [indiscernible]. good don’t I said, will exact what Honestly as three I an forward. you we I I We recall see said indication. quarters looking now but cannot

Unidentified Analyst

to with, able get guess, there to our with to something Enertec? I we in I share be raise if more we cash that. really to going down other hand? the is are Enertec think not cash that to thing cash to that shares we’ve to I’m somewhat only or raise going through I more to back -- to going related If that name agreement [indiscernible] not with how selling have need more something question, the the are would its going by the Okay. need to mean, break it's been on a with agreement, close the sure deal be we’ve with we are able but

David Lucatz

out which performance nothing -- quarter that position thing, to it say say have Enertec to stabilize always raise which more -- very from to plan. one what will we you not can [ph]. positive we that, mentioned, plan, break, One the we moving need if focus this thing I and in [ph] this have see will our that forward. if deal, just looking if you some continue, at do growth cash if the we’re going parameter And [indiscernible] and happen, a then fiscal first I want performance we’re already to our in point look Enertec if to

Unidentified Analyst

as even turning with if as whom Enertec well Right. mean Again, should are future? it be corner so doing we go through, obviously, sounded still I near like mean, I better, the in both it profitable the Enertec was didn’t Micronet,

David Lucatz

cannot the [indiscernible] We -- or you continue. future, anything really guidance the don’t that quarter that we by can give I’m first the will believe see trend we as but about from remark.

Unidentified Analyst

your but that Right. as Enertec mind in positive it be Micronet, much are appears Micronet, way -- obviously Not going also well? with I’m as we Enertec just towards for I with for it would looking guess, as

David Lucatz

and the positive. based the yes, the a -- we Yes, change backlog quarter be yes, in we believe on same Yes. next the will the same -- of have company, -- parameter, current that have Enertec the in

Unidentified Analyst

Okay.

good. much. you Thank Sounds

David Lucatz

Thank you.

Operator

go William Velmer The S.A Advisory. next from of ahead. Please question is

William Velmer

why your is trying strong, curious, breakup call you I as on mean, presentation to do knows conference sell business it's kind you how come to like for don’t understand the the even on doing, why the DPW, want seem looks really they’re don’t just your their is just that going is cash it? corner, Why pull division longer to division business been division? you of I Yes, the who be I months, turning with but as to strong, aerospace a not, backlog you’re really out? going it's mean, crawl sell explained well I’m about or you the up wonderful fee. why

David Lucatz

So, you to because don’t know, like I you a the but but the -- because was into to answer back not so we to decided necessarily management bad, it business take strategy of want don’t the and resources. couple issues focus MRM to -- it's on, want go business and on it where ago our quarters focus

very we Same we know we see which I with know then you approval than company the this and We are not moment. are financing anything need bank point don’t -- position. happen, that’s we a except if are happen, now. we happened getting expected, anything and big anything right still will focus if [indiscernible] But anything correct. But at positive to moment this for that will have even moment. we or indications that’s very to not and restrategize more going again at we positive this don’t in -- what don’t getting the this the definitely of parameters at agree that

William Velmer

-- pull going isn't months. I the just goes is was mean, back and the obviously it, that it, -- of have device, debt debt who May, money. includes into to who issues come and it’s them, presentation you they’re carry year about really medical the mean, or March contradicting raise your raising want buy on the they But I [indiscernible] whether When that this money. are there, issue, now to this mean, fee, you your really find going pull do with the to they’re yourself can bank we’re suppose your is you’re -- with must with or aerospace how why close has so it's the also this in that I have here money from I the must don’t plug somebody can sell your you up been wants the bank's even to for just also -- we them plug? with I there documentation not when they sale where mean, I you thing isn't the though the know a division. you mean, I’m to its breakup if with and issue, breakup period stay transferring the assuming company? there

David Lucatz

few package a question. there, in question of Kind one

and try So I will to address one-by-one …

William Velmer

Okay. All right.

David Lucatz

then it, or the we I details this if I at in are we this don’t would -- approval then first very first question know But that process contradict not, of looking okay? thing, that doing and we okay, the two … to all need go rather Enertec get which have bad of completed. into don’t we we division a Again, that our mean, the we already forward There about Secondly, such that I at always chance, agreed, okay? we I were we because get doing it, self deal it. in might get legally to not I all sell have are moment moment, be position you disagree that’s very than I formerly to get. a a division one be once with we do are is rather bank

legal the the that a And to any examine contradict believe at back strategy as again, Enertec we need we chance clear sit was very be again, or we But here feedback that to because said didn’t to seems out be have were and And very a we any this from good. deal. explore it. I is what who give down get from to need there our input than our to in a potential not buyer don’t plan expected. our we -- and position want potential moment, we forward. moving do finish the it strategy if we even and deal, of to Obviously, MRM better the So self

William Velmer

but when How you much How pull long? I know, plug? the do longer?

David Lucatz

… No, I don’t

William Velmer

How much longer?

David Lucatz

it's not it's I question, in have legitimate that a said think because we previous don’t time.

okay? going take. deal, a And but agreement to an don’t have all the there's long [indiscernible] it's section details probably I how my to to mind, subject again, are there's that We -- in related

William Velmer

again No, I but that, in documentation. this breakup there's understand no fee

David Lucatz

no wrong. No, you’re

William Velmer

There -- me? is no excuse

David Lucatz

wrong. you’re No, no,

There absolutely You’re a wrong. is fee. breakup

William Velmer

fee? What is the breakup

David Lucatz

is $XXX,XXX, in which already put that.

William Velmer

if out, the There's back the got give them you you pull $XXX,XXX, that’s So breakup fee? $XXX,XXX? to

David Lucatz

no. no, No,

You it wrong. got

me a let that of breakup correct $XXX,XXX breakup don’t myself. fee breakup Now escrow. We There's [indiscernible] fee. a have have a in They fee.

William Velmer

Okay.

to out what you if out, If going you? cost deal, this you? pulled it would So of pulled you the what’s cost

David Lucatz

question didn’t you we address believe the prepare at so this moment, didn’t to don’t this can okay? plan if me. very question I pull I ask up, Because I

William Velmer

come -- part party up fee I that you you Thank was they just wonderful and with amount you sell come would [indiscernible]. it, negotiation your mean, you. is, the why or money, pull much up may can't very [indiscernible] how to Okay. but business breakup But be with -- I’m obviously crawl either okay, Thank get of would again, out of I point, just sir. the it? this decides you a want get the about to may if

David Lucatz

a don’t Fortunately have have they breakup we fee. breakup a fee,

William Velmer

Right.

David Lucatz

[Indiscernible] now. good right the but is but -- deal this business, a situation

William Velmer

Okay. you. Thank

Operator

Please is from Tracy Capital Lakeview of go Partners. The Joe next ahead. question

Joe Tracy

plans conferences with Yes, attending getting and some any meet to increase institutional and exposure? to are institutional road investor to I’m the wondering, there if increase exposure up analysts try coming on just out this or probably year trying

David Lucatz

going we’re a it. sure. to do Yes, plan There's

about than -- we the like to it focus waited wanted to clear very of our increase of exposure a to what the clarity the couple transaction of on strategy -- we to and to hopefully of expose are But limited actually focusing the market. we we is course, going be last One our [indiscernible] strategy. soon we the [indiscernible] until we reason was in weeks in to have

Joe Tracy

Thank you.

Operator

of question American next Birkenfeld Please Karl is go from The Trust. ahead.

Karl Birkenfeld

United FDA little you just in States sales do at bit Hi, Europe? on David. It's the have Birkenfeld. And in a or product Karl you medical elaborate device? Could is medical

David Lucatz

question. Thank Karl. you the for Hi,

last of field to So we the in we in more device get FDA. forward, to orders we we and fairly involved we couple the Literally, [indiscernible] don’t a only big for remain so minor now [indiscernible] want of companies, the sale if because this division, right actually start [indiscernible] try and they’re but XX -- mentioned and years, scope. But medical more we to charge forward as global to see definitely looking to in [indiscernible]. -- with sales we looking Fortune we'd again, like -- explore the and this

So …

Karl Birkenfeld

[ph] for handles MicroTek So, the Enertec? actual distribution in States the United

David Lucatz

moment Enertec for No, this doing company. no. At again -- very [indiscernible] what is big a this do for we -- its this manufacture

dialogue existing answer a have potentially have is have potentially get don’t any Right company we and and we And orders, which also this this them. division. a We don’t the believe this already the we’re order I in also but with past, into grow dialogue order new question. a now dialogue for I with do we the right them, we just an see this but it's business. exploring but additional We cooperation what’s product, going with more more and dialogue, to Again, with move this product. yet, or again, on anything, to the product going is want of have now we reason will one manufacture

Karl Birkenfeld

you. Okay. That’s Thank great.

Operator

Boots Craig a question [ph]. ahead. go have from Please follow-up We

Unidentified Analyst

guess, the to own over shares question if the the spinning original and I I buy to deal of subsidiary would did go to more the stand my fall And Micronet Enertec. we that, and we we through just on question in it be I I related is off two plans going if company first into company? cash go have part get back would does in our all do that’s then, Yes, through, guess, its a one guess, other Israel? are

David Lucatz

Thank very much for the you questions. good

what all, moment we at -- of remain cannot division. the I if cannot focus I with this do we again, First

necessary, of up changes [indiscernible] One the company in the see not bring is as can you possibility [indiscernible].

and it to will know we look where again we once we clarity we a at stand, what we exactly decide So have do.

changed The ago principle of couple of the second the been option years not the discussed question, just possibility of is off in for [indiscernible], option. have to several of option of only the Tel times. the apply is couple device our we once all one a Micronet because One discuss but little, Aviv. so the but have scenes the minutes We it exist. in spin still direction, medical all, necessarily in same cash, increase position the last the in a We’ve

another which to So we once this [indiscernible] is need that explore know done. possibility is we

Unidentified Analyst

mean So just XX% it's that own holding if be it would a possibly stake I it? Because the slightly I’m you would increase larger know now subsidiary? we in and could right then over your sure that would desirable in

David Lucatz

to that but do [indiscernible] again, option. -- the serious a a we an we myself Not totally, we cash we So, it, we express point this but positively. didn’t [indiscernible] of a option, Once need maybe didn’t it's think I -- it's it's serious option. we have to it get

Karl Birkenfeld

Okay. Thank you.

Operator

this Instructions] point, no [Operator there questions. At further are

that Internationally, like you his U.S., dial I’d please this remarks? to In concluding would David statement, XXXX-XXX-XXXX. please like ask Israel, participants make I available the two In dial please David, XX-XXX-XXXX. call be will a Before to replay remind make hours. of within your dial concluding XXX-X-XXX-XXXX. to

David Lucatz

Yes, thank you. Micronet continue to exact on [indiscernible] previous orders. ship of

speaking continuing are to and we continue you with to performance. next ability performance our quarter. ship on should you, to good with line we strong and combined backlog, in I our We look Thank MRM experience seeing forward our top that believe business existing

Operator

conference Technologies’ Micronet for your quarter first concludes Thank results This XXXX participation. you you. Thank Enertec call.

go You and may ahead disconnect.

Tingo (TIOG) 15 May 182018 Q1 Earnings call transcript