Quarterly GAAP Revenue Totaled Record $35.1M, Up 17% Year-over-Year on a Pro Forma Basis
WOODCLIFF LAKE, N.J., March 12, 2020 (GLOBE NEWSWIRE) -- PowerFleet, Inc. (Nasdaq: PWFL), a global leader and provider of subscription-based wireless IoT and M2M solutions for securing, controlling, tracking, and managing high-value enterprise assets, reported results for the fourth quarter and full year ended December 31, 2019.
Management Commentary
“The fourth quarter was a strong finish to a transformational year for PowerFleet,” said CEO Chris Wolfe. “As our results for the quarter demonstrated, we are beginning to recognize the material financial benefits as well as operational efficiencies and deal flow as a larger organization. This was highlighted by the record $35.1 million in total revenue, which was up 17% year-over-year on a pro forma basis, driven by solid contribution in high-margin recurring solutions and services revenue. We ended the quarter with approximately 550,000 mobile subscription units on our platform, putting us on track to meet our target of at least 600,000 mobile subscriber units by the end of 2020.
“Our powerful portfolio of solutions spanning the industrial, logistics and commercial vehicle industries continues to differentiate PowerFleet in the market. The best companies in the world continue to choose our mobility platforms and full end-to-end solutions to power their asset and fleet monitoring and management needs, and this was again validated in the fourth quarter. We secured several major new wins with leading transportation companies in our logistics business and had similar success in our industrial business, highlighted by multiple wins through our dealer channel. Our sales through Jungheinrich continue to build momentum, as we are seeing an increasing volume of orders secured in Europe. In our connected car business, we continued to execute on our program with Avis Budget Group and are in the process of bringing Pointer’s products into the U.S. to pursue the class 1 through class 5 fleet management market.
“Along that line, the integration of Pointer is proceeding rapidly, with several milestones achieved in the first six months post-close, including the consolidation of our strategic and tactical plans and product roadmaps. The alignment of our sales and go-to-market motions are yielding early success, validating one of the core theses for the business combination. In addition to our growth and cross-selling initiatives, we’ve already eliminated duplicative corporate costs and have identified more than $3 million in supply chain savings that we expect to realize in 2020 as well as incremental cost savings expected in 2021 related to the platform consolidation currently underway.
“Today, we are a much stronger business with greater scale and resources, an industry-leading end-to-end IoT platform, significant cross-selling opportunities, and robust secular tailwinds working in our favor. Longer term, our vision of creating PowerFleet as a global IoT software and solutions provider is progressing, which we believe will generate significant shareholder value through global operational and financial scale, sustainable profitability and cash flow generation.”
Fourth Quarter 2019 Financial Results
Financial results for the quarter ended December 31, 2019 include consolidated results for both I.D. Systems, Inc. and Pointer Telocation Ltd., which was acquired on October 3, 2019. Financial results for the quarter ended December 31, 2018 include only financial results from I.D. Systems, Inc. prior to its acquisition of Pointer Telocation Ltd.
Total revenue increased to $35.1 million from $11.5 million in the same year-ago period. Services revenue was $18.7 million (53.2% of total revenue), compared to $4.3 million (37.6% of total revenue) in the same year-ago period. Product revenue was $16.5 million (46.8% of total revenue), compared to $7.2 million (62.4% of total revenue) in the same year-ago period.
Gross profit increased to $16.6 million (47.4% of total revenue) from $6.1 million (53.3% of total revenue) in the same year-ago period. Service gross profit was $11.6 million (62.3% of total service revenue), compared to $3.1 million (70.7% of total service revenue) in the same year-ago period. Product gross profit was $5.0 million (30.4% of total product revenue), compared to $3.1 million (42.8% of total product revenue) in the same year-ago period.
Selling, general and administrative expenses were $12.7 million, compared to $6.2 million in the same year-ago period. Research and development expenses were $3.0 million, compared to $1.9 million in the same year-ago period. Depreciation and amortization expenses were $2.0 million, compared to $387,000 in the same year-ago period. Severance expenses related to the Pointer acquisition were $1.7 million, compared to no severance expenses in the same year-ago period. Acquisition-related expenses were $462,000, compared to $428,000 in the same year-ago period.
Net loss attributable to common stockholders totaled $5.2 million or $(0.18) per basic and diluted share (based on 28.6 million weighted average shares outstanding), compared to net loss of $2.8 million or $(0.16) per basic and diluted share in the same year-ago period (based on 17.6 million weighted average shares outstanding).
Adjusted EBITDA, a non-GAAP metric, totaled $2.1 million or $0.06 per diluted share (based on 35.5 million weighted average shares outstanding), compared to adjusted EBITDA loss of $595,000 or $(0.03) per basic and diluted share (based on 17.6 million weighted average shares outstanding) in the same year-ago period (See the section below titled “Non-GAAP Financial Measures” for more information about adjusted EBITDA and its reconciliation to GAAP net income/loss).
At quarter-end, the company had $16.4 million in cash and cash equivalents. The company’s working capital position at quarter-end was $29.3 million.
Full Year 2019 Financial Results
Financial results for the full year ended December 31, 2019 include financial results from Pointer Telocation Ltd., which was acquired on October 3, 2019. Financial results for the year ended December 31, 2018 include only financial results from I.D. Systems, Inc. prior to its acquisition of Pointer Telocation Ltd.
Total revenue increased to $81.9 million from $53.1 million in 2018. Services revenue was $36.5 million (44.6% of total revenue), compared to $16.2 million (30.5% of total revenue) in 2018. Product revenue was $45.4 million (55.4% of total revenue), compared to $36.9 million (69.5% of total revenue) in 2018.
Gross profit increased to $38.4 million (46.8% of total revenue) from $25.8 million (48.6% of total revenue) in 2018. Services gross profit was $22.9 million (62.8% of services revenue), compared to $11.5 million (71.4% of services revenue) in 2018. Product gross profit was $15.4 million (34.0% of product revenue), compared to $14.3 million (38.6% of product revenue) in 2018.
Selling, general and administrative expenses were $29.8 million, compared to $22.2 million in 2018. Research and development expenses were $8.5 million, compared to $6.9 million in 2018. Depreciation and amortization expenses were $3.3 million, compared to $1.6 million in 2018. Severance expenses related to the Pointer acquisition were $1.7 million, compared to no severance expenses in 2018. Acquisition-related expenses were $5.1 million, compared to $867,000 in 2018.
Net loss attributable to common stockholders totaled $12.0 million or $(0.59) per basic and diluted share (based on $20.5 million weighted average shares outstanding), compared to net loss of $5.8 million or $(0.34) per basic and diluted share in 2018 (based on 17.2 million weighted average shares outstanding).
Adjusted EBITDA, a non-GAAP metric, totaled $3.2 million or $0.14 per diluted share (based on 22.3 million weighted average shares outstanding), compared to adjusted EBITDA loss of $23,000 or $0.00 per basic and diluted share (based on 17.2 million weighted average shares outstanding) in 2018 (See the section below titled “Non-GAAP Financial Measures” for more information about adjusted EBITDA and its reconciliation to GAAP net income/loss).
Investor Conference Call
PowerFleet management will discuss these results and business outlook on a conference call today (Thursday, March 12, 2020) at 8:30 a.m. Eastern time (5:30 a.m. Pacific time).
PowerFleet CEO Chris Wolfe and CFO Ned Mavrommatis will host the call, followed by a question and answer session where sell-side analysts and major institutional shareholders can ask questions.
U.S. dial-in: (877) 307-1379
International dial-in: (443) 877-4066
Passcode: 3989798
The conference call will be broadcast simultaneously and available for replay in the investor section of the company’s website at ir.powerfleet.com.
If you have any difficulty connecting with the conference call, please contact PowerFleet’s investor relations team at (949) 574-3860.
Non-GAAP Financial Measures
To supplement its financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP), PowerFleet provides certain non-GAAP measures of financial performance. These non-GAAP measures include adjusted EBITDA and adjusted EBITDA per basic and diluted share. Reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors’ overall understanding of PowerFleet’s current financial performance. Specifically, PowerFleet believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results and business outlook. Adjusted EBITDA is not a measure of financial performance or liquidity under GAAP and, accordingly, should not be considered as an alternate to net income or cash flow from operating activities as an indicator of operating performance or liquidity. Because PowerFleet’s method for calculating the non-GAAP measures may differ from other companies’ methods, the non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliation of all non-GAAP measures included in this press release to the nearest GAAP measures can be found in the financial tables included in this press release.
| Powerfleet, Inc. and Subsidiaries | |||||||||||||||||
| Reconciliation of GAAP to Adjusted EBITDA Financial Measures | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2018 | 2019 | 2018 | 2019 | ||||||||||||||
| Net loss attributable to common stockholders | $ | (2,809,000) | $ | (5,169,000) | $ | (5,812,000) | $ | (12,047,000) | |||||||||
| Minority interest | - | (18,000) | (18,000) | ||||||||||||||
| Dividends on preferred stock | - | 1,084,000 | 1,084,000 | ||||||||||||||
| Interest (income) expense, net | (22,000) | 877,000 | (89,000) | 823,000 | |||||||||||||
| Other (income) expense, net | 12,000 | 4,000 | 165,000 | 50,000 | |||||||||||||
| Income tax (benefit) expense | - | (75,000) | - | (75,000) | |||||||||||||
| Depreciation and amortization | 387,000 | 2,042,000 | 1,561,000 | 3,341,000 | |||||||||||||
| Stock-based compensation | 505,000 | 801,000 | 2,163,000 | 2,533,000 | |||||||||||||
| Foreign currency translation losses | 68,000 | 179,000 | 214,000 | 467,000 | |||||||||||||
| Litigation expenses and settlement | 836,000 | - | 968,000 | - | |||||||||||||
| Acquisition-related fees | 428,000 | 462,000 | 807,000 | 5,135,000 | |||||||||||||
| Severance expenses related to the acquistion | - | 1,724,000 | - | 1,724,000 | |||||||||||||
| Impact of the fair value mark-up of acquired inventory | - | 211,000 | 211,000 | ||||||||||||||
| Adjusted EBITDA | $ | (595,000) | $ | 2,122,000 | $ | (23,000) | $ | 3,228,000 | |||||||||
| Non-GAAP adjusted EBITDA per share - basic | $ | (0.03) | $ | 0.07 | $ | - | $ | 0.16 | |||||||||
| Non-GAAP adjusted EBITDA per share - diluted | $ | (0.03) | $ | 0.06 | $ | - | $ | 0.14 | |||||||||
| Weighted average common shares outstanding - basic | 17,564,000 | 28,582,000 | 17,233,000 | 20,476,000 | |||||||||||||
| Weighted average common shares outstanding - diluted | 17,564,000 | 35,511,000 | 17,233,000 | 22,305,000 | |||||||||||||
About PowerFleet
PowerFleet® Inc. (NASDAQ: PWFL; TASE: PWFL) is a global leader and provider of subscription-based wireless IoT and M2M solutions for securing, controlling, tracking, and managing high-value enterprise assets such as industrial trucks, tractor trailers, containers, cargo, and vehicles and truck fleets. The company is headquartered in Woodcliff Lake, New Jersey, with offices located around the globe. PowerFleet’s patented technologies address the needs of organizations to monitor and analyze their assets to increase efficiency and productivity, reduce costs, and improve profitability. Our offerings are sold under the global brands PowerFleet, Pointer, and Cellocator. For more information, please visit www.powerfleet.com, the content of which does not form a part of this press release.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements include statements with respect to PowerFleet’s beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond PowerFleet’s control, and which may cause its actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. For example, forward-looking statements include statements regarding: prospects for additional customers; potential contract values; market forecasts; projections of earnings, revenues, synergies, accretion or other financial information; emerging new products; and plans, strategies and objectives of management for future operations, including growing revenue, controlling operating costs, increasing production volumes, and expanding business with core customers. The risks and uncertainties referred to above include, but are not limited to, future economic and business conditions, the ability to recognize the anticipated benefits of the acquisition of Pointer, which may be affected by, among other things, the loss of key customers or reduction in the purchase of products by any such customers, the failure of the market for PowerFleet’s products to continue to develop, the possibility that PowerFleet may not be able to integrate successfully the business, operations and employees of I.D. Systems and Pointer, the inability to protect PowerFleet’s intellectual property, the inability to manage growth, the effects of competition from a variety of local, regional, national and other providers of wireless solutions, and other risks detailed from time to time in PowerFleet’s, I.D. Systems’ and Pointer’s filings with the Securities and Exchange Commission, including I.D. Systems’ annual report on Form 10-K for the year ended December 31, 2018, Pointer’s annual report on Form 20-F for the year ended December 31, 2018 and PowerFleet’s registration statement on Form S-4 filed with the Securities and Exchange Commission on May 24, 2019, as amended on July 1, 2019 and July 23, 2019. These risks could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, PowerFleet. Unless otherwise required by applicable law, PowerFleet assumes no obligation to update the information contained in this press release, and expressly disclaims any obligation to do so, whether a result of new information, future events, or otherwise.
PowerFleet Company Contact
Ned Mavrommatis, CFO
NMavrommatis@powerfleet.com
(201) 996-9000
PowerFleet Investor Contact
Matt Glover
Gateway Investor Relations
PWFL@gatewayIR.com
(949) 574-3860
| Powerfleet, Inc. and Subsidiaries | |||||||||||||||||||
| Condensed Consolidated Statements of Operations Data | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||
| 2018 | 2019 | 2018 | 2019 | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
| Revenue: | |||||||||||||||||||
| Products | $ | 7,171,000 | $ | 16,462,000 | $ | 36,897,000 | $ | 45,416,000 | |||||||||||
| Services | 4,320,000 | 18,684,000 | 16,167,000 | 36,499,000 | |||||||||||||||
| 11,491,000 | 35,146,000 | 53,064,000 | 81,915,000 | ||||||||||||||||
| Cost of revenue: | |||||||||||||||||||
| Cost of products | 4,101,000 | 11,454,000 | 22,638,000 | 29,982,000 | |||||||||||||||
| Cost of services | 1,266,000 | 7,047,000 | 4,628,000 | 13,569,000 | |||||||||||||||
| 5,367,000 | 18,501,000 | 27,266,000 | 43,551,000 | ||||||||||||||||
| Gross profit | 6,124,000 | 16,645,000 | 25,798,000 | 38,364,000 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||
| Selling, general and administrative expenses | 6,246,000 | 12,682,000 | 22,243,000 | 29,807,000 | |||||||||||||||
| Research and development expenses | 1,882,000 | 3,032,000 | 6,863,000 | 8,540,000 | |||||||||||||||
| Depreciation and amortization expenses | 387,000 | 2,042,000 | 1,561,000 | 3,341,000 | |||||||||||||||
| Severance expenses related to the acquistion | - | 1,724,000 | - | 1,724,000 | |||||||||||||||
| Acquisition-related expenses | 428,000 | 462,000 | 867,000 | 5,135,000 | |||||||||||||||
| 8,943,000 | 19,942,000 | 31,534,000 | 48,547,000 | ||||||||||||||||
| Loss from operations | (2,819,000) | (3,297,000) | (5,736,000) | (10,183,000) | |||||||||||||||
| Interest income | 45,000 | 15,000 | 262,000 | 125,000 | |||||||||||||||
| Interest expense | (23,000) | (892,000) | (173,000) | (948,000) | |||||||||||||||
| Other expense | (12,000) | (4,000) | (165,000) | (50,000) | |||||||||||||||
| Net loss before income taxes | (2,809,000) | (4,178,000) | (5,812,000) | (11,056,000) | |||||||||||||||
| Income tax benefit | - | 75,000 | - | 75,000 | |||||||||||||||
| Net loss before minority interest | (2,809,000) | (4,103,000) | (5,812,000) | (10,981,000) | |||||||||||||||
| Minority interest | - | 18,000 | - | 18,000 | |||||||||||||||
| Preferred stock dividends | - | (1,084,000) | - | (1,084,000) | |||||||||||||||
| Net loss attributable to common stockholders | $ | (2,809,000) | $ | (5,169,000) | $ | (5,812,000) | $ | (12,047,000) | |||||||||||
| Net loss per share - basic and diluted | $ | (0.16) | $ | (0.18) | $ | (0.34) | $ | (0.59) | |||||||||||
| Weighted average common shares outstanding - basic and diluted | 17,564,000 | 28,582,000 | 17,233,000 | 20,476,000 | |||||||||||||||
| Powerfleet, Inc. and Subsidiaries | |||||||||
| Condensed Consolidated Balance Sheet Data | |||||||||
| As of December 31, | |||||||||
| 2018 | 2019 | ||||||||
| ASSETS | (Unaudited) | ||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 10,159,000 | $ | 16,395,000 | |||||
| Restricted cash | 307,000 | 308,000 | |||||||
| Investments - short term | 394,000 | - | |||||||
| Accounts receivable, net | 9,247,000 | 27,016,000 | |||||||
| Inventory, net | 4,649,000 | 16,381,000 | |||||||
| Deferred costs - current | 3,660,000 | 3,720,000 | |||||||
| Prepaid expenses and other current assets | 4,244,000 | 7,370,000 | |||||||
| Total current assets | 32,660,000 | 71,190,000 | |||||||
| Investments - long term | 4,131,000 | - | |||||||
| Deferred costs - less current portion | 5,409,000 | 4,810,000 | |||||||
| Fixed assets, net | 2,149,000 | 8,240,000 | |||||||
| Goodwill | 7,318,000 | 89,068,000 | |||||||
| Intangible assets, net | 4,705,000 | 36,639,000 | |||||||
| Right of use asset | - | 7,024,000 | |||||||
| Severance payable fund | - | 3,530,000 | |||||||
| Deferred tax asset | - | 2,475,000 | |||||||
| Other assets | 1,431,000 | 2,532,000 | |||||||
| $ | 57,803,000 | $ | 225,508,000 | ||||||
| LIABILITIES | |||||||||
| Current liabilities: | |||||||||
| Short-term bank debt and current maturities of long-term debt | $ | - | $ | 3,475,000 | |||||
| Convertible note payable | - | 5,000,000 | |||||||
| Accounts payable and accrued expenses | 8,027,000 | 24,880,000 | |||||||
| Deferred revenue - current | 7,902,000 | 7,687,000 | |||||||
| Lease liability - current | - | 868,000 | |||||||
| Acquisition related contingent consideration and payable - current | 946,000 | - | |||||||
| Total current liabilities | 16,875,000 | 41,910,000 | |||||||
| Long-term debt, less current maturities | - | 26,413,000 | |||||||
| Deferred revenue - less current portion | 9,186,000 | 8,544,000 | |||||||
| Lease liability - less current portion | - | 6,371,000 | |||||||
| Accrued severance payable | - | 4,062,000 | |||||||
| Deferred tax liability | - | 6,197,000 | |||||||
| Other long-term liabilities | 208,000 | 438,000 | |||||||
| 26,269,000 | 93,935,000 | ||||||||
| MEZZANINE EQUITY | |||||||||
| Convertible redeemable Preferred stock: Series A | - | 47,393,000 | |||||||
| STOCKHOLDERS’ EQUITY | |||||||||
| Total Powerfleet, Inc. stockholders’ equity | 31,534,000 | 84,190,000 | |||||||
| Non-controlling interest | - | (10,000) | |||||||
| Total equity | 31,534,000 | 84,180,000 | |||||||
| Total liabilities and stockholders’ equity | $ | 57,803,000 | $ | 225,508,000 | |||||
| Powerfleet, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Statements of Cash Flow Data | ||||||||
| (Unaudited) | ||||||||
| Year Ended December 31, | ||||||||
| 2018 | 2019 | |||||||
| Cash flows from operating activities (net of net assets acquired): | ||||||||
| Net loss before minority interest | $ | (5,812,000) | $ | (10,981,000) | ||||
| Adjustments to reconcile net loss to cash (used in) provided by operating activities: | ||||||||
| Inventory reserve | 321,000 | 207,000 | ||||||
| Stock based compensation expense | 2,163,000 | 3,794,000 | ||||||
| Depreciation and amortization | 1,561,000 | 3,347,000 | ||||||
| Operating lease right-of-use assets, net of operating lease liabilities | (141,000) | |||||||
| Bad debt expense | 31,000 | 319,000 | ||||||
| Deferred income taxes | - | (167,000) | ||||||
| Change in contingent consideration | 169,000 | 54,000 | ||||||
| Other non-cash items | 85,000 | (40,000) | ||||||
| Changes in: | ||||||||
| Operating assets and liabilities | (220,000) | (3,661,000) | ||||||
| Net cash used in operating activities | (1,702,000) | (7,269,000) | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisitions, net of cash assumed | - | (69,005,000) | ||||||
| Proceeds from sale of property and equipment | - | 24,000 | ||||||
| Capital expenditures | (251,000) | (1,042,000) | ||||||
| Purchases of investments | (3,235,000) | (99,000) | ||||||
| Proceeds from the sale and maturities of investments | 10,082,000 | 4,638,000 | ||||||
| Net cash (used in) provided by investing activities | 6,596,000 | (65,484,000) | ||||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from preferred stock offering | - | 46,309,000 | ||||||
| Proceeds from convertible note | - | 5,000,000 | ||||||
| Proceeds from long-term debt | - | 30,000,000 | ||||||
| Repayments of long-term debt | - | (2,010,000) | ||||||
| Debt issuance costs | - | (742,000) | ||||||
| Short-term bank debt, net | - | 75,000 | ||||||
| Net proceeds from underwritten public offering | - | - | ||||||
| Borrowings under revolving credit facility | - | - | ||||||
| Repayments under revolving credit facility | - | - | ||||||
| Proceeds from exercise of stock options | 721,000 | 330,000 | ||||||
| Shares repurchased pursuant to vesting of restricted stock | (652,000) | (317,000) | ||||||
| Net cash provided by financing activities | 69,000 | 78,645,000 | ||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | 100,000 | 345,000 | ||||||
| Net increase in cash, cash equivalents and restricted cash | 5,063,000 | 6,237,000 | ||||||
| Cash, cash equivalents and restricted cash - beginning of period | 5,403,000 | 10,466,000 | ||||||
| Cash, cash equivalents and restricted cash - end of period | $ | 10,466,000 | $ | 16,703,000 | ||||