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 second quarter ended June 30, 2020.
Second Quarter Financial and Operational
Highlights
- Generated $25.8 million in total revenue, including $16.4
million (63.5% of total revenue) of high margin, recurring and
services revenue
- Produced $4.4 million in operating cash for the first six
months of 2020
- Maintained healthy on-air subscriber units at over 550,000
- Maintained solid liquidity position with $21.5 million in cash
and cash equivalents and $28.9 million of working capital
Management Commentary“Our performance for the
second quarter was solid, especially given the headwinds and
challenges presented by COVID-19,” said CEO Chris Wolfe. “We
delivered solid top- and bottom-line results, including $25.8
million in revenue, $2.1 million in adjusted EBITDA and $1.7
million in operating cash flow, again demonstrating the resiliency
of our financial model.
“Despite the slowdown globally in Q2, we signed
several significant deals in our Logistics business, including wins
with Rusken Packaging and Day & Ross, one of Canada’s largest
fleets. These combined multi-million-dollar deals started shipping
in June and July. We also extended and expanded our strategic
partnership with Jungheinrich, which continues to exceed
expectations. Since launching our white-labeled enterprise solution
with Jungheinrich a year ago, sales were 40% higher than planned.
We look forward to building on our partnership’s momentum by
pursuing new market opportunities for both companies.
“While our business continues to operate according
to our post-COVID plan, we are also encouraged by the strength of
our financial foundation. Our subscriber base of more than 550,000
has remained very resilient. Our optimized cost-structure coupled
with the $21.5 million in cash on our balance sheet, gives us
confidence that we will not only weather this storm but come out
stronger when the situation recovers. In the face of today’s
uncertain and constantly evolving environment, we remain confident
in our ability to extend our position as one of the leading global
B2B mobile fleet and asset management companies.”
Second Quarter 2020 Financial ResultsFinancial
results for the quarter ended June 30, 2020 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 June 30, 2019 include only financial results from
I.D. Systems, Inc. prior to its acquisition of Pointer Telocation
Ltd.
Total revenue increased to $25.8 million from $16.3 million in
the same year-ago period. Services revenue was $16.4 million (63.5%
of total revenue), compared to $5.6 million (34.6% of total
revenue) in the same year-ago period. Product revenue was $9.4
million (36.5% of total revenue), compared to $10.6 million (65.4%
of total revenue) in the same year-ago period.
Gross profit increased to $14.0 million (54.5% of total revenue)
from $7.1 million (43.5% of total revenue) in the same year-ago
period. Service gross profit was $10.7 million (65.2% of total
service revenue), compared to $3.5 million (62.0% of total service
revenue) in the same year-ago period. Product gross profit was $3.4
million (35.9% of total product revenue), compared to $3.6 million
(33.6% of total product revenue) in the same year-ago period.
Selling, general and administrative expenses were $10.3 million,
compared to $5.6 million in the same year-ago period. Research and
development expenses were $2.6 million, compared to $2.0 million in
the same year-ago period. Depreciation and amortization expenses
were $1.8 million, compared to $443,000 in the same year-ago
period.
Net loss attributable to common stockholders totaled $3.8
million or $(0.13) per basic and diluted share (based on 29.4
million weighted average shares outstanding), compared to net loss
of $2.6 million or $(0.15) per basic and diluted share in the same
year-ago period (based on 17.7 million weighted average shares
outstanding).
Adjusted EBITDA, a non-GAAP metric, totaled $2.1 million,
compared to adjusted EBITDA of $129,000 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 $21.5 million in
cash and cash equivalents. The company’s working capital position
at quarter-end was $28.9 million.
Termination of At-the-Market (ATM) Equity
Offering ProgramThe Company has elected to terminate its
“at-the-market” equity offering program (“ATM Facility”). The
Company initiated the 10-day termination process of the ATM
Facility with Canaccord Genuity on August 4, 2020, with the
official termination to take effect August 14, 2020. The Company
will make no further sales of shares under the ATM Facility. Upon
the announcement of the initiation of the ATM Facility’s
termination process, the Company had sold 809,846 shares raising
approximately $4.2 million in gross proceeds. The Company currently
expects to use the proceeds from the ATM Facility to pay down high
interest-rate debt.
Investor Conference
CallPowerFleet management will discuss these
results and business outlook on a conference call today (Thursday,
August 6, 2020) at 9:00 a.m. Eastern time (6:00 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: 866-831-8711International dial-in: 203 518
9865Passcode: 92741
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
MeasuresTo 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
SubsidiariesReconciliation of GAAP to Adjusted
EBITDA Financial Measures(Unaudited)
|
Three Months
Ended |
|
Six Months
Ended |
June 30, |
June 30, |
|
2019 |
2020 |
|
2019 |
2020 |
|
|
|
|
|
|
Net loss
attributable to common stockholders |
$ |
(2,585,000 |
) |
|
$ |
(3,766,000 |
) |
|
$ |
(4,779,000 |
) |
|
$ |
(8,315,000 |
) |
Minority interest |
|
- |
|
|
|
(1,000 |
) |
|
|
- |
|
|
|
(16,000 |
) |
Dividends on preferred stock |
|
- |
|
|
|
1,140,000 |
|
|
|
- |
|
|
|
2,263,000 |
|
Interest (income) expense, net |
|
18,000 |
|
|
|
625,000 |
|
|
|
(27,000 |
) |
|
|
1,360,000 |
|
Other (income) expense, net |
|
8,000 |
|
|
|
(5,000 |
) |
|
|
46,000 |
|
|
|
(7,000 |
) |
Income tax (benefit) expense |
|
- |
|
|
|
460,000 |
|
|
|
- |
|
|
|
653,000 |
|
Depreciation and amortization |
|
470,000 |
|
|
|
1,983,000 |
|
|
|
852,000 |
|
|
|
4,050,000 |
|
Stock-based compensation |
|
601,000 |
|
|
|
977,000 |
|
|
|
1,184,000 |
|
|
|
2,086,000 |
|
Foreign currency translation losses |
|
4,000 |
|
|
|
693,000 |
|
|
|
30,000 |
|
|
|
51,000 |
|
Acquisition-related fees |
|
1,613,000 |
|
|
|
- |
|
|
|
3,062,000 |
|
|
|
- |
|
Impact of the fair value mark-up of acquired inventory |
|
- |
|
|
|
(9,000 |
) |
|
|
- |
|
|
|
124,000 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
129,000 |
|
|
$ |
2,097,000 |
|
|
$ |
368,000 |
|
|
$ |
2,249,000 |
|
|
|
|
|
|
|
|
|
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
StatementsThis 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 filings with
the Securities and Exchange Commission, including PowerFleet’s
annual report on Form 10-K for the year ended December 31, 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
SubsidiariesCondensed Consolidated Statements of
Operations Data(Unaudited)
|
Three Months Ended |
|
Six Months Ended |
|
June
30, |
|
June
30, |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
Products |
$ |
10,643,000 |
|
|
$ |
9,394,000 |
|
|
$ |
17,892,000 |
|
|
$ |
22,602,000 |
|
Services |
|
5,631,000 |
|
|
|
16,371,000 |
|
|
|
11,993,000 |
|
|
|
33,962,000 |
|
|
|
|
|
|
|
|
|
|
|
16,274,000 |
|
|
|
25,765,000 |
|
|
|
29,885,000 |
|
|
|
56,564,000 |
|
Cost of revenue: |
|
|
|
|
|
|
|
Cost of products |
|
7,062,000 |
|
|
|
6,023,000 |
|
|
|
11,301,000 |
|
|
|
15,325,000 |
|
Cost of services |
|
2,141,000 |
|
|
|
5,699,000 |
|
|
|
4,495,000 |
|
|
|
12,330,000 |
|
|
|
|
|
|
|
|
|
|
|
9,203,000 |
|
|
|
11,722,000 |
|
|
|
15,796,000 |
|
|
|
27,655,000 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
7,071,000 |
|
|
|
14,043,000 |
|
|
|
14,089,000 |
|
|
|
28,909,000 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
5,550,000 |
|
|
|
10,338,000 |
|
|
|
11,301,000 |
|
|
|
23,746,000 |
|
Research and development expenses |
|
2,024,000 |
|
|
|
2,582,000 |
|
|
|
3,684,000 |
|
|
|
5,754,000 |
|
Depreciation and amortization expenses |
|
443,000 |
|
|
|
1,828,000 |
|
|
|
802,000 |
|
|
|
3,523,000 |
|
Acquisition-related expenses |
|
1,613,000 |
|
|
|
- |
|
|
|
3,062,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
9,630,000 |
|
|
|
14,748,000 |
|
|
|
18,849,000 |
|
|
|
33,023,000 |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(2,559,000 |
) |
|
|
(705,000 |
) |
|
|
(4,760,000 |
) |
|
|
(4,114,000 |
) |
Interest income |
|
8,000 |
|
|
|
17,000 |
|
|
|
73,000 |
|
|
|
31,000 |
|
Interest expense |
|
(26,000 |
) |
|
|
(1,484,000 |
) |
|
|
(46,000 |
) |
|
|
(1,339,000 |
) |
Other income (expense) |
|
(8,000 |
) |
|
|
5,000 |
|
|
|
(46,000 |
) |
|
|
7,000 |
|
|
|
|
|
|
|
|
|
Net loss before income taxes |
|
(2,585,000 |
) |
|
|
(2,167,000 |
) |
|
|
(4,779,000 |
) |
|
|
(5,415,000 |
) |
|
|
|
|
|
|
|
|
Income tax expense |
|
- |
|
|
|
(460,000 |
) |
|
|
- |
|
|
|
(653,000 |
) |
|
|
|
|
|
|
|
|
Net loss before minority
interest |
|
(2,585,000 |
) |
|
|
(2,627,000 |
) |
|
|
(4,779,000 |
) |
|
|
(6,068,000 |
) |
Minority interest |
|
- |
|
|
|
1,000 |
|
|
|
- |
|
|
|
16,000 |
|
Preferred stock dividends |
|
- |
|
|
|
(1,140,000 |
) |
|
|
- |
|
|
|
(2,263,000 |
) |
|
|
|
|
|
|
|
|
Net loss attributable to common
stockholders |
$ |
(2,585,000 |
) |
|
$ |
(3,766,000 |
) |
|
$ |
(4,779,000 |
) |
|
$ |
(8,315,000 |
) |
|
|
|
|
|
|
|
|
Net loss per share - basic and
diluted |
$ |
(0.15 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding - basic and diluted |
|
17,678,000 |
|
|
|
29,399,000 |
|
|
|
17,650,000 |
|
|
|
29,216,000 |
|
|
|
|
|
|
|
|
|
PowerFleet, Inc. and
SubsidiariesCondensed Consolidated Balance Sheet
Data
|
As of |
|
December 31, 2019 |
|
June 30, 2020 |
ASSETS |
|
|
(Unaudited) |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
16,395,000 |
|
|
$ |
21,469,000 |
|
Restricted cash |
|
308,000 |
|
|
|
308,000 |
|
Accounts receivable, net |
|
27,016,000 |
|
|
|
22,842,000 |
|
Inventory, net |
|
16,381,000 |
|
|
|
15,337,000 |
|
Deferred costs - current |
|
3,720,000 |
|
|
|
3,568,000 |
|
Prepaid expenses and other current assets |
|
7,370,000 |
|
|
|
5,717,000 |
|
|
|
|
|
Total current assets |
|
71,190,000 |
|
|
|
69,241,000 |
|
|
|
|
|
Deferred costs - less current
portion |
|
4,810,000 |
|
|
|
3,337,000 |
|
Fixed assets, net |
|
8,240,000 |
|
|
|
6,984,000 |
|
Goodwill |
|
89,068,000 |
|
|
|
88,872,000 |
|
Intangible assets, net |
|
36,639,000 |
|
|
|
33,941,000 |
|
Right of use asset |
|
7,024,000 |
|
|
|
8,490,000 |
|
Severance payable fund |
|
3,530,000 |
|
|
|
3,510,000 |
|
Other assets |
|
2,532,000 |
|
|
|
2,573,000 |
|
|
$ |
223,033,000 |
|
|
$ |
216,948,000 |
|
|
|
|
|
LIABILITIES |
|
|
|
Current liabilities: |
|
|
|
Short-term bank debt and current maturities of long-term debt |
$ |
3,373,000 |
|
|
$ |
4,328,000 |
|
Convertible note payable |
|
5,000,000 |
|
|
|
5,000,000 |
|
Accounts payable and accrued expenses |
|
24,880,000 |
|
|
|
20,962,000 |
|
Deferred revenue - current |
|
7,687,000 |
|
|
|
8,036,000 |
|
Lease liability - current |
|
868,000 |
|
|
|
2,012,000 |
|
|
|
|
|
|
|
41,808,000 |
|
|
|
40,338,000 |
|
Total current liabilities |
|
|
|
Long-term debt, less current
maturities |
|
26,515,000 |
|
|
|
24,001,000 |
|
Deferred revenue - less current
portion |
|
8,544,000 |
|
|
|
6,534,000 |
|
Lease liability - less current
portion |
|
6,371,000 |
|
|
|
6,676,000 |
|
Accrued severance payable |
|
4,062,000 |
|
|
|
4,200,000 |
|
Deferred tax liability |
|
3,722,000 |
|
|
|
4,506,000 |
|
Other long-term liabilities |
|
438,000 |
|
|
|
761,000 |
|
|
|
|
|
|
|
91,460,000 |
|
|
|
87,016,000 |
|
MEZZANINE EQUITY |
|
|
|
Convertible redeemable Preferred
stock: Series A |
|
47,393,000 |
|
|
|
49,656,000 |
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Total Powerfleet, Inc. stockholders’ equity |
|
84,190,000 |
|
|
|
80,320,000 |
|
Non-controlling interest |
|
(10,000 |
) |
|
|
(44,000 |
) |
Total equity |
|
84,180,000 |
|
|
|
80,276,000 |
|
Total liabilities and stockholders’ equity |
$ |
223,033,000 |
|
|
$ |
216,948,000 |
|
|
|
|
|
PowerFleet, Inc. and
SubsidiariesCondensed Consolidated Statements of
Cash Flow Data(Unaudited)
|
Six Months ended June 30, |
|
2019 |
2020 |
|
|
|
Cash flows from operating
activities (net of net assets acquired): |
|
|
Net loss before minority interest |
$ |
(4,779,000 |
) |
$ |
(6,068,000 |
) |
Adjustments to reconcile net loss
to cash (used in) provided by operating activities: |
|
|
|
|
Inventory reserve |
|
93,000 |
|
|
126,000 |
|
Stock based compensation expense |
|
1,184,000 |
|
|
2,086,000 |
|
Depreciation and amortization |
|
852,000 |
|
|
4,050,000 |
|
Operating lease right-of-use assets, net of operating lease
liabilities |
|
- |
|
|
1,437,000 |
|
Bad debt expense |
|
110,000 |
|
|
245,000 |
|
Deferred income taxes |
|
- |
|
|
653,000 |
|
Change in contingent consideration |
|
47,000 |
|
|
- |
|
Other non-cash items |
|
(11,000 |
) |
|
(35,000 |
) |
Changes in: |
|
|
Operating assets and liabilities |
|
222,000 |
|
|
1,921,000 |
|
|
|
|
Net cash (used in) provided by operating activities |
|
(2,282,000 |
) |
|
4,415,000 |
|
|
|
|
Cash flows from investing
activities: |
|
|
Acquisitions, net of cash
assumed |
|
(3,800,000 |
) |
|
- |
|
Proceeds from sale of property
and equipment |
|
- |
|
|
35,000 |
|
Capital expenditures |
|
(396,000 |
) |
|
(822,000 |
) |
Purchases of investments |
|
(99,000 |
) |
|
- |
|
Proceeds from the sale and
maturities of investments |
|
4,638,000 |
|
|
- |
|
|
|
|
Net cash provided by (used in) investing activities |
|
343,000 |
|
|
(787,000 |
) |
|
|
|
Cash flows from financing
activities: |
|
|
Net proceeds from stock
offering |
|
- |
|
|
4,041,000 |
|
Repayments of long-term debt |
|
- |
|
|
(991,000 |
) |
Short-term bank credit, net |
|
- |
|
|
(356,000 |
) |
Proceeds from exercise of stock
options |
|
177,000 |
|
|
342,000 |
|
Shares repurchased pursuant to
vesting of restricted stock |
|
(245,000 |
) |
|
(249,000 |
) |
|
|
|
Net cash (used in) provided by financing activities |
|
(68,000 |
) |
|
2,787,000 |
|
|
|
|
Effect of foreign exchange rate changes on cash and cash
equivalents |
|
(54,000 |
) |
|
(1,341,000 |
) |
Net increase in cash, cash equivalents and restricted
cash |
|
(2,061,000 |
) |
|
5,074,000 |
|
Cash, cash equivalents and restricted cash - beginning of
period |
|
10,466,000 |
|
|
16,703,000 |
|
|
|
|
Cash, cash equivalents
and restricted cash - end of period |
|
8,405,000 |
|
|
21,777,000 |
|
|
|
|
PowerFleet (NASDAQ:PWFL)
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