PowerFleet Reports First Quarter 2022 Financial Results

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    Total Revenue up 14% Year-Over-Year to $33.2 Million and High Margin, Recurring and Services Revenue up 7% Year-Over-Year to $18.8 million

    WOODCLIFF LAKE, N.J., May 10, 2022 (GLOBE NEWSWIRE) —


    PowerFleet, Inc.



    (Nasdaq: PWFL)

    , a global leader of SaaS-based data insight solutions that manage enterprise assets for seamless business operations, reported results for the first quarter ended March 31, 2022.


    First Quarter


    2022 Financial Highlights

    • Total revenue was $33.2 million, up 14% year-over-year.
    • High margin, recurring and services revenue increased 7% year-over-year to $18.8 million, or 57% of total revenue.
    • $20.9 million in cash and cash equivalents and working capital of $40.5 million at quarter-end.


    Management Commentary

    “The first quarter marked a solid start to the year, highlighted by 14% year-over-year revenue growth,” said PowerFleet CEO Steve Towe. “The double-digit growth we realized in the quarter was driven by ongoing deployments with major customers, including Walmart, Albertsons, and American Intermodal Management. Additionally, we saw growth across our core verticals and markets, particularly in Mexico and our Pointer operation, both of which are realizing solid growth with key partners.

    “Operationally, we continue to navigate through the global supply chain and electronic component challenges to deliver solutions that our valued customers rely on for their business operations. As we progress through 2022, we expect product gross profit to improve as we begin to realize the benefits from our operational and product reengineering initiatives. Longer term, we are confident these measures will give us better control over our supply chain and how we deliver products to customers. In parallel, we’re working hard to expand recurring revenue while reducing operating expenses through even closer integration of our business units.

    “Our companywide focus in 2022 is on establishing a world-class SaaS and AI platform to maximize the impact we make for our customers and increase the wallet share we can derive in the future. PowerFleet is well positioned to capitalize on this opportunity thanks to the depth and breadth of our technology, specifically the rich history of innovative devices, sensors, suite of software applications and data, coupled with the growing need for real-time AI-based insights across our SaaS offerings. We are executing to plan and are confident the successful realization of our vision will create a highly scalable, repeatable, and profitable global organization for the years ahead.”


    First Quarter


    2022


    Financial Results


    Total revenue increased 14% to $33.2 million from $29.0 million in the same year-ago period.

    Services revenue was $18.8 million, or 57% of total revenue, an improvement compared to $17.6 million, or 61% of total revenue, in the same year-ago period. Product revenue, which drives future services revenue, was $14.4 million, or 43% of total revenue, compared to $11.4 million, or 39% of total revenue, in the same year-ago period.

    Gross profit was $14.4 million, or 43% of total revenue, compared to $14.5 million, or 50% of total revenue, in the same year-ago period. Service gross profit was $12.0 million, or 64% of total service revenue, compared to $11.2 million, or 64% of total service revenue, in the same year-ago period. Product gross profit was $2.4 million, or 17% of total product revenue, compared to $3.3 million, or 29% of total product revenue, in the same year-ago period. In Q1 2022, product gross profit was impacted by product mix, higher costs associated with supply chain issues and electronic component shortages and inflation.

    Selling, general and administrative expenses were $14.9 million, compared to $16.1 million in the prior quarter and $13.6 million in the same year-ago period. Research and development expenses were $3.2 million, compared to $2.7 million in the same year-ago period.

    Net loss attributable to common stockholders totaled $4.1 million, or $(0.12) per basic and diluted share (based on 35.3 million weighted average shares outstanding), compared to net loss attributable to common stockholders of $3.0 million, or $(0.09) per basic and diluted share, in the same year-ago period (based on 33.3 million weighted average shares outstanding).

    Non-GAAP net loss, a non-GAAP metric, totaled $2.2 million, or $(0.06) per basic and diluted share (based on 35.3 million weighted average basic and diluted shares outstanding), compared to non-GAAP net income of $61,000, or $0.00 per basic and diluted share (based on 33.3 million weighted average basic shares outstanding and 41.8 million weight average diluted shares outstanding), in the same year-ago period (See the section below titled “Non-GAAP Financial Measures” for more information about non-GAAP net income and its reconciliation to GAAP net income/loss).

    Adjusted EBITDA loss, a non-GAAP metric, totaled $993,000, compared to adjusted EBITDA of $1.4 million 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 $20.9 million in cash and cash equivalents. The company’s working capital position at quarter-end was $40.5 million.


    Investor Conference Call


    PowerFleet management will discuss these results and business outlook on a conference call today (Tuesday, May 10, 2022) at 8:30 a.m. Eastern time (5:30 a.m. Pacific time).

    PowerFleet management will host the presentation, followed by a question-and-answer session.

    Toll Free: 888-506-0062

    International: 973-528-0011

    Entry code: 949768

    The conference call will be broadcast simultaneously and available for replay

    here

    and in via 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 non-GAAP net income (loss), non-GAAP net income (loss) per basic and diluted share and adjusted EBITDA. 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. These non-GAAP measures are not measures 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
    March 31,
    2021 2022
    Net loss attributable to common stockholders $ (2,983,000)
    $
    (4,124,000


    )
    Non-controlling interest
    –
    1,000
    Preferred stock dividend and accretion 1,196,000
    1,196,000
    Interest (income) expense, net 458,000
    431,000
    Other (income) expense, net
    –
    1,000
    Income tax (benefit) expense 473,000
    (703,000


    )
    Depreciation and amortization 2,141,000
    2,089,000
    Stock-based compensation 1,097,000
    457,000
    Foreign currency translation (1,019,000)
    (341,000


    )

    Adjusted EBITDA
         		$ 1,363,000
    $
    (993,000


    )


    PowerFleet, Inc. and Subsidiaries



    Reconciliation of GAAP to Non-GAAP Net Income (Loss) Financial Measures



    (Unaudited)

    Three Months Ended
    March 31,
    2021 2022
    Net loss attributable to common stockholders $ (2,983,000)
    $
    (4,124,000


    )
    Preferred stock dividend and accretion 1,196,000
    1,196,000
    Other (income) expense, net
    –
    1,000
    Intangible assets amortization expense 1,299,000
    1,274,000
    Stock-based compensation 1,097,000
    457,000
    Foreign currency translation (1,019,000)
    (341,000


    )
    Non-cash portion of income tax expense 471,000
    (706,000


    )

    Non-GAAP net income (loss)
         		$ 61,000
    $
    (2,243,000


    )
    Non-GAAP net income (loss) – basic $ 0.00
    $
    (0.06


    )
    Non-GAAP net income (loss) – diluted $ 0.00
    $
    (0.06


    )
    Weighted average common shares outstanding – basic 33,259,000
    35,332,000
    Weighted average common shares outstanding – diluted 41,771,000
    35,332,000


    About PowerFleet


    PowerFleet® Inc. (NASDAQ: PWFL; TASE: PWFL) is a global leader of subscription-based wireless solutions that manage enterprise assets for seamless business operations. PowerFleet’s patented technologies are the proven solution for organizations that must monitor and analyze their assets to improve safety, increase efficiency, reduce costs, and drive profitability. Our offerings are sold under the global brands PowerFleet, Pointer, and Cellocator. PowerFleet’s global headquarters are in Woodcliff Lake, New Jersey, with additional offices around the globe. 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 filings with the Securities and Exchange Commission, including PowerFleet’s annual report on Form 10-K for the year ended December 31, 2021. 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 Investor Contact


    Matt Glover

    Gateway Investor Relations



    [email protected]



    (949) 574-3860


    PowerFleet Media Contact


    Calen McGee


    [email protected]


    (908) 461-0266


    PowerFleet, Inc. and Subsidiaries



    Condensed Consolidated Statements of Operations Data

    Three Months Ended
    March 31,
    2021 2022

    (Unaudited)
    (Unaudited)
    Revenue:
    Products $ 11,420,000
    $
    14,392,000
    Services 17,571,000
    18,769,000
    28,991,000
    33,161,000
    Cost of revenue:
    Cost of products 8,152,000
    11,978,000
    Cost of services 6,369,000
    6,784,000
    14,521,000
    18,762,000
    Gross Profit 14,470,000
    14,399,000
    Operating expenses:
    Selling, general and administrative expenses 13,608,000
    14,912,000
    Research and development expenses 2,745,000
    3,229,000
    16,353,000
    18,141,000
    Loss from operations (1,883,000)
    (3,742,000


    )
    Interest income 12,000
    13,000
    Interest expense (470,000)
    (444,000


    )
    Foreign currency translation of debt 1,027,000
    544,000
    Other (expense) income, net –
    (1,000


    )
    Net loss before income taxes (1,314,000)
    (3,630,000


    )
    Income tax benefit (expense) (473,000)
    703,000
    Net loss before non-controlling interest (1,787,000)
    (2,927,000


    )
    Non-controlling interest –
    (1,000


    )
    Net loss (1,787,000)
    (2,928,000


    )
    Accretion of preferred stock (168,000)
    (168,000


    )
    Preferred stock dividend (1,028,000)
    (1,028,000


    )
    Net loss attributable to common stockholders $ (2,983,000)
    $
    (4,124,000


    )
    Net loss per share – basic and diluted $ (0.09)
    $
    (0.12


    )
    Weighted average common shares outstanding – basic
    and diluted 33,259,000
    35,332,000


    PowerFleet, Inc. and Subsidiaries



    Condensed Consolidated Balance Sheet Data

    As of
    December 31, 2021 March 31, 2022

    (Unaudited)
    ASSETS
    Current assets:
    Cash and cash equivalents $ 26,452,000
    $
    20,559,000
    Restricted cash 308,000
    308,000
    Accounts receivable, net 32,094,000
    31,861,000
    Inventory, net 18,243,000
    20,313,000
    Deferred costs – current 1,762,000
    1,416,000
    Prepaid expenses and other current assets 9,051,000
    10,716,000
    Total current assets 87,910,000
    85,173,000
    Deferred costs – less current portion 249,000
    224,000
    Fixed assets, net 8,988,000
    8,532,000
    Goodwill 83,487,000
    83,487,000
    Intangible assets, net 26,122,000
    24,848,000
    Right of use asset 9,787,000
    9,597,000
    Severance payable fund 4,359,000
    4,282,000
    Deferred tax asset 4,262,000
    4,977,000
    Other assets 4,703,000
    4,778,000
    Total assets $ 229,867,000 $
    225,898,000
    LIABILITIES
    Current liabilities:
    Short-term bank debt and current maturities of long-term debt $ 6,114,000 $
    6,006,000
    Accounts payable and accrued expenses 29,015,000
    28,777,000
    Deferred revenue – current 6,519,000
    7,168,000
    Lease liability – current 2,640,000
    2,718,000
    Total current liabilities 44,288,000
    44,669,000
    Long-term debt, less current maturities 18,110,000
    16,258,000
    Deferred revenue – less current portion 4,428,000
    4,466,000
    Lease liability – less current portion 7,368,000
    7,128,000
    Accrued severance payable 4,887,000
    4,857,000
    Deferred tax liability 5,220,000
    5,305,000
    Other long-term liabilities 706,000
    738,000
    Total liabilities 85,007,000
    83,421,000
    MEZZANINE EQUITY
    Convertible redeemable Preferred stock: Series A 52,663,000
    53,859,000
    STOCKHOLDERS’ EQUITY –
    –
    Total Powerfleet, Inc. stockholders’ equity 92,111,000
    88,516,000
    Non-controlling interest 86,000
    102,000
    Total equity 92,197,000
    88,618,000
    Total liabilities and stockholders’ equity $ 229,867,000 $
    225,898,000



    PowerFleet, Inc. and Subsidiaries



    Condensed Consolidated Statements of Cash Flow Data

    Three Months Ended March 31,
    2021 2022

    Cash flows from operating activities
    Net loss $ (1,787,000) $ (2,928,000)
    Adjustments to reconcile net loss to cash (used in) provided by operating activities:
    Non-controlling interest – 1,000
    Inventory reserve 74,000 53,000
    Stock based compensation expense 1,357,000 457,000
    Depreciation and amortization 2,144,000 2,089,000
    Right-of-use assets, non-cash lease expense 768,000 658,000
    Bad debt expense 268,000 252,000
    Deferred income taxes 473,000 (703,000)
    Other non-cash items 88,000 556,000
    Changes in:
    Accounts receivable (3,355,000) (533,000)
    Inventory (829,000) (1,929,000)
    Prepaid expenses and other assets 214,000 (1,337,000)
    Deferred costs 723,000 372,000
    Deferred revenue 1,230,000 689,000
    Accounts payable and accrued expenses 164,000 809,000
    Lease liabilities (748,000) (631,000)
    Net cash (used in) provided by operating activities 784,000 (2,125,000)
    Capital expenditures (597,000) (610,000)
    Net cash (used in) provided by investing activities (597,000) (610,000)

    Cash flows from financing activities:
    Net proceeds from stock offering 26,867,000 –
    Payment of preferred stock dividends (1,028,000) –
    Repayment of long-term debt (1,315,000) (1,497,000)
    Short-term bank debt, net 91,000 –
    Proceeds from exercise of stock options, net 70,000 –
    Purchase of treasury stock upon vesting of restricted stock (347,000) (181,000)
    Net cash (used in) provided by financing activities 24,338,000 (1,678,000)
    Effect of foreign exchange rate changes on cash and cash equivalents (1,701,000) (1,480,000)

    Net (decrease) increase in cash, cash equivalents and restricted cash
         		22,824,000 (5,893,000)
    Cash, cash equivalents and restricted cash – beginning of period 18,435,000 26,760,000

    Cash, cash equivalents and restricted cash – end of period
         		$ 41,259,000 $ 20,867,000


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    May 10, 2022 – 4:00 AM PDT