PowerFleet Reports First Quarter 2022 Financial Results

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
PWFL@gatewayir.com
(949) 574-3860

PowerFleet Media Contact
Calen McGee
powerfleet@n6a.com
(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